Chapter 10 Summary: Digital Markets, Digital Goods

This chapter is about e-commerce, which “refers to the use of the Internet and the Web to transact business” (Laudon 373). The text says that in 2010 e-commerce represents about 6 percent of all retail sales but that statistic seemed a little dated so I decided to do a little extra research. According to the U.S. Census Bureau, that statistic is about the same in the end of 2012 with e-commerce making up 5.2 percent of total retail sales. However, e-commerce retails sales increased by 15.8 percent from 2011 to 2012. This data was released on February 15, 2013 at this website: http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf. The statistics show us that e-commerce has seen rapid growth in the last few years and I believe it will continue to grow in the future.

We need to understand the differences between e-commerce and traditional retail sales to fully appreciate the rapid growth of this convenient shopping experience. First, e-commerce is ubiquitous meaning that you don’t have to physically go to a brick and mortar store or own a store to participate. Anyone can make purchases at any time from any where in the world which also lends itself to uniqueness and global reach.

Also, e-commerce allows for more accessible entry to the market because of the universal standards. A company doesn’t need to rely on traditional television and radio technology and guidelines for their location or even bringing your goods to the market. Now with e-commerce, every country pretty well uses the same guidelines. The richness of the information provided also enhances the popularity of e-commerce. Through customer reviews, audio, and video the quality of the products and additional information can help a consumer make a more informed decision.

Next, interactivity plays a huge part of e-commerce in that it allows the consumer to feel like they have a say in the product and therefore make more of an investment. Interactivity also gives the producer valuable information through surveys and the release of the customer’s information. Another valuable advantage to e-commerce is the information density or the “total amount and quality of information available to all market participants, consumers, and merchants alike” (Laudon 377).

E-commerce saves a company processing and storage space, time, and costs and gives companies more timely information. The density of information also gives companies the competitive edge and collects data that allows producers to price discriminate, knowing that different people will pay different prices. In addition to the density of information, personalization and customization of the Internet and e-commerce has greatly enhanced the consumer experience and allowed for more direct and targeted marketing. Also, e-commerce companies don’t have to spend large amounts marketing thanks to social media. Through social media, anyone is now an author and publisher of valuable content, which in turn creates, free marketing for e-commerce companies.

E-commerce, like many of the other information technology advances we have studied thus far, has completely revolutionized and digitalized the consumer buying experience.

Source: Laudon, Kenneth C. & Jane P. Laudon. Management Information Systems: Managing the Digital Firm 12^th ed. Pearson Hall, 2010.