13-Sp09--E-commerce6 - 4/22/2009 Learning Objectives...

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4/22/2009 1 ELECTRONIC COMMERCE Potential roles of e-commerce Economics of online sales Obstacles to growth Legal issues Web site design and problems Consumer cyber behavior BUAD 307 ELECTRONIC COMMERCE Lars Perner, Instructor 2 Learning Objectives Understanding opportunities to use e-commerce Understanding the economics of e-commerce Understanding circumstances when e- commerce is more appropriate Understanding influences on a site’s rank on major search engines BUAD 307 ELECTRONIC COMMERCE Lars Perner, Instructor 3 Potential Roles of e-commerce Trade: – B2C [business to consumer] – B2B – C2C (e.g., eBay) – C2B • Advertising/promotion • Customer service/support • Market research BUAD 307 ELECTRONIC COMMERCE Lars Perner, Instructor 4 Types of Trade Object of sale – Goods – Services • Traditional • Information • Entertainment Distribution – Shipping by operator – Shipping from manufacturer/ client – Download Methods of sale – Direct to customer – Online retailer – Auction facilitator – Referral Business model – Retail sale margin – Commission – Subscription/content – Advertising/market research revenue – Support of brands/other channels – Mixed BUAD 307 ELECTRONIC COMMERCE Lars Perner, Instructor 5 Basic Internet Economics In most markets, online merchants tend to have HIGHER costs than do conventional retailers – Much more of the work is done by the merchant rather than by the customer. Intermediaries usually add value through specialization of labor and consolidation of tasks. Eliminating intermediaries usually results in higher costs. Customers do a lot of the work when they select, aggregate, bring for check- out, and carry away their products. Employees of e-commerce companies and their transportation services have to be paid to do this work! BUAD 307 ELECTRONIC COMMERCE Lars Perner, Instructor 6 Considerations in Evaluating E-Commerce Potential Value-to-bulk ratio. High value, low weight/volume items can be more readily handled and shipped. Absolute margin. Even if the percentage margin on a high price item is low (e.g., 15%), the absolute margin can cover considerable expenses (e.g., 0.15x$1,000=$150) Ability of consumer to evaluate quality and fit through online description. Standard branded items from a trusted source can be more easily evaluated than items that need to be examined up close. Convenience to the customer and willingness to pay for this convenience. Some consumers may be willing to pay more for door-to-door delivery. It is usually more expensive to buy groceries online. Sensitivity to delayed delivery .
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13-Sp09--E-commerce6 - 4/22/2009 Learning Objectives...

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