Module 8

Question 1

3 Major segments of E-commerce

Answer 1

1. Retail goods
2. Travel and other services
3. Online content

Question 2

What is e-commerce?

Answer 2

E-commerce is the use of the internet, web, apps to transact business.

Question 3

What is social marketing about in e-commerce?

Answer 3

Social marketing is based on firms engaging in social conversations. Firms participating in everything social

Question 4

Keywords in e-commerce channels

Answer 4

1. Mobile -From PCs to mobile phones
2. Local - Local merchants can gain access to customers
3. Social - A collection of technology-based tools for communicating with shoppers

Question 5

8 Unique features of e-commerce

Answer 5

1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Information density
6. Personalization
7. Social technology
8. Interactivity

Question 6

What is ubiquity

Answer 6

Ubiquity is the fact that the internet is available everywhere, and the marketspace extends everywhere.
Ubiquity reduces transaciton costs

Question 7

What are univseral standards in e-commerce

Answer 7

The internet is the same everywhere and has one standard. This lowers market entry for merchants and search costs for consumers

Question 8

What is information density

Answer 8

Information density is the total amount and quality of info available to market particpants.
It makes costs/prices more transparent. Price transparency means consuemrs can find out the variety of prices.
Information density helps firms price-discriminate

Question 9

What is dynamic pricing

Answer 9

When price of a product varies depending on demand or supply situation

Question 10

What is disintermediation

Answer 10

Disintermediation is the removal of organizations or intermediaries in the value chain. This makes things cheaper as there is less processes

Question 11

Answer how digital markets affect the following:
Information asymmetry
Search costs
Menu costs
Dynamic pricing
Price discrimination
Market segmentation
network effects
disintermediation

Answer 11

Asymmetry reduced
search costs reduced
menu costs reduced
dynamic pricing low cost
price discrimiantion low cost
market segmentation low cost
network effects strong
disintermediation more possible

Question 12

Digital goods:
marginal cost
cost of production
copying cost
distributed delivery cost
inventory cost
pricing

Answer 12

marginal cost zero
cost of production high
copy cost zero
distributed delivery cost low
invneotry cost 0
markeitng cost variable
pricing more variable

Question 13

Types of e-commerce

Answer 13

1. Business-to-Business (B2B) e-commerce
2. Business-to-consumer (B2C) e-commerce
3. Consumer-to-consumer (C2C) e-commerce. This is where consumers sell to consumers like marketplace

Question 14

E-commerce business models

Answer 14

1. E-tailer or online retailer
   Sells physical products
2. Transaction broker
   Saves users money+time by processing online sales transactions. Booking.com
3. Market creator
   Provides a digital environment where buyers and sellers can buy. eBay.
4. Content provider
   Creates revenue by providing digital content
5. Community provider / social network
   Provides an online meeting place
6. Portal
   Provides initial POE. google
7. Service provider
   Provides online services
   google drive, uber

Question 15

E-commerce revenue models

Answer 15

1. Advertising revenue models
   Revenue is generated by attracting a large audience to its web who can then be exposed to the ad
2. Sales revenue model
   companies get revenue from selling
3. subscription revenue model
   companies offer subscription fees for content
4. free/fremium revenue model
   firms offer basic services for free in hopes consumers buy premium version
5. transaction fee revenue model
   companies receive a fee for transaction
6. affiliate revenue model
   affiliate websites send visitors to websites

Question 16

Behavioral targeting

Answer 16

Tracking clickstreams of individuals on websites to understand interests and give ads that fit

Question 17

Native advertising

Answer 17

placing ads in social network feeds

Question 18

meaning of wisdom of crowds?

Answer 18

means a large number of people can make better decisions about a wide range of topics than a single experts

Question 19

social listening

Answer 19

understand what people are saying about a brand

Question 20

Private B2B nertwork

Answer 20

consists of large firms using secure websites to link its suppliers and partners

Question 21

B2B e-commerce marketplace

Answer 21

provides a single, digital marketplace for many buyers and sellers

Question 22

what is m-commerce

Answer 22

the commerce of goods via mobile devices

Question 23

What is the foundation of m-commerce

Answer 23

connecting people to local merchants in the form of geo-advertising.

Question 24

3 main mobile payment apps

Answer 24

1. Near field communication (NFC)
   contactless payments like apple pay
2. quick response (QR) code
   barcode where info is encoded
3. Peer-to-peer payment
   bank transfers

Question 25

4 types of e-commerce presence

Answer 25

1. Website/apps 2. email 3. social media 4. offline media

Question 26

What makse e-commerce disruptive?

Answer 26

1. Advancement in technology leads to lower transaction costs and search costs 2. Leveraging communities as assets and using the social community of the product 3. growing by power of network effects.

Question 27

what is network effect?

Answer 27

The more users, the more powerful/better the platform becomes.

Question 28

Same-side network effects?

Answer 28

The network effect happens between the users of the same class. More people on insta is better

Question 29

Cross-side network effects?

Answer 29

Happens among two different classes of users uber drivers and uber consumers

Question 30

What is metcalf's law/equation

Answer 30

value of network is proportional to n^2 users The formula for number of posible connections between network users is: n(n-1)/2

Question 31

What are 2 types of network externalities

Answer 31

positive - additional network user increases value to all other users negative - additional network user decreases value to all other users

Question 32

What is a one-sided market on e-commerce?

Answer 32

a large share of value is derived from single class of users. Whatsapp for example has majority as just people who chat

Question 33

What is a two-sided market on e-commerce?

Answer 33

value is derived from 2 categories of network users. Uber, airbnb

Question 34

What is same-side network effects?

Answer 34

increasing value to a class of users resulting from an increase in the number of users from that class

Question 35

Cross-side network effect?

Answer 35

increasing value to a class of users resulting from an increase in the number of users from another class

Question 36

positive feedback loops

Answer 36

an increase in A leads to an increase in B, which leads to an increase in A etc

Question 37

How network effects can affect industries with strong network effects

Answer 37

Industries with strong network effects lead to winner takes all dynamics. once a leader emerges, positive feedback loops strengthen its positionn

Question 38

Key concepts in e-commerce

Answer 38

information asymmetry menu costs dynamic pricing switching costs delayed gratification disintermediation - ability to remove intermediary processes. Consumers can use this to also remove the service fee of platforms.

Question 39

Digital goods and their costs

Answer 39

Cost of producing first unit is almost entire cost of product and marginal cost is low