Chapter 7 – Understanding E-Business

 

 

E-business means not only conducting business transactions over the Internet, but also includes servicing customers, and collaborating with other businesses. Some types of electronic business transactions have been around for over 40 years and started with the EFT system and the Automated Clearing House.

The network effect, also known as Metcalfe’s law is named for Robert Metcalfe, the founder of 3Com, and an early pioneer in the development of Ethernet networking technologies.  It is an important e-business success factor and refers to the increasing value of a network as it grows.  One of the most popular examples of the network effect that is well-known today is Hotmail.

Disintermediation is the process of redefining a market by removing its traditional intermediaries and allowing consumers to purchase products or services directly from the e-business’s web site.  One of the more famous examples of disintermediation is Dell Computer Corporation.

Customization and personalization are processes that allow web site visitors to manage Web page content by selecting their viewing preferences or creating a personal profile on a company’s web site, such as LL Bean or Land’s End.

There are a few different types of common e-business models:

• Business-to-Consumer (B2C) which is retail sales directly to consumers – Amazon is one of the most well-known examples of this type of business
• Consumer-to-Business (C2B), which allows a buyer to name their own price for specific goods or services, such as plane tickets or hotel accommodations
• Consumer-to-Consumer (C2C) which brings individual buyers and sellers together in an online marketplace such as eBay, PaperBackSwap.com, or SwapaDVD.com
• Business-to-Business (B2B) – companies such as CATEX, which are exchanges for insurance industries, or Automotix Car Exchange for the auto industry
• Business-to-Government (B2G), which includes online businesses that sell directly to government agencies