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E-Business and ECommerce
Information Technology For Management 6th Edition
Turban, Leidner, McLean, Wetherbe Lecture Slides by L. Beaubien, Providence College
John Wiley & Sons, Inc. Chapter 5
Describe electronic commerce, its scope, benefits, limitations, and types
Understand auctions and bartering Describe the major applications of business-to-consumer commerce, including service industries, and major issues faced by e-tailers Describe business-to-business applications Describe emerging EC applications such as intrabusiness and B2E commerce Chapter 5
Learning Objectives (Continued)
• Describe e-government activities and consumer-to-consumer e-commerce • Describe the e-commerce support services, specifically payments and logistics
• Discuss the importance and activities of online advertising
• Discuss some ethical and legal EC issues
• Describe EC failures and strategies for success
and give examples of how they are implemented in e-commerce applications • Identify and give examples of several key factors and Web store requirements need to succeed in e-commerce 9-4 .Learning Objectives • Identify the major categories and trends of e-commerce applications • Identify the essential processes of an e-commerce system.
Learning Objectives • Identify and explain the business value of several types of e-commerce marketplaces • Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives 9-5 .
The Structure of E-Commerce Chapter 5 6 .
Introduction to e-Commerce • Electronic commerce encompasses the entire online process of • • • • • • Developing Marketing Selling Delivering Servicing Paying for products and services • It relies on the Internet and other information technologies to support every step of the process 9-7 .
The Scope of e-Commerce 9-8 .
E-Commerce Technologies 9-9 .
electronic payment. multimedia catalogs. direct links between businesses. posting to newspaper sites.g beliscity Business-to-Business • Electronic business marketplaces.Categories of e-Commerce • Business-to-Consumer • Virtual storefronts. olx • • Consmer to business (C2B) Elance freelance website • • 9-10 . personal websites. online customer support e. auctions and exchanges • Intell mircroproceser to Dell Consumer-to-Consumer • Online auctions. e-commerce portals • Ebay. interactive order processing.
Essential e-Commerce Architecture 9-11 .
• Digital certificates and signatures • Restricted access areas • Other people’s accounts • Restricted company data • Webmaster administration areas 9-12 .Access Control and Security • E-commerce processes must establish mutual trust and secure access between parties • User names and passwords • Encryption key transformation of plain text into ciphertext.
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 9-13 .
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 like Google or Requisite Technology • Searches are often on content or by parameters 9-14 .
deliver. update. generate.Content and Catalog Management • Content Management Software • Helps develop. 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 • Includes product configuration and mass customization 9-15 .
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 Routing alternative Databases used Task sequences 9-16 .
Example of Workflow Management 9-17 .
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 • Works in conjunction with user-profiling software 9-18 .
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. discussion groups • Enhances customer service • Builds loyalty 9-19 . chat.
Electronic Payment Processes • Complex processes • Near-anonymous and electronic nature of transactions • Many security issues • Wide variety of debit and credit alternatives • Financial institutions may be part of the process 9-20 .
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 9-21 .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.
Electronic Payment Example
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
Components of EC (Continued)
To execute these applications, companies need the right information, infrastructure, and support services. As shown: People: Sellers, buyers, intermediaries, information systems specialists and other employees, and any other participants Public policy: Legal and other policy and regulating issues, such as privacy protection and taxation Marketing and advertising: Like any other business, EC usually requires the support of marketing and advertising Support services: Many services are needed to support EC. They range from payments to order delivery and content creation Business partnerships: Joint ventures, e-marketplaces, and partnerships are some frequently occurring relationships in ebusiness
Chapter 5 24
Reverse auctions. Common mechanisms used in its implementation: electronic auctions Electronic Auctions (e-Auctions): A market mechanism by which sellers place offers and buyers make sequential bids Forward auctions are auctions where sellers place items at sites for auction and buyers bid continuously for the items. Suppliers are invited to submit bids. e-government. C2B. B2B. have one buyer.Auctions The major mechanism for buying and selling on the Internet is the electronic catalog. and C2C commerce Chapter 5 25 . Auctions are used in B2C. that wants to buy a product or a service. usually an organization.
Developing a Web Store • Build a website • Choose or set up web hosting • Use simple design tools and templates • Include a shopping cart and payment support • Market the website • Include Web page and e-mail advertising and promotions • Exchange advertising with other Web stores • Register with search engines and directories • Sign up for affiliate programs 9-26 .
friendly. efficient store Offer fast order processing and payment Notify when orders are processed and shipped Provide links to related websites 9-27 .Serving Your Customers • Convert visitors into loyal customers • • • • • • • • Develop one-to-one relationship with customers Create incentives to encourage registration Use Web cookies to identify visitors Use tracking services to record and analyze website behavior and customer preferences Create an attractive.
inventory data to accounting systems • Operate 24 hours a day.Managing a Web Store • Manage both the business and the website • Record and analyze traffic. seven day a week • Protect transactions and customer records • • • • Use security monitors and firewalls Use redundant systems and power sources Employ passwords and encryption Offer 24-hour tech support 9-28 . inventory. sales • Use CRM features to help retain customers • Link sales.
Seven Design Elements of Customer Interface • Context • Content • Functional look and feel • How it is presented • What is presented • Consumers and firm • Consumers to consumers • Chat room and message board • Ability to modify itself • Dialog between website and its users • Links between the site and other sites • Transactional capacity • Community • Customization • Communication • Connection • Commerce .
sound. and video that webpages contain Commerce Site’s capabilities to enable commercial transactions Community Site’s ability to enable user-touser communication Connection Degree to which a site is linked to other sites Customization Site’s ability to self-tailor to different users or to allow users to personalize the site Communication The ways sites enable site-touser communication or two-way communication . pictures.The 7Cs of Customer Interface Context Site’s layout and design Content Text.
Individualizing a Website: Customization Commonly used customization features: – E-mail accounts: Users can send and receive e-mail from the site. using a free. layout design. or items they want to buy – Agents: Computer programs can perform simple tasks upon request. by choosing background colors. unique e-mail address – Content and layout configuration: Users can design their own homepage. URLs. within limits. and content sources – Storage: Users can store e-mail. such as notifying a user via e-mail when a product is in stock . favorite content.
Personalization by User Example— MyLook.com .
com .Personalization by User Example — mylook.
Tailoring by Site Example .
Tailoring Example—Amazon Homepage for Two Users .
com Homepage for Two Different Customers .Amazon.
Communications • Types of communications • Broadcast (1 way) • • • • • Mass mailing FAQs E-mail newsletters Content update notifications Broadcast events • Interactive (2 way) • E-mail • Chat room • User feedback • Hybrid .
Non-Responding User: Site messages are announcements that users receive without needing to respond • One-to-Many. Responding User: Site messages are invitations to users to submit their comments and responses • One-to-One.Keeping in Touch with Users: Communication Communication Archetypes • One-to-Many. Non-Responding User: User receives personalized messages to address specific interests or needs without a need to respond • One-to-One. Responding User: User responds to personalized messages sent by the site .
B2B E-Commerce • B2B is the wholesale and supply side of the commercial process • Businesses buy. or trade with other businesses • Relies on multiple electronic information technologies • • • • Catalog systems Trading systems Data interchange Electronic funds transfers 9-39 . sell.
E-Commerce Portals • B2B e-commerce portals offer multiple marketplaces • Catalogs • Exchanges • Auctions • Often developed and hosted by third-party market-maker companies • Infomediaries serve as intermediaries in e-business and e-commerce transactions 9-40 .
and sales • Segmentation is done with the aid of tools such as data modeling and data warehousing . advertising.Market Research for EC market segmentation The process of dividing a consumer market into logical groups for conducting marketing research.
Market Research for EC • Tracking Customer Movements transaction log A record of user activities at a company’s Web site clickstream behavior Customer movements on the Internet Electronic Commerce .
Market Research for EC Web bugs Tiny graphics files embedded on e-mail messages and in Web sites that transmit information about the users and their movements to a Web server spyware Software that gathers user information over an Internet connection without the user’s knowledge .
edited. and summarized • The solution to this problem is to automate the process by using data warehousing and data mining • Some of the limitations of online research methods are: • • • • Accuracy of responses Loss of respondents because of equipment problems The ethics and legality of Web tracking Lack of representativeness in samples of online users .Market Research for EC • Limitations of Online Market Research • Too much data may be available • To use data properly. it should be organized. condensed.
Web Advertising • Some Internet Advertising Terminology ad views The number of times users call up a page that has a banner on it during a specific time period. known as impressions or page views Button Page click (click-through or ad click) A count made each time a visitor clicks on an advertising banner to access the advertiser ’s Web site Electronic Commerce .
Web Advertising CPM (cost per thousand impressions) The fee an advertiser pays for each 1.000 times a page with a banner ad is shown conversion rate The percentage of visitors who actually make a purchase click-through rate (or ratio) The percentage of visitors that are exposed to a banner ad and click on it .
a pause of a certain length of time ends a visit . measures the success of a banner in attracting visitors to click on the ad hit A request for data from a Web page or file visit A series of requests during one navigation of a Web site.Web Advertising click-through ratio The ratio between the number of clicks on a banner ad and the number of times it is seen by viewers.
regardless of how many pages are viewed per visit stickiness Characteristic that influences the average length of time a visitor stays in a site Electronic Commerce .Web Advertising unique visit A count of the number of visitors to a site.
Web Advertising • Why Internet Advertising? • Television viewers are migrating to the Internet • Advertisers are limited in the amount of information they can gather about the television and print ads • Other reasons why Web advertising is growing rapidly: • • • • • • Cost Richness of format Personalization Timeliness Location-basis Digital branding Electronic Commerce .
Advertising Methods • Banners banner On a Web page. a graphic advertising display linked to the advertiser’s Web page keyword banners Banner ads that appear when a predetermined word is queried from a search engine random banners Banner ads that appear at random. not as the result of the user’s action Electronic Commerce .
Advertising Methods • Benefits of Banner Ads • By clicking on them users are transferred to an advertiser’s site. and frequently directly to the shopping page of that site • The ability to customize them for individual surfers or a market segment of surfers • Viewing of banners is fairly high because “forced advertising” is used • Banners may include attention-grabbing multimedia .
Advertising Methods • Limitations of Banner Ads • Cost • A limited amount of information can be placed on the banner • Viewers have become somewhat immune to banners and simply do not notice them as they once did Electronic Commerce .
Advertising Methods banner swapping An agreement between two companies to each display the other’s banner ad on its Web site Electronic Commerce .
during. he or she sees the ad interstitial An initial Web page or a portion of it that is used to capture the user’s attention for a short time while other content is loading Electronic Commerce . so when the user closes the active window.Advertising Methods pop-up ad An ad that appears in a separate window before. or after Internet surfing or when reading email pop-under ad An ad that appears underneath the current browser window.
Ensuring their recipients know about their privacy protection. . Thinking about customer experience. and 4. 3. 2. Making privacy protection a part of their brand promise. Measuring impact.Advertising Methods • • E-Mail Advertising E-Mail Advertising Management—Four guidelines that marketers should consider to leverage customer insights throughout the e-mail marketing campaign lifecycle: 1.
Advertising Strategies and Promotions Online affiliate marketing A marketing arrangement by which an organization refers consumers to the selling company’s Web site viral marketing Word-of-mouth marketing by which customers promote a product or service by telling others about it Electronic Commerce .
Special Advertising Topics • Permission Advertising spamming Using e-mail to send unwanted ads (sometimes floods of ads) permission advertising (permission marketing) Advertising (marketing) strategy in which customers agree to accept advertising and marketing materials Prentice Hall © 2006 57 Electronic Commerce .
and withdrawing content? • Will our brand translate to the new channel? • How will we market the channel itself? 9-58 .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.
Integration issues involve planning. and customers may develop. training. vendors. Integration of e-commerce into the business environment. and publicity over an extended time period offer possible solutions to the problem. existing IT applications. and infrastructure. such as when to offer special promotions on the Internet.Managerial Issues Managing resistance to change. and interfacing EC with databases. Lack of qualified personnel and outsourcing. how to integrate an e-market with the information systems of buyers and sellers. Chapter 5 . competition for corporate resources with other projects. Electronic commerce can result in a fundamental change in how business is done. For this reason. Ecommerce needs to be integrated with the rest of the business. it may be worthwhile to outsource some e59 commerce activities. Very few people have expertise in e-commerce. There are many implementation issues that require expertise. Resistance to change from employees. Education. and what kind of customer incentives are appropriate under what circumstances.
Amazon. budgets. organizational. (3) Experiment: Start some e-commerce experimental projects (learn by doing). Some EC companies (e. Chapter 5 60 . It should address the many legal. Choosing the company’s strategy toward e-commerce. and contingency plans. It is not a bad idea to join an alliance or consortium of companies to explore e-commerce. financial. technological. and ethical issues that can surface during implementation. timetables. Because of the complexity and multifaceted nature of EC.Managerial Issues (Continued) Alliances. it makes sense to prepare an implementation plan. Implementation plan.g. or what kind of alliance to form and with whom. Such a plan should include goals. The problem is which alliance to join..com) have thousands of alliances. Alliances can be created at any time. but carefully watch what is going on in the field in order to determine when EC is mature enough to enter it. (2) Watch and wait: Do nothing. Generally speaking there are three major options: (1) Lead: Conduct large-scale innovative e-commerce activities.
Chapter 5 61 . Managing the impacts. and estimates of costs and benefits must be made. Nevertheless. Many intangible benefits and lack of experience may produce grossly inaccurate estimates of costs and benefits. Taking orders in EC may be easier than fulfilling them. In electronic payment systems. Other privacy issues may involve tracking of Internet user activities by intelligent agents and cookies. The impacts of e-commerce on organizational structure. a feasibility study must be done.Managerial Issues (Continued) Privacy. marketing procedures. and profitability may be dramatic. and in-house monitoring of employees’ Web activities. people. Justifying e-commerce by conducting a cost-benefit analysis is very difficult. Therefore. establishing a committee or organizational unit to develop strategy and to manage e-commerce is necessary. Order fulfillment. it may be necessary to protect the identity of buyers.
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