Chapter 5

E-BUSINESS AND E-
COMMERCE

Information Technology For Management 5th Edition

Turban, Leidner, McLean, Wetherbe
Lecture Slides by A. Lekacos,
Stony Brook University
John Wiley & Sons, Inc.
 Learning Objectives
electronic commerce,

online auction bartering
major applications business-to-consumer commerce
service industries major issues e-tailers.

business-to-business application
intrabusiness B2E e-commerce
e-government activities consumer-to-consumer e-commerce
e-commerce support services payment
logistic
e-commerce
EC

 Dell is using E-Commerce for success
The business problem/opportunity:
Michael Dell Dell Computer 1984
PC mail
Dell PC

Build-to-Order ( )
direct mail
1993 Dell
1 5 c
Compaq Dell Fax snail mail

1994 100 M$
 Solution:
Direct Marketing Online
1990
Web 1993 Dell
Web Online

Dell Compaq
1999 Dell PC

06 B$
63,000
Dell
Business-to-consumer (B2C)
Business-to-Business (B2B)
 Dell
E-Collaboration
UPS FedEx
Dell
CRM, Helpdesk
E-Customer Service
Dell

Dell Intrabusiness
EC
 Results:
Dell
1999
Lesson Learned:
166
 4.1 Overview of E-Business and E-
Commerce

Electronic commerce ( e-commerce EC)

/

commerce
(transaction)
electro- nic commerce

e-business
E-business EC

e-learning
(electronic transaction)
 EC
(Pure versus
partial EC)
Electronic commerce degree of
digitization ( )

Degree of digitization (1) (2)
(3) (delivery agents intermediary)
EC pure EC


EC (partial EC)
Amazon

Partial EC
Amazon E-Book

download Pure EC
Text EC Pure Partial
EC
 Pure vs Partial EC cont
Brick-and-mortar



Purely

Physical Purely Physical Organization
Brick-and-Mortar Organization
EC Organizations
(Virtual organization)
(product) (process)

pure play organization
Pure vs Partial EC cont

Click-and mortar


(physical or digital)

Online

Brick-and-Mortar
Click-and-Mortar
online

Brick-and-Mortar




Click-and-Mortar Click-and-Brick
(Brick-and-Mortar) + (Click and-Order) = (Brick-and-
Click)
Store (
) online shopping Barnes and
Noble
Click-and-Click
online Store
Amazon

The EC Lanscape

EC

 E-Business Transaction Medium

E-commerce Internet EC
private networks
value-added networks (VANs, networks that add
communication services to existing common carriers),
local area networks (LANs) wide area networks
(WANs)
 E-Commerce Transaction

E-commerce transaction
( )
Business-to-Business (B2B): E-commerce


E business
Collaborative commerce (c-commerce): Ecommerce
(
) Supply Chain
Business-to-Consumers (B2C): E-commerce

e-tailing ( Electronic retailing)
 Types of E-Commerce Transaction
cont
Consumer-to-Consumer(C2C): E-commerce
(

customer-to-customer)
Business-to-business-to-consumers (B2B2C): Business
business
Customer -to-Business (C2B): E-commerce


Intrabusiness (intraorganizational) commerce E-commerce
EC
B2E( business to employees) EC:
intrabusiness e-commerce

Types of E-commerce cont

GovernmenttoCitizens(G2C): E-commerce
EC
Government-tobusiness (G2B): E-commerce
(G2G) (G2B)
Mobile Commerce (m-commerce): E-commerce wireless
environment.
 EC Business Model
Business Model

The major business model of EC are summarized in
Table 5.1 E-Commerce Business Models 141
 Brief History and Scope of EC
Brief History
EC 1970
EDI (Electronic Data Interchange)

1990 EC
web
2000 EC
dot- com dotcom

A Close Look 5.1 Interesting Student-Targeted Web
Sites page 171
 The Scope of EC
EC

5
(People) IS
(Public Policy)


(Marketing and advertising) EC
B2C online

(Support services)

(Business Partnerships) Joint Venture, e-
marketplaces
A Components of EC
framework
for e-
commerce
 E-commerce











5.2 173
 (Technological

Limitations)
(Technological Limitations)


(Expensive accessibility)
(Nontechnological
Limitations)
EC

critical mass
5.3 173

5.2 Major EC Mechanism

(electronic catalog)
Electronic auctions) (online
bartering)
Electronic Catalogs Electronic catalogs CD-ROM


product database, directory
search
Electronic Auctions (E-auction)


Electronic bartering


Electronic catalogs
Electronic catalog
(dynamic)
static dynamic
Static catalog
Dynamic catalog

(Degree of customization)
Standard catalog catalog
Customized catalog
catalog
Electronic catalogs
(Degree of integration)

Catalog



extranet

 Electronic Auction (E-Auctions)
(Auction)


e-auction
E-Auction :
Forward auction:
(
)
Reverse auction: ( )
(
) (
)
IT at Work 5.1e-Bay-The Worlds Largest Auction
Site, page 175
Gallaugher (2002) Forward
Auction 2
Bartering
Electronic bartering

(Individual-to-individual
bartering)

e-bartering (Corporate e-bartering)



(e.g., barterbrokers.com)
5.3 Business-to-Consumer Applications
B2C E-commerce ( Amazon)


Electronic Retailing Mechanisms: Storefronts and Malls


online
storefronts malls
Electronic relating (e-tailing) (direct
sale) electronic storefronts
electronic malls
electronic catalog / electronic auctions
 B2C Applications cont
online electronic storefronts
electronic malls:
Electronic storefront website Internet
address storefront
Specialized storefront
CD General
storefront
Electronic malls (cyber mall)
(individual shop) Internet address
Referral malls

(
)
electronic shopping cart
( )

E-Tailing: The Essentials
retailing /
(
)
E-trailing (
)
(customized product)
(
Dell computer)
IT at Work 4.2 Amazon.com: The
King of E-Tailing, page 149
 B2C Applications cont
Online Service Industries

:
Cyberbanking

Virtual bank
(
)
Online Securities Trading


The Online Job Market



Web
B2C Applications cont
Travel Services




Real Estate
EC



Customer Service
Phases in Customer Service Life Cycle
a business life cycle process 4

Phase 1: Requirement
:

CD

Phase 2: Acquisition

:
(online order entry, negotiations, closing of sale
delivery)

Website Phase1,2
Customer Service
Phase 3: Ownership
:
(interactive online user groups,

online technical support, FAQ and answer, resource
libraries, newsletters, and online renewal of subscriptions)
Phase 4: Retirement
/ :

(online resale, classified ads)
electronic help desk install
computer Phase 3
Phase 4
 Fidelity Investment Offers
Financial Information and News, page 151
Facilitating Customer Service
152
Issues in E-tailing
e-tailing

e-tailing
1) channel conflict click-
and-mortar online
channel conflict
2) clickand-mortar
Brick-and-Mortar ( offline)


3) order fulfilment logistics E-tailer




 Issues in E-tailing
4) online e-
tailers pure online e-tailer 2000 2003



e-tailer

5) appropriate revenue models


dotcom web



5.4 B2B Applications
business to business (B2B) applications,

sell-side marketplaces, buy-side
marketplaces electronic exchanges.
) Sell-side marketplace. B2B
e-marketplace /
third-party site B2C (
B2B ) Web


1) Electronic catalog
2) Forward auctions
 Major B2B Models
) Buy-side marketplace B2B model

reverse auction

(Request for quotation; RFQ) Web

E-procurement
Reverse auction

Group Purchasing

(volume discount)
Major B2B Models
Desktop Purchasing: E-procurement

(master catalog)



IT at Work 5.4 E-Procurement at Defra,
page 185
 Major B2B Models
) Public exchange (exchanges): E-marketplace

( )
:
1) Vertical distributors for direct materials B2B
marketplaces direct materials (materials
) long-term relationship
systematic sourcing.
2) Vertical exchanges for indirect materials indirect
materials - as-
needed ( spot sourcing)
vertical exchanges
supply demand.
IT at Work 5.5 Chemical Companies Bond at
ChemConnect, page 186
Major B2B Models
3) Horizontal distributors many-to-many
e-marketplaces indirect (MRO; Maintenance,
Repair and Operating) materials

systematic
sourcing-type exchange.
4) Functional exchanges

as-needed (spot sourcing)
supply demand
 5.5 Major Models of E-Business: From E-
Government to C2C
EC business partners
Intrabusiness
Intrabusiness. E- commerce (
(B2E)

)
Business to its Employees (B2E) commerce
intranet





 E-commerce between and among units within the business

strategic business units (SBU)


intranet
E-commerce between and among corporate Employees
intranet

Collaborate commerce (C-commerce)


EC
 E-Government
E-government. e-commerce



E-government application
) government-to-citizens (G2C)
internet
) governmenttobusiness (G2B)

) government-togovernment (G2G) EC

 Customer-to-Consumer(C2C) E-
Commerce
Customer-to-Customer (C2C) E-commerce

( )

C2C auctions Web


Classified Ads ads online
Personal Services
internet
Support services to C2C C2C

5.6 E-Commerce Support Services: Advertising
Payment and Order Fulfillment

B2B B2C
Portals



e-infrastructure (mostly technology consultants, system
developers and integrators, hosting, security, and
networks)
e-process (mainly payments and logistics)
e-markets (mostly marketing and advertising)
e-communities (different audiences and business partners)
e-services (CRM, PRM, and directory services)
e-content (supplied by content providers)
Online Advertising

:






/



Shortcomings:

 Advertising Method

1) Banners: Electronic billboards
(promote)
click
homepage
) Keyword banner: (Banner advertising)
search engine.
) Random banner: (random)
banner


pop-ups
Advertising Method
2) Pop-up ad:
active window
Pop-under ad: active
window window
Pop-up ad Pop-under ad


3) E-mail advertising:
e-mail address
( )
Electronic Catalogs Electronic
Brochures
Advertising Method
Electronic Catalogs and Brochures:
online catalog brochure
(
)
Spyware Banner:
(adware)
shareware


Other forms of Internet Advertising
Online ads post chat room
Web
 Some Advertising Issues and
Approaches


(Unsolicited Advertising): Spamming
electronic ads
E-mail spamming Unsolicited
commercial e-mail (UCE)
Permission marketing:
(consumer)

CD



Viral Marketing: Virtual marketing online word-of-
mouth marketing

Some Advertising Issues and
Approaches
Interactive Advertising and Marketing: interactive
(

)


Online Promotion: Attracting Visitors to a Site


)
list search
engine.
)

)
 Viral Marketing
Viral Marketing Defined
?



(marketing
message)


exponential


Viral
Marketing
The Classic Hotmail.com Example
viral marketing Hotmail.com free
Web-based e-mail services :
free e-mail addresses and services

simple tag free message "Get
your private, free email at http://www.hotmail.com"

e-mail ( Hotmail)
e-mail


e-mail address
Sign up free e-mail service

simple tag
 Elements of a Viral Marketing Strategy
viral marketing
6
:

() (


)




( )

Electronic Payments
Electronic Payments


EC B2B
Electronic funds transfer
Electronic Checks (e-checks)
B2B

Electronic Credit Cards online
credit card
Purchasing Cards B2B electronic
credit cards.
Electronic Cash (e-cash) : stored-value
money cards, smart cards person-to-person payments.
 Three forms of electronic cash
Person- to-Person Payment e-cash
credit
card
Stored-value money card e-cash

Smart card e-cards microprocessor (chip)


Electronic Bill Presentment and Payments


Paying Bills at ATMs ATM
Micropayments credit card
B2B special methodes
wire transfer, electronic letter
How e-credit cards work
 Security in Electronic Payment
EC payment


(Authentication) paying institution


(Integrity)
EC

(Nonrepudiation)


( (
) repudiation)
Security in Electronic Payment

(Privacy)



(Safety)

Security Protection

(encryption)
E-wallets (digital wallets) security
measure EC purchasing
 Security in Electronic Payment
Virtual credit card
ID number
Payment Using Fingerprint



Order Fulfillment

(pack) (
)
Order fulfillment
 5.7 Ethical issues in e-business
EC
(Privacy)

e-mail


Website
(Loss of Jobs)
EC

(1) matching providing information
(2) value-added services
Ethical issues in e-business
1
Disintermediation (
) EC (
)
broker


EC
Reintermediation ()
2
Legal Issues Specific to E-Commerce

EC

(Domain names)
Web
Cybersquatting





(copyright) EC

Protection of Buyers and Sellers

EC
Buyer Protection
Seller Protection



Tips for Safe Electronic Shopping
5.8 MANAGERIAL ISSUES

1 E-commerce failure
a. Dot-com failure

b. Failed EC initiatives within organizations.

2 Success stories and lessons learned

MANAGERIAL ISSUES
3 Strategy-related Issues
a. Managing resistance to change.
Electronic commerce
Vendor



b. Integration of e-commerce into the business environment.
E-commerce

EC
infrastructure
 MANAGERIAL ISSUES
4 Implement-related issues
a. Lack of qualified personnel and outsourcing.
e-commerce

special
promotions Internet e-market


outsource e-commerce
b. Implementation plan.

EC
goals, budgets, timetables, contingency plans
legal, financial, technological, organizational, ethical issues

 c. Managing the impacts.
e-commerce organizational structure,
people, marketing procedures, profitability
committee organizational unit
e-commerce
5 Deployment-related issued
a. Alliances.
idea
e-commerce EC
Amazon.com


 b. Choosing the companys strategy toward e-commerce.

(1) (Lead): large-scale innovative e-
commerce
(2) (Watch and wait):

(3) (Experiment): (learn by
doing).
c. Justifying e-commerce by conducting a cost-benefit analysis is very
difficult.



 Justifying e-commerce by conducting a cost-
benefit analysis is very difficult.





 5