1 electronic commerce systems 7. 2 learning objectives identify the major categories and trends of...

1

Electronic Commerce Electronic Commerce SystemsSystems

77

2

Learning ObjectivesLearning Objectives

• Identify the major categories and Identify the major categories and trends of e-commerce applications.trends of e-commerce applications.

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

77

3

Learning Objectives (continued)Learning Objectives (continued)

• Identify several key factors and Web Identify several key factors and Web store requirements needed to store requirements needed to succeed in e-commerce.succeed in e-commerce.

• Identify the business value of several Identify the business value of several types of e-commerce marketplaces.types of e-commerce marketplaces.

77

4

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

77 Learning Objectives (continued)Learning Objectives (continued)

5

Section ISection I

• Electronic Commerce FundamentalsElectronic Commerce Fundamentals

77

6

Electronic Commerce Fundamentals Electronic Commerce Fundamentals (continued)(continued)77

• ““Few concepts have revolutionized Few concepts have revolutionized business more profoundly than e-business more profoundly than e-commerce. E-commerce is commerce. E-commerce is changing the shape of competition, changing the shape of competition, the speed of action, and the the speed of action, and the streamlining of interactions, streamlining of interactions, products, and payments from products, and payments from customers to companies and from customers to companies and from companies to suppliers.”companies to suppliers.”

7

77Electronic Commerce Fundamentals Electronic Commerce Fundamentals (continued)(continued)

• E-commerceE-commerce– The online process of developing, The online process of developing,

marketing, selling, delivering, servicing, marketing, selling, delivering, servicing, and paying for products & services and paying for products & services transacted on internetworked, global transacted on internetworked, global marketplaces of customers, with the marketplaces of customers, with the support of a worldwide network of support of a worldwide network of business partners.business partners.

8

The Scope of e-CommerceThe Scope of e-Commerce

• Three Basic CategoriesThree Basic Categories– Business-to-Consumer (B2C)Business-to-Consumer (B2C)– Business-to-Business (B2B)Business-to-Business (B2B)– Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C)

77

9

Scope of e-Commerce (continued)Scope of e-Commerce (continued)

• Electronic Commerce TechnologiesElectronic Commerce Technologies

– The Internet, intranets, and extranets The Internet, intranets, and extranets are the network infrastructure or are the network infrastructure or foundationfoundation

– Customers must be provided with a Customers must be provided with a range of secure information, range of secure information, marketing, transaction processing, and marketing, transaction processing, and payment servicespayment services

77

10

• Electronic commerce technologies Electronic commerce technologies (continued)(continued)– Trading and business partners rely on the Trading and business partners rely on the

Internet and extranets to exchange Internet and extranets to exchange information and accomplish secure information and accomplish secure transactionstransactions

– Company employees depend on a variety of Company employees depend on a variety of Internet and intranet resources to Internet and intranet resources to communicate and collaboratecommunicate and collaborate

77 Scope of e-Commerce (continued)Scope of e-Commerce (continued)

11

• Electronic commerce technologies Electronic commerce technologies (continued)(continued)

– IS professionals and end users can IS professionals and end users can use a variety of software tools to use a variety of software tools to develop and manage the content and develop and manage the content and operations of the websites and other operations of the websites and other e-commerce resourcese-commerce resources

77 Scope of e-Commerce (continued)Scope of e-Commerce (continued)

12

Essential e-Commerce ProcessesEssential e-Commerce Processes

• Nine key components of an e-Nine key components of an e-commerce process architecturecommerce process architecture– Access control and securityAccess control and security– Profiling and personalizingProfiling and personalizing– Search managementSearch management– Content managementContent management– Catalog managementCatalog management

77

13

Essential e-Commerce Processes (continued)Essential e-Commerce Processes (continued)

• Key components (continued)Key components (continued)– PaymentPayment– Workflow managementWorkflow management– Event notificationEvent notification– Collaboration and trainingCollaboration and training

77

14

• Access control and securityAccess control and security– Processes MUST establish mutual trust and Processes MUST establish mutual trust and

secure accesssecure access• Authenticating usersAuthenticating users• Authorizing accessAuthorizing access• Enforcing security featuresEnforcing security features

– Must protect the resources of e-commerce Must protect the resources of e-commerce sites from threatssites from threats

• HackersHackers• Theft of passwords or credit card numbersTheft of passwords or credit card numbers• System failuresSystem failures

77 Essential e-Commerce Processes (continued)Essential e-Commerce Processes (continued)

15

• Profiling and personalizingProfiling and personalizing– One-to-one marketing strategyOne-to-one marketing strategy

• Personalized view of the websitePersonalized view of the website– Based on…Based on…

» Personal dataPersonal data» Website behavior and choicesWebsite behavior and choices

– Used to help authenticate your identity Used to help authenticate your identity for account management and payment for account management and payment purposespurposes


16

• Search managementSearch management– Helps customers find the specific Helps customers find the specific

product or service they wantproduct or service they want– Software may include a search engine Software may include a search engine

component or a company may acquire component or a company may acquire a customized e-commerce search a customized e-commerce search engineengine


17

• Content and catalog managementContent and catalog management– Content management software helps Content management software helps

companies develop, generate, deliver, companies develop, generate, deliver, update, and archive text data and update, and archive text data and multimedia informationmultimedia information

– Frequently takes the form of multimedia Frequently takes the form of multimedia catalogs of product informationcatalogs of product information

– Works with profiling tools to personalize Works with profiling tools to personalize the content of the websitethe content of the website


18

• Content and catalog management Content and catalog management (continued)(continued)– May be expanded to include product May be expanded to include product

configuration processes that support configuration processes that support mass customization of a company’s mass customization of a company’s productsproducts


19

• Workflow managementWorkflow management– Workflow software engineWorkflow software engine

• Predefined sets of business rulesPredefined sets of business rules• Roles of stakeholdersRoles of stakeholders• Authorization requirementsAuthorization requirements• Routing alternativesRouting alternatives• Databases usedDatabases used• Sequence of tasksSequence of tasks


20

• Workflow management (continued)Workflow management (continued)– Workflow systems ensure that..Workflow systems ensure that..

• Proper transactions, decisions, & work Proper transactions, decisions, & work activities are performedactivities are performed

• Correct data and documents are routed to Correct data and documents are routed to the right employees, customers, suppliers, the right employees, customers, suppliers, and other business stakeholdersand other business stakeholders


21

• Event notificationEvent notification– Most applications are event drivenMost applications are event driven

• New customer’s first visitNew customer’s first visit• Payment and delivery processesPayment and delivery processes• Customer relationship & supply chain Customer relationship & supply chain

management activitiesmanagement activities

– Notifies those concerned when an Notifies those concerned when an event occurs that might affect their event occurs that might affect their status in a transactionstatus in a transaction


22

• Collaboration and trainingCollaboration and training– Supports the collaboration Supports the collaboration

arrangements & trading services arrangements & trading services needed by customers, suppliers, & needed by customers, suppliers, & other stakeholdersother stakeholders

– May be provided by Internet-based May be provided by Internet-based trading servicestrading services


23

Electronic Payment ProcessesElectronic Payment Processes

• Processes are complexProcesses are complex– Near anonymous nature of Near anonymous nature of

transactionstransactions– Security issuesSecurity issues– Wide variety of debit and credit Wide variety of debit and credit

alternativesalternatives– Wide variety of financial institutions Wide variety of financial institutions

and intermediariesand intermediaries

77

24

Electronic Payment Processes (continued)Electronic Payment Processes (continued)

• Web payment processesWeb payment processes– Credit cardsCredit cards– Purchase ordersPurchase orders– Electronic shopping cartElectronic shopping cart

77

25

• Electronic funds transfer (EFT)Electronic funds transfer (EFT)– Uses a variety of IT to capture and Uses a variety of IT to capture and

process money and credit transfers process money and credit transfers between banks and businesses and between banks and businesses and their customerstheir customers• ATMsATMs• Pay-by-phonePay-by-phone• Web-basedWeb-based

– PayPal & Bill Point (cash transfers)PayPal & Bill Point (cash transfers)– CheckFree and PayTrust (automatic bill paying CheckFree and PayTrust (automatic bill paying

services)services)

77 Electronic Payment Processes (continued)Electronic Payment Processes (continued)

26

• Electronic funds transfer (continued)Electronic funds transfer (continued)

• Electronic bill paymentElectronic bill payment• Point-of-sale terminals linked to bank EFT Point-of-sale terminals linked to bank EFT

systemssystems


27

• Secure electronic paymentsSecure electronic payments– Addresses vulnerability to network Addresses vulnerability to network

snifferssniffers• Encrypt data passing between customer Encrypt data passing between customer

and merchantand merchant• Encrypt the data passing between the Encrypt the data passing between the

customer and the company authorizing the customer and the company authorizing the credit card transactioncredit card transaction

– Secure Socket Layer (SSL)Secure Socket Layer (SSL)– Digital WalletDigital Wallet– Secure Electronic Transaction standardSecure Electronic Transaction standard


28

Section IISection II

• E-Commerce Applications and IssuesE-Commerce Applications and Issues

77

29

e-Commerce Application Trendse-Commerce Application Trends

• ““E-commerce is here to stay. The E-commerce is here to stay. The Web and e-commerce are key Web and e-commerce are key industry drivers. It’s changed how industry drivers. It’s changed how many companies do business. It’s many companies do business. It’s created new channels for our created new channels for our customers. Companies are at the customers. Companies are at the e-commerce crossroads and there e-commerce crossroads and there are many ways to go.”are many ways to go.”

77

30

e-Commerce Application Trends (continued)e-Commerce Application Trends (continued)77

31

• E-commerce SectorsE-commerce Sectors– Six major e-commerce sectorsSix major e-commerce sectors

• InfrastructureInfrastructure• ApplicationsApplications• PortalsPortals• ContentContent• ServicesServices• Exchanges Exchanges

77 e-Commerce Application Trends (continued)e-Commerce Application Trends (continued)

32

Business-to-Consumer e-CommerceBusiness-to-Consumer e-Commerce

• Location is not a factorLocation is not a factor

• Must build customer satisfaction, Must build customer satisfaction, loyalty, & relationshipsloyalty, & relationships

77

33

• Success factors

– Selection and value• Offer a good selection of attractive

products and services• Build a reputation for high quality,

guaranteed satisfaction, and top customer support

77Business-to-Consumer e-Commerce Business-to-Consumer e-Commerce (continued)(continued)

34

• Success factors (continued)

– Performance and service• Site must be efficiently designed for ease

of access, shopping, and buying• Service must be friendly and helpful• Products should be available in inventory


35

• Success factors (continued)

– Look and feel• Attractive storefront, shopping areas, and

multimedia product catalogs


36

• Success factors (continued)– Advertising and incentives

• Targeted, personalized ads• Incentives include

– Coupons– Discounts– Special offers– Vouchers for other web services


37

• Success factors (continued)– Personal attention

• Encourages customers to buy and make return visits

• Welcomed by name• Greeted with special offers• Guided to the parts of the site that you are

most interested in• Relationship building


38

• Success factors (continued)– Community relationships

• Giving customers with special interests a feeling of belonging to a unique community

• Virtual communities– Discussion forums– Newsgroups– Chat rooms– Message boards– Cross-links to related web communities


39

• Success factors (continued)– Security and reliability

• Customers must feel confident regarding the security of their…

– Credit card– Personal information– Transaction details


40

• Success Factors (continued)• Must feel that you are dealing with a

trustworthy business.• Reliability

– Orders filled and shipped as you requested– Orders shipped in the timeframe promised– Good customer support


41

• Developing a Web Store– Build

• Website design tools• Site design templates• Custom design services• Website hosting

77 Web Store RequirementsWeb Store Requirements

42

• Developing a web store (continued)– Market

• Web page advertising• E-mail promotions• Web advertising exchanges with affiliated

sites• Search engine registrations

77 Web Store Requirements (continued)Web Store Requirements (continued)

43

• Serving Your Customers

– Serve• Personalized web pages• Dynamic multimedia catalog• Catalog search engine• Integrated shopping cart


44

• Serving your customers (continued)

– Transact• Flexible order process• Credit card processing• Shipping and tax calculations• E-mail order notifications


45

• Serving your customers (continued)

– Support• Website online help• Customer service e-mail• Discussion group and chat rooms• Links to related sites


46

• Managing a Web Store

– Manage• Website usage statistics• Sales and inventory reports• Customer account management• Links to accounting system


47

• Managing a web store (continued)

– Operate• 24/7 website hosting• Online tech support• Scalable network capacity• Redundant servers and power


48

• Managing a web store (continued)

– Protect• User password protection• Encrypted order processing• Encrypted website administration• Network fire walls and security monitors


49

• The wholesale and supply side of the commercial process

• Businesses buy, sell, or trade with other businesses

• Includes…– Electronic catalog systems– Electronic trading systems– Electronic data interchange– Electronic funds transfer

77 Business-to-Business e-CommerceBusiness-to-Business e-Commerce

50

• One-to-Many– Sell-side. Host one major supplier who

dictates product catalog offerings & prices.

• Many-to-One– Buy-side. Attract many suppliers that

flock to these exchanges to bid on the business of a major buyer.

77 e-Commerce Marketplacese-Commerce Marketplaces

51

• Some-to-Many– Distribution marketplaces. Unite major

suppliers who combine their product catalogs to attract a larger audience of buyers.

• Many-to-Some– Procurement marketplaces. Unite major

suppliers who combine their purchasing catalogs to attract more suppliers.

– More competition, lower prices

77 e-Commerce Marketplaces (continued)e-Commerce Marketplaces (continued)

52

• Many-to-Many– Auction marketplaces. Used by many

buyers and sellers that can create a variety of buyers’ or sellers’ auctions to dynamically optimize prices.

77 e-Commerce Marketplaces (continued)e-Commerce Marketplaces (continued)

53

• Alternatives– E-Commerce Integration

• E-commerce is integrated into the traditional business operations of a company.

• Business case for integration– Capitalizing on unique strategic capabilities

that exist in a company’s traditional business operations

77 Clicks and BricksClicks and Bricks

54

• Alternatives (continued)– Gaining strategic benefits such as..

» Sharing established brands» Sharing key business information» Joint buying power» Distribution efficiencies

77 Clicks and Bricks (continued)Clicks and Bricks (continued)

55

• Alternatives (continued)– Partial e-commerce integration using

joint ventures and strategic partnerships

– Complete separation via the spin-off of an independent e-commerce company


56

• E-Commerce Channel Choices– An e-commerce channel is the

marketing or sales channel created by a company to conduct and manage its chosen e-commerce activities


57

• Revenue-generating alternatives– Additive channel– New offer channel– Subscription– Advertising– Sponsorship– Licensing– Portaling– Commission– Tolling


58

• Do you agree that most businesses should engage in electronic commerce on the Internet?

• Are you interested in investing in, owning, managing, or working for a business that is primarily engaged in electronic commerce on the Internet?

77 Discussion QuestionsDiscussion Questions

59

• Why do you think there have been so many business failures among “dot-com” companies that were devoted only to retail e-commerce?

• Do the e-commerce success factors discussed in the chapter guarantee success for an e-commerce business venture?

• What else could go wrong & how would you confront those challenges?

77 Discussion Questions (continued)Discussion Questions (continued)

60

• If personalizing a customer’s website experience is a key success factor, then electronic profiling processes to track visitor website behavior are necessary. Do you agree? What are the ethical implications?

• All corporate procurement should be accomplished in e-commerce auction marketplaces, instead of using B2B websites that feature fixed-price catalogs or negotiated prices. Do you agree?


61

• If you were starting an e-commerce web store, which of the business requirements listed in this chapter would you primarily do yourself, and which would you outsource to a Web development or hosting company?

• Which of the e-commerce clicks and bricks alternatives discussed in this chapter would you recommend to Barnes & Noble? Amazon.com? Wal-Mart? Any business?


62

ReferencesReferences

• James A. O'Brien; George M. Marakas. Management Information Systems: Managing Information Technology in the Business Enterprise 6th Ed., Boston: McGraw-Hill/ Irwin,2004

77

1 electronic commerce systems 7. 2 learning objectives identify the major categories and trends of...

Documents