Ralph M. Stair | George W.

Reynolds

Chapter 8

Electronic and Mobile Commerce

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An Introduction to Electronic Commerce

• Electronic commerce: conducting business

activities electronically over computer
networks
• Business activities that are strong
candidates for conversion to e-commerce
are:
– Paper based
– Time-consuming
– Inconvenient for customers
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 Business-to-Business (B2B)
E-Commerce

• A subset of e-commerce
• All the participants are organizations
• Useful tool for connecting business
partners in a virtual supply chain to cut
resupply times and reduce costs
• An organization uses both:
– Buy-side e-commerce to purchase goods and
– Sell-side e-commerce to sell products

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 Business-to-Consumer (B2C)
E-Commerce

• Customers deal directly with an

organization and avoid intermediaries; this
is called disintermediation
• Reasons for steady growth
– Cheaper goods and services via the Web
– Online shoppers can design a personalized
product
– The use of social media networks to promote
products and reach customers
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 Consumer-to-Consumer (C2C)
E-Commerce

• Electronic transactions between

consumers are facilitated by a third party
• Popular sites include:
– eBay, Bidz.com, Craigslist, eBid, ePier,
Ibidfree, Kijiji, Ubid, and Tradus
• Companies and individuals involved in
C2C must be careful
– Sales must not violate the rules of various
county, state, and country legal jurisdictions
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 Table 8.3 Differences Among B2B, B2C,
and C2C
Factors B2B B2C C2C
Value of sale Thousands or millions Tens or hundreds of Tens of dollars
of dollars dollars

Length of sales process Days to months Days to weeks Hours to days

Number of decision Several people to a dozen One or two One or two
makers involved or more

Uniformity of offer Typically a uniform More customized Single product

product offering product offering offering, one of a kind

Complexity of Extremely complex; Relatively simple; Relatively simple;

buying process much room for limited discussion over limited discussion over
negotiation on price, price and payment and payment and delivery
payment and delivery delivery options options; negotiation
options, quantity, over price
quality, and options and
features

Motivation for sale Driven by a business Driven by an Driven by an

decision or need individual consumer’s individual consumer’s
need or emotion need or emotion

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 E-Government

• Use of information and communications

technology to:
– Simplify the sharing of information
– Speed formerly paper-based processes
– Improve the relationship between citizens and
government

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 E-Government (cont’d.)

• Forms of e-Government:
– Government-to-consumer (G2C)
– Government-to-business (G2B)
– Government-to-government (G2G)

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 An Introduction to Mobile Commerce

• Mobile commerce (m-commerce) relies on

the use of wireless devices
• The Internet Corporation for Assigned
Names and Numbers (ICANN):
– Created a .mobi domain to help attract mobile
users to the Web
• mTLD Top Level Domain Ltd of Dublin,
Ireland administers the .mobi domain and

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 Advantages of Electronic and Mobile
Commerce

• Reach new customers

• Reduce the cost of doing business
• Speed the flow of goods and information
• Increase the accuracy of order-processing
• Improve the level of customer service

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 E-Commerce Challenges

• Dealing with consumer privacy concerns

– About one-third of all adult Internet users will
not buy online due to privacy concerns
• Overcoming consumers’ lack of trust in
online sellers
• Overcoming global issues
– Cultural, language, time and distance,
infrastructure, currency, and legal challenges

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 Electronic and Mobile Commerce
Applications

• Areas in which applications are used

– Retail and wholesale –
Manufacturing
– Marketing and advertising – Bartering
– Price comparison – Couponing
– Investment and finance – Banking
– E-boutiques

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 Retail and Wholesale

• Electronic retailing (e-tailing): the direct

sale from business to consumer through
electronic storefronts
• Cybermall: a single Web site that offers
many products and services at one
Internet location
• A key sector of wholesale e-commerce
– Spending on manufacturing, repair, and
operations (MRO) goods and services
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 Marketing

• Market segmentation: the identification of

specific markets to target them with
advertising messages
• Nielsen, the marketing and media
information company:
– Has developed its Business-Facts database,
which provides information for more than 14
million businesses

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 Advertising

• Methods of buying mobile ad impressions

– Cost per thousand (CPM)
– Cost per click (CPC)
– Cost per action (CPA)
• Three main measures of success
– Number of users reached
– Click through rate (CTR)
– Number of actions users take

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 Advertising (cont’d.)

• Three types of mobile ad networks

– Blind
– Premium blind
– Premium networks

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 Banking

• Online banking customers can:

– Check balances of their savings, checking,
and loan accounts
– Transfer money among accounts
– Pay their bills
• Many banks enable customers to perform
online banking activities via mobile phone

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 Strategies for Successful
E-Commerce and M-Commerce

• Companies must develop effective Web

sites that include the following
characteristics:
– Easy to use
– Accomplish the goals of the company
– Safe and secure
– Affordable to set up and maintain

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Defining an Effective E-Commerce Model
and Strategy

• First major challenge for a successful

e-commerce site
• Three components of a successful model
– Community
– Content
– Commerce

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Content, Commerce, and Community

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 Establishing a Web Site

• Web site hosting companies:

– Allow you to set up a Web page and conduct
e-commerce within a matter of days
– Have little up-front cost
• Storefront broker: a company that acts as
an intermediary between your Web site
and online merchants who have the
products and retail expertise

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Maintaining and Improving Your Web Site

• Personalization: the process of tailoring

Web pages to specifically target individual
consumers
• Implicit personalization captures data from
customer Web sessions
• Explicit personalization captures user-
provided information

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 Technology Infrastructure Required to
Support E-Commerce and M-Commerce

• Factors in site performance

– Response time
– Customer support
– Order handling
• Poor Web site performance drives
consumers to abandon some e-commerce
sites in favor of those with better, more
reliable performance

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Technology Infrastructure: Web Server
Software

• Fundamental services needed in Web

server software
– Security and identification
– Retrieving and sending Web pages
– Web site tracking
– Web site development
– Web page development

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Technology Infrastructure: E-Commerce
Software

• Five core tasks that must be supported by

e-commerce software
– Catalog management
– Product configuration
– Shopping cart facilities
– E-commerce transaction processing
– Web traffic data analysis

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 Technology Infrastructure: Electronic
Payment Systems

• Digital certificate: an attachment to an e-

mail message or data embedded in a Web
site that verifies the identity of a sender or
Web site
• Certificate authority (CA): a trusted third-
party organization or company that issues
digital certificates

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 Electronic Payment Systems (cont’d.)

• Secure Sockets Layer (SSL) is used to

secure sensitive data during e-commerce
• Electronic cash: an amount of money that
is computerized, stored, and used as cash
for e-commerce transactions
• Credit, charge, debit, and smart cards are
payment systems used for e-commerce

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 Summary – Principle 1

• Electronic commerce is the conducting of

business activities electronically over
computer networks
• Types of e-commerce
– Business-to-consumer (B2C)
– Business-to-business (B2B)
– Consumer-to-consumer (C2C)

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 Summary – Principle 1 (cont’d.)

• A successful e-commerce system must

address the many stages consumers
experience in the sales life cycle
• Key challenges a business must overcome
in developing e-commerce processes
– Consumer privacy concerns
– Consumers’ lack of trust
– Global issues

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 Summary – Principle 2

• Electronic retailing (e-tailing) is the direct

sale from a business to consumers
through electronic storefronts
• Manufacturers are joining electronic
exchanges
• The Internet has revolutionized the world
of investment and finance
• There are many m-commerce applications

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 Summary – Principle 2 (cont’d.)

• Businesses and individuals use

e-commerce and m-commerce to:
– Reduce transaction costs
– Speed the flow of goods and information
– Improve the level of customer service
– Enable the close coordination of actions
among manufacturers, suppliers, and
customers

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 Summary – Principle 2 (cont’d.)

• E-commerce and m-commerce enable

consumers and companies to gain access
to worldwide markets
• E-commerce and m-commerce are global
systems facing cultural, language, time
and distance, infrastructure, currency,
product and service, and state, regional,
and national law challenges

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 Summary – Principle 3

• An effective Web site is one that creates

an attractive presence and meets the
needs of its visitors
• Web site operators must constantly
monitor the traffic and response times
associated with their sites and adjust
software, databases, and hardware to
ensure that visitors have a good
experience when they visit
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 Summary – Principle 4

• M-commerce presents additional

infrastructure challenges including:
– Improving the ease of use of wireless devices
– Addressing the security of wireless
transactions
– Improving network speed
• Electronic payment systems are a key
component of the e-commerce
infrastructure
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or duplicated, or posted to a publicly accessible website, in whole or in part.
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