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Chapter 10

E-Commerce: Digital
Markets, Digital Goods

10.1

© 2007 by Prentice Hall

Management Information Systems
Chapter 10 E-Commerce: Digital Markets, Digital Goods
LEARNING OBJECTIVES

• Describe the unique features of e-commerce, digital
markets, and digital goods.
• Analyze how Internet technology has changed value
propositions and business models.
• Describe the various types of e-commerce and how
e-commerce has changed consumer retailing and
business-to-business transactions.

10.2

© 2007 by Prentice Hall

• Compare the principal payment systems for electronic commerce.3 © 2007 by Prentice Hall .Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods LEARNING OBJECTIVES (cont’d) • Evaluate the role of m-commerce in business and describe the most important m-commerce applications. 10.

• Demonstrates IT’s role in reducing cost. • SAS customer analysis software and Web site tracking tools help identify good sales prospects. declining customer base. and building community with customers. Digital Goods Major League Baseball Hits a Home Run with Information Systems • Problem: Declining revenue from traditional sales channels. increasing costs. 10.4 © 2007 by Prentice Hall . • Illustrates the emerging digital firm landscape where businesses can use tools to analyze critical data and leverage expertise in emerging technologies to offer services to other businesses. which increase sales. opening new sales channels. • Solutions: MLB Web sites and cell phone ticketing enable electronic ticketing and delivery of online information and games.Management Information Systems Chapter 10 E-Commerce: Digital Markets.

10. Unique Features of E-commerce: • Ubiquity: Internet is available everywhere. • Interactivity: the technology works through interaction with the user. Digital Goods • E-commerce: the use of the Internet and the web to transact business. • Information density: the technology reduces information costs and raises quality. • Richness: video. • Personalization/customization: the technology allows personalized messages to be delivered to individuals as well as groups. • Global reach: the technology reaches across national boundaries.Management Information Systems Chapter 10 E-Commerce: Digital Markets. • Universal standards: one set of technology standards. anytime. audio and text messages are possible.5 © 2007 by Prentice Hall .

6 © 2007 by Prentice Hall . reducing costs to the consumer 10. Digital Goods ELECTRONIC COMMERCE Key concepts in E-commerce: • Disintermediation: The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain.Management Information Systems Chapter 10 E-Commerce: Digital Markets.

Management Information Systems Chapter 10 E-Commerce: Digital Markets.7 Figure 10-2 © 2007 by Prentice Hall . Digital Goods ELECTRONIC COMMERCE The Benefits of Disintermediation to the Consumer 10.

8 © 2007 by Prentice Hall .Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods Internet Business Models Business Model: • Defines an enterprise • Describes how the enterprise delivers a product or service • Shows how the enterprise creates wealth 10.

com) 10. Digital Goods Internet Business Models • Virtual storefront: Sells goods or services online (Amazon.Management Information Systems Chapter 10 E-Commerce: Digital Markets.9 © 2007 by Prentice Hall .com) • Online marketplace: Provides a trading platform for individuals and firms (eBay.

com. Digital Goods Internet Business Models (Continued) • Content provider: Creates revenue by providing content (WSJ. MSN. services (Yahoo.10 © 2007 by Prentice Hall . TheStreet. iVillage.Management Information Systems Chapter 10 E-Commerce: Digital Markets.com) 10.com.com) • Virtual community: Provides an online community to focused groups (Friendster. specialized content.com.com) • Portal: Provides initial point of entry to Web.com) • Online service provider: Provides online services for individuals and businesses (Xdrive.

com) • Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com.Management Information Systems Chapter 10 E-Commerce: Digital Markets. Ariba.com) • Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay. Digital Goods Electronic Commerce Types of Electronic Commerce • Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.11 © 2007 by Prentice Hall .com ) 10.

12 © 2007 by Prentice Hall . Digital Goods Interactive Marketing and Personalization Clickstream tracking tools: • Collect data on customer activities at Web sites and store them in a log 10.Management Information Systems Chapter 10 E-Commerce: Digital Markets.

Management Information Systems Chapter 10 E-Commerce: Digital Markets.13 Figure 10-3 © 2007 by Prentice Hall . Digital Goods ELECTRONIC COMMERCE Web Site Visitor Tracking 10.

while reducing costs of interacting with the customer 10.Management Information Systems Chapter 10 E-Commerce: Digital Markets.14 © 2007 by Prentice Hall . Digital Goods ELECTRONIC COMMERCE Web Personalization • Create unique personalized Web pages for each customer • Increased closeness to customer increases value to the customer.

15 Figure 10-4 © 2007 by Prentice Hall .Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods ce ELECTRONIC COMMERCE Web Site Personalization 10.

16 EDI Procurement Private industrial networks (private exchanges) Net marketplaces Exchanges © 2007 by Prentice Hall .Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods • Blogs: Personal Web page that contains a series of chronological entries by its author. and links to related Web pages. • Business-to-business (B2B) electronic commerce: New efficiencies and relationships • • • • • 10.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. 10. Currently 80% of B2B e-commerce uses this system.17 © 2007 by Prentice Hall . Digital Goods Business-to-Business Electronic Commerce: New Efficiencies and Relationships • Electronic Data Interchange (EDI): Enables the computer-to-computer exchange between two organizations of standard transactions. • EDI is being replaced by more powerful Webbased alternatives.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. Figure 10-5 10. The purchasing firms can use EDI to provide production and inventory requirements and payment data to suppliers.18 © 2007 by Prentice Hall . Digital Goods Electronic Commerce Electronic Data Interchange (EDI) Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment. Suppliers can automatically send data about shipments to purchasing firms.

000 suppliers to its stores. 10.Management Information Systems Chapter 10 E-Commerce: Digital Markets. Wal-Mart uses its own private network to coordinate more than 15.19 © 2007 by Prentice Hall . Digital Goods ELECTRONIC COMMERCE Private Industrial Networks • The largest Web-based form of B2B commerce • Private B2B extranets that focus on continuous business process coordination between a small group of companies for collaboration and supply chain management.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods ELECTRONIC COMMERCE A Private Industrial Network 10.20 Figure 10-6 © 2007 by Prentice Hall .

Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods ELECTRONIC COMMERCE • Net marketplaces (e-hubs) provide a single marketplace for many different buyers and sellers.21 © 2007 by Prentice Hall . 10.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods A Net Marketplace 10.22 Figure 10-7 © 2007 by Prentice Hall .

23 © 2007 by Prentice Hall . Digital Goods • M-commerce: The use of the Internet for purchasing goods and services and also for transmitting messages using wireless mobile devices 10.Management Information Systems Chapter 10 E-Commerce: Digital Markets.

Digital Goods M-Commerce Services and Applications • Information-based services: Instant messaging.Management Information Systems Chapter 10 E-Commerce: Digital Markets. e-mail. music. searching for the best price for an item using a cell phone and buying it in a physical store or on the Web 10. or games. concert tickets.24 © 2007 by Prentice Hall . searching for a movie or restaurant using a cell phone or handheld PDA • Transaction-based services: Purchasing stocks.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. Digital Goods M-Commerce Services and Applications (Continued) • Personalized services: Services that anticipate what a customer wants based on that person’s location or data profile.25 © 2007 by Prentice Hall . such as updated airline flight information or beaming coupons for nearby restaurants 10.

Management Information Systems Chapter 10 E-Commerce: Digital Markets.26 © 2007 by Prentice Hall . resulting in higher costs to customer • Limited memory and power supplies 10. Digital Goods M-Commerce Challenges • Slow data transfer speeds on second-generation cellular networks.

Management Information Systems Chapter 10 E-Commerce: Digital Markets. • Keyboards and screens on cell phones are still tiny and awkward to use.27 © 2007 by Prentice Hall . Digital Goods M-Commerce Challenges (Continued) • More Web sites need to be designed specifically for small wireless devices. 10.

Electronic billing presentment and payment Used by consumers to pay bills online. Accumulated balance Used for micro payments. Stored value Used for micro payments. Digital cash Electronic currency that can be transferred over the Web.D.28 Credit cards The most common form of payment. Pre-payment of funds. Digital wallets Electronic storage of I. Smart Cards I. Peer-to-Peer payment Interpersonal transfer of funds such as PayPal. and digital cash. debited on use.Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Electronic Commerce Payment Systems 10. provided by many banks. used most often in B2B commerce. © 2007 by Prentice Hall .D. Used in Europe. Digital checking Electronic checks with digital signatures. and credit information stored on a chip attached to a card. Similar to monthly telephone bills.