Features of e-commerce

(memorize these)
 7 features of e-commerce
1. Ubiquity
2. Global Reach
3. Universal Standards
4. Richness
5. Interactivity
6. Information Density
7. Personalization/Customization
 Why study these feature?
To some extend, these features are unique
to e-commerce and explain why this
technology has change the world so much
more than other technologies

Do these technologies have any of 7

features?
Phone, electricity, cars, planes

Yes, but not all 7.

 Ubiquity
Available everywhere
Built into other devices

Hidden, but still there

Why is ubiquity good?

 Ubiquity
Ubiquity lowers transaction costs for
the consumer/buyer.
How so?

Think about buying gifts last

Christmas
Think about the fact that gas costs

$2.40/gallon
 Related Concept
Cognitive Energy mental effort
needed to complete a task.

Ubiquity reduces cognitive energy.

Humans tend to seek options that
require the minimum cognitive energy.
Consider the mental effort needed to
buy your book online vs. hunting for it
at various book stores.
 Global Reach
e-commerce technologies enable a
business to easily reach across
geographic boundaries.

Its really easy to understand how

this feature can benefit business and
consumers.
 Global Reach
While e-commerce can reach across geographic
boundaries, can it reach across demographic
boundaries.

Demographics
age
income
race
gender
religion

There is one demographic boundary that

technology can reach. Luckily, business doesnt
have an interest in reaching this group.
 Universal Standards
e-commerce is made possible through
hardware (Internet) and
software/content (World Wide Web)

The Internet In its infancy, the

architects developed standards that are
now globally recognized (TCP/IP)
The World Wide Web Standards are

becoming #1 priority (XML, HTML, etc.)

 Universal Standards
Universal standards can greatly influence
market entry costs.

How so?

Consider the cost of bring goods to a market

Consider the cost of setting up a virtual,
web-based store, vs. a real brick-mortar
store?
 Universal Standards
Standards make it much easier to build
business from existing technologies.
This reduces entry costs

You can setup an e-commerce website

for about $10/month in technology

overhead costs.
By reducing entry costs, there is a lot

more competition.
 Related Concept
Price discovery - can the consumer/buyer
find prices easily, with minimal cognitive
energy.
Since e-commerce is built on standard
technology (XML, HTML), its really to integrate,
aggregate, and summarize information.

Standardization Low Entry Cost More completion.

Standardization Info. integration More price discovery opportunities.

More competition + price discovery opportunity = lower consumer prices

 Richness
Advertising and branding are an
important part of commerce.
e-commerce can deliver video, audio,

animation, etc. much better than other

technologies (billboards, signs, etc.)
However, its about as rich as television
technology.
Comparison: Airplanes enable global
reach, but how about Richness?
 Interactivity
Consumer/user can interact with the
content.
Here is where Web technology kicks
TVs ass!
TV is a passive activity
Engaging consumer/user is a powerful
feature.
 Information Density
The e-commerce technology
reduces information costs
raises the quality of information

How does the technology reduce costs?

How does it raise quality.

Consider the old way to share information,

i.e., paper, mail, voice communication, etc.
 Personalization/Customization
It seems like a contradiction that e-
commerce has more opportunities for
personalization then, umm, going to a
store and buying an item face-to-face
with a cleck.

How can e-commerce permit or

enhance personalization and
customization.
 Customization Example
1992: Dr. B buys Compaq computer
at CompUSA.
2007: Dr. B buys a Mac Pro computer

at www.apple.com
Which product is more customized?
 Personalization Example
Dr. Bs 3-year old son is watching
Sponge Bob and sees an
advertisement for Polly Pocket. BTW,
he hates Polly Pocket or anything pink
for that matter.
Dr. Bs 3-year old son is play the Bob

the Builder Game on noggin.com and

suddenly a pop-up ad for the Talking
Bob the Builder appears.