Electronic Commerce

Chapter 8

Principles of Information Systems,

Sixth Edition
 Principles and Learning Objectives

• E-commerce is a new way of conducting

business, and as with any other new application
of technology, it presents both opportunities for
improvement and potential problems.
– Identify several advantages of e-commerce.
– Outline a multistage model that describes how e-
commerce works.
– Identify some of the major challenges companies
must overcome to succeed in e-commerce.
– Identify several e-commerce applications.

Principles of Information Systems,

Sixth Edition
 Principles and Learning Objectives

• E-commerce requires the careful planning and

integration of a number of technology
infrastructure components.

– Outline the key components of technology

infrastructure that must be in place for e-commerce to
succeed.
– Discuss the key features of the electronic payments
systems needed to support e-commerce.

Principles of Information Systems,

Sixth Edition
 Principles and Learning Objectives

• Users of the new e-commerce technology must

take safeguards to protect themselves.
– Identify the major issues that represent significant
threats to the continued growth of e-commerce.

• Organizations must define and execute a

strategy to be successful in e-commerce.
– Outline the key components of a successful e-
commerce strategy.

Principles of Information Systems,

Sixth Edition
 An Introduction to
Electronic Commerce

Principles of Information Systems,

Sixth Edition
 Introduction to Electronic Commerce

• Business-to-consumer (B2C) e-commerce

• Business-to-business (B2B) e-commerce
• Consumer-to-consumer (C2C) e-commerce

Principles of Information Systems,

Sixth Edition
 Multistage Model for E-commerce

• Search and identification

• Selection and negotiation
• Purchasing products and services
electronically
• Product and service delivery
• After-sales service

Principles of Information Systems,

Sixth Edition
Multistage Model for E-commerce

Principles of Information Systems,

Sixth Edition
Product and Service Delivery

Principles of Information Systems,

Sixth Edition
E-Commerce Model

Principles of Information Systems,

Sixth Edition
 E-Commerce Challenges

• Change distribution systems & work processes

• Split-case distribution
• Integrate web-based order processing with
traditional systems

Principles of Information Systems,

Sixth Edition
 The E-Commerce Supply Chain

• Supply chain management

– Demand planning
– Supply planning
– Demand fulfillment
• Increased revenues and decreased costs
• Improved customer satisfaction
• Inventory reduction across the supply chain

Principles of Information Systems,

Sixth Edition
The E-Commerce Supply Chain

Principles of Information Systems,

Sixth Edition
Supply Chain Management

Principles of Information Systems,

Sixth Edition
 Business-to-Business

• Allows manufacturers to buy at low price

worldwide
• Enterprise can sell to a global market

Principles of Information Systems,

Sixth Edition
 Global E-Commerce

• Steps in localization
– recognizing and conforming to the nuances,
subtleties, and tastes of local cultures
– supporting basic trade laws such as each
country’s currency, payment preferences,
taxes, and tariffs
– ensuring that technological capabilities match
local connection speeds

Principles of Information Systems,

Sixth Edition
 Global E-Commerce

• Determine which global markets make the most

sense for selling products or services on-line
• Decide whether Web content should be
generated or updated centrally or locally

Principles of Information Systems,

Sixth Edition
E-Commerce Applications

Principles of Information Systems,

Sixth Edition
 Retail and Wholesale

• Electronic retailing
• Cybermalls
• Wholesale e-commerce: B2B

Principles of Information Systems,

Sixth Edition
Manufacturing

Principles of Information Systems,

Sixth Edition
 Marketing

• Market segmentation
• Technology-enabled relationship
management

Principles of Information Systems,

Sixth Edition
 Investment and Finance

• On-line stock trading

• On-line banking
– Electronic bill presentment

Principles of Information Systems,

Sixth Edition
Investment and Finance

Principles of Information Systems,

Sixth Edition
Investment and Finance

Principles of Information Systems,

Sixth Edition
Technology Infrastructure

Principles of Information Systems,

Sixth Edition
Technology Infrastructure

Principles of Information Systems,

Sixth Edition
 Hardware

• Storage capacity
– Software
– Volume of e-commerce transactions

• Website hosting

Principles of Information Systems,

Sixth Edition
 Web Server Software

• Security and identification

– Denial of service attack

• Web site tracking

– Web log file

Principles of Information Systems,

Sixth Edition
 Web Server Software

• Web site development tools

• Retrieving and sending Web pages
• Web page construction software
– Static Web page
– Dynamic Web page

Principles of Information Systems,

Sixth Edition
 E-Commerce Software

• Catalog management
• Product configuration
• Shopping cart

Principles of Information Systems,

Sixth Edition
 E-Commerce Transaction Processing

• Automates transaction processes from order

placement to reconciliation

• Web traffic data analysis

Principles of Information Systems,

Sixth Edition
Electronic Shopping Cart

Principles of Information Systems,

Sixth Edition
 Network and Packet Switching
• All e-commerce depends on a type of network to
securely transmit data
– Internet
– Extranet
– Value-added network (VAN)
– Virtual private network (VPN)
• All approaches rely on packet switching and use
routers
• Cost, availability, reliability, security, and
redundancy must be considered when choosing
a network

Principles of Information Systems,

Sixth Edition
Electronic Payment
Systems

Principles of Information Systems,

Sixth Edition
 Electronic Payment Systems

• Digital certificate
• Certificate authority
• Secure sockets layer (SSL)
• Electronic cash
• Electronic wallets
• Smart, credit, charge, and debit cards

Principles of Information Systems,

Sixth Edition
Threats to E-Commerce

Principles of Information Systems,

Sixth Edition
 Threats to E-Commerce

• E-commerce incidents
• Theft of intellectual property
– Patents on business processes

Principles of Information Systems,

Sixth Edition
 Fraud

• On-line auction fraud

• Spam
• Pyramid schemes
• Investment fraud
• Stock scams

Principles of Information Systems,

Sixth Edition
 Invasion of Consumer Privacy

• On-line profiling
• Clickstream data
• Safe harbor principles

Principles of Information Systems,

Sixth Edition
 TRUSTe Seal

Principles of Information Systems,

Sixth Edition
BBB On-line Privacy Seal

Principles of Information Systems,

Sixth Edition
How to Protect Your Privacy
While On-Line

Principles of Information Systems,

Sixth Edition
Strategies for Successful
E-Commerce

Principles of Information Systems,

Sixth Edition
 Developing an Effective Web
Presence
Visitors to a web site should be able to:
• Obtain general information about the
organization
• Obtain financial information for making an
investment decision
• Learn the organization’s position on social
issues
• Learn about the products or services that the
organization sells
Principles of Information Systems,
Sixth Edition
 Putting up a Web Site

• Web site hosting services

• Storefront brokers

Principles of Information Systems,

Sixth Edition
 Building Traffic to Your Web Site
• Domain names
• Meta tags
• Traffic data analysis

Principles of Information Systems,

Sixth Edition
Maintaining and Improving Your Web
Site
• Be alert to new trends
• Be prepared to take advantage of new
opportunities
• Personalization
– Explicit
– Implicit

Principles of Information Systems,

Sixth Edition
 Summary

• E-commerce - enables consumers and companies to

gain access to worldwide markets

• Electronic retailing (e-tailing) - the direct sale from

business-to-consumer through electronic storefronts
designed around an electronic catalog and shopping cart
model

• E-commerce shoppers - must be on constant guard to

protect their rights, security, and personal privacy

Principles of Information Systems,

Sixth Edition