electronic commerce systems

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Introduction to e-CommerceScope of e-CommerceE-Commerce ProcessesElectronic Payment ProcessesSection IIE-Commerce ApplicationsB2C e-CommerceB2B e-CommerceE-Commerce Marketplaces

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Copyright 2005, McGraw-Hill/Irwin, Inc. 8-1

Real World Cases

Electronic Electronic Commerce SystemsCommerce Systems

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Real World Cases

Learning ObjectivesLearning Objectives1. Identify the major categories and trends

of e-commerce applications.2. Identify the essential processes of an e-

commerce system, and give examples of how they are implemented in e-commerce applications.

3. Identify and give examples of key factors and Web store requirements needed to succeed in e-commerce.

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

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

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Electronic Electronic Commerce FundamentalsCommerce Fundamentals

• Impact of e-Commerce on Competitive Markets

• Reliance on Internet and Related Technologies

• Many Challenges and Opportunities in the Field

• Real World Case 1- Real World Case 1- e-Bay, Inc.e-Bay, Inc. Click to go to

Case 1

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Real World Cases

CustomerService and

Support

ProductService and

Support

Scope of e-CommerceScope of e-CommerceA Wide Range of Business Processes Support E-Commerce

Market/Product

Research

Market StimulationEducation

TermsNegotiation

OrderReceipt

Order Selection

and Priority

OrderBilling/

PaymentMgmt.

OrderScheduling/Fulfillment Delivery

ProductDiscovery

ProductEvaluation

TermsNegotiation

OrderPlacement

OrderTracking

OrderPayment

ProductReceipt

Marketing/Discovery Transaction Processing Service and Support

Selling ProcessSelling Process

Buying ProcessBuying Process

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• Business-to-Customer (B2C)

• Business-to-Business (B2B)

• Customer-to-Customer (C2C)

Scope of e-CommerceScope of e-CommerceE-Commerce ApplicationsE-Commerce Applications

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Real World Cases

Example QuickSource Internet AuctionExample QuickSource Internet Auction

QuickSource user submits a request for quote (RFQ) for publication via Internet

Web server parses HTTP request, validates user identity and authorization, and processes request

DatabaseServers

Firewall

Web Server Farm

•Windows 2000 Datacenter Server cluster

•SQL Server 2000

•Windows 2000 Advanced Server

• Internet Information Server 5

Transactions and user activity logged for billing and marketing purposes

Storage-Area Network

Database server updates RFQ status as “published”

•Windows 2000 Advanced Server cluster

•J.D. Edwards OneWorld ERP software

•Siebel Systems e-Business CRM software

Application servers notify suppliers of the new RFQ via e-mail

Web server sends confirmation to browser

1

2

3

4

5

6

Scope of e-CommerceScope of e-Commerce

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e-Commerce Processese-Commerce Processes• Electronic Commerce Technologies• Access Control and Security

Access Control and SecurityAccess ControlAuthentication

Security Measures

Content ManagementDynamic ContentGeneration

Data Repository

Catalog ManagementPricing Calculation

Product Configuration

Catalog Generation

Profiling and Personalizing

Profile Management

Personalization

Behavior Tracking

Search ManagementContent-Based Search

Parametric-Based Search

Role- and Rule-Based Search

PaymentShopping Cart

Payment Method Support

Payment Verification

Workflow ManagementBuying Process Automation

Document Management

Rule- and Role-Based Content Routing

Event NotificationEvent-Driven Transaction Messaging

Message to e-mail Message Boards Newsgroups

Collaboration and Trading

Mediation Negotiation

Bidding/Auctioning Collaborative Buying

Online Community

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Bselect Software Gathers and Analyzes Bselect Software Gathers and Analyzes the Behavior of Website Visitorsthe Behavior of Website Visitors

e-Commerce Processese-Commerce Processes

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Profiling and Personalizinge-Commerce Processese-Commerce Processes

Be Free and Supergo Bike Shops: Be Free and Supergo Bike Shops: Personalizing e-CommercePersonalizing e-Commerce

• Use of Bselect Personalization Application

• Profile Information Saved by Key• Tracks Customers Anonymously• Supergo Bike Used Bselect 1 Year• Bselect Suggests Additional Sales• Highly Successful Application• E-Commerce Sales Grew from

33% to 60%

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Real World Cases

• Search Management• Content and Catalog

Management


Cableton Systems: e-Commerce Cableton Systems: e-Commerce ConfigurationConfiguration

• Network Equipment Maker with $3 Billion in Sales

• e-Sales Configuration Workbench• Guides Customer Through Complex

Purchase Processes• 60% of Web Orders Used Configurator

to Reduce Errors Resulting in Huge Savings

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Workflow Managemente-Commerce Processese-Commerce Processes

Microsoft Corporation: Microsoft Corporation: e-Commerce Purchasing Processese-Commerce Purchasing Processes• MS Market – Internal e-

Commerce Purchasing System• Reduced Personnel Used for

Purchasing Without Paperwork• High-Volume Low-Dollar

Purchases Make Up 70% of Volume but Only 3% of Microsoft’s Accounts Payable

• Very Successful Implementation

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Workflow Management of MS Market

MultisupplierCatalog

CorporateCatalog

Order Form

Availability

Order Entry

Supplier 1Supplier 2

Supplier n

Fulfillment• Shipping• Accounting• Messaging

EmployeeIntranetProcurement

1. Browse Suppliers

2. Find Products

3. Order Items

4. Confirm Order

5. Transmit Order

6. Process Order

7. Order Completed

Ca

talo

g C

on

ten

tA

nd

Wo

rkflo

wM

an

ag

em

en

t

Approval Workflow

Purchase OrderWorkflow

MS Market

e-Commerce Processese-Commerce ProcessesMicrosoft Corporation: Microsoft Corporation: e-Commerce Purchasing Processese-Commerce Purchasing Processes

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Collaboration and TradingOnline Communities of

InterestB2B e-Commerce Web

PortalsDependence on Internet-

Based Trading Platforms


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Electronic Payment Electronic Payment ProcessesProcesses

Electronic Payment ProcessesWeb Payment ProcessesElectronic Funds Transfer (EFT)Secure Electronic Payments• Encrypt the Data Customer to

Merchant• Encrypt the Data Passing

Between Customer and Credit Authorizer

• Take Sensitive Information Offline

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Real World Cases

Customer Merchant

RequestClient

BrowserMerchant’sWeb Server

PaymentServer

•Verify Merchant•Receive Order Info•Receive Payment Info•Confirm Order

•Verify Customer•Review Payment Info•Authorize or Deny Payment

Online Third-PartyComputers withLinks to MultiplePayment Systems

Credit CardsVISAMasterCard

Bank AccountsDebit CardsOnline Banking

Online BuyingPayflow Pro1 ClickCharge

Electronic CashBillPointPayPal

e-Bill PaymentCheckFreePaytrust


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Verisign Provides Security Plus…


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E-Commerce E-Commerce Applications and IssuesApplications and Issues

• E-Commerce is Here to Stay• B2C Applications • Brochureware• B2B – Website Support then

Automating Procurement Systems

Real World Case 2- Real World Case 2- Corporate Express:Corporate Express:

Click to go toCase 2

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B2C and B2B Growth to e-Business Empowerment

High

Business Value

Low

Short-Term Strategies Long-Term Strategies

Operations Automation

High

Short-Term Projects

Time to Implement

CustomerSelf-Service

ProcurementAutomation

ExtranetsAnd Exchanges

B2BPortal

CustomerRelationshipManagement

SupplyChain

Management

Web Storefront& e-Catalog

InteractiveMarketing

IntegratedWeb Store

Self-ServiceWeb Stores

B2CPortal

e-BusinessEmpowerment

B2C

B2B

e-Commerce Trendse-Commerce Trends

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B2C e-CommerceB2C e-CommerceCreating B2C e-CommerceCreating B2C e-Commerce• Offer Attractive Products or

Services • Attractive Prices• Great Consumer Value• Realistic Forecasts of

Profitability• Breakdown of Old Barriers

of Time, Distance, and Form• Find Ways to Build Loyalty

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Real World Cases

• Amazon.Com www.amazon.com

• eBaywww.ebay.com

• Eddie Bauerwww.eddiebauer.com

• Land’s End www.landsend.com

Top Retail Web SitesTop Retail Web SitesB2C e-CommerceB2C e-Commerce

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E-Commerce Success FactorsE-Commerce Success Factors• Selection and Value• Performance and Service• Look and Feel• Advertising and

Incentives• Personal Attention• Community Relationships• Security and Reliability

B2C e-CommerceB2C e-Commerce

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How Traditional and Web Marketing Communications Differ in Supporting the Buying Process…

Buying Process

TraditionalMarket

Communications

WebMarket

Communications

•Television Ads•General Interest Magazines

•Buttons•Banners•Sponsorships

•Television Ads•General Interest Magazines

•Banners

•Niche Magazines•Collateral

•Microsites•Brochureware•Website

•Point-of-Sale Promotions

•Direct Marketing

•Daily Specials•Sweepstakes•First-time Order Incentives

•Product Experience

•Buyers Clubs

•e-Mail Alerts•Newsletters

Awareness Consideration Preference Purchase Loyalty


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• One of the Biggest and Best Virtual Retailers

• Finally Making Profits• Quick Confirmation and

Order Processing• Adding Goods and Services• Wants to be a Next-

Generation Retail Commerce Portal

B2C e-CommerceB2C e-CommerceAmazon.Com: Tops in B2C Amazon.Com: Tops in B2C

Retailing Retailing

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Steps in the Development of a Steps in the Development of a Web StoreWeb Store


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Example of Prodigy.Biz SiteExample of Prodigy.Biz SiteB2C e-CommerceB2C e-Commerce

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NTT/Verio Inc.: Website NTT/Verio Inc.: Website ManagementManagement


• One of the World’s Leading Web Hosting Companies

• Offers Complete Services to Web Retailers

• Guarantees 99.9% Uptime• 24x7 Server Monitoring and

Customer Support• Hosts more than 10,000 Web

Businesses

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• The Wholesale and Supply Side of the Commercial Process

• Electronic Catalog Systems• Electronic Trading Systems• Electronic Data Interchange• Electronic Funds Transfer• Integrating Supply-Chain

Management with Customer Relationship Management

B2B e-CommerceB2B e-Commerce

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B2B e-CommerceB2B e-CommerceCisco Systems: B2B Marketplace Cisco Systems: B2B Marketplace

SuccessSuccess• 70% of Product Sales Occur at

Their Website • Wide Variety of Service Offerings

in the Purchase Process• Regular Customers Linked to

Back-End Data Systems• Strong Post-Sale Customer

Support• Highly Successful and Widely Used

Implementation

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B2B e-CommerceB2B e-Commercee-Commerce Marketplacese-Commerce Marketplaces–One-to-Many–Many-to-One–Some-to-Many–Many-to-Some–Many-to-Many

• e-Commerce Portals• Exchanges• Auctions• Market Makers• Infomediaries

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Example of a B2B Web Portal

INTERNETINTERNET

INTERNETAUCTION

REVERSE AUCTION

LIVE MARKETSERVER

B2B WEB PORTAL1

CONTENT MANAGERSERVER

2 POST-TRADE MARKETHISTORY SERVER

4

MARKET GENERATORSERVER

3

BUYERS SELLERS


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B2B e-CommerceB2B e-CommerceChemConnect and Heritage Services: ChemConnect and Heritage Services: Public and Private B2B ExchangesPublic and Private B2B Exchanges

• Public B2B Exchanges• ChemConnect – A Chemical

Exchange Online Auction• Much Quicker than any Other

Method• Private B2B Exchanges• Heritage Built Private Exchange

in their Own Web Portal• Private Exchanges Offer More

Control and Automates Processes

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B2B e-CommerceB2B e-CommerceElectronic Data InterchangeElectronic Data Interchange

• EDI an Early Example of IT in e-Commerce

• EDI Over the Internet Using Secure VPNs is a Growing Application

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Alternatives and Benefit Alternatives and Benefit Tradeoffs in Selecting an e-Tradeoffs in Selecting an e-Commerce System Commerce System

Spin-Off

(Banesandnoble.com)

In-HouseDivision

(OfficeDepot.com)

StrategicPartnership

(Rite Aid and Drugstore.com)

JointVenture

(KBtoys.com)Separation Integration

•Greater Focus

•More Flexibility

•Access to Venture Funding

•Established Brand

•Shared Information

•Purchasing Leverage

•Distribution Efficiencies


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Clicks and Bricks in e-Clicks and Bricks in e-CommerceCommerce

e-Commerce Integration• E-Commerce a Part of

the Regular Business Plan

• Joint Ventures• Strategic Partnerships• Independent Spin-OffsE-Commerce Channel

Choices

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E-Commerce Channel Development StrategiesE-Commerce Channel Development Strategies


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Citigroup: From Failure to Success in Citigroup: From Failure to Success in e-Commerce Integration Strategiese-Commerce Integration Strategies

• Launch of e-Citi in 1977• Sought to Attract its Own Customers

Electronically Before Someone Else Did

• Extremely High Costs and had Numerous Problems and Failures

• Formed New Internet Operating Group in 2000

• By 2001 Online Customers Were Up 80% and 100 Websites Trimmed to 38 Saving $1 Billion


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• Electronic Commerce• E-Commerce Issues• B2C E-Commerce• B2B E-Commerce

SummarySummary

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KEY TERMSKEY TERMSClicks and Bricks

AlternativesE-Commerce ChannelE-Commerce Marketplaces

a. Auctionb. Catalogc. Exchanged. Portal

E-Commerce Success Factors

E-Commerce TechnologiesElectronic Commerce

a. Business-to-Businessb. Business-to-Consumerc. Consumer-to-Consumer

Electronic Data Interchange

Electronic Funds TransferEssential e-commerce

Processesa. Access Control and Securityb. Catalog Managementc. Collaboration and Tradingd. Content Managemente. Electronic Payment Systemsf. Event Notificationg. Profiling and Personalizingh. Search Managementi. Workflow Management

InfomediariesTrends in e-commerceWeb Store Requirements

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Real World Cases

Real World Case 1 eBay Inc.: Managing Success in a Dynamic Online Marketplace


Real World Case 2 Corporate Express: The Business Value of Integrating Customer and Supplier Procurement Systems


Optional Case StudiesOptional Case Studies

Real World Case 3 E-Trade and Wells Fargo: The Business Case for Clicks and Bricks e-Commerce

Real World Case 4 Providence Washington Insurance and Tharco: The Business Value of an Online Customer Interface



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Decision Support Systems

Chapter 9

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Real World Cases

eBay Inc.: Managing eBay Inc.: Managing Success in a Dynamic Online Success in a Dynamic Online

MarketplaceMarketplace

1- Why has eBay become such a 1- Why has eBay become such a successful, fast growing, and successful, fast growing, and diverse online marketplace? Visit diverse online marketplace? Visit the eBay website to help you the eBay website to help you answer, and check out their answer, and check out their many trading categories, many trading categories, specialty sites, international sites, specialty sites, international sites, and other features.and other features.

Return toCases Page

Return toChapter 8

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Discussion Points Would Include: Discussion Points Would Include: • Buyers/Sellers Feedback

Rating System • eBay’s Fraud Policy• PayPal-Electronic eBay

Payments• Vortex-Draws

Products/Players • Expansion into B2C and B2B• User Voice in Decisions



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2- Why do you think eBay has 2- Why do you think eBay has become the largest become the largest

online/offline seller of used online/offline seller of used cars, and the largest online cars, and the largest online

seller of certain other seller of certain other products, like computers and products, like computers and

photo equipment?photo equipment?



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Discussion Points Would Include: Discussion Points Would Include: • Kruse International Purchase

– Acquire not Start Marketplace– Requires a Different Strategy

• Include listings-Online AutoTrader.com LLC

• Arranged Insurance and Warranty Plans

• Established an Escrow Service• Established Shipping/Inspection

Services• B2C is Similar to C2C Selling



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3- Is eBay’s move from a pure 3- Is eBay’s move from a pure consumer-to-consumer consumer-to-consumer auction marketplace to auction marketplace to inviting large and small inviting large and small

businesses to sell to businesses to sell to consumers and other consumers and other

businesses, sometimes at fixed businesses, sometimes at fixed prices, a good long term prices, a good long term

strategy? Why or why not? strategy? Why or why not?



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Discussion Points Would Include: Discussion Points Would Include: • Profitability to eBay• eBay’s Meets Shift in

Demand• eBay Maintains-Voice of the

Customer• IT Delivers Online System



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Return toChapter 8

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Discussion Points Would Include: Discussion Points Would Include: • Profitability to eBay• eBay’s Meets Shift in

Demand• eBay Maintains-Voice of the

Customer• IT Delivers Online System• Trading Assistants

Impact on eBay



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Return toChapter 8

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Corporate Express: The Corporate Express: The Business Value of Integrating Business Value of Integrating

Customer and Supplier Customer and Supplier Procurement Systems Procurement Systems

1- What is the business value to 1- What is the business value to Corporate Express of integrating Corporate Express of integrating its systems with the procurement its systems with the procurement systems of its customers?systems of its customers?

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Discussion Points Would Include: Discussion Points Would Include: • Half of 75,000 Daily Orders

Electronically• Smallest of Corporate Express’

30,000 Customers– Log onto E-Way– Conduct Purchasing Transactions

• E-Way Checks Controls• Corporate Express Tailors Catalog

to User’s Practices• Buyer Time/Cost Savings

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2- What are the business benefits 2- What are the business benefits of Corporate Express’ E-Way of Corporate Express’ E-Way Web portal to its smaller Web portal to its smaller customers? Its larger customers?customers? Its larger customers?

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Smaller Companies:Smaller Companies:• Smallest of Corporate Express’

30,000 Customers– Log onto E-Way– Conduct Purchasing Transactions

• E-Way Checks Controls• Corporate Express Tailors

Catalog to User’s Practices• Buyer Time/Cost Savings

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Larger Companies:Larger Companies:• E-Way Integrated into the

Processing Fabric of Company

• Tailored Buyer’s Catalog • Buyer Time/Cost Savings

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3- Should every business that 3- Should every business that has an e-commerce website has an e-commerce website integrate its systems with the integrate its systems with the procurement systems of its procurement systems of its business customers? Why or business customers? Why or why not? why not?

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Return toChapter 8

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Discussion Points Would Include: Discussion Points Would Include: • E-Commerce Web Site

Integrated System• Company Commitment to IT

Support• Current Customer Base

Breakdown

Return toCases Page

Return toChapter 8

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Discussion Points Would Include: Discussion Points Would Include: • E-Commerce Web Site

Integrated System• Company Commitment to IT

Support• Current Customer Base

Breakdown• Performance and

Scalability Issues Return toCases Page

Return toChapter 8

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Real World Cases

E-Trade and Wells Fargo: E-Trade and Wells Fargo: The Business Case for Clicks The Business Case for Clicks

and Bricks e-Commerce and Bricks e-Commerce

1- What lessons in business 1- What lessons in business strategy can be applied to strategy can be applied to

development of the e-development of the e-commerce channels of commerce channels of

other companies from the other companies from the experience of E-Trade?experience of E-Trade?

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Lessons that Could be Applied Lessons that Could be Applied Would Include: Would Include:

• Diversify With Selective Acquisitions

• Implement Cost Reduction Programs

• Business-not Internet-based



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2- What is the business value 2- What is the business value of the C.E.O. online of the C.E.O. online

wholesale banking portal to wholesale banking portal to Wells Fargo?Wells Fargo?

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Discussion Points Would Include: Discussion Points Would Include: • 25% Internet Recession

Growth-Wells Fargo’s • C.E.O. Banking Portal

Improved • Expose Clients-Sign up for

More • Focused on Customer

Want



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3- What can other 3- What can other companies learn from the companies learn from the successes and mistakes of successes and mistakes of

the Wells Fargo e-the Wells Fargo e-commerce system?commerce system?

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Lessons Would Include: Lessons Would Include: • E-commerce Systems

Expensive• Internet Systems Allows

Cross Selling • Learn Customers Wants



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Real World Cases

Lessons Would Include: Lessons Would Include: • E-commerce Systems

Expensive• Internet Systems Allows

Cross Selling • Learn Customers Wants• Users Depend on

Successful E-commerce Site



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1- What are the business 1- What are the business reasons why even “in a tight reasons why even “in a tight

budget year, e-commerce budget year, e-commerce projects have not lost their projects have not lost their appeal” and are still highly appeal” and are still highly ranked by IT leaders from ranked by IT leaders from

many companies?many companies?Return to

Cases Page

Providence Washington Providence Washington Insurance and Tharco: The Insurance and Tharco: The Business Value of an Online Business Value of an Online

Customer Interface Customer Interface

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Business Reasons Would Include: Business Reasons Would Include: • Improving Order Taking

• Tuning the Sales Channel

• Creating Business Partner Portals

• Cost Reduction



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2- What is the business value of 2- What is the business value of Providence Washington’s Providence Washington’s

extranet portal? Of Tharco’s extranet portal? Of Tharco’s Web-based order processing Web-based order processing

system?system?



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Providence Washington’s:Providence Washington’s:• Speed Delivery-Weeks to

Minutes• Automated the Sales ProcessTharco’s:Tharco’s:• Interactive Web-based Ordering

System• Cost Savings• Reduces Errors• Provide Real-time Order System



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3- What lessons on developing 3- What lessons on developing successful e-commerce successful e-commerce

projects for small businesses projects for small businesses can be gained from the can be gained from the

information in this case?information in this case?



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• Improved Productivity/ Increased Revenues

• Check Financial Status of Vendors, etc.

• Allow Extra Time for Project Completion


Customer Interface Customer Interface Lessons for Small Business Would Include: Lessons for Small Business Would Include:

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• Improved Productivity/ Increased Revenues

• Check Financial Status of Vendors, etc.

• Allow Extra Time for Project Completion

• Aggressively Market Project


Customer Interface Customer Interface Lessons for Small Business Would Include: Lessons for Small Business Would Include:

Return toCases Page

electronic commerce systems

Documents