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Chapter 9 Electronic Commerce Systems


Identify the essential processes of an e-commerce system, and give examples of ... Are eBay's development of Kijiji, acquisition ... – PowerPoint PPT presentation

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Title: Chapter 9 Electronic Commerce Systems

Chapter 9 Electronic Commerce Systems
  • James A. O'Brien, and George Marakas. Management
    Information Systems with MISource 2007, 8th ed. 
    Boston, MA McGraw-Hill, Inc., 2007.  ISBN 13

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
  • Identify and give examples of several key factors
    and Web store requirements need to succeed in
  • Identify and explain the business value of
    several types of e-commerce marketplaces
  • Discuss the benefits and trade-offs of several
    e-commerce clicks and bricks alternatives

Introduction to e-Commerce
  • Electronic commerce encompasses the entire online
    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

Case 1 eBay, Running the Right Play
  • eBay is one of the fastest-growing companies in
    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

Case Study Questions
  • Why has eBay become such a successful and diverse
    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?

The Scope of e-Commerce
E-Commerce Technologies
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

Essential e-Commerce Architecture
Access Control and Security
  • E-commerce processes must establish mutual trust
    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

Profiling and Personalizing
  • Profiling gathers data on you and your website
    behavior 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

Search Management
  • Search processes help customers find the specific
    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

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

Workflow Management
  • E-business and e-commerce workflow management
    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

Example of Workflow Management
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
  • Notifies all involved stakeholders
  • Works in conjunction with user-profiling software

Collaboration and Trading
  • Processes that support vital collaboration
    arrangements and trading services
  • Needed by customers, suppliers, and other
  • Online communities of interest
  • E-mail, chat, discussion groups
  • Enhances customer service
  • Builds loyalty

Electronic Payment Processes
  • Complex processes
  • Near-anonymous and electronic nature of
  • Many security issues
  • Wide variety of debit and credit alternatives
  • Financial institutions may be part of the process

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

Electronic Payment Example
Securing Electronic Payments
  • Network sniffers easily recognize credit card
  • Encrypt data between customer and merchant
  • Encrypt data between customer and financial
  • Take sensitive information off-line

E-Commerce Application Trends
Case 2 Battle for e-Commerce Supremacy
  • eBay commands more than 90 percent of the online
    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 with
    added features
  • Search by zip code, online maps, free listings

Case Study Questions
  • Do you agree with Google and Microsoft that eBay
    is now vulnerable to their assaults via Google
    Base and Windows Live Expo?
  • What are the major advantages and limitations of
    Google Base and Windows Live Expo?
  • Which do you prefer, or would you use both?
  • Are eBays development of Kijiji, acquisition of
    Skype, alliance with Yahoo, and other
    acquisitions enough to ward off the competitive
    assaults of Google and Microsoft?

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

Differences in Marketing
Web Store Requirements
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
  • Exchange advertising with other Web stores
  • Register with search engines and directories
  • Sign up for affiliate programs

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

Managing a Web Store
  • Manage both 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
  • Operate 24 hours a day, seven day a week
  • Protect transactions and customer records
  • Use security monitors and firewalls
  • Use redundant systems and power sources
  • Employ passwords and encryption
  • Offer 24-hour tech support

B2B E-Commerce
  • B2B is the wholesale and supply side of the
    commercial process
  • Businesses buy, sell, or trade with other
  • Relies on multiple electronic information
  • Catalog systems
  • Trading systems
  • Data interchange
  • Electronic funds transfers

E-Commerce Marketplaces
  • One to Many
  • Sell-side marketplaces
  • One supplier dictates product offerings and
  • 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

E-Commerce Marketplaces
  • Many to Some
  • Procurement marketplaces
  • Unites major buyers who combine purchasing
  • Attracts more competition and thus lower prices
  • Many to Many
  • Auction marketplaces
  • Dynamically optimizes prices

E-Commerce Portals
  • B2B e-commerce portals offer multiple
  • Catalogs
  • Exchanges
  • Auctions
  • Often developed and hosted by third-party
    market-maker companies
  • Infomediaries serve as intermediaries in
    e-business and e-commerce transactions

B2B E-Commerce Web Portal
Clicks and Bricks
  • Success will go to those who can integrate
    Internet initiatives with traditional operations
  • Merging operations has trade-offs
  • See Figure 9.18

E-Commerce Integration
  • The business case for merging e-commerce with
    traditional business operations
  • Move strategic capabilities in traditional
    operations to the e-commerce business
  • Integrate e-commerce into the traditional
  • Sharing of established brands
  • Sharing of key business information
  • Joint buying power and distribution efficiencies

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

E-Commerce Channel Choices
  • An e-commerce channel is the marketing or sales
    channel created by a company for its e-commerce
  • 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

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
  • Is the e-commerce channel planned alongside other
  • 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?

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 that
    make 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

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
  • Yahoos strategy
  • Also uses algorithms, but not as well
  • Is gambling that the collective intelligence of
    its audience will produce more relevant search

Case Study Questions
  • How does the Web foster the growth of social
    media and social networking?
  • What business benefits does Yahoo hope to gain
    from its acquisition of Flickr and drive to
    Flickize its business?
  • How realistic are such planned benefits?
  • Can social media and networking serve as a
    strategic competitive differentiator that enables
    Yahoo to overtake Google in the
    multibillion-dollar targeted search ads market?

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 help Microsoft
    learn which product features work, and which dont

Case 4 Todays Web Anything but Usual
  • 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 the companys

Case 4 Todays Web Anything but Usual
  • 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

Case Study Questions
  • What is the primary driver behind the Web upgrade
    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?
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