Chapter 11 E-Commerce

What Is E-Commerce? E-commerce—the term used to describe performing business transactions online. E-commerce has been growing at a steady pace. One estimate predicts that 18% of all purchasing will be performed over the Internet by 2006. Brick-and-mortar, dot coms, and click-and-mortar stores.

Benefits of E-Commerce To businesses: Reduced costs. Increased customer satisfaction. More effective management tools. Potentially higher sales.

Benefits of E-Commerce, Cont’d. To customers: Convenience. Easier comparison shopping. Higher degree of selection. Potential cost savings.

Risks of E-Commerce To businesses: Pressure to be “always open.” Lost business due to customer hesitation to shop online. Risk of fraudulent credit card transactions. Ease of entry for competitors.

Risk of E-Commerce, Cont’d. To customers: Fraud and other potential security problems. Not being able to feel or touch the goods. Possible expense to the customer of returning merchandise.

Types of E-Commerce Web Sites Manufacturer and e-tailer Web sites E-tailers (electronic retailers) Electronic storefronts

Types of E-Commerce Web Sites, Cont’d. Brokerage sites Online auctions Financial brokerages Market and commodity exchanges

E-Commerce Business Models Business model—describes a company’s policies, operations and technology and how it generates revenue. Most common e-commerce business models: Business to consumer (B2C) Business to business (B2B) Consumer to consumer (C2C) Business to government (B2G) Intermediary hubs

Implementing Web-Based E-Commerce Five basic steps: Step 1: Select appropriate business models and types of Web sites. Step 2: Select desired e-commerce applications.

Implementing Web-Based E-Commerce, Cont’d. Step 3: Develop procedures for handling electronic financial transactions. Credit and debit card processing Electronic checks Online payment accounts Electronic gift certificates, gift cards, and coupons Smart cards Digital wallets

Implementing Web-Based E-Commerce, Cont’d. Special considerations for B2B financial transactions. Using a B2B transaction processing company (payment processing, credit checking, escrow services, etc.). Using an order-fulfillment company (order management, shipping, inventory, returns processing, marketing tools, etc.).

Implementing Web-Based E-Commerce, Cont’d. Step 4: Design and develop an effective Web site. Storefront software (either packaged or Web- based) Shopping cart software

Implementing Web-Based E-Commerce, Cont’d. Step 5: Implement appropriate sales and marketing strategies. Include adequate customer service features. Collect taxes from customers only if required by law. Display a privacy policy and security statement. Use an appropriate domain name and URL. Promote your Web site sufficiently (promote URL, use meta tags, etc.). Data warehousing and mining.

Security Issues Secure financial transactions. Secure sensitive documents and files. Authenticate online business partners.

Summary What is e-commerce? Types of e-commerce Web sites E-commerce business models Implementing Web-based e-commerce Security issues