Anthony J. Pennings, PhD

WRITINGS ON DIGITAL STRATEGIES, ICT ECONOMICS, AND GLOBAL COMMUNICATIONS

Dominant and Emerging Models of Global E-Commerce

Posted on | November 24, 2010 | No Comments

The term “e-commerce” provokes connotations of computer users “surfing” the web and using their credit cards to make online purchases. While this has been the popular conception and will continue to drive strong e-commerce sales for the retail sector, other technologies and business models will also be important. E-commerce is as dynamic as the technologies and creative impulses involved and can be expected to morph and expand in concert with new innovations.

Unlike the traditional business model that aims to mass-market products and services to passive consumers by manipulating their perceptions and buying behaviors, the e-commerce “e-retail” or “e-tail” model strives to personalize marketing strategies with interactive and rich media technologies, giving the online buyer a crucial say in the dialogue among producers and consumers via more informed choices and opportunities to provide detailed feedback. The communication phenomenon termed “social media” is calling into question traditional e-commerce and media models and calling for new strategies and skills to conduct successful commercial and grassroots operations.

Social media uses the web to empower and mobilize individual choices and opinions through online applications and platforms that allow people to converse, collaborate, publish and share media content. These new online environments provide people with tools to join and build communities with shared ideals and missions. While the earliest tools included blogs, bookmark sharing, forums, podcasts, tagging and wikis; new applications available through platforms like Facebook, hulu, Second Life, Twine, and Xbox Live suggest that the creative capacities of social media are only beginning to be explored.

E-commerce technologies are now transcending geographical limitations, expanding the reach of market/product information and introducing new levels of price competition to millions of new customers. The traditional business model limited markets within geographical constraints, relying on large production runs of uniform products and hiding important cost and pricing information to maximize producer advantage. E-commerce takes advantage of network effects, where the value of goods and services increase the more people use it. Examples included the telephone and fax, and in the web world Facebook has shown its value increases with its growing ubiquity. But other aspects of network effects show that indirect or social network effects provide value via influential individuals and groups. The globalization of the Internet in the 1990s has provided a massive communication and distribution system where even smaller niches take advantage of the “long tail” of increasingly efficient and cost-effective storage systems to provide less popular digital products to specific users.

E-commerce continues to have a major impact on the commercial and communicative relationships between businesses, what is often called B2B electronic commerce. This involves some aspect or combination of the following: collaborative design and production processes; e-procurement and reverse auctions; direct sales and customer relationship management (CRM). B2B e-commerce involve the coordination of supply chains that can span the globe; transporting and storing raw materials, work-in-process inventories, and moving finished goods from point-of-origin to point-of-consumption. B2B is likely to be one of the most promising aspects of global e-commerce as it not only provides revenues but cost-saving efficiencies.

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Anthony

Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital media, information systems management, and global communications.

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  • About Me

    Professor and Associate Chair at State University of New York (SUNY) Korea. Recently taught at Hannam University in Daejeon, South Korea. Moved to Austin, Texas in August 2012 to join the Digital Media Management program at St. Edwards University. Spent the previous decade on the faculty at New York University teaching and researching information systems, media economics, and strategic communications.

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