Key Factor Description Example
Ubiquity Referring to the e-commerce market’s availability being anywhere and anytime. You can shop on eBay 24 hours a day, 365 days per year, from anywhere with an internet connection.
Global Reach The ability of an e-commerce business to reach people around the world regardless of their location. I can create an e-commerce website with goods for sale that can be viewed from anywhere in the world with an internet connection, creating a potentially worldwide market.
Universal Standards Standards shared across the world. Credit card standards (PCI) and their acceptance for payment on e-commerce sites.
Richness The depth and value that e-commerce experiences offer its users through video, animations, java, pop-ups, etc. Certain websites it’s only about buying the product and the experience is over. At OneWheel, they enrich the user experience with videos and the culture behind the product.
Information Density The total quantity and quality of information available to users. Amazon has a wealth of information on its listings to fully describe the items for sale, along with user reviews of the item, weights and dimensions for shipping, and related items to help you get exactly what you want.
Personalization/Customization Tailoring marketing communications to each individual customer. Allowing customers to alter products to suit their own personal style or needs. eBay targets their emails for users to include items of interest that they have previously viewed making the experience more personal. Zazzle offers many products that are customizable for users.
Interactivity Engaging the user with both the website and other users, or customer representatives, for the merchant through various means of communication. On Rogers Canada website there is a Live Chat option to “speak” via a chat application to ask questions or receive advice about the products and services.
Social Technology Apps and websites that allow user generated content as a platform or enhancement for a marketplace. Youtube, Facebook, Instagram.
2. Main functionalities and features in an e-commerce server:
– E-commerce website creation software
– Catalog interface to showcase products and information about them
– Online shopping cart system for customers to create orders of the products they want
– Payment processor such as PayPal (which acts as a merchant account now for credit card payments)
– Database management system for inventory, sales, customer information, and other information relevant to the business
– Website analytics software to track customer behaviour on the website as well as where site traffic comes from
Factors to consider when choosing amongst merchant server software packages:
– Performance (Can it handle heavy traffic and orders?)
– Reliability (Have they been hacked ever? How do they deal with issues/problems?)
– Scalability (If the business grows, can the merchant server software handle large growth?)
– Universal Standards (Is the software adaptable to allow for international growth?)
– Adaptability (If the business model changes, can the software adapt to mobile e-commerce?)
– Integration (Can the software integrate seamlessly with current business systems and operations?)
– User Interface (Is the software easy to use or is there a steep learning curve?)
– Software Tools (Does it come with all the appropriate analytical tools to fine tune business operations and profit margins?)
– Functionality (Can the software operate properly if the business changes models or moves to include Software as a Service (Saas)?)
– Compatibility (Will the software be compatible with different languages and be able to function in global markets and allow localization of content?)
– Regulations (Can the software handle multi-country shipping regulations? Sales tax procedures?)
3. “B2B” exchanges are transactions between businesses (ie. the businesses are the buyers and sellers). There are many successful and viable B2B business models: raw materials to manufacturers; manufacturers to wholesalers; wholesalers to distributors; distributors to retailers. The aforementioned examples are typically for products, but businesses also utilize the services of other businesses such as accounting, maintenance, and security.
An example of a successful B2B business model for products is Alibaba, where you can purchase almost anything in large quantities at wholesale prices. An example of a B2B business model for a service is external corporate cybersecurity.
Benefits of B2B members are wholesale pricing, access to supplier information and inventory numbers, and sales information/trends, better ability to control profit margins when bargaining for the price of multiple units. Limitations of B2B members are the potential for shipping costs and logistics to decrease profit margins; your company may be competing against many other companies for similar products and driving up the wholesale costs; establishing a supplier and developing a relationship can be difficult.
Threat of substitute products: The internet is the epitome of the threat of substitute products. You can find almost anything for sale online from multiple websites in many variations. You can go to a brick and mortar bookstore, clothing store, kitchenware shop, etc., use the Amazon app to scan barcodes of items you want, and order it from Amazon (usually cheaper buy of course need to wait for it to be shipped). The internet allows for seemingly unlimited substitutions of any product you desire if you are willing to search a little for it.
Bargaining power of buyers: With the sheer amount of products and services online, the competition drives the prices of almost everything down and a global market helps set those prices. Buyers have access to an incredible amount of information and options online to get the best deals on many products. Even many traditional services are developing competitive business models online that are disrupting businesses. For example, Uber is replacing the taxi industry, AirBnB is competing with the hotel industry, and streaming video services such as Netflix have rendered movie rental stores obsolete.
Bargaining power of suppliers: While the internet has made it easier for suppliers to operate globally, it has simultaneously made it easier for buyers to connect with suppliers, therefore increasing competition amongst suppliers and driving down prices.
Rivalry amongst existing competitors: Consider this: I can create a website using Shopify (storefront established), which can be integrated with PayPal for payment processing (merchant account ability), and I can “stock” the store with items from Alibaba (wholesaler that I could order 1,000 toasters from to store, sell, and ship myself) or just post trendy items from AliExpress (an Alibaba subsidiary that gives you items for near wholesale prices but you don’t have to purchase them in large quantities, it can be just one at a time. They also have options for dropshipping the items.) So with a website store that I could set up in a few hours that’s already integrated with a payment processor, that I can “stock” full of products from another wholesaling website who will ship them to my customers (dropshipping) for me so I never even touch the actual product; this just leaves me to know my profit margins, sell at a higher rate than I’m buying and allow for a certain percentage of returns. Then I can use SEO experts and social media influencers that I can hire from Guru or Fiverr to drive traffic to my website to hopefully convert into sales. I can do all of this for $500 – $1,000 per month and ideally see a positive return on investment (ROI) all from the comfort of my home. Now imagine all the people who know of a “system” like this that will do the same idea with the same and different products and you’ve got some major market saturation that creates cutthroat rivalry amongst competitors. You can always rise to the top by enriching your customers’ experience, but you also need to remain competitive price-wise.
5. Cloud computing is a great option for small to medium sized businesses who have limited resources to operate. Cloud computing may allow them to subscribe to a software application for its’ usage rather than purchase it outright if it is expensive. Cloud computing also allows a business to utilize the computing power of a cloud business for various operations or storage which in turn means not having to purchase hardware for infrastructure or dealing with maintenance or operating costs. This can lower operating costs for a business, however, with many businesses taking advantage of cloud computing, it can also use an enormous amount of bandwidth requiring more expensive internet connections and for telecoms to upgrade their infrastructure. There is also the issue that cloud computing relies on both the host company to always be operational (hopefully they use redundancy systems to ensure this) and a reliable internet connection.
6. The Internet of Things (IoT) refers to electronic devices that may not be computers themselves, or even thought of as a product that is connected to the internet, but does however, use smart technology that may connect wirelessly or through cable to the internet for a specific purpose or function. These items could be a baby monitor, appliance, (fridge, oven, washing machine), smart tv, stereo, Roomba, etc. These items have connectivity for updates, remote controllability, monitoring purposes, etc.
The major issues and challenges associated with IoT are security, compatibility, personal invasiveness, and standards. These products can easily be hacked since the manufacturers don’t generally put any security measures on their programming, or weak measures compared to computers. Their connectivity can prove difficult because of their compatibility issues depending on where in the world they are used. The standards of the items may be lacking in terms of how long it may be used due to programming not being updated to keep current with technology. The invasiveness on people’s lives is disturbing with the information these products collect from homes.