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Prof Rushen Chahal

Chapter 14 Electronic Commerce

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Learning Objectives
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Describe the concepts involved in electronic commerce. Understand auctions and portal mechanisms. Know the applications involved in e-commerce. Learn about electronic market research, eCRM, and online advertising. Define collaborative commerce and B2B applications. Understand e-government activities. Describe mobile commerce and pervasive computing. Learn e-commerce infrastructure and support services. Understand the ethical and legal issues involved in e-commerce.

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E-commerce Provides Decision Support to Hi-Life Corp. Vignette
‡ Convenience store chain needs accurate stock count
± ± ± ± Overstocking expensive Understocking results in customer dissatisfaction Losses due to shrinkage Manual counts used data collection sheets
‡ Expensive, labor intensive

‡ Solution based on handheld computer
± ± ± ± ± Counts entered relayed immediately to headquarters Bar code scanner employed to shorten process, minimize errors Allows for real time product totals Dramatic reduction in labor involved Lower inventory levels and quicker response time

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E-commerce
‡ Process of buying, selling, transferring, exchanging products, services, or information over computer networks ‡ Pure versus partial
± Based on degree of digitization
‡ Product ‡ Process ‡ Intermediary

± Pure requires all three components to be fully digitized

‡ Internet versus non-Internet
± Most are Internet based ± May be value-added networks or local area networks

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E-commerce Transactions
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Business-to-business (B2B) Business-to-consumer (B2C) Consumer-to-consumer (C2C) Consumer-to-business (C2B) Government-to-citizens (G2C) Collaborative commerce between partners Business to employees Intrabusiness/Intraorganizational commerce Mobile commerce (M-commerce)

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Scope of E-commerce
‡ Applications supported by infrastructure
± Hardware ± Software
‡ Messaging, multimedia, interfaces, business services

± Networks
‡ communications

‡ Support areas
± ± ± ± ± People Legal and public policy and regulations Marketing and advertisements Support services ranging from payments to order delivery Business partnerships like joint ventures, e-marketplaces, affiliations

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Advantages
‡ Advantages: ± Expands marketplace globally ± Expands availability of resources ± Shortens marketingdistribution channels ± Decreases expenses ± Reduces inventory ± Aids small businesses in competing ± Enables specialized niches ± Quicker delivery of information ± Enables individuals to work from home ± Facilitates delivery of public services ± Allows for purchase of goods at lowered prices ± Enables customization, personalization ± Decreases costs to customers, while increasing their choices ± Allows for 24 hour shopping ± Makes electronic auctions possible ± Enables people to interact in electronic communities

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Limitations
‡ Limitations: ± Lack of universal standards ± Insufficient bandwidth ± Software-development tools are still evolving ± Integration difficulties ± Need for special Web servers in addition to network servers ± Accessibility expensive ± Unresolved legal issues ± Lack of national and international governmental regulations ± Lack of mature methodologies to measure benefits and justify ± Customer resistance ± Security questions ± Insufficient number of buyers and sellers for profitable e-commerce operations

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DSS and E-commerce
‡ DSS supports e-commerce
± ± ± ± ± ± ± ± DSS allows for scheduling and transportation optimization Match buyers to sellers Improves market operations Conducts risk analysis Optimizes selection of transportation routes Assists in running B2C operations Data collection Business intelligence

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DSS and E-commerce
‡ E-commerce facilitates decision support
± Efficient transfer of information ± Enhances decision-support process ± Data collection and storage

‡ E-commerce works with DSS
± Inventory management ± Produce strategic change in call center by integration of simulation decision support ± Marketing database applications and distribution systems ± Streaming financial reports ± Comparison shopping engines ± Data transfer and storage for BI analysis

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E-commerce Mechanisms
‡ Electronic auctions
± Competitive market mechanisms
‡ Forward auctions
± Sellers place offers and buyers make sequential bids

‡ Reverse auctions
± Sellers are invited to submit bids on product or service buyer wants

‡ Bartering
± Exchange of goods or services without money transactions

‡ Portals
± Information gateways
‡ Single point of access through Web browser

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Portals
‡ Commercial
± Offer content to broad audiences
‡ Routine ‡ Little personalization

‡ Publishing
± Based on specific interests
‡ Extensive search capabilities

‡ Personal
± Target specific filtered information
‡ Narrow content ‡ Personalized

‡ Mobile
± Accessible through mobile devices
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Portals
‡ Voice
± Audio interfaces ± Accessible through phones

‡ Corporate
± Access to business information located both within and outside of organization
‡ Rich content ‡ Limited communities ‡ Organized focal point
± ± ± ± Suppliers Customers Employees Supervisors

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Business to Consumer Applications
‡ E-tailing
± Storefronts
‡ General or specialized ‡ May be extensions of physical stores

± E-Malls
‡ Collection of stores under single Internet address

± Manufacturers may sell direct ± Retailers may act as intermediaries

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DSS Support
‡ Channel conflict resolution through GDSS tools ‡ DSS and GDSS can be used for conflict resolution on pricing, resource allocation, logistics services ‡ DSS can aid in order fulfillment and logistics of small quantities ‡ DSS models can foster strategies and determine viability ‡ Identification of appropriate revenue models ‡ Risk analysis with DSS modeling

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Online Service Industries
‡ ‡ ‡ ‡ ‡ ‡ Electronic banking International banking Securities trading Online job market Travel Real estate

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Market Research
‡ E-commerce model of consumer behavior
± Independent uncontrollable variables
‡ Personal characteristics
± Age, gender, demographics

‡ Environmental characteristics
± Social, cultural, available information, government regulations, legal constraints

± Intervening variables
‡ Vendor controlled ‡ Market stimuli ‡ E-commerce systems
± Physical environment, logistics support, customer services

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Market Research
± Decision making process
‡ Influenced by independent and intervening variables ‡ Feeds into buyers decisions

± Dependent variables
‡ Buyers decisions

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Market Research
± Decision-making process
‡ Generic model
± Identification of needs, information search, evaluation of alternatives, purchase and delivery, after-purchase evaluation

‡ Consumer decision support system model
± Support facilities from CDSS and Internet and Web produce framework for Web purchasing

‡ Online buyer decision support model
± Customer decision-making guided by Web purchasing models

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Discovering Customer Desires
‡ Software agent search engines ‡ Intelligent agents
± Monitor site activity ± Searching and filtering agents for customers ± Comparison agents

‡ Electronic questionnaires ‡ Site tracking
± Cookies, Web bugs, spyware

‡ Collaborative filtering through inference of interest

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E-commerce CRM
‡ During life cycle of product
± ± ± ± ± ± ± ± ± ± Determine customer requirements Help customer acquire product or service Ongoing support Aid in disposal FAQs E-mail messaging Track status of order Personalization of Web pages and information at vendor s site Chat rooms and communities Web-based call centers

‡ Tools available

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Online Advertising
‡ Media rich, dynamic, interactive ‡ Types
± ± ± ± ± ± Banners Pop-ups and pop-unders E-mail advertisements Electronic catalogs and brochures Advertisement postings in chatrooms, communities, and newsgroups Online classifieds

‡ Issues
± Spam
‡ Permission marketing ‡ Viral marketing

± Passive, mass market advertising
‡ Interactive advertising

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B2B Applications
‡ Sell-side marketplaces
± Private e-marketplaces operated by seller
‡ Electronic catalogs ‡ Forward auctions

‡ Buy-side marketplaces
± Reverse auction ± Third-party bidding marketplace or buyer s Web site ± Procurement models
‡ Group purchasing ‡ Desktop purchasing

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B2B Applications
‡ Electronic exchanges
± E-marketplaces with many sellers and buyers

‡ Types
± Systematic sourcing by vertical distributors of direct materials ± Indirect materials sold on as needed basis with dynamic pricing ± Systematic sourcing for indirect materials at fixed pricing ± Spot sourcing of services on as needed basis

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Collaborative E-commerce
‡ Non-sales based e-commerce transactions between organizations ‡ Electronic support of communication, information sharing, joint decision making ‡ Types
± ± ± ± Retailers/suppliers Vendor-managed inventories supplied to retailers Product design Collaborative manufacturing through outsourcing of components and subassemblies

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Collaborative E-commerce
‡ Collaborative workflow management
± Planning and scheduling ± Design ± New product information ± Product-content management ± Order management ± Sourcing and procurement

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Intrabusiness E-commerce
‡ B2E
± Intranet-enabled business between business and employees

‡ E-commerce between business units
± Organization units sell and buy materials and products from each other

‡ E-commerce between corporate employees
± Classified ads

‡ Sales force automation
± Empowerment of salespersons

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E-government
‡ Use of Internet technologies and e-commerce to deliver information and services to citizens
± Gives citizens more access to information ± Allows for more feedback from citizens ± Facilitates fundamental changes in relationships between citizen and government

‡ Types
± Government-to-citizens (G2C)
‡ Electronic benefits transfer, payment of taxes

± Government-to-business (G2B)
‡ RFQs, RFBs, reverse auctions

± Government-to-government (G2G)
‡ Sharing of databases, information
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E-learning
‡ Online delivery of information for educational or training purposes ‡ Benefits
± ± ± ± ± Eliminates barriers of time, distance, socioeconomic status Saves money, reduces travel time Increases access to experts Enables large numbers to take classes Provides on-demand, self-paced learning

‡ Limitations
± Special training for instructors and students ± Requires special equipment and support services ± Lack of face-to-face interaction

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Customer to Customer E-commerce
‡ Buyers and sellers not businesses ‡ Types
± Auctions ± Classified ads ± Personal services ± Bartering

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Variants of E-Commerce
‡ Mobile commerce
± E-commerce through use of mobile computing devices on wireless networks
‡ Advantages
± Mobility ± People can be reached at any time

‡ L-commerce
± Location-based mobile commerce
‡ Information pushed out to recipient based on their current location

‡ Pervasive computing
± Computations become part of the environment
‡ Embodied in things ‡ Based on intelligent systems

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E-commerce Support Systems
‡ Electronic payments
± ± ± ± ± Electronic checks Electronic credit cards Virtual credit cards Purchasing cards Electronic cash
‡ Stored value money cards ‡ Smart cards with microprocessors ‡ Person-to-person payments

± Payment of bills online
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Security in Electronic Payments ‡ Authentication of all parties ‡ Protection of data from alteration or destruction during transmission ‡ Protection from buyer s unjustified repudiation ‡ Privacy ‡ Customer safety ‡ Protection of information at seller s end
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Order Fulfillment in Electronic Commerce ‡ Provide customers with ordered goods ‡ Goods must be quickly packaged, shipped, and delivered ‡ Payment collection system must be in force ‡ Handle the return of unwanted or defective merchandise ‡ Customer relations

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Legal and Ethical Issues
‡ Fraud
± Seller s and buyer s

‡ Buyer protection ‡ Seller protection
± Unwarranted repudiation ± Intellectual property rights ± Domain names

‡ Privacy issues
± ± ± ± Cookies Web tracking Sales of lists Monitoring e-mails and site visits

‡ Taxation ‡ Disintermediation ‡ Intellectual Property issues
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