Page 44 - Introduction to Electronic Commerce and Social Commerce

1.6 Electronic Commerce Business Models 21

Being connected, customers realized that they could ask more from
companies and share opinions about products and services

Uses new
online
channels and
new
Web 2.0 stimulated communication
fundamental changes in Seeks support tools Trusts in
consumer behavior to connect advices made
by online
with like-
minded peers acquaintances
and strangers
Interactions between
customer and brands starting
earlier and never ending
The new
Reads and
New behavior patterns creates Social
demand a new strategy, product Customer Tends to buy
better segmentation, new reviews, more online
product
than offline
channels and targeted rankings and
messages and review of blog posts
current customer facing
business processes Wants to
provide
Expects better feedback
customer about the
experience product and
customer
service
Figure 1.6 The social customer (Source: Courtesy of F. Cipriani, “Social CRM: Concept, Benefits, and Approach to Adopt,” November 2008.
slideshare.net/fhcipriani/social-crm-presentation-761225 (Accessed March 2016; used with permission)

requires a new strategy for both marketing communication 9. Visit packdog.com and entirelypets.com/dogtoys.html.
and customer service. The social customer is participatory, Compare the two sites and relate their contents to the
and has active involvement in the shopping process both as a digital society.
buyer and as an influencer. Individuals are influenced by
friends, friends of friends, and friends of friends of friends.
Merchants must understand how these consumers differ from 1.6 ELECTRONIC COMMERCE BUSINESS
conventional customers, and therefore use appropriate MODELS
e-commerce marketing strategy as well as superb customer
service (e.g., see Turban et al. 2016). Procedures, guidelines, One of the major characteristics of EC is that it facilitates the
and software are publically available for social CRM (e.g., creation of new business models. A business model describes
see en.wikipedia.org/wiki/Social_CRM). the manner in which business is done to generate revenue and
IBM’s Smarter Commerce initiative is focusing on the create value. This is accomplished by attaining organizational
digital customer. IBM is developing new software and ser- objectives. A key area is attracting enough customers to buy
vices that deliver intelligence-guided customer experience the organization’s products or services. Several different EC
(e.g., personalization and targeted advertising based on cloud business models are possible, depending on the company, the
computing analytics). industry, and so on. Business models can be found in existing
businesses as well as in proposed ones. See Lazazzera (2015).
SECTION 1.5 REVIEW QUESTIONS Note: The January–February 2011 issue of Harvard Business
Review is dedicated to business model innovations (five arti-
1. Define the digital revolution and list its components. cles), including several topics related to e-commerce.
2. List the characteristics of the digital economy.
3. What is the social economy?
4. Define a digital enterprise and relate it to social business. The Structure and Properties of Business Models
5. Describe the social enterprise.
6. Compare traditional and digital enterprises. A comprehensive business model (for a proposal company)
7. Describe the digital society. may include some or all of the following components illus-
8. Describe the social customer. trated in Figure 1.7.