Page © BIS Department, 2014: BIS 312 E- Commerce OVERVIEW OF ELECTRONIC COMMERCE Define electronic commerce (EC). Describe and discuss the content and framework of EC. Describe the major types of EC transactions. Discuss e-commerce 2.0. Understand the elements of the digital world. Describe the drivers of EC. Describe some EC business models. Describe the benefits and limitations of EC. 1

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Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce: Definitions and Concepts 3 Defining electronic commerce ★ “The process of buying, selling, or exchanging products, services, or information via computer.” a)From a business process perspective, EC is ✴ Doing business electronically by implementing business process over electronic networks. b)From a service perspective, EC is a tool ✴ Addresses the desire of governments, firms, consumers, and management ➡ Cuts service costs, ➡ Improves the quality of customer service, ➡ Increases the speed of service delivery. c)From a learning perspective, EC is ✴ An enabler of online training and education in schools, universities, and other organizations, including businesses.

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce: Definitions and Concepts 4 d)From a collaborative perspective, EC is ✴ The framework for inter- and intraorganization collaboration. e)From a community perspective, EC ✴ Provides a gathering place for community members, to learn, transact, and collaborate. ✴ Social networks, e.g. MySpace, Facebook. Defining e-business ★ “A broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization.”

Page © BIS Department, 2015: BIS 312 E- Commerce Other EC concepts ★ Pure Vs partial EC 1.Brick-and-mortar (old economy) organizations ✴ “Old-economy organizations (corporations) that perform their primary business off-line, selling physical products by means of physical agents.” 2.Virtual (pure-play) organizations ✴ “Organizations that conduct their business activities solely online.” 3.Click-and-mortar organizations ✴ “Organizations that conduct some e-commerce activities, usually as an additional marketing channel. ” Electronic Commerce: Definitions and Concepts 5

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce: Definitions and Concepts 6

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce: Definitions and Concepts 7 Electronic market (e-market) ★ “An online marketplace where buyers and sellers meet to exchange goods, services, money, or information.” Intranet ★ “An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols.” Extranet ★ “A network that uses the Internet to link multiple intranets.”

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce: Definitions and Concepts 8 Electronic market (e-market) ★ “An online marketplace where buyers and sellers meet to exchange goods, services, money, or information.” Interorganizational information systems (IOSs) ★ “Communications systems that allow routine transaction processing and information flow between two or more organizations.” Intraorganizational information systems ★ “Communication systems that enable e-commerce activities to go on within individual organizations.” Intranet ★ “An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols.” Extranet ★ “A network that uses the Internet to link multiple intranets.”

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Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: Classification 1.Business-to-business (B2B) ★ “E-commerce model in which all of the participants are businesses or other organizations.” ★ E.g. Dell sells its products to companies. 2.Business-to-consumer (B2C) (Or e-tailing) ★ “E-commerce model in which businesses sell to individual shoppers.” ★ E.g. Amazon.com. 3.Business-to-business-to-consumer (B2B2C) ★ “E-commerce model in which a business provides some product or service to a client business that maintains its own customers.” 10

Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: Classification 4.Consumer-to-business (C2B) ★ “E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need.” ★ E.g. Priceline.com. 5.Intrabusiness EC ★ “E-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization.” ★ E.g. Selling corporate products to one’s employees, online training. 6.Business-to-employees (B2E) ★ “E-commerce model in which an organization delivers services, information, or products to its individual employees.” ★ Business-to-mobile employees (B2ME): Support to mobile employees. 11

Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: Classification 7.Consumer-to-consumer (C2C) ★ “E-commerce model in which consumers sell directly to other consumers.” 8.Collaborative commerce (c-commerce) ★ “E-commerce model in which individuals or groups communicate or collaborate online.” ★ E.g. Business partners in different locations design a product together, using screen-sharing; manage inventory online; or jointly forecast product demand. 9.E-learning (e-training) ★ “The online delivery of information for purposes of training or education.” 10.E-government ★ “E-commerce model in which a government entity buys or provides goods, services, or information from or to businesses (G2B) or individual citizens (G2C).” 12

Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: History 13 YearDevelopment of EC 1969The Internet began By the U.S. government, government agencies, academic researchers, scientists 1970sElectronic funds transfer (EFT) EC applications: funds could be routed electronically from one organization to another. Disadv: Limited to large corporations, financial institutions, etc sElectronic data interchange (EDI) A technology used to electronically transfer routine documents. Participating companies from financial institutions to manufacturers, retailers, services, etc sElectronic commerce World Wide Web introduction. dot-coms, Internet start-ups appeared. 1995Innovative applications Online direct sales, e-learning, etc B2C to B2B 2001B2B to B2E, c-commerce, e-government, e-learning, m-commerce. 2005Social networks, wireless applications

Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: History The interdisciplinary nature of EC ★ Computer science, marketing, consuming behavior, finance, economics, management information systems, accounting, management, human resource management, business law, robotics, public administration, and engineering. The Google revolution ★ Since 2001, Google has great impact on EC. ★ Impacts both organizational activities and individual lives. EC failures ★ Starting in 1999, a large number of EC companies began to fail. ★ 62% of dot-coms lacked financial skills. ★ 50% had little experience with marketing. ★ Many failed to ensure they had the inventory and distribution setup to meet the fluctuating demand for their products. 14

Page © BIS Department, 2015: BIS 312 E- Commerce The Electronic Commerce Field: History EC successes ★ eBay, Google, Yahoo!, E-Trade. ★ Click-and-mortar companies, e.g. Wal-Mart online, General Electric, IBM, Intel. The future of EC ★ 50% of all Internet users will shop online by ★ EC growth will come from B2C, B2B, e-government, e- learning, B2E, c-commerce. ★ The total volume of EC has been growing by 15-25% every year. ★ Largely by social computing and networking. 15

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Social computing ★ “An approach aimed at making human- computer interface more natural.” ★ Tools: blogs, instant messaging, social network services, wikis, social bookmarking, etc... ➡ Improve collaboration and interaction among people and on user-generated content. ★ E.g. Travelers share information and warn others of bad experiences at sites such as tripadvisor.com. 16

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Web 2.0 ★ “The second-generation of Internet-based services that let people collaborate and share information online in new ways, such as social networking sites, wikis, communication tools, and folksonomies.” ★ E.g.: eBay, Wikipedia, Skype; Flickr; Google Docs, Spreadsheets, iTunes; Google Maps. 17

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Social network ★ “A category of Internet applications that help connect friends, business partners, or individuals with specific interests by providing free services such as photos presentation, e- mail, blogging, and so on using a variety of tools.” Social network services (SNS) ★ E.g. MySpace, Facebook. 18

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Social network ★ “A category of Internet applications that help connect friends, business partners, or individuals with specific interests by providing free services such as photos presentation, , blogging, and so on using a variety of tools.” Social network services (SNS) ★ “A service that builds online communities by providing an online space for people to build free homepages and that provides basic communication and support tools for conducting different activities in the social network.” ★ E.g. MySpace, Facebook. Social networking ★ “The creation or sponsoring of a social network service and any activity, such as blogging, done in a social network (external or internal).” 19

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Capabilities and services provided by social network sites: 1.Construct a Web page to present themselves to the larger community. 2.Create a circle of friends who are linked together. 3.Provides discussion forums (by group, by topic). 4.Supports photo, video, and document viewing and sharing (streaming videos, user-supplied videos). 5.Uses wikis to jointly create documents. 6.Uses blogs for discussion, dissemination of information, etc.. 7.Offers community and instant messaging (IM) capabilities. 8.Answered member queries by experts. 9.Rates and comments on products. 10.Provides an e-newsletter. 11.Votes online to poll member opinions. 20

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce Supports conference (group) chatting, combined with photo sharing. 13.Uses message and bulletin board services for posting information to groups and anyone on the Web site. 14.Provides storage for content, including photos, videos, and music. 15.Bookmarks self-created content. 16.Finds other networks, friends, or topics of interest. 21

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Enterprise social networks ★ “Social networks whose primary objective is to facilitate business.” ➡ Grow the circle of business contacts and promote themselves online, by 1.Participating in existing public social networks, e.g. Facebook, MySpace. 2.Creating private social networks for customers and business partners (e.g. Starbucks). 3.Offering internal private social networks for employees and alumni. 4.Enhancing existing applications, such as and customer relationship management applications. 5.Developing tools or offering services for building and supporting social networks. 22

Page © BIS Department, 2015: BIS 312 E- Commerce E-Commerce 2.0 Virtual worlds and second life ★ Virtual world (metaverse) ✴ “A user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second Life.” ★ How students make money in a virtual world ✴ Many young people are pursuing money-making opportunities in virtual worlds. ✴ They hone their computer skills to capitalize on the growing demand for virtual goods and services. 23

Page © BIS Department, 2015: BIS 312 E- Commerce The Digital World The digital economy ★ “An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.” 24

Page © BIS Department, 2015: BIS 312 E- Commerce The Digital World The digital enterprise ★ “A new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively, boost employee productivity, and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes.” ★ E.g. Dell, Amazon.com, Google. 25

Page © BIS Department, 2015: BIS 312 E- Commerce The Digital World 26

Page © BIS Department, 2015: BIS 312 E- Commerce The Digital World 27

Page © BIS Department, 2015: BIS 312 E- Commerce The Digital World The digital society ★ E.g. Digital camera, digital TV, digital car, etc.. ★ E.g. ✴ Shopping online; ✴ Using social smartphones to connect with Facebook and MySpace; ✴ Having RFID to charge drinks; ✴ Receiving alerts; swiping a student ID card; ✴ Using blog site to do business; ✴ Using online dating and matching services; ★ E.g. Barack Obama. ✴ Obama purchased Internet ads featured in 18 videogames through Microsoft’s Xbox Live Service. ✴ His objective was to target young adult males, who are difficult to reach through traditional campaign advertising. 28

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce Drivers 29

Page © BIS Department, 2015: BIS 312 E- Commerce The Changing Business Environment Customers are becoming more powerful. Organizations are operating under increasing pressures to produce more products, faster, and with fewer resources. Impact on the manner in which companies operate, and many firms have restructured themselves and their information systems. The new business environment has the following characteristics: ➡ A more turbulent environment, with more business problems and opportunities; ➡ Stronger competition; ➡ The need for organizations to make decisions more frequently; ➡ A larger scope for decisions, because more factors (market, competition, political issues, and global environment) need to be considered; ➡ More information and/or knowledge is needed for making decisions. 30

Page © BIS Department, 2015: BIS 312 E- Commerce Performance, Business Pressures, and Organizational Responses 31

Page © BIS Department, 2015: BIS 312 E- Commerce Performance, Business Pressures, and Organizational Responses 32

Page © BIS Department, 2015: BIS 312 E- Commerce Performance, Business Pressures, and Organizational Responses 33

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce Business Models Revenue models ★ Outlines how the organization, or the EC project, will generate revenue. 34

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce Business Models 5 Typical EC business models a)Online direct marketing ✴ Sales may be from a manufacturer to a customer, eliminating intermediaries or physical stores; or from retailers to customers, making distribution more efficient (e.g. Wal-Mart). b)Electronic tendering systems ✴ Large organizational buyers, private or public, usually make large-volume or large-value purchases through a tendering (bidding) system, also known as a reverse auction. ✴ Tendering (bidding) system ✦ “Model in which a buyer requests would-be sellers to submit bids; the lowest bidder wins”. ✴ E.g. Government agencies. 35

Page © BIS Department, 2015: BIS 312 E- Commerce Electronic Commerce Business Models c)Electronic marketplaces and exchanges ✴ E.g. Vertical marketplaces that concentrate on one industry such as retail industry or chemical industry. d)Viral marketing ✴ An organization can increase brand awareness or even generate sales by inducing people to send influencing messages to other people or to recruit friends to join certain programs. e)Social networking and Web 2.0 tools ✴ Many companies are deriving commercial benefits from social networking and Web 2.0 tools. 36

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Page © BIS Department, 2015: BIS 312 E- Commerce The Limitations and Barriers of EC 38

Page © BIS Department, 2015: BIS 312 E- Commerce The Limitations and Barriers of EC Major barriers: ★ Resistance to new technology; implementation difficulties; security concerns; lack of technology skills; lack of potential customers; cost; ★ Government, private sector, international organizations; lack of time and resources; ★ Cultural differences; organizational differences; incompatible B2B interfaces; international trade barriers; lack of standards. Ethical issues ★ Employee monitoring; ★ Invasion of privacy of millions of customers whose data are stored in private and public databases; 39