E-COMMERCE &

INTERNET MARKETING
LESSON 1-5
E-COMMERCE
“Electronic commerce, commonly written as E-Commerce, is the trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile
commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection
systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction’s life cycle, although it may also use other technologies such as E-Mail."

E-Commerce is the exchange of goods and services between (usually) independent organizations and/or persons supported by a comprehensive usage of powerful ICT systems and a globally standardized network
infrastructure. (Turban, et.al, 2015)
 E-Commerce with "5-C-Model" (Zwass, 2014)

1. Commerce. In the electronic marketplaces there is a matching of customers and

suppliers, an establishing of the transaction terms, and the facilitation of exchange
transactions.
2. Collaboration. The Web is a vast nexus, or network, of relationships among firms and
individuals.
3. Communication. This universal medium has become a forum for self-expression (as in
blogs) and self-presentation
4. Connection. Common software development platforms, many of them in the open-
source domain, enable a wide spectrum of firms to avail themselves of the benefits of
the already developed software, which is, moreover, compatible with that of their trading
and collaborating partners.
5. Computation.  Internet infrastructure enables large-scale sharing of computational and
storage resources, thus leading to the implementation of the decades-old idea of utility
computing.
 Additional Terms:

1. M-Commerce (Mobile Commerce). It is commonly understood as the usage of mobile devices for
business purposes, especially mobile phones and PDA’s (Personal Digital Assistants)
2. Procurement (Electronic Procurement). It is the automation of an organization’s procurement
processes using Web-based applications.
3. E-Government (Electronic Government). E-Government (short for electronic government, also
known as e-gov, Internet government, digital government, online government, or connected
government) consists of the digital interactions between citizens and their government (C2G),
between governments and government agencies (G2G), between government and citizens (G2C),
between government and employees (G2E), and between government and businesses/commerce
(G2B).
4. E-Administration (Electronic Administration). E-administration refers to those mechanisms which
convert the paper processes in a traditional office into electronic processes, with the goal to create a
paperless office. Its objective is to get total transparency and accountability within any organization.
5. E-Democracy (Electronic Democracy). E-Democracy incorporates 21st-century information and
communications technology to promote democracy. That means a form of government in which all
adult citizens are presumed to be eligible to participate equally in the proposal, development, and
creation of laws.
Role of Internet

 Between 1998 and 2000, a substantial number of businesses in the

United States and Western Europe developed rudimentary
websites. In the dot-com era, E-Commerce came to include
activities more precisely termed ‘‘Web commerce’’ – the purchase
of goods and services over the World Wide Web, usually with
secure connections with E-Shopping carts and with electronic
payment services such as credit card payment authorizations.
BUSINES MODELS RELATED TO E-COMMERCE

Internet Based Business

1. Access provider. The access provider ensures (technical) access to the Internet.
2. Search engine. Search engines are the most used software in the Internet. They are the
starting step for many Internet-based activities, not only but, of course, also if
somebody is looking for a business opportunity.
3. Online shop. An online shop is a website, where you can buy products or services, e.g.
books or office supplies.
4. Content provider. Content providers offer content, a completely digital good, e.g.
information, news, documents, music. A specific variant of a content provider is the
information broker, who is a trader of information.
5. Portal. A portal is a website, which provides a set of services to the user so that he/she
sometimes thinks that he/she is using a single but very complex software system.
6. Online marketplace/electronic mall. An online marketplace is a website,
where suppliers and potential customers can come together like on a real
marketplace in a small town. An E-Mall is a set of online shops, which can be
found on one website.
7. Virtual community. A virtual community is a platform for communication and
exchange of experience. It is similar to a virtual club or association.
8. Information broker. An information broker collects, aggregates and provides
information, e.g. information with respect to products, prices, availabilities or
market data, economical data, technical information.
9. Transaction broker. A transaction broker is a person or an organization to
execute sales transactions. Sometimes those brokers are used to hide the real
customer to the supplier. A transaction broker is an agent who is an expert in a
specific area and can take over parts of a business.
10.Online service provider/cloud service provider (CSP). An online service
provider provides services, which can be run electronically, e.g. application
software services or ICT infrastructure services like storage or backup
services.  
Types of Web

1. Blogs
2. Social networking services
3. Online communities
4. Forms/Bulletin boards
5. Content aggregators
TECHNICAL AND ECONOMIC CHALLENGES

Technical Challenges
1. ICT systems have to work properly not only within the
boundaries of the own organization but also in combination with
ICT systems of other organizations. Interfaces between the
involved systems have to be defined and documented properly.
2. In the digital business ICT systems are mission critical assets.
Economic Challenges
E-Commerce is not only a matter of technology. It is primarily,
because it is commerce, a matter of management and organization.
ACTORS AND STAKEHOLDERS
1.C2C: “Consumer to Consumer” 
2.B2C: “Business to Consumer”
3.B2B: “Business to Business”
4.G2C: “Government to Citizen”
5.G2B: “Government to Business”
6.G2G: “Government to Government”
• First we have persons, abbreviated by “C”, where “C” stands for (potential)
consumers or citizens, according to the specific context, which is to be
considered.
• Secondly we have business organizations, abbreviated by “B”, where “B”
stands for producers and suppliers, trade organisations or merchants,
banks, insurance companies or other financial service providers, logistics &
transportation firms or forwarding agencies and last but not least several
intermediaries (making business with and on the Internet).
• Thirdly we have governmental authorities, abbreviated by “G” or “A”, where “A”
stands for administration and “G” stands for Government. This category includes
local authorities, e.g. on town level or on county level, national authorities, e.g.
on state level or on federation level (United states of…), and international
authorities like European Union, United Nations, etc.
• We also see political parties, lobby organizations, press and media, non-
governmental organizations (NGO’s) like Greenpeace, Red Cross or Olympic
committee, churches and other religious organizations, sports and other
associations. There is no specific abbreviation for this group of stakeholders.
• According to the specific nature of the interacting partners we talk about “X2Y
business” where X and Y belong to the above-mentioned categories. We only talk
about X2Y business if there is an interchange of goods or services and money.
The supplier provides goods or services, the customer, be it a consumer or
another business, has to forward an appropriate amount of money to the supplier.
This is done on the base of a contract (be it a written or an oral contract).
FUNDAMENTAL SALES PROCESS
1. Primary Process
2. Secondary Process
The Process and Its Variants

Business to Customer) normally the selling partner is a business organization, but this is
not a Must. Normally the buying partner is a single person, but this also is not a Must. So B2C
is a synonym for the selling process considered from the point of view of the supplier.
1. Buying via internet -The process starts, when the customer generates an order via an
online shop.
2. Variants of the process - The Internet based selling process is more complex than it looks
like at the first impression. Thus, we will discuss the process steps in more detail.
 Information Step - The first variant is that the customer becomes active. Even
here we have to differentiate because the starting point may be different:
 Product/service is clear, the supplier has already been selected,
 Product/service is clear; the supplier has not yet been selected,
 Product/service has to be determined.
Cookies are tokens or short packets of data passed between
communicating programs, where the data is typically not meaningful to
the recipient program.
Recommendation Engines are software systems, which analyze what the
customer has purchased or checked.
 Initiation Step - customer and supplier at the end of the information step know
that they want to conduct a business transaction together, then they initiate it
according to the specific nature of the goods to be sold respectively bought.
 Contract conclusion step - At the end, both, the supplier as well as the
customer, have to “sign” a contract. Initially all relevant data have to be put
together.
 Delivery/Fulfillment Step - If real goods have been sold, then the contract
between supplier and customer is followed by the compilation of the ordered
goods.
 Billing/Invoicing step - If the customer had to pay before delivery, then it may
happen that the invoice has to be corrected and a credit or debit note must be
created.
 Service/Support step - To be successful in E-Commerce does not only depend on
interesting products, low prices and fast delivery.
 Communication/Tracking and tracing step - Customer and supplier want to monitor the
order processing status. This presumes a seamless and automated data capture during the
total workflow, e.g. by scanners or RFID technology (RFID = Radio Frequency
identification).

3. E-Procurement - a synonym for the selling process considered from the point of view of
the customer. It is similar to B2C, but now the buying organization is the driver. This
organization is the only customer and is looking for many suppliers. Thus, a procurement
platform if we talk about IT systems is somehow an inverse of an online shop.
The Pricing Challenge

1. Pricing Strategies - In the E-Commerce world this leads to lower

prices and price dispersion. The problem for the supplier is that it is
easy to reduce prices but it is extremely hard to increase prices.
2. Reasons for price dispersion - In the economic theory there is the
law of one price. That means that in an ideal market with identical
and total information for every participant, demand and supply lead
to a unique price for a specific product.
The Fulfillment Challenge
1. Delivering real goods
2. Delivering digital goods

B2C Business and CRM

CRM (Customer Relationship Management) aims at tracking
and analyzing all interactions od the firm with the customer to
optimize sales volume, customer effectiveness, customer
satisfaction and customer loyalty
B2C Software System

1. Online Shop
2. Procurement platform
3. Customer Relationship Management`