E-Commerce Questions and Answers

Answer

Qn. 1. Major advantages and disadvantages of being a first mover?

The major advantage of a first mover is that it gains brand recognition. The excitement of being the first to produce a given good or service often attracts customers thus creating both brand recognition and loyalty (Ma, Mello & Wu, 2020). This is the case with Amazon which was the first online store and is still the market leader in e-commerce retail. The second advantage is first movers have a longer learning curve which enables them to introduce cost-efficient approaches to production. The major disadvantage with first movers is that they incur massive costs on researching and developing innovative products and processes (Ma et al. 2020). Secondly, their ideas are prone to duplication from rivals.
Qn. 2. What are five of the major differences between the early years of e-commerce and today’s e-commerce?
                First, in the early years, e-commerce was dominated by the first movers but today, other businesses using traditional brick and mortar models are catching up (Chaffey, Hemphill & Edmundson-Bird, 2019). Another surprising trend is that purely e-commerce sites such as Amazon are setting up physical stores.

Second, e-commerce in the early years was less regulated. This is unlike today where instances of cybercrime have led to interventions, surveillance, and regulations by governments globally.

 In the early years, e-commerce was characterized by restructuring of traditional distribution channels with the aim of eliminating intermediaries, today, the rise of small online retailers has transformed e-commerce into an intermediary brokering customers and other sellers.

Fourth, in the early years, e-commerce was characterized by youthful entrepreneurs, today, the scene is dominated by retail giants and other web-based firms.

 Fifth, Chaffey et al. (2019) note that e-commerce was technology driven but today, it is driven by a focus on business, customers and community.

Qn. 3. Necessity of multidisciplinary approach in understanding e-commerce

E-commerce is a business entity that involves interaction between people and technologies. As a result, it is classified as a sociotechnical system. This means that for the technological solutions embedded in e-commerce to work, the people depending on the technologies also have to be knowledgeable, competent and with the right attitude (Stanujkic, Karabasevic, Maksimovic, Popovic & Brzakovic, 2019). Similarly, managing the e-commerce system needs people with both interpersonal skills and technological savviness. In addition, it is necessary for the management of e-commerce sites to understand other disciplines involved in running a successful business. This includes having graphic designers, marketers, typographers, advertisers, SEO, content writers, IT experts, human resource managers, and inventory managers among others.
Qn. 4. Privacy Issues Created by Facebook

Going by the many legal troubles facing Facebook, the company is blamed for creating diverse privacy issues. This includes breaching internet privacy as it exposes its users to tracking by third-party websites. For instance, when customers like a page, the third party becomes entitled to tracking their activities and pushing marketing messages. In another instance, Facebook allowed app developers to install bugs into accounts of 6.8 million thus allowing them access to private photos uploaded by users but never posted on the social site (Ho, 2018). The third case involves Facebook allowing Cambridge Analytica to harvest personal data of 50 million people for analysis and political advertisements.

Qn. 5.  Five primary revenue models used by e-commerce firms

E-commerce firms collect revenues using different models. This includes affiliate marketing where an e-commerce firm receives financial incentives for promoting another site through their site. Secondly, online advertising. This is a popular source of revenue. It is revenues received when companies buy advertising space on the e-commerce site and pay for the promotional messages based on pay-per-view or pay-per-click model (Ali & Thangavelan, 2018). The third model is charging a transaction fee on every purchase made through the site. Fourth, subscription-based model can be used in situations where customers subscribe to the e-commerce site at a fee after which they can have free access to content or products available. This model is best used by online bookstores. The fifth model is sales revenue model where e-retailers sell products through their website at a profit.

Qn. 6. Amazon and eBay as Direct Competitors

Amazon and eBay are direct competitors, even though they use different pricing models and business models. Raj and Pandey (2019) argue that the two firms are direct competitor since they sell similar products and services to the same customers or market segments. The two sites both sell music, electronics, books, software, toys, games, movies and DVDs among other products including clothing. Secondly, both Amazon and eBay sell used and new products through an online platform. Third, they both provide free shipping and offer great discounted pricing for their customers. In spite of these similarities, Amazon uses the business-to-consumer model while eBay uses the consumer-to-consumer business model.