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Management Information Systems:
Managing the Digital Firm Learning Objectives
Sixteenth Edition 10.1 What are the unique features of e-commerce, digital markets,
and digital goods?
10.2 What are the principal e-commerce business and revenue
models?
Chapter 10 10.3 How has e-commerce transformed marketing?
E-commerce: Digital Markets, Digital 10.4 How has e-commerce affected business-to-business
Goods transactions?
10.5 What is the role of m-commerce in business, and what are
the most important m-commerce applications?
Slide in this Presentation Contain Hyperlinks.
JAWS users should be able to get a list of links
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10.6 What issues must be addressed when building an
e-commerce presence?
10.7 How will MIS help my career?
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Video Cases YouTube Transforms the Media
• Case 1: Walmart Takes on Amazon: A Battle of IT and Landscape
Management Systems • Problem
• Case 2: Groupon: Deals Galore – Opportunities presented by new technology
• Case 3: Etsy: A Marketplace and Community • Solutions
– Streaming video
• Instructional Video 1: Walmart’s E-commerce Fulfillment
Center Network – Piggyback advertising
– Content subscription services
• Instructional Video 2: Behind the Scenes of an Amazon
Warehouse • Illustrates some major trends in e-commerce
– Sales of services
– Advanced data mining and search technology
– Mobile platforms
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E-Commerce Today Figure 10.1 The Growth of E-Commerce
• E-commerce: Use of the Internet and Web to transact business
• Began in 1995 and grew exponentially; still stable even in a recession
• Companies that survived the dot-com bubble now thrive
• The new e-commerce: social, mobile, local
• Move from desktop to smartphone
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Why E-Commerce is Different (1 of 2) Why E-Commerce is Different (2 of 2)
• Ubiquity • Interactivity
– Marketspace is virtual • Information density
– Transaction costs reduced – Greater price and cost transparency
• Global reach – Enables price discrimination
– Transactions cross cultural and national boundaries • Personalization/customization
• Universal standards – Technology permits modification of messages, goods
– One set of technology standards: Internet standards • Social technology
• Richness – Promotes user content generation and social
– Supports video, audio, and text messages networking
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Key Concepts in E-Commerce – Figure 10.2 The Benefits of
Digital Markets and Digital Goods in a Disintermediation to the Consumer
Global Marketplace
• Internet and digital markets have changed the way companies
conduct business
• Information asymmetry reduced
• Menu costs, search and transaction costs reduced
• Dynamic pricing enabled
• Switching costs
• Delayed gratification
• Disintermediation
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Digital Goods Types of E-Commerce
• Goods that can be delivered over a digital network • Three major types
• Cost of producing first unit is almost entire cost of product – Business-to-consumer (B2C)
Example: Barnes and Noble.com
• Costs of delivery over the Internet very low
– Business-to-business (B2B)
• Marketing costs remain the same; pricing highly variable Example: ChemConnect
• Industries with digital goods are undergoing revolutionary – Consumer-to-consumer (C2C)
changes (publishers, record labels, etc.) Example: e Bay
• E-commerce can be categorized by platform
– Mobile commerce (m-commerce)
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E-Commerce Business Models Interactive Session – Organizations:
• Portal
Uber: Digital Disruptor
• E-tailer • Class discussion
– Analyze Uber using the competitive forces and value
• Content provider
chain models. What is its competitive advantage?
• Transaction broker – What is the relationship between information
• Market creator technology and Uber’s business model? Explain your
answer.
• Service provider
– How disruptive is Uber?
• Community provider – Is Uber a viable business? Explain your answer.
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E-Commerce Revenue Models How Has E-commerce Transformed
• Advertising
Marketing?
• Sales • Internet provides new ways to identify and communicate
with customers
• Subscription
• Long tail marketing
• Free/Freemium
• Internet advertising formats
• Transaction fee
• Behavioral targeting
• Affiliate
– Tracking online behavior of individuals
• Programmatic ad buying
• Native advertising
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Figure 10.3 Website Visitor Tracking Figure 10.4 Website Personalization
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Figure 10.5 How an Advertising Social E-Commerce and Social
Network Such as DoubleClick Works Network Marketing (1 of 2)
• Social e-commerce based on digital social graph
• Features of social e-commerce driving its growth
– Newsfeed
– Timelines
– Social sign-on
– Collaborative shopping
– Network notification
– Social search (recommendations)
• Social media
– Fastest growing media for branding and marketing
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Social E-Commerce and Social Interactive Session – Management:
Network Marketing (2 of 2) “Socializing” with Customers
• Social network marketing • Class discussion
– Seeks to leverage individuals’ influence over others – Assess the people, organization, and technology issues for
using social media technology to engage with customers.
– Targeting a social network of people sharing interests
and advice – What are the advantages and disadvantages of using social
media for advertising, brand building, market research, and
– Facebook’s “Like” button customer service?
– Social networks have huge audiences – Give an example of a business decision in this case study
• Social shopping sites that was facilitated by using social media to interact with
customers.
• Wisdom of crowds – Should all companies use social media technology for
customer service and marketing? Why or why not? What
• Crowdsourcing
kinds of companies are best suited to use these platforms?
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How Has E-Commerce Affected Electronic Data Interchange (EDI)
Business-To Business Transactions? • Computer-to-computer exchange of standard transactions
such as invoices, purchase orders
• U.S. B2B trade in 2019 is $13.5 trillion
– U.S. B2B e-commerce in 2018 is $6.2 trillion • Major industries have ED I standards
– Define structure and information fields of electronic
• Internet and networking helps automate procurement
documents
• Variety of Internet-enabled technologies used in B2B
• More companies are moving toward web-enabled private
– Electronic data interchange (E DI) networks
– Private industrial networks (private exchanges) – Allow them to link to a wider variety of firms than E D I
– Net marketplaces allows
– Exchanges – Enable sharing a wider range of information
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Figure 10.6: Electronic Data New Ways of B2B Buying and Selling
Interchange (ED I) • Private industrial networks
– Private exchanges
– Large firm using a secure website to link to suppliers
and partners
• Net marketplaces (e-hubs)
– Single digital marketplace for many buyers and sellers
– May focus on direct or indirect goods
– May be vertical or horizontal marketplaces
• Exchanges
– Independently owned third-party Net marketplaces for
spot purchasing
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Figure 10.7 A Private Industrial Figure 10.8 A Net Marketplace
Network
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What is the Role of M-Commerce in Figure 10.9 Mobile Retail Commerce
Business, and What are the Most Revenues
Important M-Commerce Applications?
• M-commerce in 2017 is 35 percent of all e-commerce
• Fastest growing form of e-commerce
– Growing at 20 percent or more per year
• Main areas of growth
– Mass market retailing (Amazon, eBay, etc.)
– Sales of digital content (music, T V, etc.)
– In-app sales to mobile devices
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Location-Based Services and Other Mobile Commerce Services
Applications • Financial account management apps
• Used by 74 percent of smartphone owners – Banks, credit card companies
• Based on GPS map services • Mobile advertising market
– Google and Facebook are largest markets
• Geosocial services
– Ads embedded in games, videos, and mobile apps
– Where friends are
• 55 percent of online retailers have m-commerce websites
• Geo advertising
– What shops are nearby
• Geo information services
– Price of house you are passing
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What Issues Must Be Addressed Figure 10.10 E-Commerce Presence
When Building an E-Commerce Map
Presence?
• Most important management challenges
– Developing clear understanding of business objectives
– Knowing how to choose the right technology to achieve
those objectives
• Develop an e-commerce presence map
– Four areas: websites, e-mail, social media, offline
media
• Develop a timeline: milestones
– Breaking a project into discrete phases
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How Will MIS Help My Career? Copyright
• The Company: SportsFantasy Empire
• Position Description: Junior e-commerce data analyst This work is protected by United States copyright laws and is
provided solely for the use of instructors in teaching their
• Job Requirements courses and assessing student learning. Dissemination or sale of
any part of this work (including on the World Wide Web) will
• Interview Questions destroy the integrity of the work and is not permitted. The work
and materials from it should never be made available to students
• Author Tips except by instructors using the accompanying text in their
classes. All recipients of this work are expected to abide by these
restrictions and to honor the intended pedagogical purposes and
the needs of other instructors who rely on these materials.
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