1 MIS 111: Computers and the Inter-networked Society Class 4: E-Commerce July 14 th, 2011

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3 Today’s Learning Objectives List one or two current events in technology news Define e-commerce List at least 4 different ways e-commerce can make money Explain the difference between Business-to-Customer and Business-to-Business e-commerce List the components of an online store Discuss how the “long tail” is implemented in e-commerce and why it makes e-commerce successful Discuss a few ways you can make money online

Survey 4 When was the last time you used a physical store to buy… Music Book Software DVD

5 E-Commerce: An Example

6 E-Commerce: A Definition “The process of buying, selling, transferring, or exchanging products, services, or information via computer networks, including the Internet.”

Pure vs. Partial E-Commerce Bricks and mortar (not e-commerce) Virtual (pure e-commerce) Clicks and mortar (partial e-commerce) 7

A Word on Nomenclature Business and technology people are fairly simple people. Hence, the names they choose mean exactly what they say (for example, management information systems? The world wide web?) 8

Types of E-Commerce Business-to-Consumer Business-to-Business Consumer-to-Consumer Business-to-Employee E-Government Mobile Commerce 9

More details Business-to-Consumer and Business-to-Business 10

11 Business-to-Consumer EC (B2C) Means of Access (E-Tailing) – Direct sale through Electronic Storefronts Like – Direct sale through Electronic Malls May include thousands of vendors Benefits of E-Tailing: – Can buy from home 24/7 – Wider variety of products at lower prices (text books?)

12 Business-to-Consumer Services Online Service Industries (in addition to goods) – Cyberbanking (paying bills, applying for loans) – Online Securities Trading (E*Trade) – Online Job Market ( – Travel Services (

13 Business-to-Consumer Ads Online Advertising Methods – Banners (electronic billboards) – Pop-ups/Pop-unders (annoying!!) – Spamming vs. Permission Marketing (Will you please sign up for our newsletter?) – Viral Marketing “Word of Mouth” marketing Addwords (not as good as search engine optimization)

14 Business-to-Business (B2B) Sell-Side Marketplaces – Organizations sell products to others Buy-Side Marketplaces – Organizations buy products from others Electronic Exchanges – One buyer, many sellers

Some E-Commerce Business Models Online direct marketing – Manufacturers/Retailers sell directly to customers Deep discounters – Appeals to customers who consider only price Viral marketing – Receivers send info about product to friends Group purchasing – Small buyers aggregate demand to get low price Online auctions – Like regular auction, but online 15

How do they make money? 16

17 Amazon.com

Pandora.com 18

19 Ebay.com

20 iTunes

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Google 22

Facebook 23

CNN 24

ESPN 25

NCN.com 26

go.disney.com 27

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Woot.com 29

Where to start? Q1. how are you going to make money Adverting Selling a product Selling a service Selling digital media Affiliate program Selling sort of you own program Subscriptions Hybrid DO YOUR RESEARCH! 30

Example, I’m going to be selling a digital product Tomorrow, we will do an affiliate program so today we are going to be selling videos and music Q2. how much work am I willing to put into Web development? 31

Option 1 Online solutions – – solution-features.php solution-features.php 32

e-commerce - Michael McDonnell Online Stores: Components & Processes CustomerCatalogue Shopping Cart Checkout Payment Collection a b c d Catalogue List of Products Descriptions Prices Options, size, etc. Pictures 1 Shopping Cart A temporary list of item to be purchased 2 Checkout Billing Info Shipping Address Shipping Cost Record Order Process Payment 3

34 Electronic Payments Electronic Checks Electronic Credit Cards Purchasing Cards Do you know what that little lock means in the upper right hand corner of the browser?

35 Electronic Payments (cont’d) Electronic Cash – Stored-Value Money Cards (calling cards) – Smart Cards (like the CatCard) – Person-to-Person Payments (PayPal) – Digital Wallets (stores financial info of buyer so no reentry is needed)

Option 2 Content Management System – Blog – Google sites – Word press – Joomla – Drupal Plugins –

Option 3 Completely program it Why? – Complete flexibility – Your platform doesn’t support content management systems Free and lots of traffic (great for facebook, iphone integration) – You’re a geek 37

With option 2 and 3 You usually need to find you own place to host the Web site (they are just software) – Install software – Create a database 38

The Long Tail 39

“The Long Tail” What happened to Touching the Void? What does it mean that we have a “market of hits?” (anyone listen to the Top 40 station?) Why aren’t obscure products in the market? What is the 20/80 principle and why doesn’t it apply to the market for music and videos? 40

41 The Long Tail: Power Law Distribution

42 The Rules of The Long Tail Rule 1: Make Everything Available – Why can sellers sell everything online? Rule 2: Cut the Price in Half; Now Lower it. – Is any price too low? Rule 3: Help Me Find it. – How do recommendations work?

You: A Money Maker Affiliate Programs ( Advertising ( Create Products ( I want to sell my own product … – Don’t want to handle order fulfillment – by-amazon.htm?id=hm2 by-amazon.htm?id=hm2 43

Tomorrow No reading Meet in McClelland Hall 214 We’re going to make a business!!! 44

Quiz 45