electronic commerce systems

Chapter 9 Electronic Commerce Systems

James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8th ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091

Chapter 9 Electronic Commerce Systems 2

Identify the major categories and trends of e-commerce applications

Identify the essential processes of an e-commerce system, and give examples of how they are implemented in e-commerce applications

Identify and give examples of several key factors and Web store requirements need to succeed in e-commerce

Identify and explain the business value of several types of e-commerce marketplaces

Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives

Learning Objectives


Introduction to e-Commerce Electronic commerce encompasses the entire

online process ofDevelopingMarketingSellingDeliveringServicingPaying for products and services

It relies on the Internet and other information technologies to support every step of the process


Case 1 eBay, Running the Right Play eBay is one of the fastest-growing companies in

history, and business is surging31 sites around the world$1.1 billion in international sales in 2004, and

growing twice as fast as the domestic marketHalf of their 125 million registered users are

outside of the United States eBay keeps a playbook

Several hundred pages of wisdom collected from worldwide managers


Case Study Questions Why has eBay become such a successful and

diverse online marketplace? What do you think of eBay’s playbook concept?

Why do they call it a playbook? Is eBay’s move into the international arena a

good long-term strategy?


The Scope of e-Commerce


E-Commerce Technologies


Categories of e-Commerce Business-to-Consumer

Virtual storefronts, multimedia catalogs, interactive order processing, electronic payment, online customer support

Business-to-BusinessElectronic business marketplaces, direct links

between businesses, auctions and exchanges Consumer-to-Consumer

Online auctions, posting to newspaper sites, personal websites, e-commerce portals


Essential e-Commerce Architecture


Access Control and Security E-commerce processes must establish mutual

trust and secure access between partiesUser names and passwordsEncryption keyDigital certificates and signatures

Restricted access areasOther people’s accountsRestricted company dataWebmaster administration areas


Profiling and Personalizing Profiling gathers data on you and your website

behavior and choicesUser registrationCookie files and tracking softwareUser feedback

Profiling is used forPersonalized (one-to-one) marketingAuthenticating identityCustomer relationship managementMarketing planningWebsite management


Search Management Search processes help customers find the

specific product or service they wantE-commerce software packages often include

a website search engineA customized search engine may be acquired

from companies like Google or Requisite Technology

Searches are often on content or by parameters


Content and Catalog Management Content Management Software

Helps develop, generate, deliver, update, and archive text and multimedia information at e-commerce websites

Catalog Management SoftwareHelps generate and manage catalog content

Catalog and content management software works with profiling tools to personalize content Includes product configuration and

mass customization


Workflow Management E-business and e-commerce workflow

management depends on a workflow software engineContains software model of business

processes Workflow models express predefined

Sets of business rulesRoles of stakeholdersAuthorization requirementsRouting alternativeDatabases usedTask sequences


Example of Workflow Management


Event Notification Most e-commerce applications are event driven

Responds to such things as customer’s first website visit and payments

Monitors all e-commerce processesRecords all relevant events, including problem

situationsNotifies all involved stakeholdersWorks in conjunction with user-profiling

software


Collaboration and Trading Processes that support vital collaboration

arrangements and trading servicesNeeded by customers, suppliers, and other

stakeholders Online communities of interest

E-mail, chat, discussion groupsEnhances customer serviceBuilds loyalty


Electronic Payment Processes Complex processes

Near-anonymous and electronic nature of transactions

Many security issuesWide variety of debit and credit alternativesFinancial institutions may be part of the

process


Electronic Payment Processes Web Payment Processes

Shopping cart processCredit card payment processDebit and other more complex processes

Electronic Funds Transfer (EFT)Major payment system in banking, retailVariety of information technologies capture

and process money and credit card transfersMost point-of-sale terminals in retail stores

are networked to bank EFT systems


Electronic Payment Example


Securing Electronic Payments Network sniffers easily recognize credit card

formatsEncrypt data between customer and merchantEncrypt data between customer and financial

institutionTake sensitive information off-line


E-Commerce Application Trends


Case 2 Battle for e-Commerce Supremacy eBay commands more than 90 percent of the

online auction marketGrowth is at least 40 percent per year

CraigsList is an online classifieds meeting placeBuying and selling, but no payment systemOnline classifieds growing faster than

auctions Google and Microsoft entering the market with

added featuresSearch by zip code, online maps, free listings


Case Study Questions Do you agree with Google and Microsoft that

eBay is now vulnerable to their assaults via Google Base and Windows Live Expo?

What are the major advantages and limitations of Google Base and Windows Live Expo?Which do you prefer, or would you use both?

Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions enough to ward off the competitive assaults of Google and Microsoft?


E-Commerce Success Factors Some of the success factors in e-commerce

Selection and valuePerformance and serviceLook and feelAdvertising and incentivesPersonal attention (one-to-one marketing)Community relationshipsSecurity and reliability


Differences in Marketing


Web Store Requirements


Developing a Web Store Build a website

Choose or set up web hostingUse simple design tools and templates Include a shopping cart and payment support

Market the website Include Web page and e-mail advertising

and promotionsExchange advertising with other Web storesRegister with search engines and directoriesSign up for affiliate programs


Serving Your Customers Convert visitors into loyal customers

Develop one-to-one relationship with customers

Create incentives to encourage registrationUse Web cookies to identify visitorsUse tracking services to record and analyze

website behavior and customer preferencesCreate an attractive, friendly, efficient storeOffer fast order processing and paymentNotify when orders are processed and

shippedProvide links to related websites


Managing a Web Store Manage both the business and the website

Record and analyze traffic, inventory, salesUse CRM features to help retain customersLink sales, inventory data to accounting

systems Operate 24 hours a day, seven day a week Protect transactions and customer records

Use security monitors and firewallsUse redundant systems and power sourcesEmploy passwords and encryptionOffer 24-hour tech support


B2B E-Commerce B2B is the wholesale and supply side of

the commercial processBusinesses buy, sell, or trade with other

businesses Relies on multiple electronic information

technologiesCatalog systemsTrading systemsData interchangeElectronic funds transfers


E-Commerce Marketplaces One to Many

Sell-side marketplacesOne supplier dictates product offerings and

prices Many to One

Buy-side marketplacesMany suppliers bid for the business of a buyer

Some to ManyDistribution marketplacesUnites suppliers who combine their product

catalogs to attract a larger audience


E-Commerce Marketplaces Many to Some

Procurement marketplacesUnites major buyers who combine purchasing

catalogsAttracts more competition and thus lower

prices Many to Many

Auction marketplacesDynamically optimizes prices


E-Commerce Portals B2B e-commerce portals offer multiple

marketplacesCatalogsExchangesAuctions

Often developed and hosted by third-party market-maker companies Infomediaries serve as intermediaries in

e-business and e-commerce transactions


B2B E-Commerce Web Portal


Clicks and Bricks Success will go to those who can integrate

Internet initiatives with traditional operationsMerging operations has trade-offs

See Figure 9.18


E-Commerce Integration The business case for merging e-commerce

with traditional business operationsMove strategic capabilities in traditional

operations to the e-commerce business Integrate e-commerce into the traditional

businessSharing of established brandsSharing of key business informationJoint buying power and distribution

efficiencies


Other Clicks and Bricks Strategies Partial e-commerce integration

Joint ventures and strategic partnerships Complete separation

Spin-off of an independent e-commerce company

Barnes and Noble’s experienceSpun off independent e-commerce companyGained venture capital, entrepreneurial

culture, and flexibilityAttracted quality managementAccelerated decision makingFailed to gain market share


E-Commerce Channel Choices An e-commerce channel is the marketing or

sales channel created by a company for its e-commerce activitiesThere is no universal strategy or e-commerce

channel choiceBoth e-commerce integration and separation

have major business benefits and shortcoming

Most businesses are implementing some measure of clicks and bricks integration


E-Commerce Strategy Checklist Questions to ask and answer

What audiences are we attempting to reach?What action do we want those audiences to

take?Who owns the e-commerce channel within the

organization? Is the e-commerce channel planned alongside

other channels? Is there a process for generating, approving,

releasing, and withdrawing content?Will our brand translate to the new channel?How will we market the channel itself?


Case 3 Yahoo and Flickr Flickr is a photo sharing site

14,000 images per hour are uploadedThere are 1.5 million users80 percent of the 60 million photos are publicMore than half have user-created labels that

make them searchable Yahoo purchased Flickr

The user-generated content (social media) will be used in the war against Google

It would like to apply the same concept to web content as well


Case 3 Yahoo and Flickr Google takes an automated approach to

searchesArmies of Ph.D.s and servers Creates more relevant searches by using

algorithms Yahoo’s strategy

Also uses algorithms, but not as well Is gambling that the collective intelligence

of its audience will produce more relevant search results


Case Study Questions How does the Web foster the growth of social

media and social networking? What business benefits does Yahoo hope to

gain from its acquisition of Flickr and drive to “Flickize” its business?How realistic are such planned benefits?

Can social media and networking serve as a strategic competitive differentiator that enables Yahoo to overtake Google in the multibillion-dollar targeted search ads market?


Case 4 Today’s Web; Anything but Usual Customers aren’t just reading these days

They’re writing and watching as well Community features

Interactive webcastsNewsgroupsOnline chat forums

Customer-to-customer interactions help Microsoft learn which product features work, and which don’t


Case 4 Today’s Web; Anything but Usual Federated will be using FedAd software to

Coordinate the efforts of 4,000 marketing staffers in six divisions

Buy and publish the company’s newspaper, radio, and TV ads

Pay invoicesShip ads to publicationsManage marketing expenses against the

company’s budget


Case 4 Today’s Web; Anything but Usual Dell’s initiatives

Redesign of its website to make it easier to use

Make IT costs smaller by being more efficientCombine the website re-launch with an

e-commerce consolidation


Case Study Questions

What is the primary driver behind the Web upgrade activities of Microsoft and Dell?

What is the business value of Microsoft’s Web-based, live-feedback program?

What lessons on developing successful e-commerce projects can be gained from the information in this case?

electronic commerce systems

Documents

windows live expo

web store requirements

case study questions

electronic payment processes

commerce applications identify

electronic payment

web store

workflow management