09 ecommerce

8/8/2019 09 ECommerce

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Chapter 9:

Electronic Commerce


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E-Commerce / E-Business

Electronic Commerce: buying and selling ofproducts, services and information viacomputer networks, primarily the Internet

Electronic Business: a broader definition that

includes buying and selling, plus servicing customers collaborating with business partners conducting electronic transactions within an

organization


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Types of E-Commerce

Business-to-business EC (B2B) Collaborative commerce (c-commerce) Business-to-consumer EC (B2C)

Consumer-to-businesses (C2B) Consumer-to-consumer (C2C) Intrabusiness (intraorganizational) commerce Government-to-citizens (G2C) and others Mobile commerce (m-commerce)


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E-Commerce History and

Scope History Began in the early 1970s (long before the Internet was open

to commercial use) Limited to large businesses initially Electronic Fund Transfer (EFT) and Electronic Data

Interchange (EDI) Scope Today Includes

advertising home banking shopping in electronic stores and malls buying stocks

finding a job conducting an auction collaborating electronically with business partners around

the globe providing customer service


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E-Commerce Framework


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EC Benefits to Organizations Increased customer base:

Broaden markets

Find niche markets (e.g. www.dogtoys.com)

Reduced cost: Reach a large number ofcustomers at little cost

Procure material and services from other companies at less cost Allow lower inventories by facilitating pull-type supply chainmanagement

Shorten marketing distribution channels and reduce marketing costs

Decrease the cost of creating, processing, distributing, storing, andretrieving paper-based information

Lower telecommunications costs because the Internet is much cheaperthan value-added networks (VANs)

Reduced cycle time: Procure material and services from other companies rapidly

Reduce the time between the outlay of capital and the receipt of productsand services

Helps small businesses compete against large companies


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EC Benefits to Customers Choice

Consumers can select from many vendors and many more products thanthey could locate otherwise

Consumers can get customized products, from PCs to cars, atcompetitive or bargain prices

Consumers can find unique products and collectors items throughvirtual auctions that might otherwise require them to travel long distances toa particular auction place at a specific time

Convenience Consumers can conduct online quick comparisons to find less expensive

products and services

Customers can shop or make other transactions 24 hours a day, year

round, from almost any location Product information immediately available 24 hours a day, year round,

from almost any location

Consumers can interact with other consumers in electronic communitiesand can exchange ideas as well as compare experiences


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EC Benefits to Society Convenience

Enables more individuals to work at home and to do lesstraveling

Access Allows some merchandise to be sold at lower prices - less

affluent people can buy more and increase their standard ofliving

Enables people in less developed countries and rural areasto enjoy products and services that otherwise are notavailable to them

Facilitates delivery of public services, such as governmententitlements, reducing the cost of distribution and fraud, andincreasing the quality of the social services, police work,health care and education


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Technical Limitations of EC A few technical challenges remain for organizations

wishing to conduct EC:

Lack of universally accepted standards for quality, security,and reliability

Insufficient telecommunications bandwidth Still-evolving software development tools

Difficulties in integrating the Internet and EC software withsome existing (especially legacy) applications anddatabases

Need for special Web servers in addition to the networkservers (added cost)

Expensive and/or inconvenient Internet accessibility formany people

All of these will diminish over time


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Non-Technical Limitations of

EC Legal and economic concerns: Many legal issues are yet unresolved

Lack of national and international regulations and standards

Difficulty in measuring benefits of EC and justifying EC

Insufficient number (critical mass) of sellers and buyersexists for profitable EC operations

Cultural resistance: Distrust of the new: Many sellers and buyers are waiting for

EC to stabilize before they take part

Customer resistance to the change from a physical to virtualstores

Perception that electronic commerce is expensive andunsecured, so many do not want even to try it


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Business-to-Consumer EC

Electronic Storefronts and Malls

Electronic retailing can be conducted viasolo storefront or as a part of cybermall

Issues of e-tailing May be channel conflict and conflict with

existing stores

Difficult to fulfill large quantity of very smallorders

Incorrect business model (advertisingrevenue versus profitable sales)


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(continued) Services Online Banking (www.sfnb.com)

Securities trading (Schwab Online)

Job markets (Monster Board)

Travel (Expedia.com)

Real estate (Realtor.com)

Auctions (eBay.com)


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(continued) Personalization ability to customizeproduct, service, advertisement, or customerservice

B2C EC enables personalization at low cost Internet enables marketing research

Questionnaires Usually involve some inducement

Direct behavior observation Cookies or site tracking services


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(continued) Use of intelligent agents Help customers determine what to buy

Search for and compare vendor prices

Collect information and develop customer profiles Online advertising

Banners

Keyword banners

Random banners

Direct email

Pop-up windows


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(continued) Advertising Approaches and Issues Permission marketing offer incentives to consumers to

receive advertising

Viral (advocacy) marketing online word of mouth

advertising (send this ad to a friend and get

) Customizing ads base ads on consumersprofile

Interactive marketing tailor ads based on stored customerdata

Attracting visitors to a site

Making the top list of a search engine

Online events, promotions, and attractions

Electronic catalogs / customized catalogs

Coupons online


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(continued) Providing Customer Service

Help customer determine needs

Help customer acquire product or service

Support customer during ownership ofproduct or service

Help customer dispose of product orservice


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Business-to-Business EC Composes the majority of EC volume

Enables organizations to form electronicrelationships

Covers all activities along the supply chain

Business Models: Sell-Side Marketplace

Organizations sell products to other organizationselectronically.

Buy-Side Marketplace

Buyers post needs; sellers submit bids

Electronic Exchanges Electronic marketplaces link many buyers and many

sellers


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Business-to-Business EC

(continued) Collaborative Commerce non-buying/selling activities betweenbusinesses

Planning and scheduling Design

New product information

Product content management

Order management Sourcing and procurement


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Electronic Commerce

Innovations E-Government deliver information and

public services to citizens and members ofthe public sector

M-Commerce use of wireless devices todeliver mobile e-commerce

Consumer-to-consumer EC directinteraction facilitated by auctions, classifieds,

and bartering Intrabusiness EC business units interact

or employees interact with employers


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Electronic Commerce

Requirements Infrastructure hardware, software, and networksneeded to conduct transactions, communicate, andcollaborate

Electronic Payment Mechanisms

Electronic checks Customer opens account with a bank

the customer e-mails an encrypted electronic checksigned with a digital signature

the merchant deposits the check in his or her account;

money is debited in the buyers account and credited tothe sellers account


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Electronic Commerce

Requirements Electronic Payment Mechanisms (continued) Electronic credit cards

Unencrypted payments - the buyer e-mails her or his creditcard number to the seller on the Internet

Encrypted payments - credit card details encrypted for security

Electronic cash in PC bank provides special software to consumer customer buys electronic money from the bank through

software the bank sends electronic money note to this customer,

endorsing it with a digital signature

the money is stored on the buyers PC and can be spent in anyelectronic store that accepts e-cash

the software is also used to transfer the e-cash from the buyerscomputer to the sellers computer

the seller either deposits the e-cash in a bank or uses the e-cash to make purchases elsewhere


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Electronic Commerce

Requirements Electronic Payment Mechanisms (continued) Electronic payment cards with e-cash

Credit cards using magnetic strips

Card holds information about prepaid cash which can be

used to make payments Smart cards

Cards with microprocessors can hold much moreinformation

Person-to-person payment systems

Transfer of funds between individuals (PayPal) EFT

Electronic wallets

Purchasing cards


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Electronic Commerce

Requirements Security Authentication - assurance regarding the identity of the

parties who are involved in the deal

Integrity - assurance that data and information (orders, replyto queries, and payment authorization) are not accidentallyor maliciously altered or destroyed during transmission

Non-repudiation - Protection against the customersunjustifiable denial of placing an order; buyer needsprotection against the vendor denial of shipment, or sendingwrong order

Privacy - many customers want their identity to beundisclosed

Safety - assurance that it is safe to provide a credit cardnumber on the Internet


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Electronic Commerce

Requirements Security (continued) Encryption - a process of making messages

indecipherable except by those who have an authorizeddecryption key

Single-key encryption Public/private key encryption

Public key infrastructure

Electronic Certificates

Secure Socket Layer (SSL)

Secure Electronic Transaction Protocol(SET)


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Electronic Commerce

Requirements Order Fulfillment

Find, assemble, and pack product

Ship product to customer Collect customer payment

Arrange for returns if needed

Provide on-going support (e.g.,

animated assembly instructions) EC is a pull operation hard to

forecast demand and prepare to fulfillorders


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Electronic Commerce Issues Buyer Protection

look for reliable brand names at sites like Wal-Mart Online, DisneyOnline, and Amazon.com

search any unfamiliar selling site for companys address and phoneand fax number

check out the seller with the local Chamber of Commerce and/orBetter Business Bureau

investigate how secure the sellers site is by reading the postedprivacy notice, and evaluate how well the site is organized

examine the money-back guarantees, warranties, and serviceagreements

compare prices to those in regular stores (suspect the too cheap

sites) ask friends what they know about the vendor

find out what your rights are in case of a dispute

consult the National Fraud Information Center

check www.consumerworld.org for a listing of useful resources


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Electronic Commerce Issues

Seller Protection Need protection against consumers who refuse to

pay or pay with bad checks and buyers claims

that the merchandise did not arrive

Need protection against the use of their name by

others as well as use of their unique words and

phrases, slogans and Web address

Need legal recourse against customers who

download copyrighted software and/or knowledgeand sell it to others


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Electronic Commerce Issues

Ethics Privacy

most electronic payment systems know whothe buyers are; therefore, it may be necessary

to protect the buyers identity Web Tracking

by using sophisticated software it is possible totrack individual movements on the internet

Disintermediation the use of EC may result in the elimination ofsome of a companys employees as well asbrokers and agents


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Electronic Commerce Issues Legal Concerns

Domain Names several companies that have similar or same

names (in different countries) compete over a

domain name that is not a registered trademark Taxes and Other Fees

Federal, state, and local taxing authorities aretrying to figure out how to impose taxes on

Internet sales Copyright

intellectual property is protected by copyrightlaws and cannot be used freely

09 ecommerce

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