1. 1
Chapter
7
Electronic Commerce Systems
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2. 2
Learning Objectives
Identify
the major categories and trends of e-
commerce applications.
Identify the essential processes of an e-
commerce system, and give examples of how
they are implemented in e-commerce
applications.
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3. 3
Learning Objectives (continued)
Identify several key factors and Web store
requirements needed to succeed in e-
commerce.
Identifythe business value of several types of
e-commerce marketplaces.
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4. 4
Learning Objectives (continued)
Discussthe benefits and trade-offs of several e-
commerce clicks and bricks alternatives.
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5. 5
Section I
Electronic Commerce Fundamentals
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6. 6
Electronic Commerce Fundamentals (continued)
“Few concepts have revolutionized business
more profoundly than e-commerce. E-
commerce is changing the shape of
competition, the speed of action, and the
streamlining of interactions, products, and
payments from customers to companies and
from companies to suppliers.”
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7. 7
Electronic Commerce Fundamentals (continued)
E-commerce
The online process of
developing, marketing, selling, delivering, se
rvicing, and paying for products & services
transacted on internetworked, global
marketplaces of customers, with the support
of a worldwide network of business partners.
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8. 8
The Scope of e-Commerce
Three Basic Categories
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)
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9. 9
Scope of e-Commerce (continued)
Electronic Commerce Technologies
The Internet, intranets, and extranets are
the network infrastructure or foundation
Customers must be provided with a range of
secure information, marketing, transaction
processing, and payment services
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10. 10
Scope of e-Commerce (continued)
Electronic commerce technologies (continued)
Trading and business partners rely on the
Internet and extranets to exchange
information and accomplish secure
transactions
Company employees depend on a variety of
Internet and intranet resources to
communicate and collaborate
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11. 11
Scope of e-Commerce (continued)
Electronic commerce technologies (continued)
IS professionals and end users can use a
variety of software tools to develop and
manage the content and operations of the
websites and other e-commerce resources
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12. 12
Essential e-Commerce Processes
Nine key components of an e-commerce
process architecture
Access control and security
Profiling and personalizing
Search management
Content management
Catalog management
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13. 13
Essential e-Commerce Processes (continued)
Key components (continued)
Payment
Workflow management
Event notification
Collaboration and training
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14. 14
Essential e-Commerce Processes (continued)
 Access control and security
 Processes MUST establish mutual trust and secure
access
 Authenticating users
 Authorizing access
 Enforcing security features
 Must protect the resources of e-commerce sites from
threats
 Hackers
 Theft of passwords or credit card numbers
 System failures
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15. 15
Essential e-Commerce Processes (continued)
Profiling and personalizing
One-to-one marketing strategy
Personalized view of the website
Based on…
Personal data
Website behavior and choices
Used to help authenticate your identity for
account management and payment purposes
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16. 16
Essential e-Commerce Processes (continued)
Search management
Helps customers find the specific product or
service they want
Software may include a search engine
component or a company may acquire a
customized e-commerce search engine
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17. 17
Essential e-Commerce Processes (continued)
Content and catalog management
Content management software helps
companies
develop, generate, deliver, update, and
archive text data and multimedia
information
Frequently takes the form of multimedia
catalogs of product information
Works with profiling tools to personalize the
content of the website
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18. 18
Essential e-Commerce Processes (continued)
Content and catalog management (continued)
May be expanded to include product
configuration processes that support mass
customization of a company’s products
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19. 19
Essential e-Commerce Processes (continued)
Workflow management
Workflow software engine
Predefined sets of business rules
Roles of stakeholders
Authorization requirements
Routing alternatives
Databases used
Sequence of tasks
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20. 20
Essential e-Commerce Processes (continued)
Workflow management (continued)
Workflow systems ensure that..
Proper transactions, decisions, & work
activities are performed
Correct data and documents are routed to
the right
employees, customers, suppliers, and other
business stakeholders
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21. 21
Essential e-Commerce Processes (continued)
Event notification
Most applications are event driven
New customer’s first visit
Payment and delivery processes
Customer relationship & supply chain
management activities
Notifies those concerned when an event
occurs that might affect their status in a
transaction
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22. 22
Essential e-Commerce Processes (continued)
Collaboration and training
Supports the collaboration arrangements &
trading services needed by
customers, suppliers, & other stakeholders
May be provided by Internet-based trading
services
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23. 23
Electronic Payment Processes
Processes are complex
Near anonymous nature of transactions
Security issues
Wide variety of debit and credit alternatives
Wide variety of financial institutions and
intermediaries
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24. 24
Electronic Payment Processes (continued)
Web payment processes
Credit cards
Purchase orders
Electronic shopping cart
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25. 25
Electronic Payment Processes (continued)
Electronic funds transfer (EFT)
Uses a variety of IT to capture and process
money and credit transfers between banks
and businesses and their customers
ATMs
Pay-by-phone
Web-based
PayPal & Bill Point (cash transfers)
CheckFree and PayTrust (automatic bill
paying services)
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26. 26
Electronic Payment Processes (continued)
Electronic funds transfer (continued)
Electronic bill payment
Point-of-sale terminals linked to bank EFT
systems
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27. 27
Electronic Payment Processes (continued)
Secure electronic payments
Addresses vulnerability to network sniffers
Encrypt data passing between customer
and merchant
Encrypt the data passing between the
customer and the company authorizing the
credit card transaction
Secure Socket Layer (SSL)
Digital Wallet
Secure Electronic Transaction standard
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28. 28
Section II
E-Commerce Applications and Issues
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29. 29
e-Commerce Application Trends
“E-commerce is here to stay. The Web and e-
commerce are key industry drivers. It’s
changed how many companies do business.
It’s created new channels for our customers.
Companies are at the e-commerce crossroads
and there are many ways to go.”
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30. 30
e-Commerce Application Trends (continued)
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31. 31
e-Commerce Application Trends (continued)
E-commerce Sectors
Six major e-commerce sectors
Infrastructure
Applications
Portals
Content
Services
Exchanges
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32. 32
Business-to-Consumer e-Commerce
Location is not a factor
Must build customer satisfaction, loyalty, &
relationships
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33. 33
Business-to-Consumer e-Commerce (continued)
Success factors
Selection and value
Offer a good selection of attractive
products and services
Build a reputation for high
quality, guaranteed satisfaction, and top
customer support
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34. 34
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Performance and service
Site must be efficiently designed for ease of
access, shopping, and buying
Service must be friendly and helpful
Products should be available in inventory
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35. 35
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Look and feel
Attractive storefront, shopping areas, and
multimedia product catalogs
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36. 36
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Advertising and incentives
Targeted, personalized ads
Incentives include
Coupons
Discounts
Special offers
Vouchers for other web services
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37. 37
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Personal attention
Encourages customers to buy and make
return visits
Welcomed by name
Greeted with special offers
Guided to the parts of the site that you are
most interested in
Relationship building
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38. 38
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
 Community relationships
 Giving customers with special interests a feeling
of belonging to a unique community
 Virtual communities
 Discussion forums
 Newsgroups
 Chat rooms
 Message boards
 Cross-links to related web communities
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39. 39
Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Security and reliability
Customers must feel confident regarding
the security of their…
Credit card
Personal information
Transaction details
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40. 40
Business-to-Consumer e-Commerce (continued)
Success Factors (continued)
Must feel that you are dealing with a
trustworthy business.
Reliability
Orders filled and shipped as you
requested
Orders shipped in the timeframe
promised
Good customer support
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41. 41
Web Store Requirements
Developing a Web Store
Build
Website design tools
Site design templates
Custom design services
Website hosting
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42. 42
Web Store Requirements (continued)
Developing a web store (continued)
Market
Web page advertising
E-mail promotions
Web advertising exchanges with affiliated
sites
Search engine registrations
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43. 43
Web Store Requirements (continued)
Serving Your Customers
Serve
Personalized web pages
Dynamic multimedia catalog
Catalog search engine
Integrated shopping cart
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44. 44
Web Store Requirements (continued)
Serving your customers (continued)
Transact
Flexibleorder process
Credit card processing
Shipping and tax calculations
E-mail order notifications
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45. 45
Web Store Requirements (continued)
Serving your customers (continued)
Support
Website online help
Customer service e-mail
Discussion group and chat rooms
Links to related sites
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46. 46
Web Store Requirements (continued)
Managing a Web Store
Manage
Website usage statistics
Sales and inventory reports
Customer account management
Links to accounting system
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47. 47
Web Store Requirements (continued)
Managing a web store (continued)
Operate
24/7website hosting
Online tech support
Scalable network capacity
Redundant servers and power
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48. 48
Web Store Requirements (continued)
Managing a web store (continued)
Protect
Userpassword protection
Encrypted order processing
Encrypted website administration
Network fire walls and security monitors
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49. 49
Business-to-Business e-Commerce
The wholesale and supply side of the
commercial process
Businesses buy, sell, or trade with other
businesses
Includes…
Electronic catalog systems
Electronic trading systems
Electronic data interchange
Electronic funds transfer
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50. 50
e-Commerce Marketplaces
One-to-Many
Sell-side. Host one major supplier who
dictates product catalog offerings & prices.
Many-to-One
Buy-side. Attract many suppliers that flock
to these exchanges to bid on the business of a
major buyer.
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51. 51
e-Commerce Marketplaces (continued)
Some-to-Many
Distributionmarketplaces. Unite major
suppliers who combine their product
catalogs to attract a larger audience of
buyers.
Many-to-Some
Procurement marketplaces. Unite major
suppliers who combine their purchasing
catalogs to attract more suppliers.
More competition, lower prices
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52. 52
e-Commerce Marketplaces (continued)
Many-to-Many
Auction marketplaces. Used by many
buyers and sellers that can create a variety
of buyers’ or sellers’ auctions to dynamically
optimize prices.
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53. 53
Clicks and Bricks
Alternatives
E-Commerce Integration
E-commerce is integrated into the
traditional business operations of a
company.
Business case for integration
Capitalizing on unique strategic
capabilities that exist in a company’s
traditional business operations
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54. 54
Clicks and Bricks (continued)
Alternatives (continued)
Gaining strategic benefits such as..
Sharing established brands
Sharing key business information
Joint buying power
Distribution efficiencies
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55. 55
Clicks and Bricks (continued)
Alternatives (continued)
Partial e-commerce integration using joint
ventures and strategic partnerships
Complete separation via the spin-off of an
independent e-commerce company
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56. 56
Clicks and Bricks (continued)
E-Commerce Channel Choices
An e-commerce channel is the marketing or
sales channel created by a company to
conduct and manage its chosen e-commerce
activities
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57. 57
Clicks and Bricks (continued)
 Revenue-generating alternatives
 Additive channel
 New offer channel
 Subscription
 Advertising
 Sponsorship
 Licensing
 Portaling
 Commission
 Tolling
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58. 58
Discussion Questions
Do you agree that most businesses should
engage in electronic commerce on the
Internet?
Are you interested in investing
in, owning, managing, or working for a
business that is primarily engaged in electronic
commerce on the Internet?
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59. 59
Discussion Questions (continued)
Why do you think there have been so many
business failures among “dot-com” companies
that were devoted only to retail e-commerce?
Do the e-commerce success factors discussed
in the chapter guarantee success for an e-
commerce business venture?
What else could go wrong & how would you
confront those challenges?
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60. 60
Discussion Questions (continued)
If personalizing a customer’s website
experience is a key success factor, then
electronic profiling processes to track visitor
website behavior are necessary. Do you agree?
What are the ethical implications?
All corporate procurement should be
accomplished in e-commerce auction
marketplaces, instead of using B2B websites
that feature fixed-price catalogs or negotiated
prices. Do you agree?
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61. 61
Discussion Questions (continued)
If you were starting an e-commerce web
store, which of the business requirements
listed in this chapter would you primarily do
yourself, and which would you outsource to a
Web development or hosting company?
Which of the e-commerce clicks and bricks
alternatives discussed in this chapter would
you recommend to Barnes & Noble?
Amazon.com? Wal-Mart? Any business?
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62. 62
Real World Case 1 – Yahoo, Inc.
How is Yahoo doing financially right now?
Is Yahoo making the right moves toward
continuing e-commerce profitability?
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63. 63
Real World Case 1 (continued)
What are several other things Terry Semel
could do to make Yahoo more successful?
Will Yahoo be able to compete successfully
with AOL and MSN as an online service and e-
commerce portal?
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64. 64
Real World Case 2 – ChemConnect & Heritage Services
What are the business benefits and limitations
of using public B2B exchanges like
ChemConnect?
What is the business value of private B2B
exchanges for a company?
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65. 65
Real World Case 2 (continued)
Should a small business use public or private
B2B exchanges, or should they use exchanges
like eBay, that attract both consumers and
small businesses?
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66. 66
Real World Case 2 (continued)
How can ChemConnect broaden its customer
base?
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67. 67
Real World Case 3 – Staples, Steelcase, Countrywide, & HSN
Does the fact that customers who shop online
and in other channels generate more sales, as
Staples and HSN have found, mean that most
companies should have an e-commerce
website?
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68. 68
Real World Case 3 (continued)
Do you agree with Steelcase that it is better for
people to get product information online than
from a salesperson?
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69. 69
Real World Case 3 (continued)
Do the Steelcase and Countrywide websites do
a good job of encouraging customers and
visitors to buy their products and use their
services?
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70. 70
Real World Case 4 – eBags, Economy.com, & Classmates
Online
Do you feel that eBags will be able to sustain
its recent profitability?
How else could Economy.com increase its
products, markets, and profitability?
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71. 71
Real World Case 4 (continued)
How could other kinds of businesses use the
Classmates Online business model to help
strengthen their e-commerce success?
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72. 72
Real World Case 5 – Office Depot, Lands’ End, & Others
Which website, Office Depot or Lands’
End, does a better job of helping users find the
products they want?
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73. 73
Real World Case 5 (continued)
When comparing the business value of the
integration of customer information at Martha
Stewart, retailer information at
Panasonic, and inventory information at
NextWine, which capability is of greatest
importance to the success of an e-commerce
business?
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74. 74
Real World Case 5 (continued)
Which website capability or feature would you
most like to see added to e-commerce
websites?
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