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Chap007 MIS
- 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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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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