James A. Senn’sInformation Technology, 3rd Edition

Chapter 9

Electronic Commerce and Electronic Business

2 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Objectives

• Describe the meaning of electronic commerce.

• Identify the two principal segments of electronic commerce.

• Describe the seven advantages that participants in electronic commerce enjoy compared to traditional commerce.

3 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Objectives (Continued)

• Distinguish between the four business-to-consumer forms of electronic commerce.

• Discuss supply chain integration and the reason companies are making it an e-commerce objective.

• Identify the characteristics of electronic procurement.

• Explain the purpose of electronic exchanges and identify the three forms that have emerged.

4 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

What is Electronic Commerce?Definition

• Electronic Commerce (e-commerce): Use of communication networks, including the public Internet, to conduct commercial transactions between businesses or with consumers.

5 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

What is Electronic Commerce?Types of Electronic Commerce

• Business-to-Consumer (B2C) E-Commerce: Electronic commerce carried out by an enterprise in order to serve its consumer customers.

• Business-to-business (B2B) E-Commerce: Companies doing business electronically with other businesses.

• Consumer-to-Consumer (C2C): Individuals use Web for private sales or exchange

6 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

What is Electronic Commerce?Types of Electronic Commerce (Continued)

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What is Electronic Commerce?Types of Electronic Commerce (Continued)

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What is Electronic Commerce?Benefits of E-Commerce

• Geographic Reach

• Speed

• Productivity

• Information Sharing

• New Features

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What is Electronic Commerce?Benefits of E-Commerce (Continued)

• Lower Costs

• Competitive Advantage

10 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

What is Electronic Commerce?Benefits of E-Commerce (Continued)

11 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

What is Electronic Commerce?Growth of E-Commerce

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What is Electronic Commerce?Growth of E-Commerce (Continued)

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Business-to-Consumer E-Commerce ApplicationsOnline Retailing and Electronic Storefronts

• Online Retailing: Shoppers visit a store over the Internet and check out the products.

• Electronic Storefront: Home page of an online retailing business.

14 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Consumer E-Commerce ApplicationsElectronic Markets

• Electronic Markets (e-markets): A collection of individual shops accessible through a single location on the World Wide Web.

• Auctions: Shoppers make bids to determine the sale price of an item rather than relying on predetermined fixed prices.

• Brick and Mortar: Any physical store or building, regardless of how it is constructed or where it is located.

15 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Consumer E-Commerce ApplicationsElectronic Markets (Continued)

• Forward Auction: Shoppers bid on item; seller takes the highest offer.

• Reverse Auction: bidders list product or service requirements and the max they will pay for it. Sellers reverse bid against each other by posting their bids. Bidder offering the requested products or services at the best price wins the bid.

16 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Consumer E-Commerce ApplicationsElectronic Markets (Continued)

• Dutch Auctions: On electronic markets, the market operator displays a high opening price for an item and asks for buyers willing to pay the price. At prespecified intervals, the price is lowered until a bidder is willing to pay the displayed price.

17 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Consumer E-Commerce ApplicationsPortal

• Portal: gateway or hub site, such as Yahoo!, that provides chat rooms.

• Content Aggregator: e-commerce portal that assembles content from a variety of sources, organizing the information into a form that is useful to visitors to the Web site.

• Infomediary: Web site that locates, retrieves, and organizes specialized information for potential users. The term is a composite of information and intermediary.

18 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Consumer E-Commerce ApplicationsOnline Services

• Electronic Banking/Cyberbanking: Customers conduct their banking activities without going to a physical bank office.

– Virtual Bank: Operates exclusively over the Internet.

• Personal Finance and Bill Payment

– Automatic Transfer of Bank Loan and Mortgage Payments

– Automatic Payment of Utility Bills

– Online Bill Payment

– Electronic Bill Presentment

– Combined Electronic Bill Presentment and Payment

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Business-to-Consumer E-Commerce ApplicationsOnline Services (Continued)

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Business-to-Consumer E-Commerce ApplicationsOnline Services (Continued)

• Securities and Investments

• Travel Services

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Functions Performed by B2C E-Commerce SiteCommon Functions of B2C sites

• Catalog and Content Management

• Shopping and Checkout

• Back Office Processing– Processing Customer Payment– Updating Inventory Records– Preparing Item for Distribution

22 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Functions Performed by B2C E-Commerce SiteCommon Functions of B2C sites (Continued)

• Advertising– Search Engines– Banner Ads– Interactive Marketing– E-Mail

• Spam: Unsolicited advertising by e-mail.

23 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsSupply Chain Management

• Supply Chain Characteristics– Supply Chain: The flow of parts, components,

materials, funds, and information between a company’s sources and its customers.

– Supply Chain Management: The oversight of activities interconnecting suppliers and buyers.

24 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

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Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

• Supply Chain Software– Capacity Requirements Planning– Demand Planning Module– Manufacturing Planning Module– Distribution Planning Module– Logistics Planning Module– Transportation Planning Module

26 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

• Supply Chain Integration Strategies– Supply Chain Integration: synchronization of all

parties involved in making a product or delivering a service in order to meet buyer, seller, and customer needs.

– Efficient Consumer Response/Continuous Replenishment: Data and information on products are captured at the point of sale and shared with suppliers periodically (usually daily) so that both can work together to jointly forecast future demand for replenishable items, monitor trends, and detect opportunities for new items.

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Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

28 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

• Supply Chain Integration Strategies– Efficient Consumer Response/Continuous

Replenishment• Disintermediation: Name given to removing

intermediaries (like brokers and distributors) from the supply chain.

– Vendor-Managed Inventory: Companies deal directly with vendor, that is, manufacturers or suppliers.

29 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsSupply Chain Management (Continued)

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Business-to-Business E-Commerce ApplicationsE-Procurement

• Electronic Procurement (e-procurement): Give employee access to catalogs of products and services from multiple suppliers.

• Direct Spending: To obtain materials or components from suppliers for use in the manufacture of a product or delivery of a service.

• Indirect Spending/Maintenance, Repair, and Operations (MRO): Buys goods and services that support operation of the company as a whole.

31 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsE-Procurement

• E-Procurement Objectives– Reducing Purchasing Costs– Providing Employee Self-Service– Increasing Leverage with Suppliers

32 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce Applications Electronic Exchange

• Electronic Exchange/B2B hub: Commerce sites on the Internet where buyers and sellers can come together to shop, exchange information, or carry out transactions to buy or sell products and services.

• Public Exchange/Independent Exchange: A third party – the market maker – operates the electronic market, displays the market’s information content, and provides electronic tools for conducting trade.– Vertical Exchange: Structured to serve members of a

specific industry.

33 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Business-to-Business E-Commerce ApplicationsElectronic Exchange (Continued)

• Public Exchange/Independent Exchange– Horizontal Exchange: Seeks to simultaneously

serve the interests of companies across different industries. Customers seek their services because of functional expertise rather than industry expertise.

• Consortia-led Exchange: Industry players combine forces to create a common forum for the exchange of goods and services.

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Business-to-Business E-Commerce ApplicationsElectronic Exchange (Continued)

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Business-to-Business E-Commerce ApplicationsElectronic Exchange (Continued)

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Business-to-Business E-Commerce ApplicationsElectronic Exchange (Continued)

• Private Exchange: An Internet-base trading forum (I.e., an electronic market) implemented by a single company with a select group of suppliers and customers.

37 adapted from Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall

Credits

• Content and images obtained from Instructor Resources provide by Senn, Information Technology, 3rd Edition; © 2004 Pearson Prentice Hall