Chapter 9 e-Commerce Systems McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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 e-commerce

Learning Objectives 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 Relies on Internet and information technologies Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-4

Mobile shopping increasing Social networking RWC 1: Mobile Shopping Mobile shopping increasing Social networking Web sites and e-mail too many steps Sales pitches on social networks increasing Birthday prompts ad for 1-800-Flowers Impulsive buyers Cell phones Starbucks Mobile Card App Preloaded spending money Scannable bar code Last minute game tickets Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-5

Business-to-Consumer Scope of e-Commerce 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 Multimedia Lecture Support Package to Accompany Basic Marketing Lecture Script 6-6

E-Commerce Technologies

Essential e-Commerce Architecture

Access Control and Security E-commerce requires mutual trust and secure access User names and passwords Encryption key Digital certificates and signatures Restricted access areas Other people’s accounts Restricted company data Webmaster administration areas

Profiling and Personalizing Profiling captures 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

Find specific product or service Search Management Find specific product or service Website search engine Google or Requisite Technology Search on content or by parameters 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 Maintain text and multimedia for e-commerce Catalog Management Software Maintain catalog content Catalog and content management software Works with profiling tools to personalize content Product configuration and mass customization 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

Example of 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

Monitors e-commerce processes Records relevant events Event Notification Monitors e-commerce processes Records relevant events First website Payments Problem situations Notifies involved stakeholders Works with user-profiling software Most e-commerce applications are event driven Responds to such things as customer’s 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-profiling software

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

Electronic Payment Example 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 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

Securing Electronic Payments Sniffers easily recognize credit card formats Protection Encrypt data Between customer and merchant Between customer and financial institution Take sensitive information off-line Securing Electronic Payments Network sniffers easily recognize credit card formats Encrypt data between customer and merchant Encrypt data between customer and financial institution Take sensitive information off-line

RWC 2: Driving the “Buzz” on the Web Companies attempt to identify “influentials” that create online “word of mouth” Increase sales Influence opinions Differing opinion Sales data don’t match “influentials” Influentials go with the flow, not effect change Companies search social websites for “influentials” that are likely to promote a product or service through an on-line word of mouth campaign. Effort didn’t pan out.

E-Commerce Application Trends

E-Commerce Success Factors 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 Great Customer Satisfaction Despite the differences, some things remain. Constant and informative communication channels must be open either via online chat or telephone with a human being.

Web Store Requirements

Developing a Web Store Build a website Market the 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

Getting Customers to Find You Submit your site to a search engine Improve the quality and number of visitors Search Engine Optimization (SEO) Link Farms Keyword stuffing Organic Search

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

Manage both the business and the website 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

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

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

E-Commerce Marketplaces Many to Some Procurement marketplaces Unites major buyers who combine catalogs More competition Lower prices Many to Many Auction marketplaces Dynamically optimizes prices

B2B Commerce Web Portals B2B portals offer multiple marketplaces Catalogs Exchanges Auctions Third-party market-maker companies Infomediaries serve as intermediaries in e-business and e-commerce transactions

Clicks and Bricks Success will go to those who can integrate Internet initiatives with traditional operations Merging operations has trade-offs

E-Commerce Integration Move traditional strategies to e-commerce Integrate e-commerce into traditional business Sharing of established brands Sharing of key business information Joint buying power and distribution efficiencies 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 business Sharing of established brands Sharing of key business information Joint buying power and distribution efficiencies

E-Commerce trade-offs

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 Noble’s 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 activities No universal strategy or e-commerce channel choice Both e-commerce integration and separation have major business benefits and shortcomings 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 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?

RWC 3: Success for Second Movers Entellium is a successful second mover Same approach Better products and services Lower cost. Another strategy Combine successful business models Second-mover advantage seems substantial Entellium is an example of a company that has successfully implemented a second mover strategy on the Web. The second-movers can use the same approach as first mover with better products and services at much lower cost. Another strategy is to use combinations of business models that are successful.

Companies must protect brand names, logos and trademarks RWC 4: Brands Go On-Line Companies must protect brand names, logos and trademarks BrandProtect, MarkMonitor, and NameProtect offer help Challenge has grown exponentially Another type of violation is using logos without permission Companies that do business online must police unauthorized use of their brand names, logos and other trademarks to protect their investments. Companies such as BrandProtect, MarkMonitor, and NameProtect are stepping in to offer companies some artillery in the fight for control of their brands and reputations. The challenge of brand protection, however, has grown exponentially for companies operating in the online world. Other type of violation is using logos without permission because it is so easy for someone to go to a company’s web site and grab a logo and put it somewhere else.