MANAGEMENT INFORMATION SYSTEMS
“ E-commerce : Digital Markets, Digital Goods”
Group 5 :
1. Arif Fauzan Hendrosfa ( 1810521062 )
2. Amelia Fitri Hasri ( 1810523012 )
3. Fauzia Wendrisa ( 1810523013 )
4. Hijjul Husna ( 1810523001 )
5. Jovanka Tiara Anindytha Eylba ( 1810523021 )
6. Noer Rachmadhani Hernirat ( 1810523011 )
7. Yola Ramadani Afnilda ( 1810523027 )
International Management
Faculty of Economics
Andalas University
2020
10-1 What Are The Unique Features Of E-Commerce, Digital Markets, And Digital
Goods?
In nowadays, many transactions are occurred in E-Commerce. Although most
purchases still take place through traditional channels, e-commerce continues to grow rapidly
and to transform the way many companies do business. E-commerce is composed of three
major segments: retail goods, travel and services, and online content. E-commerce has
expanded from the desktop and home computer to mobile devices, from an isolated activity
to a new social commerce, and from a Fortune 1000 commerce with a national audience to
local merchants and consumers whose location is known to mobile devices.
A. E- commerce Today
E-commerce is about digitally enabled commercial transactions between and among
organizations and individuals. For the most part, this refers to transactions that occur over
the Internet and the web. E-commerce began in 1995 when one of the first Internet
portals, Netscape.com. The very rapid growth in e-commerce in the early years created a
market bubble in e-commerce stocks, which burst in March 2001. For Amazon, eBay,
Expedia, and Google, the results have been soaring revenues, fine-tuned business models
that produce profits, and rising stock prices.
B. The New E-commerce: Social, Mobile, Local
Online marketing once consisted of creating a corporate website, buying display ads
on Yahoo, purchasing search-related ads on Google, and sending email messages. And
today, it’s increasingly being replaced by video ads, which are far more effective.
What’s different about the new world of social-mobile-local e-commerce is the dual
and related concepts of conversations and engagement. Marketing in this new period is
based on firms engaging in multiple online conversations with their customers, potential
customers, and even critics. Social marketing means all things social: listening,
discussing, interacting, empathizing, and engaging. The emphasis in online marketing has
shifted from a focus on eyeballs to a focus on participating in customer-oriented
conversations. The leading social commerce platforms are Facebook, Instagram, Twitter,
and Pinterest.
The marketing dollars are following customers and shoppers from the PC to mobile
devices. Social marketing means all things social: listening, discussing, interacting,
empathizing, and engaging. The emphasis in online marketing has shifted from a focus on
eyeballs to a focus on participating in customer-oriented conversations.
C. Why E-commerce Is Different
The answer is the Internet and e-commerce technologies are much richer and more
powerful than previous technology revolutions such as radio, television, and the
telephone. Let’s explore each of these unique features in more detail.
1. Ubiquity
Internet/web technology is available everywhere: at work, at home, and elsewhere by
desktop and mobile devices. Mobile devices extend service to local areas and
merchants. The marketplace is extended beyond traditional boundaries and is
removed from a temporal and geographic location. Marketspace is created; shopping
can take place anytime, anywhere. Customer convenience is enhanced, and shopping
costs are reduced.
2. Global Reach.
The technology reaches across national boundaries, around the earth. Commerce is
enabled across cultural and national boundaries seamlessly and without modification.
The marketspace includes, potentially, billions of consumers and millions of
businesses worldwide.
3. Universal Standards.
There is one set of technology standards, namely Internet standards. With one set of
technical standards across the globe, disparate computer systems can easily
communicate with each other. The universal technical standards of the Internet and e-
commerce greatly lower market entry costs; the cost merchants must pay simply to
bring their goods to market. At the same time, for consumers, universal standards
reduce search costs.
4. Richness.
Information richness refers to the complexity and content of a message. Video, audio,
and text messages are possible. Video, audio, and text marketing messages are
integrated into a single marketing message and consumer experience.
5. Interactivity.
The technology works through interaction with the user. Consumers are engaged in a
dialogue that dynamically adjusts the experience to the individual and makes the
consumer a participant in the process of delivering goods to the market.
6. Information Density.
The technology reduces information costs and raises quality. Information processing,
storage, and communication costs drop dramatically, whereas currency, accuracy, and
timeliness improve greatly. Information becomes plentiful, cheap, and more accurate.
Information density in e-commerce markets make prices and costs more transparent.
Price transparency refers to the ease with which consumers can find out the variety of
prices in a market; cost transparency refers to the ability of consumers to discover the
actual costs merchants pay for products.
7. Personalization/Customization.
The technology allows personalized messages to be delivered to individuals as well as
to groups. Personalization of marketing messages and customization of products and
services are based on individual characteristics. The technology also permits
customization—changing the delivered product or service based on a user’s
preferences or prior behavior.
8. Social Technology.
The technology supports content generation and social networking. New Internet
social and business models enable user content creation and distribution and support
social networks.
D. Key Concepts in E-commerce: Digital Markets and Digital Goods in a Global
Marketplace
The Internet reduces information asymmetry. An information asymmetry exists when
one party in a transaction has more information that is important for the transaction than
the other party. That information helps determine their relative bargaining power. In
digital markets, consumers and suppliers can see the prices being charged for goods, and
in that sense, digital markets are said to be more transparent than traditional markets.
Digital markets are very flexible and efficient because they operate with reduced
search and transaction costs, lower menu costs (merchants’ costs of changing prices),
greater price discrimination, and the ability to change prices dynamically based on market
conditions. In dynamic pricing, the price of a product varies depending on the demand
characteristics of the customer or the supply situation of the seller.
Digital markets provide many opportunities to sell directly to the consumer, bypassing
intermediaries such as distributors or retail outlets. Eliminating intermediaries in the
distribution channel can significantly lower purchase transaction costs.
It illustrated how much savings result from eliminating each of these layers in the
distribution process. By selling directly to consumers or reducing the number of
intermediaries, companies can raise profits while charging lower prices. The removal
of organizations or business process layers responsible for intermediary steps in a
value chain is called disintermediation.
Digital Goods
The Internet digital marketplace has greatly expanded sales of digital goods—goods
that can be delivered over a digital network. Music tracks, video, Hollywood movies,
software, newspapers, magazines, and books can all be expressed, stored, delivered, and
sold as purely digital products. the cost of producing the original first unit is relatively
high—in fact, it is nearly the total cost of the product because there are few other costs of
inventory and distribution. Costs of delivery over the Internet are very low, marketing
costs often remain the same, and pricing can be highly variable. On the Internet, the
merchant can change prices as often as desired because of low menu costs. This table
describes digital goods and how they differ from traditional physical goods:
10-2 What Are The Principal E-Commerce Business And Revenue Models ?
A. Types of E-commerce
1. Business-to-consumer (B2C)
Business-electronic commerce involves retailing products and services to
individual shoppers. Example : Amazon, Lazada, Blibli, Jd.id and Traveloka
2. Business-to-business (B2B)
Electronic commerce involves sales of goods and services among businesses.
Example : Ralali.com, IndoTrading.com, Kawan Lama, Electronic City,
Indonetwork, dan Mbiz.
3. Consumer-to-consumer (C2C)
Electronic commerce involves consumers selling directly to consumers. Example :
Bukalapak, Shopee, and Tokopedia
B. E-commerce Business Models
1) Portal
Provides initial point of entry to the web along with specialized content and other
services. Example: Yahoo , MSN and AOL
2) E-tailer
Sells physical products directly to consumers or to individual businesses.
Example: Amazon and Blue Nile
3) Transaction broker
Saves users money and time by processing online sales transactions and
generating a fee each time a transaction occurs. Example: ETrade.com and
Expedia
4) Market creator
Provide a digital environment where buyers and sellers can meet, search
for products, display products, and establish prices for those products; can serve
consumers or B2B e-commerce, generating revenue from transaction fees.
Example: eBay, Priceline.com , Exostar and Elemica
5) Content provider
Creates revenue by providing digital content, such as news, music, photos,
or video, over the web. The customer may pay to access the content, or revenue
may be generated by selling advertising space. Example: WSJ.com ,
GettyImages.com , iTunes.com MSN Games
6) Service provider
Provides applications such as photo sharing, video sharing, and user
generated content as services; provides other services such as online data storage
and backup. Example: Google Docs , Photobucket.com and Dropbox.
C. E-commerce Revenue Models
A firm’s revenue model describes how the firm will earn revenue, generate profits,
and produce a superior return on investment.
1. Advertising Revenue Model
The advertising revenue model in e-commerce has companies putting ad space on
their sites and generating money from the number of visitors who see or click on
them. Example : The advertising revenue model involved selling TV commercials ,
newspaper ads , Youtube ads to generate revenue.
2. Sales Revenue Model
In the sales revenue model, companies derive revenue by selling goods,
information, or services to customers. Example : Amazon (which sells books, music,
and other products), LLBean.com, and Gap.com all have sales revenue models.
Content providers make money by charging for downloads of entire files such as
music tracks (iTunes Store).
3. Subscription Revenue Model
In the subscription revenue model, a website offering content or services charges a
subscription fee for access to some or all of its offerings on an ongoing basis.
Example : Nationalgeographic.com , Netflix
4. Free/Freemium Revenue Model
In the free/freemium revenue model, firms offer basic services or content for free
and charge a premium for advanced or special features. Example : Skype , Spotify
and VIU
5. Transaction Fee Revenue Model
In the transaction fee revenue model, a company receives a fee for enabling or
executing a transaction. The revenue is generated through transaction fees by the
customer paying a fee for a transaction to the operator of a platform. Example : The
revenue that the tokopedia.com site gets from every successful transaction
6. Affiliate Revenue Model
In the affiliate revenue model, websites (called affiliate websites) send visitors to
other websites in return for a referral fee or percentage of the revenue from any
resulting sales. Referral fees are also referred to as lead generation fees. Example :
MyPoints makes money by connecting companies to potential customers by offering
special deals to its members. When members take advantage of an offer and make a
purchase, they earn points they can redeem for free products and services, and
MyPoints receives a referral fee.
10-3 How Has E-Commerce Transformed Marketing?
Although e-commerce and the Internet have changed entire industries and enabled
new business models, no industry has been more affected than marketing and marketing
communications. The Internet provides marketers with new ways of identifying and
communicating with millions of potential customers at costs far lower than traditional media,
including search engine marketing, data mining, recommender systems, and targeted email.
The Internet enables long tail marketing. Before the Internet, reaching a large audience was
very expensive, and marketers had to focus on attracting the largest number of consumers
with popular hit products, whether music, Hollywood movies, books, or cars. In contrast, the
Internet allows marketers to find potential customers inexpensively for products where
demand is very low. For instance, the Internet makes it possible to sell independent music
profitably to very small audiences. There’s always some demand for almost any product. Put
a string of such long tail sales together and you have a profitable business. The Internet also
provides new ways—often instantaneous and spontaneous— to gather information from
customers, adjust product offerings, and increase customer value.
A. Behavioral Targeting
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 online behavior. Marketers
and most researchers believe this more precise understanding of the customer leads to
more efficient marketing (the firm pays for ads only to those shoppers who are most
interested in their products) and larger sales and revenues. Behavioral targeting takes
place at two levels: at individual websites or from within apps and on various advertising
networks that track users across thousands of websites. All websites collect data on visitor
browser activity and store it in a database. They have tools to record the site that users
visited prior to coming to the website, where these users go when they leave that site, the
type of operating system they use, browser information, and even some location data.
B. Social E-Commerce and Social Network Marketing
Social e-commerce is commerce based on the idea of the digital social graph, a
mapping of all significant online social relationships. The social graph is synonymous
with the idea of a social network used to describe offline relationships.
10-4 How Has E-Commerce Affected Business-To-Business Transactions?
The process of conducting trade among business firms is complex and requires
considerable human intervention; therefore, it consumes significant resources.
A. Electronic Data Interchange (EDI)
B2B e-commerce refers to the commercial transactions that occur among
business firms. About 80 percent of online B2B e-commerce is still based on
proprietary systems for Electronic Data Interchange (EDI). EDI enables the computer-
to-computer exchange between two organizations of standard transactions such as
invoices, bills of lading, shipment schedules, or purchase orders. EDI originally
automated the exchange of documents such as purchase orders, invoices, and shipping
notices. Although many companies still use EDI for document automation, firms
engaged in just-in-time inventory replenishment and continuous production use EDI
as a system for continuous replenishment
B. New Ways of B2B Buying and Selling
Private industrial networks typically consist of a large firm using a secure
website to link to its suppliers and other key business partners. The buyer owns
the network, and it permits the firm and designated suppliers, distributors, and
other business partners to share product design and development, marketing,
production scheduling, inventory management, and unstructured
communication, including graphics and email. Another term for a private
industrial network is a private exchange
Net marketplaces, which are sometimes called e-hubs, provide a single, digital
marketplace based on Internet technology for many buyers and sellers.
Types of Net marketplaces and ways of classifying them.
Direct goods are goods used in a production process, such as sheet steel for
auto body production.
Indirect goods are all other goods not directly involved in the production
process, such as office supplies or products for maintenance and repair.
Some Net marketplaces support contractual purchasing based on long-term
relationships with designated suppliers, and others support short-term spot
purchasing, where goods are purchased based on immediate needs, often from many
suppliers
10-5 What Is The Role Of M-Commerce In Business, And What Are The Most
Important M-Commerce Applications?
The main areas of growth in mobile e-commerce are mass market retailing such as
Amazon; sales of digital content such as music, TV shows, movies, and e-books; and in-app
sales to mobile devices. On-demand firms such as Uber and Airbnb are location-based
services, and examples of mobile commerce as well. Larger mobile screens and more-
convenient payment procedures also play a role in the expansion of m-commerce.
A. Location-based services and applications
Location-based services include geosocial services, geo advertising, and
geoinformation. What is the basis for mobile commerce is the system support map
service, namely in the form of GPS, which is available on mobile phones. Geosocial
services can find out where your friends are meeting. Geographical services can find out
what you need to know such as nearby restaurant services and you can find out the price
of houses viewed and special exhibits at museums. Location-based services such as Uber,
Lyft, Airbnb, and others provide services to users in a local area and based on the user's
location.
Waze is one of the most popular social geoformation services. Waze is a GPS-based
map and navigation app for smartphones. Waze is able to collect traffic information from
users who submit accident reports, speed gauges, landmarks, street fairs, protests, and
even addresses, which makes Waze different from other applications. Waze uses the
information to generate alternative routes, times, trips, and suggested warnings, and can
make recommendations for gas stations along the way.
One example of a geo-social service is Foursquare, Facebook and Google. Which can
help users to find friends or vice versa, and users are able to see the desired locations.
Foursquare provides locally based social networking services to more than 60 million
registered users, who can connect with friends, update their location and provide reviews
and tips for enjoying location. Points are awarded for check-in at the specified place.
Users can provide a location tag for the posts they post.
As the basis of the mobile commerce economy, connecting people to merchants is one
form of geo advertising. Geographical ads deliver advertisements to users based on GPS
location. Smartphones can report their location back to google and apple. Merchants buy
access to consumers when they are within reach of the merchant. For example, Kiehl
Stores, a cosmetics retailer, sends special offers and announcements to customers who are
within 100 yards of their store.
B. Other Mobile Commerce Services
Banks and credit card companies have developed services that let customers manage
their accounts from their mobile devices. Example: JPMorgan Chase and Bank of
America customers can use their cell phones to check account balances, transfer funds,
and pay bills.
The mobile advertising market is the fastest-growing online ad platform, racking up a
forecast $90 billion in ad revenue in 2019 and growing at 20 percent annually. Google is
the largest mobile advertising market. Google is displaying ads linked to cell phone
searches by users of the mobile version of its search engine; ads are embedded in games,
videos, and other mobile applications.
Shopkick is a mobile application that enables retailers such as Best Buy, Sports
Authority, and Macy’s to offer coupons to people when they walk into their stores. The
Shopkick app automatically recognizes when the user has entered a partner retail store
and offers a new virtual currency
10-6 What Issues Must Be Addressed When Building An E-Commerce Presence?
Building a successful e-commerce presence requires a keen understanding of
business, technology, and social issues as well as a systematic approach. an e-commerce
presence is not just a corporate website but also includes a social network site on Facebook, a
Twitter feed, and smartphone apps where customers can access your services. The two most
important management challenges in building a successful e-commerce presence are (1)
developing a clear understanding of your business objectives and (2) knowing how to choose
the right technology to achieve those objectives.
A. Develop an E-commerce Presence Map
A majority of Internet users in the United States use smartphones and tablets to shop
for goods and services,look up prices, enjoy entertainment, and access social sites, less so
to make purchases. Your potential customers use these various devices at different times
during the day and involve themselves in different conversations, depending what they
are doing—touching base with friends, tweeting, or reading a blog. Figure 10.10 provides
a roadmap to the platforms and activities that need attention when developing an e-
commerce presence.
Figure 10.10 illustrates four kinds of e-commerce presence: websites, email, social
media, and offline media. You must address different platforms for each of these types. For
instance, in the case of website presence, there are three platforms: traditional desktop,
tablets, and smartphones, each with different capabilities. Moreover, for each type of e-
commerce presence, there are related activities you will need to consider.
B. Develop a Timeline: Milestones
To have a rough idea of the time frame for developing e-commerce presence. You
should break your project down into a small number of phases that could be completed
within a specified time.
Table 10.8 illustrates a one-year timeline for the development of an e-commerce
presence for a start-up company devoted to fashions for teenagers. You can also find
more detail about developing an e-commerce website in the Learning Tracks for this
chapter.
10-7 How Will Mis Help My Career?
In finding a job, management information system have a important role at this era. In
the management information system today we can find what is the job department needed by
companies, what is the job requirement of the job we seek and hows job recruitment
procedure was do by company. Management information system not only give us the information
of job recruitment, Careers in management information systems offers so many job opportunities in
so many walks of life. Education for MIS careers provides students with problem-solving, critical-
thinking and great business skills. Students in MIS programs also have the opportunities to take
leadership classes that prepare them for advancements in the department or even another
department
Case Study
“Marketplace in Indonesia”
The growth of e-commerce in Indonesia can be said to be very fast, even becoming
one of the fastest growing e-commerce countries . According to ICD, Indonesia's e-
commerce growth is the largest in the Southeast Asia region. Furthermore, the data shows
that around 30 million Indonesians have made online transactions , creating a market with a
value of at least USD 8 billion. This market is predicted to continue to grow up to USD 40
billion in the next 5 years.
Of the many online transactions , 60 percent are made through marketplace platforms
such as Tokopedia, Shopee, Lazada, and other marketplaces . The most purchased product
categories, which are around 70% of total online transactions , include electronic, fashion ,
health and beauty products. According to Ernst & Young's report, online business in
Indonesia, which is currently dominated by MSMEs, is growing by 40% every year. E-
commerce and marketplaces have huge and broad market potential. How did the marketplace
develop to become what it is today?
In the beginning
In America, the marketplace became popular in 1995 with eBay and Amazon. In
China, the marketplace started to get busy after Jack Ma founded Alibaba which is now a
giant marketplace. Meanwhile in Indonesia, the beginning of online stores began in 1999
with the establishment of the Kaskus buying and selling forum.
However, in the early days of online buying and selling forums, most people only
used the platform to show their products. Meanwhile, the transaction process is still carried
out offline. Several years later, Tokobagus.com, which is now OLX, was founded. With the
start of the development of the digital ecosystem in Indonesia, Doku was also present in 2007
as the first electronic payment service provider in Indonesia.
More Players
Marketplace trends continue to develop along with the development of the internet
and digital technology in Indonesia. In 2009, Tokopedia was established and experienced a
very rapid development. The marketplace is becoming increasingly popular as a place for
people to shop for various needs. In 2010, the Bukalapak marketplace was also established.
The public's interest and enthusiasm for this development has attracted foreign players
who saw this opportunity. In 2011, Singapore-based fashion marketplace Zalora founded
Zalora Indonesia. Marketplace players are increasingly busy with increasingly diverse
industrial fields. 2011 was also the first year that Harbolnas or National Online Shopping Day
was held, which further increased people's enthusiasm for online shopping.
In 2014, Tokopedia set a record as the marketplace with the largest investment at that
time, valued at USD 100 million. The marketplace market is getting wider both in terms of
selling and consumers. This has led a number of old players to also launch their own
marketplaces, one of which is the Lippo Group through MatahariMall.com which was
founded in 2015. In the same year, the Chinese e-commerce giant JD.com co-founded its e-
commerce in Indonesia. , JD.id.
Currently, there are so many marketplaces with their respective industrial strengths.
Likewise, the choice of payment methods is also increasingly diverse. Transaction processes,
which were limited to debit and credit, can now be done via smartphones. Some marketplaces
even provide their own electronic wallets.This makes more and more consumers prefer to
shop on the marketplace because of the convenience it offers. This growth is said to make e-
commerce a major driver of the digital economy. It is predicted that the e-commerce market
will be able to contribute USD 100 billion in 2025.
Conclusion
Seeing the rapid development of e-commerce and marketplaces, business people can
participate in the development of the digital economy so they can take advantage of existing
opportunities, one of which is by entering various marketplace platforms so that business
reach is wider. Optimize marketplace sales with synchronized multichannel management
services. Through a multichannel e-commerce solution, businesses can integrate their sales
platform from products sold, stock, order management, to shipping.
