CHAPTER 8 Electronic Commerce: Applications and Issues

CHAPTER OUTLINE 7.1 Overview of E-Business & E-Commerce 7.2 Business-to-Consumer (B2C) Electronic Commerce 7.3 Business-to-Business (B2B) Electronic Commerce 7.4 Electronic Payments 7.5 Ethical and Legal Issues in E-Business

LEARNING OBJECTIVES 1. Describe the six common types of electronic commerce; provide specific personal examples of how you have used or could use B2C, C2C, G2C, and mobile commerce; and offer a specific example of B2B and G2B. 2. Discuss the five online services of business-to- consumer electronic commerce, provide a specific example of each service, and state how you have used or would use each service.

LEARNING OBJECTIVES (continued) 3. Describe the three business models for business-to-business electronic commerce, and provide a specific example of each model. 4. Describe the four types of electronic payments, provide a specific example of each one, and explain whether you would use each type.

LEARNING OBJECTIVES (continued) 5. Illustrate the ethical and legal issues relating to electronic commerce with two specific examples of each issue, and describe how you would respond or react to the four examples you have provided.

7.1 Overview of E-Business and E-Commerce  Definitions and Concepts  Types of E-Commerce  E-Commerce and Search  Major E-Commerce Mechanisms  Benefits and Limitations of E Commerce

Definitions and Concepts Electronic commerce Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or Exchanging of products, services or information via computer networks, including the Internet Electronic business Including buying and selling of goods and services, and also servicing customers, collaborating e-learning and conducting electronic transactions within an organization.

Definitions and Concepts (continued) Pure versus Partial Electronic Commerce depends on the degree of digitization involved. Brick-and-mortar organizations organizations are purely physical organization Virtual organizations companies that are engaged only in EC. (Also called pure play) Click-and-mortar organizations organizations are those that conduct some e- commerce activities, yet their business is primarily done in the physical world.

Bricks and Mortar, Partial EC, and Pure EC Source: Rubberball/Mike Kemp/Getty Images, Inc. Example Buy books at university bookstore: bricks and mortar Use Internet to order physical book from Amazon: partial EC

Types of E-Commerce Business-to-Consumer (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C) The sellers are organizations and the buyers are individuals. Both the sellers and buyers are business organizations. B2B represents the vast majority of e-commerce. An individual sells products or services to other individuals

Types of E-Commerce (continued) Business-to-Employee (B2E) An organization uses e-commerce internally to provide information and services to its employees. Companies allow employees to manage their benefits, take training classes electronically; buy discounted insurance, travel packages, and event tickets E-Government deliver information about public services to citizens (called Government-to-citizen [G2C EC]), business partners and suppliers (called government-to-business [G2B EC]), Mobile Commerce (m-commerce)

Refers to e-commerce that is conducted in a wireless environment. For example, using cell phone to shop over the Internet.

E-Commerce and Search

E-Commerce Business Models Online direct marketing : manufacturers or retailers sell directly to customers. Electronic tendering system :businesses (or governments) request quotes from suppliers. :electronic tending system homepage. Name-your-own-price :customers decide how much they want to pay. Find-the-best-price :customers specify a need and an intermediary compares providers and shows the lowest price.

Benefits of E-Commerce Benefits to organizations Makes national and international markets more accessible Lowering costs of processing, distributing, and retrieving information Benefits to customers Access a vast number of products and services around the clock (24/7/365)

Benefits of E-Commerce (continued) Benefits to Society Ability to easily and conveniently deliver information, services and products to people in cities, rural areas and developing countries.

Limitations of E-Commerce Technological Limitations Lack of universally accepted security standards Insufficient telecommunications bandwidth Expensive accessibility Non-technological Limitations Perception that EC is unsecure Unresolved legal issues Lacks a critical mass of sellers and buyers

7.2 Business-to-Consumer (B2C) Electronic Commerce Electronic storefronts Web site that represents a single store. are collections of individual shops under a single Internet address. Electronic Malls

Online Service Industries Cyberbanking Online securities trading Online job market Travel services Online advertising

Online Advertising Online Advertising methods attempt to disseminate information in order to influence a buyer-seller transaction. Banners = are simply electronic billboards. Pop-up ad = appears in front of the current browser window. Pop-under ad= appears underneath the active window.

Eight Types of Web sites for Advertising Portals: most popular; best for reach but not targeting Search: second largest reach; high advertising value Commerce: high reach; not conducive to advertising Source: PiperJaffray

Eight types of sites (continued) Entertainment: large reach; strong targetability Community: emphasize being a part of something; good for specific advertising Communications: not good for branding; low targetability

Eight types of sites (continued) News/weather/sports: poor targetability Games: good for very specific types of advertising Source: Don Farrall/Photodisc/Getty Images, Inc.

7.3 Business-to-Business (B2B) Electronic Commerce In B2B e-commerce, the buyers and sellers are organizations. © Richard Thomas/Age Fotostock America, Inc.

B2B Sell-Side Marketplace Key mechanisms: electronic catalogs and forward auctions Common Sell-Side Marketplaces include: Ariba Dell Auction bigboXX.com © Richard Thomas/Age Fotostock America, Inc.

B2B Buy-Side Marketplace United Sourcing Alliance is a common Sell-Side Marketplace Key mechanism: reverse auctions © Richard Thomas/Age Fotostock America, Inc.

7.4 Electronic Payments Electronic checks (e-checks) are similar to paper checks and are used mostly in B2B. Electronic credit cards allow customers to charge online payments to their credit card account. Purchasing cards are the B2B equivalent of electronic credit cards and are typically used for unplanned B2B purchases. Frederic Lucano/Stone/Getty Images, Inc. enable you to pay for goods and services electronically.

Electronic cash –Stored-value money cards allow you to store a fixed amount of prepaid money and then spend it as necessary. –Smart cards contain a chip called a microprocessor that can store a considerable amount of information and are multipurpose – can be used as a debit card, credit card or a stored-value money card. –Person-to-person payments are a form of e- cash that enables two individuals or an individual and a business to transfer funds without using a credit card. Stored-value money cards Smart cards Person-to-person payments

Legal Issues Specific to E-Commerce Fraud on the Internet stocks, investments, business opportunities, auctions. Domain Names problems with competition. Cybersquatting refers to the practice of registering domain names solely for the purpose of selling them later at a higher price.

Legal Issues Specific to E-Commerce (continued) Domain Tasting is a practice of registrants using the five-day "grace period" at the beginning of a domain registration to profit from pay- per-click advertising Taxes and Other Fees when and where (and in some cases whether) electronic sellers should pay business license taxes, franchise fees, gross-receipts taxes, excise taxes Copyright protecting intellectual property in e-commerce and enforcing copyright laws is extremely difficult.

Chapter Closing Case The Problem The Solution The Results