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McGraw-Hill/Irwin Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

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McGraw-Hill/Irwin Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Electronic Commerce Systems

Chapter

9

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9-3

Identify the major categories and trends ofe-commerce applications

Identify the essential processes of an

e-commerce system, and give examples ofhow they are implemented in e-commerce

applications

Identify and give examples of several key factorsand Web store requirements need to succeed in

e-commerce

Learning Objectives

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9-4

Learning Objectives

Identify and explain the business value of severaltypes of e-commerce marketplaces

Discuss the benefits and trade-offs of several

e-commerce clicks and bricks alternatives

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Introduction to e-Commerce

Electronic commerce encompasses the entireonline 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

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Case 1: eBay, Running the Right Play

eBay is one of the fastest-growing companiesin history, and business is surging

31 sites around the world

$1.1 billion in international sales in 2004, and

growing twice as fast as the domestic market

Half of their 125 million registered users are

outside of the United States

eBay keeps a playbook Several hundred pages of wisdom collected

from worldwide managers

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9-7

Case Study Questions

Why has eBay become such a successful anddiverse online marketplace?

What do you think of eBays playbook concept?

Why do they call it a playbook?

Is eBays move into the international arena a

good long-term strategy?

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The Scope of e-Commerce

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E-Commerce Technologies

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Categories of e-Commerce

Business-to-Consumer Virtual storefronts, multimedia catalogs,

interactive order processing, electronic payment,

online customer support

Business-to-Business

Electronic business marketplaces, direct links

between businesses, auctions and exchanges

Consumer-to-Consumer

Online auctions, posting to newspaper sites,

personal websites, e-commerce portals

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Essential e-Commerce Architecture

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Access Control and Security

E-commerce processes must establish mutualtrust and secure access between parties

User names and passwords

Encryption key

Digital certificates and signatures

Restricted access areas

Other peoples accounts

Restricted company data

Webmaster administration areas

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Profiling and Personalizing

Profiling gathers data on you and your websitebehavior 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

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Search Management

Search processes help customers find thespecific 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

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Content and Catalog Management

Content Management Software Helps develop, generate, deliver, update, 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

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Workflow Management

E-business and e-commerce workflow manage-ment 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

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Example of Workflow Management

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Event Notification

Most e-commerce applications are event driven Responds to such things as customers 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-profilingsoftware

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Collaboration and Trading

Processes that support vital collaborationarrangements and trading services

Needed by customers, suppliers, and other

stakeholders

Online communities of interest

E-mail, chat, discussion groups

Enhances customer service

Builds loyalty

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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

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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, 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

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Electronic Payment Example

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Securing Electronic Payments

Network sniffers easily recognize credit cardformats Encrypt data between customer and merchant

Encrypt data between customer and financial

institution Take sensitive information off-line

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E-Commerce Application Trends

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Case 2: Battle for e-Commerce Supremacy

eBay commands more than 90 percent of theonline auction market

Growth is at least 40 percent per year

CraigsList is an online classifieds meeting place Buying and selling, but no payment system

Online classifieds growing faster than auctions

Google and Microsoft entering the market withadded features

Search by zip code, online maps, free listings

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Do you agree with Google and Microsoft thateBay is now vulnerable to their assaults via

Google Base and Windows Live Expo?

What are the major advantages and limitationsof Google Base and Windows Live Expo? Which do you prefer, or would you use both?

Are eBays development of Kijiji, acquisitionof Skype, alliance with Yahoo, and other

acquisitions enough to ward off the competitive

assaults of Google and Microsoft?

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E-Commerce Success Factors

Some of the success factors in e-commerce Selection and value

Performance and service

Look and feel Advertising and incentives

Personal attention (one-to-one marketing)

Community relationships

Security and reliability

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Differences in Marketing

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Web Store Requirements

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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

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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, friendly, efficient store

Offer fast order processing and payment Notify when orders are processed and shipped

Provide links to related websites

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Managing a Web Store

Manageboth the business and the website Record and analyze traffic, inventory, sales

Use CRM features to help retain customers

Link sales, inventory data to accounting systems

Operate24 hours a day, seven day a week

Protecttransactions and customer records

Use security monitors and firewalls Use redundant systems and power sources

Employ passwords and encryption

Offer 24-hour tech support

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B2B E-Commerce

B2B is the wholesale and supply side ofthe commercial process Businesses buy, sell, or trade with other

businesses

Relies on multiple electronic informationtechnologies Catalog systems

Trading systems Data interchange

Electronic funds transfers

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E-Commerce Marketplaces

One to Many Sell-side marketplaces

One supplier dictates product offerings and prices

Many to One Buy-side marketplaces

Many suppliers bid for the business of a buyer

Some to Many

Distribution marketplaces

Unites suppliers who combine their product

catalogs to attract a larger audience

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E-Commerce Marketplaces

Many to Some Procurement marketplaces Unites major buyers who combine purchasing

catalogs

Attracts more competition and thus lower prices Many to Many

Auction marketplaces

Dynamically optimizes prices

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E-Commerce Portals

B2B e-commerce portals offer multiplemarketplaces Catalogs

Exchanges

Auctions

Often developed and hosted by third-party

market-maker companies

Infomediaries serve as intermediaries ine-business and e-commerce transactions

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B2B E-Commerce Web Portal

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Clicks and Bricks

Success will go to those who can integrateInternet initiatives with traditional operations

Merging operations has trade-offs

Insert Figure 9.18 here

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E-Commerce Integration

The business case for merging e-commercewith traditional business operations

Movestrategic capabilities in traditional

operations to the e-commerce business

Integratee-commerce into the traditional

business

Sharing of established brands

Sharing of key business information Joint buying power and distribution efficiencies

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Other Clicks and Bricks Strategies

Partial e-commerce integration Joint ventures and strategic partnerships

Complete separation Spin-off of an independent e-commerce company

Barnes and Nobles experience Spun off independent e-commerce company

Gained venture capital, entrepreneurial culture,

and flexibility Attracted quality management

Accelerated decision making

Failed to gain market share

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E-Commerce Channel Choices

An e-commerce channel is the marketing or saleschannel created by a company for its

e-commerce activities There is no universal strategy or e-commerce

channel choice Both e-commerce integration and separation

have major business benefits and shortcoming

Most businesses are implementing some

measure of clicks and bricks integration

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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, and withdrawing content?

Will our brand translate to the new channel?

How will we market the channel itself?

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Case 3: Yahoo and Flickr

Flickr is a photo sharing site 14,000 images per hour are uploaded There are 1.5 million users

80 percent of the 60 million photos are public

More than half have user-created labels thatmake them searchable

Yahoo purchased Flickr The user-generated content (social media)

will be used in the war against Google

It would like to apply the same concept to

web content as well

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Case 3: Yahoo and Flickr

Google takes an automated approach to searches Armies of Ph.D.s and servers

Creates more relevant searches by using

algorithms

Yahoos strategy

Also uses algorithms, but not as well

Is gambling that the collective intelligence

of its audience will produce more relevant

search results

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How does the Web foster the growth of socialmedia and social networking?

What business benefits does Yahoo hope to

gain from its acquisition of Flickr and driveto Flickize its business? How realistic are such planned benefits?

Can social media and networking serve as astrategic competitive differentiator that enables

Yahoo to overtake Google in the multibillion-

dollar targeted search ads market?

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Case 4: Todays Web; Anything but Usual

Customers arent just reading these days Theyre writing and watching as well

Community features

Interactive webcasts Newsgroups

Online chat forums

Customer-to-customer interactions helpMicrosoft learn which product features work,

and which dont

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Federated will be using FedAd software to Coordinate the efforts of 4,000 marketing

staffers in six divisions

Buy and publish the companys newspaper,

radio, and TV ads

Pay invoices

Ship ads to publications

Manage marketing expenses against thecompanys budget

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Dells initiatives Redesign of its website to make it easier to use

Make IT costs smaller by being more efficient

Combine the website re-launch with an

e-commerce consolidation

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What is the primary driver behind the Webupgrade activities of Microsoft and Dell?

What is the business value of Microsofts

Web-based, live-feedback program? What lessons on developing successful

e-commerce projects can be gained from the

information in this case?

Documents

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