IT Applications for Digital Organizations

Electronic Commerce Systems

E-Commerce

 E-commerce – the buying and selling of goods and services

over the Internet
 Electronic commerce encompasses the entire online process of
 Developing
 Marketing
 Selling
 Delivering
 Servicing
 Paying for products and services
Unique features of e-commerce technology

1. Ubiquity
• Internet/Web technology available everywhere: work, home, etc., and
anytime
2. Global reach
• The technology reaches across national boundaries, around Earth
3. Universal standards
• One set of technology standards: Internet standards
4. Richness
• Supports video, audio, and text messages

Unique features of e-commerce technology

5. Interactivity
• The technology works through interaction with the user
6. Information density
• Vast increases in information density—the total amount and quality of
information available to all market participants
7. Personalization/Customization:
• Technology permits modification of messages, goods
8. Social technology
• The technology promotes user content generation and social
networking
 Electronic Commerce and the Internet

• Key concepts in e-commerce

• Digital markets reduce
• Information asymmetry
• Search costs
• Transaction costs
• Menu costs
• Digital markets enable
• Price discrimination or price differentiation
• Dynamic pricing
• Disintermediation

Benefits of Disintermediation to the

Consumer
 Electronic Commerce and the Internet

• Key concepts in e-commerce (cont.)

• Digital goods

• Goods that can be delivered over a digital network

• E.g., Music tracks, video, software, newspapers, books

• Costs of delivery over the Internet very low

• Marketing costs remain the same; pricing highly variable

• Industries with digital goods are undergoing revolutionary

changes (publishers, record labels, etc.)

Electronic Commerce and the Internet

• Internet business models

• Pure-play models
• Clicks-and-mortar models

• Social Network
• Online meeting place
• Social shopping sites
• Can provide ways for corporate clients to target customers through
banner ads and pop-up ads

• Online marketplace:
• Provides a digital environment where buyers and sellers can meet,
search for products, display products, and establish prices for those
products
 Electronic Commerce and the Internet

• Content provider

• Providing digital content, such as digital news, music, photos, or video,

over the Web

• Online syndicators: Aggregate content from multiple sources,

package for distribution, and resell to third-party Web sites

• Service provider

• Provides Web 2.0 applications such as photo sharing and interactive

maps, and services such as data storage

• Portal

• “Supersite” that provides comprehensive entry point for huge array of

resources and services on the Internet

Electronic Commerce and the Internet

• Virtual storefront:

• Form of interactive media/electronic marketing that allows customers to view

and order merchandise on their computer screens. In a virtual storefront,
customers can read about the history of the product, browse through product
offerings, and place orders, all through the touch of the keyboard and mouse
on their computer

• Information broker:

• Provides product, pricing, and availability information to individuals and

businesses

• Transaction broker:

• Saves users money and time by processing online sales transactions and
generating a fee for each transaction
 E-Commerce Models

 Business-to-Business (B2B)
 Business-to-Consumer (B2C)
 Consumer-to-Consumer (C2C)
 Consumer-to-Business (C2B), an emerging model
 E-Government-to-citizens
 Mobile commerce (m-commerce)

Business-to-Business (B2B)

 Electronic business marketplaces, direct links between

businesses, auctions and exchanges

 Electronic marketplace (e-marketplace) – interactive business

communities providing a central market where multiple buyers
and sellers can engage in e-business activities
 Business-to-Consumer (B2C)

 Virtual storefronts, multimedia catalogs, interactive order

processing, electronic payment, online customer support
 Examples: Banking, auctions (ebay.com)

Business-to-Consumer (B2C)

 Common B2C e-business models include:

 e-shop – a version of a retail store where customers can
shop at any hour of the day without leaving their home or
office
 e-mall – consists of a number of e-shops; it serves as a
gateway through which a visitor can access other e-shops

 Business types:
 Brick-and-mortar business

 Pure-play business

 Click-and-mortar business
 Consumer-to-Consumer (C2C)

 Online auctions, posting to newspaper sites, personal

websites, e-commerce portals

Consumer-to-Consumer (C2C)

 Online auctions
 Electronic auction (e-auction) - Sellers and buyers solicit
consecutive bids from each other and prices are determined
dynamically
 Forward auction - Sellers use as a selling channel to many
buyers and the highest bid wins
 Reverse auction - Buyers use to purchase a product or
service, selecting the seller with the lowest bid

 C2C communities:
 Communities of interest

 Communities of relations

 Communities of fantasy
Emerging Model - Consumer-to-Business (C2B)

 Priceline.com is an example of a C2B e-business model

 The demand for C2B e-business will increase over the next
few years due to customer’s desire for greater convenience and
lower prices

Others

 E-Government – deliver information and public services to

citizens and members of the public sector
 Forms of e-Government

 Government-to-consumer (G2C)

 Government-to-business (G2B)

 Government-to-government (G2G)

 M-Commerce – Mobile commerce relies on the use of

wireless devices, such as personal digital assistants, cell
phones, and smart phones, to place orders and conduct
business
 Electronic Commerce

• Interactive marketing and personalization

• Web sites are bountiful source of details about customer behavior,

preferences, buying patterns used to tailor promotions, products,
services, and pricing

• Clickstream tracking tools: Collect data on customer activities at

Web sites

• Used to create personalized Web pages

• Collaborative filtering: Compares customer data to other customers to

make product recommendations

Electronic Commerce

• Blogs
• Personal web pages that contain series of chronological entries by
author and links to related Web pages
• Has increasing influence in politics, news
• Corporate blogs: New channels for reaching customers, introducing
new products and services
• Blog analysis by marketers
• Customer self-service
• Web sites and e-mail to answer customer questions or to provide
customers with product information
• Reduces need for human customer-support expert
 Learning with an Example
Oxfam GB generates £5 million in revenue with e-commerce solution
 Oxfam Great Britain is a leading international non-governmental organization
(NGO). It works with thousands of partner organizations around the world to help
overcome poverty and suffering
 Over the years Oxfam Great Britain has developed a number of creative and
innovative ways to raise funds for its work. It’s perhaps most famous for its High
Street chain of second-hand shops
 The stores sell clothes, books, music, household goods and collectors’ items
such as stamps and coins
 Until recently Oxfam Great Britain’s online shopping offering was focused largely
on the sale of “virtual” goods. The organization also sold a small number of goods
through eBay
 To help strengthen its brand and realize new sources of income, Oxfam Great
Britain recognized that it needed to expand its online sales capacity and to offer the
type of product and range that its customers were used to buying in its High Street
stores

Learning with an Example

 In 2008, Oxfam Great Britain started to lay the groundwork for a new, modern e-
commerce platform
 The project started with the High Street shops
 Next, they built a branded High Street store
 They built three product catalogues – one for new, fair trade goods, another for
second-hand items sold under the High Street brand, and a third for virtual items

Benefits
 Quick return on investment
 Scalable platform
 Greater revenue opportunity
 More efficient business
 E-Commerce Systems

E-Commerce Architecture
 Access Control and Security

 E-commerce processes must establish mutual trust and secure

access between parties
 User names and passwords
 Encryption key
 Digital certificates and signatures
 Restricted access areas
 Other people’s accounts
 Restricted company data
 Webmaster administration areas

Profiling and Personalizing

 Profiling gathers data on you and your website behavior and

choices
 User registration

 Cookie files and tracking software

 User feedback

 Profiling is used for

 Personalized (one-to-one) marketing

 Authenticating identity

 Customer relationship management

 Marketing planning

 Website management
 Search Management

 Search processes help customers find the specific product or

service they want
 E-commerce software packages often include
a website search engine
 A customized search engine may be acquired from
companies
 Searches are often on content or by parameters

Content and Catalog Management

 Content Management Software

 Helps develop, generate, deliver, update, and archive text
and multimedia information at e-commerce websites

 Catalog Management Software

 Helps generate and manage catalog content

 Catalog and content management software works with

profiling tools to personalize content
 Workflow Management

 E-business and e-commerce workflow management depends

on a workflow software engine
 Contains software model of business processes
 Workflow models express predefined
 Sets of business rules
 Roles of stakeholders
 Authorization requirements
 Databases used
 Task sequences

Event Notification

 Most e-commerce applications are event driven

 Responds to such things as customer’s first website visit
and payments
 Monitors all e-commerce processes
 Records all relevant events, including problem situations
 Notifies all involved stakeholders
 Collaboration and Trading

 Processes that support vital collaboration arrangements and

trading services
 Needed by customers, suppliers, and other stakeholders
 Online communities of interest
 E-mail, chat, discussion groups
 Enhances customer service
 Builds loyalty

Electronic Payment Processes

 Complex processes
 Electronic nature of transactions
 Many security issues
 Financial institutions may be part of the process
 Electronic Payment Processes

 Web Payment Processes

 Shopping cart process
 Credit card payment process
 Debit and other more complex processes
 Electronic Funds Transfer (EFT)
 Major payment system in banking, retail

 Variety of information technologies capture and process

money and credit card transfers
 Most point-of-sale terminals in retail stores are networked
to bank EFT systems

Securing Electronic Payments

 Network sniffers easily recognize credit card formats

 Encrypt data between customer and merchant

 Encrypt data between customer and financial institution

 Take sensitive information off-line

 E-Commerce Success Factors

 Some of the success factors in e-commerce

 Selection and value
 Performance and service
 Look and feel
 Advertising and incentives
 Personal attention (one-to-one marketing)
 Community relationships
 Security and reliability

Differences in Marketing
 Web Store Requirements

E-Commerce Marketplaces

 One to Many
 Sell-side marketplaces

 One supplier dictates product offerings and prices

 Many to One
 Buy-side marketplaces

 Many suppliers bid for the business of a buyer

 Some to Many
 Distribution marketplaces

 Unites suppliers who combine their product catalogs to attract a larger

audience
 Eg: Works, an Internet business (B2B) purchasing service that
automates the purchasing process and gives small and midsize
companies volume purchasing power
 E-Commerce Marketplaces

 Many to Some
 Procurement marketplaces

 Unites major buyers who combine purchasing catalogs

 Attracts more competition and thus lower prices

 Eg: Pantellos Group Limited Partnership provides supply chain

management services to the utility and energy services industries. The
company operates an Internet-based trading platform that offers
workforce management, logistics, e-procurement, project collaboration,
logistics, virtual inventory management, transaction facilitation, supply
chain strategy, operations, and business process services support
 Many to Many
 Auction marketplaces

 Dynamically optimizes prices

 Eg: ebay

Clicks and Bricks

 Success will go to those who can integrate Internet initiatives

with traditional operations
 Partial e-commerce integration
 Joint ventures and strategic partnerships
 Complete separation
 Spin-off of an independent e-commerce company
 E-Commerce Integration

 The business case for merging e-commerce

with traditional business operations
 Move strategic capabilities in traditional operations to the
e-commerce business
 Integrate e-commerce into the traditional business
 Sharing of established brands
 Sharing of key business information
 Joint buying power and distribution efficiencies

E-Commerce Strategy Checklist

 Questions to ask and answer

 What audiences are we attempting to reach?

 What action do we want those audiences to take?

 Who owns the e-commerce channel within the

organization?
 Is the e-commerce channel planned alongside other
channels?
 Is there a process for generating, approving, releasing, and
withdrawing content?
 Will our brand translate to the new channel?

 How will we market the channel itself?