Key Terms - Chapter 10: E-commerce: Digital Markets, Digital Goods
Advertising Revenue Model
A website generates revenue by attracting a large audience of visitors who can then be exposed to
advertisements.
Affiliate Revenue Model
Websites (affiliate websites) send visitors to other websites in return for a referral fee or percentage
of the revenue from any resulting sales.
Behavioral Targeting
Refers to tracking the clickstreams (history of clicking behavior) of individuals on thousands of
websites to understand their interests and intentions and expose them to advertisements that are
uniquely suited to their behavior.
Business-to-Business (B2B)
Involves sales of goods and services among businesses.
Business-to-Consumer (B2C)
Involves retailing products and services to individual shoppers.
Community Providers
Websites that create a digital online environment where people with similar interests can transact,
share content, and communicate.
Consumer-to-Consumer (C2C)
Involves consumers selling directly to consumers.
Cost Transparency
Refers to the ability of consumers to discover the actual costs merchants pay for products.
Crowdsourcing
Using large numbers of people (the "crowd") to obtain information or input into a particular task or
project.
Customization
The technology allows personalized messages to be delivered to individuals as well as to groups.
Digital Goods
Goods that can be delivered over a digital network, such as music, video, software, newspapers,
magazines, and books.
Direct Goods
Goods used in a production process, such as sheet steel for auto body production.
Disintermediation
The removal of organizations or business process layers responsible for intermediary steps in a
value chain.
Dynamic Pricing
The price of a product varies depending on the demand characteristics of the customer or the
supply situation of the seller.
Electronic Data Interchange (EDI)
Enables the computer-to-computer exchange between two organizations of standard transactions,
such as invoices, bills of lading, shipment schedules, or purchase orders.
E-tailer
Sells physical products directly to consumers or to individual businesses.
Exchanges
Independently owned third-party Net marketplaces that connect thousands of suppliers and buyers
for spot purchasing.
FinTech
Financial technology firms that provide online financial services, typically mobile and Internet-based.
Free/Freemium Revenue Model
Firms offer basic services or content for free and charge a premium for advanced or special
features.
Geoadvertising Services
Delivering ads to users based on their geographic location.
Geoinformation Services
Services that can tell you where to find nearby restaurants or the closest gas station or where your
children are located.
Geosocial Services
Enables users to locate friends and engage in social interaction based on their location.
Indirect Goods
Goods not directly involved in the production process, such as office supplies.
Information Asymmetry
Exists when one party in a transaction has more information that is important for the transaction than
the other party.
Information Density
The total amount and quality of information available to all market participants, consumers, and
merchants alike.
Intellectual Property
Tangible and intangible products of the mind for which the creator claims a property right.
Location-based Services
Include geosocial, geoinformation, and geoadvertising services, providing applications for mobile
users that are related to the user?s location.
Long Tail Marketing
The ability of firms to market goods profitably to very small online audiences, largely because of the
lower costs of reaching small market segments.
Market Creator
Provides a digital environment where buyers and sellers can meet, search for products, display
products, and establish prices for those products.
Market Entry Costs
The cost merchants must pay simply to bring their goods to market.
Marketspace
A marketplace extended beyond traditional boundaries and removed from a temporal and
geographic location.
Menu Costs
Merchants? costs of changing prices.
Micropayment Systems
Provide content providers with a cost-effective method for processing high volumes of very small
monetary transactions.
Mobile Commerce (m-commerce)
The use of handheld wireless devices for purchasing goods and services from any location.
Native Advertising
Placing ads in social network newsfeeds or within traditional editorial content, such as a newspaper
article.
Net Marketplaces
Online marketplaces that are industry owned or operate independently where multiple buyers and
sellers can conduct e-commerce.
Personalization
Merchants can target their marketing messages to specific individuals by adjusting the message to a
person?s clickstream behavior, name, interests, and past purchases.
Podcasting
A method of publishing audio or video broadcasts through the Internet, allowing subscribing users to
download audio or video files onto their personal computers, smartphones, or tablets.
Price Discrimination
Selling the same goods, or nearly the same goods, to different targeted groups at different prices.
Price Transparency
The ease with which consumers can find out the variety of prices in a market.
Private Exchange
Another term for a private industrial network, which links a firm to its suppliers and other key
business partners.
Private Industrial Networks
Large firms using secure websites to link to suppliers and other key business partners.
Revenue Model
Describes how the firm will earn revenue, generate profits, and produce a superior return on
investment.
Richness
Refers to the complexity and content of a message.
Sales Revenue Model
Companies derive revenue by selling goods, information, or services to customers.
Search Costs
The effort required to find suitable products.
Social Graph
A mapping of all significant online social relationships.
Social Shopping
Sites that provide a social environment where individuals can share shopping experiences with
others by viewing products that friends purchase or recommend.
Streaming
A method of sending audio and video files over the Internet in such a way that the user can view the
file while it is being transferred.
Subscription Revenue Model
A website offering content or services charges a subscription fee for access to some or all of its
offerings.
Transaction Costs
The costs of participating in a market.
Transaction Fee Revenue Model
A company receives a fee for enabling or executing a transaction.
Wisdom of Crowds
The idea that large numbers of people can make better decisions about a wide range of topics or
products than a single person or even a small committee of experts.
