Chapter 9 �Digital Commerce

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Objectives

1. To understand the principles of digital commerce, benefits, and limitations.
2. The importance of the Department of Business Development Trustmark (Trustmark)
3. To understand different types of electronic commerce formats
4. To understand social commerce

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E-Commerce

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• Electronic commerce or e-commerce
• Buying-selling process, exchange products and information by relying on computers and network systems
• includes
• Communications of Business-to-Business and business to consumer
• Business transactions, payments, shipping
• Customer service and building relationships with customers

https://www.youtube.com/watch?v=qb5HfsTewQ0

E-Commerce business operations

• Public relations (Broadcast)
• Business interactions (Interaction)
• Linking buyer information for complete information (Integration)
• It is a system where buyers and sellers can contact each other quickly and conveniently.
• Access to a large number of customers
• It has lower transaction costs per unit than in the traditional model.

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Impact of E-commerce

https://www.youtube.com/watch?app=desktop&v=Ykft689OfyE

Benefits of E-commerce

Limitations of E-Commerce

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• security system Data reliability and system standards
• Internet speed and number of communication channels
• Computer systems and programs still need to be developed.
• Consumers want privacy (Privacy).
• Electronic commerce laws are still incomplete.
• It requires personnel with interdisciplinary knowledge. (Multidisciplinary)

Trustmark - Mark of trustworthiness

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• DBD Registered by Department of Business Development, Ministry of Commerce
• Smile Mark by Electronic Transactions Development Agency There are security standards for online trading
• Security, Privacy and Transparency
• Reliability Seal Program
• buySAFE Seal

Types of E-commerce : B2B

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Business-to-business (B2B) is a business model that provides products from one business to another.

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This category usually includes service providers and extends to different ecommerce models like software firms, office furniture & supply providers, and document hosting companies.

Examples of B2B Companies

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Zoom Video Communications

- Zoom Video Communications gained prominence in the B2B landscape. Provides video calling and online chat services, improving connections with clients, colleagues, friends, and family.

Slack

- Positioned as a “collaboration hub,” Slack provides a messaging platform for communication and aids businesses in automating workflow tasks.

Google

- Google has an extensive collection of 271 products that cover areas like cloud content collaboration, surveys, digital analytics, document creation, and video conferencing.

Types of E-commerce : B2C

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Business-to-Consumer or B2C is the most common type of business model, where businesses sell products and services directly to individual online shoppers rather than through physical stores.

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B2C became widely popular during the late 1990s dotcom boom. It mainly pertains to online retailers using the internet to sell products and services to consumers directly

Examples of B2C Companies

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Amazon

-Amazon excels in various domains such as e-commerce, digital streaming, cloud computing, and artificial intelligence. When customers purchase Amazon products, they’re involved in a B2C transaction while also paying for Amazon’s online services.

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Netflix

-Netflix, a popular online streaming platform, provides subscribers with access to movies, documentaries, and TV shows for a monthly fee. Moreover, Netflix produces its original content, engaging in B2C transactions by directly offering self-created content to viewers.

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Spotify

-Spotify provides a music streaming service through monthly subscriptions, giving users access to a wide range of songs, podcasts, and albums. 

Other well-known B2C companies include Starbucks, H&M, Facebook, YouTube, Alibaba, Airbnb, Uber, and eBay.

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Types of E-commerce : D2C

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Direct-to-consumer (D2C) is a business model that allows companies to sell their product directly to their end customers, bypassing third-party wholesalers or online retailers.

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This approach is well-suited for small business marketing to launch products, though it necessitates partnering with a fulfillment center for inventory storage and prompt order shipping.

Examples of D2C Companies

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MeUndies - stands out with its slogan “Feel it to believe it.”

• As a D2C brand, it reaches diverse customer groups through two purchasing options: a regular online store and a subscription service. For subscribers, MeUndies provides new designs and selects upcoming pairs to feature in the online shop based on customer feedback.

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Bombas

• Bombas stands out as a D2C startup by significantly enhancing product quality and pricing items above the standard while still achieving remarkable success.

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HIMS & HERS

• HIMS and HERS are outstanding illustrations of packaging design and rank among the leading D2C brands in the cosmetics industry.

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Types of E-commerce : C2C

Consumer to Consumer (C2C) business is a digital platform for individuals to sell their own items directly to other consumers. These transactions are often managed by third-party websites or marketplaces that facilitate interactions between buyers and sellers.

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These platforms enable small businesses and hobbyists to sell their products at their chosen prices, without the need for their own online storefronts.

Examples of C2C Companies

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eBay

• eBay stands out as a notable C2C intermediary, providing a variety of fixed-price and auction items. It appeals to bargain hunters and those in search of rare products, making it a captivating platform for a diverse array of shoppers.

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Amazon

• Amazon is a versatile platform, engaging in both B2C and C2C interactions. Beyond its B2C retail role, Amazon Marketplace serves as a hub connecting third-party vendors, including both new and used products.

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Craigslist

• Craigslist is a popular C2C marketplace that enables individuals to buy, sell, and trade goods and services. With its localized sites for cities worldwide, it fosters a sense of community and emphasizes relationship-building.

Type o f E-commerce : C2B

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Consumer-to-Business (C2B) is a business model in which consumers sell goods or services to companies. 

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This model includes reverse auctions, service provision sites like UpWork, and several familiar blog monetization methods, such as affiliate marketing or Google AdSense.

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Businesses can browse for required services, submit offers, and once terms are agreed upon, the platform manages the transaction process and receives a service fee.

Examples of C2B Companies

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In the C2B model, companies benefit from customers’ readiness to set their own prices, share information, or promote businesses, while consumers enjoy advantages like payment flexibility, direct goods, and services at low or no cost.

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Reverse Auctions

• Reverse auctions enable customers to participate in the purchasing process by proposing the price they are willing to pay, providing a unique approach that aligns with their preferences and financial limitations.

Affiliate Marketing

• Affiliate marketing enables individuals, such as influencers, bloggers, and writers, to promote specific products on their platforms and earn a fee in return.

Freelance

• C2B businesses also enable interactions between freelancers, or gig workers, and businesses. Prominent C2B platforms such as Fiverr, Shutterstock, and Upwork provide listings for such collaborations.

Type of E-commerce : B2G

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Business-to-government (B2G) involves selling and promoting goods, services, and information to government entities at various levels, including federal, state, and local levels.

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Government contracts offer profitable prospects for businesses of various sizes. It’s noteworthy that contracts in the public sector are typically larger and more enduring compared to those in the private sector.

Examples of B2G business models

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Riskpulse

• Riskpulse offers a tailored risk management and supply chain solution for government agencies, effectively cutting operational costs, minimizing disruptions, and predicting timely or delayed delivery of goods. Riskpulse serves diverse sectors like healthcare, transportation, energy, and defense.

Senseware

• Senseware provides an all-inclusive IoT platform, including hardware, cloud data , and software solutions. Their primary focus is capturing real-time data for energy submetering, indoor air quality (IAQ), and HVAC operations.

Skycatch

• Skycatch is a top-tier aerial intelligence platform designed for enterprises excelling in data imaging. Government agencies use Skycatch’s on-site connectivity, robust Artificial Intelligence, and advanced analysis tools to enhance project planning, all supported by powerful Machine Learning algorithms.

Type of E-commerce product

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Divided according to the nature of products and services. Can be classified into 3 types

1. Digital products

• They are intangible goods (Intangible Goods) such as software, music, movies.
• The delivery of digital data will be downloaded by the buyer via the Internet.

2. Non-Digital Products

• It is a tangible product (Tangible Goods) such as computer equipment, electrical appliances.
• Shipping of this type of product is commonly sent in the form of a package. or delivered at the location specified by the customer

3. Products and services

• Including tourism, hotels, shops, airline ticket booking.

E-commerce Trade Cycle

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E-commerce System

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1. Storefront

• An online storefront, also known as an electronic storefront or e-storefront, is a website that serves as the online representation of a business.
• A digital storefront encompasses all the necessary elements for selling products and services over the internet, such as hosting, homepage, digital catalog, online support, and payment gateways.

online storefront operation

https://www.engati.com/glossary/online-storefront

What are the essential components to build an Online Storefront?

1. Brand name, logo, and domain name
2. Catalog and product placement
3. Online support/chatbots
4. CTA (call to action), login, sign-up, and cart
5. Payment options
6. Social media links
7. Social proofing and trust marks

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E-commerce System

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2. Shopping Cart Systems

• to display and allow ordering of a person's products in an orderly, secure and easy method - usually linking to an existing website.

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E-commerce System

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2. Shopping Cart Systems

• E-Commerce shopping cart types:
• Hosted : this is a pretty good choice for small businesses because of its simplicity and user-friendly interface where you can easily insert every details of your products like descriptions, prices, and delivery options. Hosted shopping cart packages are usually provided by a third-party web host.
• Licensed : those kind packages can be purchased separately if businesses want to host their own server. They are basically premium options, but you can also find some free and open-source options as well. Licensed shopping-carts provide more flexibility but integrating them into your website can be a bit complicated.

E-commerce System

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3. E-Payment Systems

E-commerce System

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3.1 Participants in the ePayment process

• The customer – the purchaser of the product or service offered online, who is also known as the cardholder.
• The merchant – selling their products or services but are also responsible for the monitoring of their online store’s inventory, storage, and delivery operations, control of the payment process
• The issuer – (issuing bank) customer’s bank and the financial institution that provides the customer with their credit card.
• The acquirer – is the financial institution who is aligned with the merchant. Acquirers are responsible for payment processing when credit and debit cards are used.
• The payment processor –main operational function is to connect the merchant to their acquirer. Provides the technology needed to accept and process online payments which include connections to a payment gateway and risk management solutions.

E-commerce System

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3.2 The most popular methods of e-payments are:

• Debit/ Credit cards: Visa, Mastercard and American Express are the most well-known brands for debit or credit cards.
• e-Wallets: an e-wallet is a mobile app which stores the user’s credit card details and personal information and can be used for online and in-store purchases.
• Bank-to-bank transfers: Bank-to-bank transfers are real-time bank transfers from the customer’s bank account to the merchant’s bank account. Contrary to wire transfers which take longer to clear, bank-to-bank transfers enable the merchant to receive payments online and instantly.
• Prepaid vouchers: a prepaid voucher is an ideal option for customers who wish to shop online and do not have a bank account. A customer effectively preloads funds into a voucher, most commonly by purchasing such a voucher with cash, which does not require the involvement of a bank.

M-Commerce (Mobile Commerce)

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m-commerce which involves shopping through a mobile device (mostly smartphone), and all transactions are performed over a mobile device. It mostly aims to enhance CX on smartphones which will eventually drive higher conversion rates and revenue. Typically, m-commerce is classified into three categories, mobile shopping, mobile banking, mobile payments, and digital wallets.

M-commerce v/s e-Commerce

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1. The basic difference between e-commerce and m-commerce is that e-Commerce shopping is done over desktops and laptops with the help of the internet and m-commerce means that all the transactions are done via mobile devices like smartphones, tablets. On mobile devices, you can push notifications and for eCommerce, you can share promotional emails.
2. The location tracking on eCommerce is done via the IP address and on the other hand in m-commerce, you will be able to track location via GPS, Wi-Fi, and cellular connections.
3. While in eCommerce shopping experience is highly dependent on computers and websites which makes it lesser mobility. On m-commerce, you can do the personalization and deliver a customized shopping experience where customers can make prompt shopping decisions.

M-Commerce:

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