Chapter 6 E-Commerce

Agenda What is E-Commerce? Business to Business Business to Customer Business to employee Infrastructure Problems

What is E-Commerce? “Electronic commerce is the exchange of products, services, information, or money with the support of computers and networks. It is business done on- line.”

Terminology From narrowest to broadest: –E-Shopping –E-Business –E-Commerce –E-Economy –E-Culture

Types of E-Commerce Business to Business –80% of dollar volume –$7.29 trillion by 2002 Business to Customer –20% of dollar volume –$10 billion by 2002

Benefits Improve internal operations Decrease operating expenses Eliminate middlemen

Internal Operations Smaller inventory JIT manufacturing Customize products Automatic billing Electronic collections

Operating expenses Lower overhead –Location is irrelevant Eliminate paperwork Reduce cycle time Produce greater variety at the same cost

Middlemen Eliminate transfer costs Only used when adding value to product or service –Travel Agent? –Stock Broker? –Retail Store?

Amazon.com On-line book-store –Expanding services No physical plant No inventory Negative asset intensity –Customer pays for books (which they don’t have) up front

Problems Data & system incompatibility Privacy Bandwith Cybercrime

Data & System Incompatibility Information glut Slow to find anything –No standards –No search content consistency Delivery structure: one to one (customer) not one to many (wholesale)

Bandwith Twisted copper wire –Analog Reverting to –Fiber optics –Satellites –Digitization

Cybercrime Credit cards Electronic money Authentication

Agenda What is E-Commerce? Business to Business Business to Customer Business to employee Infrastructure Problems

Channels Internet Extranet Private networks Electronic data interchange (EDI)

Benefits Internal process Business reengineering Enterprise model Alliance

Internal Processes Reduce paper output Improve accuracy Increase throughput –Errorless transactions input per day

Reengineering Reduce cycle time –Order to customer receipt Reduce in labor costs Reduce open accounts-receivable days –Cash flow

Enterprise Models Increase productivity Increase cash flow Increase product quality Increase customer service and satisfaction

Alliances Increase efficient Increase market share Increase profitability

Agenda What is E-Commerce? Business to Business Business to Customer Business to employee Infrastructure Problems

Uses Direct sales –Product –Service –Information Brand enhancement Cross sales

Know You’re There Critical mass Internet customer growth Off Internet advertising –TV commercials –Magazines

Finding You Gateway ads (AOL) Search engines Portal sites –Major advertisers

Holding attention “3 click” rule Site thickness –Chat rooms –Frequent ask question page –Dark page –Telephone no. Convenient navigation path

Return Next Time Satisfaction with first time Offering something new for next visit

Attributes of an Offer S. Davis and C. Meyer, Blur (Warner Books, 1999) Products and services are blending (blurring) Result is an “offer” Authors list 10 attributes of a successful offer in future

Offer Attributes Anytime Real time Online Interactive Anyplace

Offer Attributes Learning Anticipating Filtering Customizing Upgrading

Agenda What is E-Commerce? Business to Business Business to Customer Business to employee Infrastructure Problems

Intranet Usages – –Workflow –Education –Communication –Collaboration

Benefits Productivity Cost Knowledge Convenient

Agenda What is E-Commerce? Business to Business Business to Customer Business to employee Infrastructure Problems

Infrastructure Networks Web servers Supporting tools –Tracking software, database connectivity, electronic form, on-line discussion group, etc. Internet access components –Protocols, browser Web page design Transaction processing system

Agenda What is E-Commerce? Business to Business Business to Customer Business to Employee Infrastructure Problems

Problems - Payment Security Privacy Micropayment Inconvenience Imcompatibility

Countermeasures Encryption & decryption Private key & public key Digital signature Electronic certificates Secure electronic transaction protocol (SET)

Points to Remember What is E-Commerce? Business to Business Business to Customer Business to Employee Infrastructure Problems

Discussion Questions What are the impacts of e-commerce on the issues of human, social, and legal? Does your organization have a e- commerce? What type? What will it take for the general public (or you) to feel reasonably comfortable with using credit cards over the Internet?

Discussion Questions What is the future of e-business? What is the future of e-education?

Assignment Review technology guides 1,2,4 & chapters 1- 6 Read chapter 7 Exam 1 Group Assignment Research paper