E-Commerce

Electronic commerce, also known as e-commerce or EC, consists of the transaction of products and services over electronic systems such as the Internet. Although the history of E-commerce is short, merely no more than 20 years since the advent of the Internet in 1990, there are already abundant researches about e-commerce. Jeffrey F. Rayport and Bernard J.

Jaworski formally define e-commerce as technology-mediated exchanges between parties (individuals or organizations) as well as the electronically based intra- or inter-organizational activities that facilitate such exchanges (Rayport & Jaworski, 2001). Therefore, in the general category, electronic banking or TV shopping by phone can be a type of e-commerce as well.

However, since the subject of this case study closely relates to Internet shopping, the following content will focus mainly on the Internet-based e-commerce.

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Rayport and Jaworski further define four distinct categories of e-commerce with a matrix with different combinations of buyers and sellers (see Figure 2.2). The e-commerce conducted between businesses is referred to as business-to-business or B2B. Alibaba.com is a recent example for businesses to search for and purchase the products and services they need from the others. E-commerce that is conducted between business and consumers is referred to as business-to-customers or B2C. Although it is usually much smaller than B2B transactions, B2C may be considered the most common type of e-commerce (Lin & Wang, 2008).

As 7net belongs to this category, this paper will further describe its details in Paragraph 2.4.1. Well-known B2C shopping websites include Amazon.com, Books.com.tw, and Buy.yahoo.com.tw. From the consumer‘s side, another type of e-commerce is referred to as consumer-to-business or C2B. Under this category, consumers can join together as a purchase group and make deals with businesses, mainly to get a discount from the business with larger demand. Groupon.com and ihergo.com.tw are the examples of this type.

Consumer-to-consumer, C2C, or peer-to-peer e-commerce involves transactions between and among consumers. C2C websites play the role as a third-party platform to facilitate such transaction and sometimes charge for services such as online exposure and advertisements.

Examples are auction websites such as eBay.com or Yahoo! Auction and recruiting websites such as Monsters.com.

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Figure 2. 2 Four Types of E-commerce

Factors of an Effective E-commerce

In the book E-commerce, six dimensions, or six flows, are defined as the transaction processes of e-commerce. The six flows are business flow, logistics flow, financial flow, information flow, design flow, and service flow (see Figure 2.3) (欒斌, 陳苡任, & 羅凱揚, 2006).

1. Business Flow indicates the transaction between businesses and consumers, mainly selling and buying and should occur in all four types of e-commerce.

2. Logistic flow in e-commerce is similar to that in the physical channels; except for the virtual products such as software and the other digital products, deliveries to consumers relies largely on a physical logistic system.

3. Financial flow in e-commerce may involve credit or debit cards as a tool for consumers to pay for the purchase. Security may be an issue for the consumers, so

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gaining trust from consumers is vital to a successful shopping website. As online shopping market is growing, websites may develop alternatives such as ATM transaction and paying cash on-site that lowers the risks consumers may have to bear.

4. Information flow is a two-way communication between the sides; businesses and consumers exchange their information via the Internet. Businesses may be able to collect sufficient consumers‘ profiles for data mining and further marketing analysis.

5. Design flow refers to product or website planning, the website is the virtual store, so the user‘s interface of the website is equivalent to the store planning.

6. Service flow provides integrated and customized service based on the website‘s resources to facilitate the transaction between the website and the users.

Figure 2. 3 Six Flows of an E-commerce Model

Source: E-commerce (5^th Edition), 欒斌、陳苡任，2006

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2.4.1 B2C Online Shopping

B2C online shopping, or Internet shopping, is the process whereby consumers directly buy goods or services from a seller real-time over the Internet (Rayport & Jaworski, 2001).

It is one rapidly growing market ever since the advent of the Internet. A large body of research made efforts to draw the definition and classification of B2C online shopping, key success factors, e-business models, and consumers‘ behavior.

B2C online shopping is defined as businesses, including manufacturers, wholesalers, and retailers, provide an online platform and display their products and services to the consumers, and allow the consumers to directly purchase the items on the platform without the limits of opening hours or locations (欒斌, et al., 2006).

The design of the users‘ interface may be one of the keys to draw customers‘ attention and expand its customer base (Elliott & Speck, 2005). To improve performance, B2C shopping websites must more assiduously attend to every aspect of execution and optimize the sites for easiest flow of information to an increasingly sophisticated customer. Michael T.

Elliot and Paul Surgi Speck in University of Missouri –St. Louis (2005) find that there are five important factors can strengthen consumers‘ favorable attitude toward the shopping website: 1.) ease of use; 2.) product information; 3.) entertainment; 4.) trust; 5.) currency.

These factors positively relate to consumers attitude toward the site, purchase intent, shopping likelihood, site loyalty, and confidence in brand belief.

Rayport & Jaworski concluded that there are seven essential elements for an effective users‘ interface, which is the virtual representation of a firm‘s chosen value proposition. It is referred to as the 7Cs framework: Context, Content, Community, Customization, Communication, Connection, and Commerce (Rayport & Jaworski, 2001).

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