Professional Documents
Culture Documents
Chapter # 3
Enabling Business-to-
Consumer Electronic
Commerce
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Learning Objectives
• 3.1 Describe different approaches to competing in cyberspace as well as
different forms of electronic government and e-finance.
• 3.5 Describe how to conduct financial transactions and navigate the legal
issues of electronic commerce.
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Electronic Business: E-Commerce and
E-Government
• Learning Objective: Describe
different approaches to
competing in cyberspace as well
as different forms of electronic
government and e-finance.
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E-Commerce (EC) Defined
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E-finance
• E-finance is the use of information systems to
provide financial services and markets
• E-finance consists of:
– E-banking and online brokerage
▪ Paying bills online using electronic bill pay
▪ People can turn to multiple sites to get the latest information
about stock prices
• Fintech
– Refers to technologies that support activities in the
financial sector.
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Business-To-Consumer E-Commerce
• Learning Objective:
Describe business-to-
consumer electronic
commerce strategies.
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E-tailing: Capabilities and Opportunities
(1 of 2)
• Firms from across the world can effectively compete
for customers and gain access to new markets
• Disintermediation
– Cutting out the “middleman” and reaching customers
more directly and efficiently
• The Long Tail refers to the ability to cater to niche
markets instead of selling mainstream products
• Mass Customization
– Firms can tailor their products and services to meet a
customer’s particular needs
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E-tailing: Capabilities and Opportunities
(2 of 2)
• Group Buying
– If enough people agree to purchase the product or service,
they get significant discounts
• New Revenue and Pricing Models
– Companies can earn revenues not only through traditional
sales, but also through subscription, licensing, or
transaction fees
– Companies and individuals can earn money through Web
advertising or affiliate marketing
• Social Commerce
– Utilizing social networks to build lasting relationships and
advertise products
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Mass Customization
Mass customization
generates additional
value for customers and
profits for producers
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New Revenue and Pricing Models
Priceline.com lets consumers name
their own price for travel-related
services.
Reverse pricing
“Name your
own price”
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Benefits of e-Tailing
• Product benefits: With no store size and shelf
space restrictions, companies can sell a far wider
variety of goods
• Place benefits: Internet storefronts are available
on almost every computer connected to the
Internet
• Price benefits: Online retailers are efficient, with
high volumes and low overhead that allow for
very competitive pricing
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Drawbacks of E-tailing
• Trust
– This is especially a concern for new online businesses
without a proven track record
• Direct Product Experience
– E-tailing doesn’t provide sensory information
• Product Delivery and Returns
– Except for direct downloads, e-tailing requires
additional delivery time for products
– Returns may also be a hassle, compared to just going
to the store
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Electronic Commerce Websites and
Internet Marketing
• Learning Objective:
Understand the keys to
successful electronic commerce
websites and explain the
different forms of Internet
marketing.
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Designing Websites to Meet Online
Consumers’ Needs
• Structural Firmness
– No bad links, understandable error messages, privacy/
security, speed
• Functional Convenience
– Ease of use, simple navigation, user feedback, help
features, on-click ordering, flexible payment, order
tracking
• Representational Delight
– Aesthetically pleasing, professional look and feel, color/
font/images, consistent layout, no clutter
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Internet Marketing
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Mobile Commerce, Consumer-To-
Consumer EC, and Consumer-To-Business
EC
• Learning Objective: Describe
mobile commerce, consumer-to-
consumer electronic commerce,
and consumer-to-business
electronic commerce.
• C2C EC
• C2B EC
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Mobile EC
• Location-Based M-Commerce
– Services can be offered tailored to a person’s needs
based on their current location
• Information on the Go
– Customers can get further information about a product
wherever they are, including in the store, but this can
lead to “showrooming”
• Product and Content Sales
– Consumers use mobile apps to make purchases while
on the go
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C2C EC
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Opportunities and Threats of C2C EC
(Table 3.3)
Opportunities Threats
Consumers can buy and sell to No quality control
broader markets
Eliminates the middleman that Higher risk of fraud
increases the final price of products
and services
Always available for consumers, Harder to use traditional
24/7/365 payment methods (checks,
cash, ATM cards)
Market demand is an efficient
mechanism for setting prices in the
electronic environment
Increases the numbers of buyers and
sellers who can find each other
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E-Auctions and Online Classifieds
• E-Auctions
– Individual sellers can sell or barter items at online auctions
– Consumers place bids
– Examples: eBay.com and swap.com
– Revenue model based on small transaction fees, highly
profitable
• Online Classifieds
– Just advertising, no online transactions
– Freecycling
– Examples: craigslist.com
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C2B EC
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Securing Payments in the Digital World
• Must be sure that online transactions are secure
• Issues related to different forms of online
payments are:
1. Payment Services—involves the use of independent
payment services such as PayPal, Google Wallet
2. Cryptocurrencies—involves the use of a non-
banking currency such as Bitcoin.
3. Managing Risk—businesses are financially liable for
fraudulent transactions, thus have to look for these
and sometimes have to reject risky transactions
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Bitcoins
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Ways to Protect Yourself When Shopping
Online
• Use a secure browser • Give payment
information only to
• Check the site’s privacy
businesses you know
policy
and trust
• Read and understand
• Keep records of your
the refund and shipping
online transactions and
policies
check your e-mail
• Keep your personal
• Review you monthly
information private
credit card and bank
Source: Based on Privacy transactions
Rights Clearinghouse (2016)
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Possible Indicators of Fraud
• Email
addresses
• Shipping and
billing
addresses
• Transactions
patterns
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Legal Issues in EC
• Taxation
– Sales taxes
– Internet Freedom Act: Internet sales are treated like mail-
order sales
• Net Neutrality
– Should the Internet be open? Or should Internet access
come first to the highest bidder?
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END OF CHAPTER CONTENT
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Managing in the Digital World:
Taobao and the World of E-commerce
• Taobao is the largest digital marketplace in China
– By 2011 more registered users (370 million) than the
population of the United States
– Online marketplace for multiple companies
– Online consumer-to-consumer sales, much like eBay
– Notorious for piracy and counterfeit goods
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Security Matters:
Too Small to Be Hacked?
• Cybercriminals steal data that can be converted into
cash (credit card numbers, personal info)
• They now have begun to take a users data hostage by
encrypting it
– Demands ransom payment to unlock data
– If paid, will the data be released?
• Experts recommend paying a 3rd party to maintain
system security
• Technology alone cannot protect a business if the
system user is the weak link
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When Things Go Wrong:
Buying Likes
• Many businesses entice users to “like” their
business page on Facebook, Twitter, or other
social media sites for some reward
• Campaigns and contests can be deeply biased by
automated “like” and votes, giving unfair
advantage to users who game the system
• Social media platforms try to suppress this type of
devious behavior, but it can be a cat-and-mouse
game
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Green IT:
Green Online Shopping
• Fossil fuel requirements
– Retail shopping—use cars to drive to many stores in different
locations
– Online shopping—most of the fuel use is by delivery vehicles
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