IS4838

Fundamentals of Electronic Commerce

Robert Davison

http://www.is.cityu.edu.hk/staff/isrobert

Aims

How new information technologies and networks will affect the exchange of goods and services between buyers and sellers in the 21st century – in Hong Kong and globally

Objectives

Assessment and understanding of… Technologies - Internet, interactive television,

virtual reality, digital cash, etc. Business strategies and initiatives Contextual issues – politics, economics,

consumer psychology and global forces

Syllabus

Impact of emerging national and global information superhighways on the way goods and services are transacted

Stakeholder issues Transaction types – advertising,

purchasing, customer service Critical evaluation of business strategies

Syllabus

Models of web-based business E-Commerce developments in China Effectiveness of web sites for commerce Legal and ethical issues Practitioner Perspectives – guest lectures …

Week by Week

1 – Introduction 2 – Infrastructure 3 – Regulatory

Framework 4 – Virtual Teams 5 – B2B 6 – B2C 7 - Trust

8 – Internet Marketing 9 – EC in China Guest

Speaker 10 – M-Commerce, L-

Commerce & U-Commerce 11 – B2C Guest Speaker 12 – To be decided 13 – Revision

Week by Week

Cultural Perspectives Legal Issues Ethical Concerns Privacy Matters Local Examples Global Perceptions

E-everything? Virtual Teams Virtual Organisations The Social Dimension Political Realities Psychological

Differences

Teaching Methods

Lectures – concepts, models, examples Tutorials – a mixture of lab and discussion

case studies of successful (and unsuccessful) instances of EC

problems in EC – for discussion critical analyses

Assessment

Exam (2 hours) – 50% Coursework – 50% Coursework

One group, virtual team project (40%) Participation in tutorial classes (10%)

Questions, answers, ideas, willingness to be involved – there will be many opportunities!

Set Texts

Farhoomand, A. and Lovelock, P. (2001) Global E-Commerce, Prentice Hall: 0-13-061229-4

Turban, E., Lee, J., King, D. and Chung, H.M. (2002) Electronic Commerce: A Managerial Perspective, Prentice Hall: 0-13-975285-4

Flavour of IS4838

Primarily looking at consumer and organisational perspectives of electronic commerce.

Less attention to systems analysis/design and developmental issues – this is not intended to be a technical course (the only prerequisite is FB2500 – which itself is essentially non-technical)

!

The Marketspace Ecosystem

A virtual location on the web where transactions take place

A location that is defined and governed by information

Reliable, quality information is of paramount importance – for effective decision making by all stakeholders

A new ecosystem – with new objects and relationships, models and dynamics

Spaces

Buying/selling - Marketspace Working - Workspace Info-/Enter- tainment – Infospace There is an almost unlimited variety of

spaces for different purposes, where many different types of digitised information products can be transacted… much more cheaply than in the physical marketplace

Products

Documents Data (inc. statistics) Dictionaries/Encyc. Investments Bookings and tickets News Musical performance Images

Video (inc. TV, VC) info~, enter~, edu~

~tainment Money - digicash Insurance Software Weather forecasts etc.

E.g.: Financial Products/Services

Teller-based transaction costs ~$10 Internet-based transaction costs ~$0.1 Travel reservation through an agent ~$80 Travel reservation through the Internet

~$16 Stock purchase through an agent ~$500

up Stock purchase on the Internet ~$0 up

Marketplace vs. Marketspace

In the transition from place to space, information is a critical strategic resource

Adding efficiency – and adding value. Linking businesses, partners, customers … ever

more dynamically into a virtual value chain The vast majority of companies operate in both

space and place – few are space only.

Mixing and Matching

In the marketspace, we can mix and match product and infrastructure characteristics so as to add value

Building relationships with non-traditional partners

Identifying new customers Personalisation is a major part of this new

wave of mix 'n' match

Personalisation

Content: online information in online stock trading

Context: development of customer loyalty – e.g. Amazon,…

Infrastructure – searching for products, 'test-driving' new products, customisation of products, e.g. ABEBooks, Dell,

Marketspace Types I

Seller-controlled: Cisco – www.cisco.com On-line ordering, customisation, documentation

Buyer-controlled: JAL – www.jal.co.jp On-line procurement to search for suppliers

Buyer intermediaries: Freemarkets – www.freemarkets.com act as agents or aggregators, identifying a pool of

competitive suppliers

Marketspace Types II

Neutral: auction houses and other third-party intermediaries FastParts – www.fastparts.com

anonymous spot market for trade in electronics components

eBay – www.ebay.com Red Dots – www.red-dots.com

consumer-consumer trading

IceRed – www.icered.com consumer-consumer conversations

Marketspace Themes I

EC is changing the importance of time. 24-hour communication; continuous buying and selling

EC is diminishing the importance of geographical boundaries – anytime, anyplace transactions, but… legal issues? logistics? finance/payment?

security/jurisdictions? culture?

Marketspace Themes II

EC is changing the character of intermediation HK has traditionally built much of its wealth

out of intermediating trade between China and the outside

Intermediation functions still exist, but they look different – with disintermediation and reintermediation

Marketspace Themes III

EC is premised on technical and philosophical openness The Internet is fundamentally open and non-

proprietary Customers can be partners – a new open

strategic approach Major implications for CRM, social

transformations, transparency and privacy

Marketspace Themes IV

EC acts as a catalyst to many other changes in economics, politics and organisational structures, including globalisation

EC produces synergies, with multiple winners and win-win scenarios

Virtual Value Chains

The value chain is a model that describes how value is added to a product as it progresses from raw materials through design, production and out to the customer.

Producer > Wholesaler > Retailer > Consumer $200 Producer > Retailer > Consumer $145 Producer > Consumer $88

IT enables the producer to disintermediate the wholesaler and retailer

Infomediaries I

New entrants can disintermediate existing relationships – online travel agents, stock brokers, etc.

Established organisations can reintermediate or reinvent existing markets, creating new value for customers

Both practices come from the emergence of information as a critical strategic resource.

Infomediaries II

An infomediary (information intermediary) derives its primary or only source of revenue from consumer information and profiling – for use by (selected) third-party vendors

Infomediaries negotiate with consumers for their information

Analysis of website visitors: www.doubleclick.net

Summary

In the shift from marketplace to marketspace, there are fundamental business and economic changes.

New business models emerge. Information is a source of value, not just a

supporting element. Sustainability in the longer term depends on

building and maintaning a critical mass of consumers, stable networks, trust, security, standardisation and compelling content.