copyright © 2014 pearson education, inc. 1 the internet and world wide web are extremely well...
TRANSCRIPT
Copyright © 2014 Pearson Education, Inc. 1
The Internet and World Wide Web are extremely well suited for conducting
business electronically on a global basis
Chapter 4 - Enabling Business-to-Consumer Electronic Commerce
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Before We Begin
• Laptops• Cellphones• Questions about life?• Project 1 is up!
– Due in class Feb 11/12
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Agenda
• What eCommerce IS?– It is IS
• Types of eCommerce business models• Changes brought by eCommerce• Long Tail
We’ve talked quite about how we would assess an industry. Now lets talk about how to exploit one.
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“There is no physical analog for what Amazon.com is becoming.”
Jeff BezosCofounder and long-time CEO of Amazon.com
Complete the following sentences:1.Amazon.com is ____________________2.In the physical world, Amazon.com is like
_________________________________
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Chapter 4 Learning ObjectivesAfter this chapter, you will be able to:
Electronic Commerce Defined• Describe electronic commerce, how it has evolved, and the strategies that companies
are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet Marketing• Describe the stages of business-to-consumer electronic commerce, understand the keys to
successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC• Describe mobile commerce, consumer-to-consumer electronic commerce, and
consumer-to-business electronic commerce.
Managing Finances and Navigating Legal Issues in EC• Describe how to conduct financial transactions and navigate the legal issues of
electronic commerce.
E-Government• Explain different forms of electronic government.
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Electronic Commerce Defined
Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.
Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-GovernmentExplain different forms of electronic government.
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Electronic Commerce Defined
• Electronic Commerce“the exchange of goods, services, and money among firms, between firms and their customers, and between customers, supported by communication technologies and, in particular, the Internet”
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Question
• What are the most common types of E-Commerce? (There are really only two)– B2C – Business to Customer/Consumer– B2B – Business to Business
• There are also pedantic ones like C2C or G2C, these are foolish and don’t matter much
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Where is the money…B2B or B2C?
This is where the media isThis is where the big money is
Management Information Systems for the Information Age, Haag and Cummings
97% 3%
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Question 2
• Well, the presence of the internet gives rise to some interesting capabilities on the part of firms…
• Such as?– Information Dissemination– Information Integration– Mass Customization– Interactive Communication– Transaction Support– Disintermediation (probably the biggest one)
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Information Dissemination
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Information Integration
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Mass Customization
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Interactive Communication
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Transaction Support
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Disintermediation (This is the big one)
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These opportunities give rise to newly possible business strategies
All of this is possible through this new fango thing we call the internet…
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The Internet . . . A network of networks
• Computers and other devices capable of communicating– Servers, desktops and laptops– Phones, PDAs and other mobile devices– Xbox 360, Wii– Vending machines, appliances, etc.
• The infrastructure that connects them (fiber optics, copper, modems, routers, microwave, etc.)
• The software tools and protocols that make communication possible
• It is more than the World Wide Web!
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Web Services
ProductLookup Application
Credit verification application
Stock DB
AccountDB
Shopping Application
BigStore.com
The Gap
GiantBank
“In stock”
confirmatio
n
Credit card confirmationClient
The BigStore.com application can check whether a product is in stock at The Gap, or the verify a customer’s credit card at GiantBank.
BigStore.com doesn’t have to know the technology in use at the Gap or at GiantBank.
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Business-to-Consumer E-Commerce and Internet Marketing
Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.
Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-GovernmentExplain different forms of electronic government.
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Stages of B2C e-Commerce
• Range from passive to active
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Three Stages of Evolution
• e-Information– Dissemination of marketing material and product
info• e-Integration
– Dynamic access to customized information• e-Transaction
– Real time access to trading and markets for exchange
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This leads naturally to electronic retail
• Benefits?– Product: Unlimited number of products – Place: Virtual Storefronts are unconstrained
geographically– Price: Frictionless pricing (but do they?)
• Drawbacks?– Delivery: Delayed– Direct product Experience: None
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The Long Tail
• Recall that in information goods our MC 0• The other benefit is that shelf space becomes
infinite• Before Digitization
– Only Selling the red• After Digitization
– We can offer all of the blue products as well!– The sum of the blue products far exceeds red!
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Physical Economy
• Two Primary Limitations– We need to find local audiences
• People need to be nearby to purchase our goods
– We are also constrained by the physics of the world
• The radio spectrum is not infinite• The size of our shelves is not infinite
• People have varying tastes – how can we offer them everything they want
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In a Digital World
• Because MC 0 we can offer as much of any good as we want
• We can offer it to anyone with a modem• We can offer as many goods as we want
because our only shelf constraint is physical memory
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How to Harness the Long Tail
• Three Rules– Make everything available
• Increase variety to account for varying tastes
– Reduce the price by half and lower it• Incentivize purchase
– Help me find it• Reduce Search Costs
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Critical Thinking
• Is there value in the long tail?• The Cello Suites: Johan Sebastian Bach
– More than 200 versions on iTunes– Does this variety actually grow the market?
• Reducing Search Costs…– Does it actually matter if consumers don’t know the
item exists?• Consolidating the market
– If the blockbuster is all people want why go through the effort and spend the money to get everything else?
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Time for a Break
• What eCommerce IS?– It is IS
• Types of eCommerce business models• Changes brought by eCommerce• Long Tail
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Take 10
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Before the break
• What eCommerce IS?• Types of eCommerce business models• Changes brought by eCommerce• Long Tail
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Remainder of Class
• Mobile Commerce• Online Auctions• Financial management in the online age• E-Government
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Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC
Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-GovernmentExplain different forms of electronic government.
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Mobile Commerce (mCommerce)
• In addition to influencing the products firm’s can carry the Internet has influenced consumer access– i.e. exploiting the
“always on” society
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Mobile EC - Types
• Location-Based M-Commerce– Services can be offered tailored to a person’s needs based
on their current location• Information on the Go
– Customers can get further information about a product wherever they are, including in the store, but this can lead to “showrooming”
• Product and Content Sales– Consumers use mobile apps to make purchases while on-
the-go• When will these items increase revenue for the firm?
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E-Auctions
• It has similarly given rise to the auction economy– Forward– Reverse
• Forward auction– English or Dutch– Highest offer wins
• Reverse auction (traditional bid process for projects)– Buyers post a request for quote (RFQ).– Seller proposes a bid.– Lowest seller bid wins.– This is frequently in B2B e-commerce.
• You will encounter this frequently in your professional life
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Managing Finances and Navigating Legal Issues in EC
Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.E-GovernmentExplain different forms of electronic government.
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E-Banking
• Online Banking– Convenience– Security Concerns– Mobile banking
• Online Investing– Increased access to financial information and
analytical tools– Online investing– Mobile investing
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Payment Services
• Online transactions without sharing private information with actual seller
• Payment service keeps information secure.– PayPal (owned by eBay)
• Can send and receive money if you have an e-mail account.
– Google Checkout• Linked with Google search• Users can see if merchants offer this option.
• Conceptually this is funding escrow
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Securing Payments in the Digital World
• Credit and Debit Cards– Credit Cards are a simple mechanism– Consumers have to transfer a lot of personal information
to the seller– Difference between the European and American
methods…• Managing Risk
– Businesses are financially liable for fraudulent transactions– Businesses have to look for fraud indicators and
sometimes reject risky transactions – How can firms leverage analytics to assist with this?
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Legal Issues in EC
• Digital Rights Management– Preventing unauthorized duplication– Restrict which devices can play media– Limit number of times media can be played
• Taxation– Sales Taxes
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Legal Issues in EC—Taxation
The Internet Tax Freedom Act (1998) Moratorium on online commerce taxation
Internet Tax Nondiscrimination Act (2004) Replication of the ITFA
Internet sales treated as mail-order salesNo sales taxes paid in states where the company has
no presenceCritical thinking: is this a progressive or regressive tax?
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E-Government
Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.
Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.
Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.
Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.
E-GovernmentExplain different forms of electronic government.
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E-Government
• Government-to-Citizens– e-Filing of taxes– Licensure
• Government-to-Business– Taxation– Procurement– Contracting
• Government-to-Government– Law enforcement– Information Sharing– Health informatics
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Critical Thinking: Amazon and Alibaba
• Amazon and Alibaba are online retail stores based in Seattle, WA and Hangzhou, China providing B2C, C2C, and B2B sales of goods via their respective web portals
• In 2014 they were valued at $157.52B and $168.0B respectively.• Consider the relative market position of each firm and their
relative dominance in their focal markets. Why might Alibaba be at an advantage? Why might Amazon be at an advantage?
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Recap
• What eCommerce IS?• Types of eCommerce business models• Changes brought by eCommerce• Long Tail• Mobile Commerce• Online Auctions• Financial management in the online age• E-Government
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Administrivia
• Project 1– Due in class Feb 11/12