1. Chapter 7
Electronic Commerce Systems

2. Learning Objectives
Identify the major categories and trends of e-commerce applications.
Identify the essential processes of an e-commerce system, and give examples of how they are implemented in e-commerce applications.

3. Learning Objectives (continued)
Identify several key factors and Web store requirements needed to succeed in e-commerce.
Identify the business value of several types of e-commerce marketplaces.

4. Learning Objectives (continued)
Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives.

5. Electronic Commerce Fundamentals
Section I
Electronic Commerce Fundamentals

6. Electronic Commerce Fundamentals (continued)
“Few concepts have revolutionized business more profoundly than e-commerce. E-commerce is changing the shape of competition, the speed of action, and the streamlining of interactions, products, and payments from customers to companies and from companies to suppliers.”

7. Electronic Commerce Fundamentals (continued)
E-commerce
The online process of developing, marketing, selling, delivering, servicing, and paying for products & services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners.

8. The Scope of e-Commerce
Three Basic Categories
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)

9. Scope of e-Commerce (continued)
Electronic Commerce Technologies
The Internet, intranets, and extranets are the network infrastructure or foundation
Customers must be provided with a range of secure information, marketing, transaction processing, and payment services

10. Scope of e-Commerce (continued)
Electronic commerce technologies (continued)
Trading and business partners rely on the Internet and extranets to exchange information and accomplish secure transactions
Company employees depend on a variety of Internet and intranet resources to communicate and collaborate

11. Scope of e-Commerce (continued)
Electronic commerce technologies (continued)
IS professionals and end users can use a variety of software tools to develop and manage the content and operations of the websites and other e-commerce resources

12. Essential e-Commerce Processes
Nine key components of an e-commerce process architecture
Access control and security
Profiling and personalizing
Search management
Content management
Catalog management

13. Essential e-Commerce Processes (continued)
Key components (continued)
Payment
Workflow management
Event notification
Collaboration and training

14. Essential e-Commerce Processes (continued)
Access control and security
Processes MUST establish mutual trust and secure access
Authenticating users
Authorizing access
Enforcing security features
Must protect the resources of e-commerce sites from threats
Hackers
Theft of passwords or credit card numbers
System failures

15. Essential e-Commerce Processes (continued)
Profiling and personalizing
One-to-one marketing strategy
Personalized view of the website
Based on…
Personal data
Website behavior and choices
Used to help authenticate your identity for account management and payment purposes

16. Essential e-Commerce Processes (continued)
Search management
Helps customers find the specific product or service they want
Software may include a search engine component or a company may acquire a customized e-commerce search engine

17. Essential e-Commerce Processes (continued)
Content and catalog management
Content management software helps companies develop, generate, deliver, update, and archive text data and multimedia information
Frequently takes the form of multimedia catalogs of product information
Works with profiling tools to personalize the content of the website

18. Essential e-Commerce Processes (continued)
Content and catalog management (continued)
May be expanded to include product configuration processes that support mass customization of a company’s products

19. Essential e-Commerce Processes (continued)
Workflow management
Workflow software engine
Predefined sets of business rules
Roles of stakeholders
Authorization requirements
Routing alternatives
Databases used
Sequence of tasks

20. Essential e-Commerce Processes (continued)
Workflow management (continued)
Workflow systems ensure that..
Proper transactions, decisions, & work activities are performed
Correct data and documents are routed to the right employees, customers, suppliers, and other business stakeholders

21. Essential e-Commerce Processes (continued)
Event notification
Most applications are event driven
New customer’s first visit
Payment and delivery processes
Customer relationship & supply chain management activities
Notifies those concerned when an event occurs that might affect their status in a transaction

22. Essential e-Commerce Processes (continued)
Collaboration and training
Supports the collaboration arrangements & trading services needed by customers, suppliers, & other stakeholders
May be provided by Internet-based trading services

23. Electronic Payment Processes
Processes are complex
Near anonymous nature of transactions
Security issues
Wide variety of debit and credit alternatives
Wide variety of financial institutions and intermediaries

24. Electronic Payment Processes (continued)
Web payment processes
Credit cards
Purchase orders
Electronic shopping cart

25. Electronic Payment Processes (continued)
Electronic funds transfer (EFT)
Uses a variety of IT to capture and process money and credit transfers between banks and businesses and their customers
ATMs
Pay-by-phone
Web-based
PayPal & Bill Point (cash transfers)
CheckFree and PayTrust (automatic bill paying services)

26. Electronic Payment Processes (continued)
Electronic funds transfer (continued)
Electronic bill payment
Point-of-sale terminals linked to bank EFT systems

27. Electronic Payment Processes (continued)
Secure electronic payments
Addresses vulnerability to network sniffers
Encrypt data passing between customer and merchant
Encrypt the data passing between the customer and the company authorizing the credit card transaction
Secure Socket Layer (SSL)
Digital Wallet
Secure Electronic Transaction standard

28. E-Commerce Applications and Issues
Section II
E-Commerce Applications and Issues

29. e-Commerce Application Trends
“E-commerce is here to stay. The Web and e-commerce are key industry drivers. It’s changed how many companies do business. It’s created new channels for our customers. Companies are at the e-commerce crossroads and there are many ways to go.”

30. e-Commerce Application Trends (continued)

31. e-Commerce Application Trends (continued)
E-commerce Sectors
Six major e-commerce sectors
Infrastructure
Applications
Portals
Content
Services
Exchanges

32. Business-to-Consumer e-Commerce
Location is not a factor
Must build customer satisfaction, loyalty, & relationships

33. Business-to-Consumer e-Commerce (continued)
Success factors
Selection and value
Offer a good selection of attractive products and services
Build a reputation for high quality, guaranteed satisfaction, and top customer support

34. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Performance and service
Site must be efficiently designed for ease of access, shopping, and buying
Service must be friendly and helpful
Products should be available in inventory

35. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Look and feel
Attractive storefront, shopping areas, and multimedia product catalogs

36. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Advertising and incentives
Targeted, personalized ads
Incentives include
Coupons
Discounts
Special offers
Vouchers for other web services

37. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Personal attention
Encourages customers to buy and make return visits
Welcomed by name
Greeted with special offers
Guided to the parts of the site that you are most interested in
Relationship building

38. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Community relationships
Giving customers with special interests a feeling of belonging to a unique community
Virtual communities
Discussion forums
Newsgroups
Chat rooms
Message boards
Cross-links to related web communities

39. Business-to-Consumer e-Commerce (continued)
Success factors (continued)
Security and reliability
Customers must feel confident regarding the security of their…
Credit card
Personal information
Transaction details

40. Business-to-Consumer e-Commerce (continued)
Success Factors (continued)
Must feel that you are dealing with a trustworthy business.
Reliability
Orders filled and shipped as you requested
Orders shipped in the timeframe promised
Good customer support

41. Web Store Requirements
Developing a Web Store
Build
Website design tools
Site design templates
Custom design services
Website hosting

42. Web Store Requirements (continued)
Developing a web store (continued)
Market
Web page advertising
promotions
Web advertising exchanges with affiliated sites
Search engine registrations

43. Web Store Requirements (continued)
Serving Your Customers
Serve
Personalized web pages
Dynamic multimedia catalog
Catalog search engine
Integrated shopping cart

44. Web Store Requirements (continued)
Serving your customers (continued)
Transact
Flexible order process
Credit card processing
Shipping and tax calculations
order notifications

45. Web Store Requirements (continued)
Serving your customers (continued)
Support
Website online help
Customer service
Discussion group and chat rooms
Links to related sites

46. Web Store Requirements (continued)
Managing a Web Store
Manage
Website usage statistics
Sales and inventory reports
Customer account management
Links to accounting system

47. Web Store Requirements (continued)
Managing a web store (continued)
Operate
24/7 website hosting
Online tech support
Scalable network capacity
Redundant servers and power

48. Web Store Requirements (continued)
Managing a web store (continued)
Protect
User password protection
Encrypted order processing
Encrypted website administration
Network fire walls and security monitors

49. Business-to-Business e-Commerce
The wholesale and supply side of the commercial process
Businesses buy, sell, or trade with other businesses
Includes…
Electronic catalog systems
Electronic trading systems
Electronic data interchange
Electronic funds transfer

50. e-Commerce Marketplaces
One-to-Many
Sell-side. Host one major supplier who dictates product catalog offerings & prices.
Many-to-One
Buy-side. Attract many suppliers that flock to these exchanges to bid on the business of a major buyer.

51. e-Commerce Marketplaces (continued)
Some-to-Many
Distribution marketplaces. Unite major suppliers who combine their product catalogs to attract a larger audience of buyers.
Many-to-Some
Procurement marketplaces. Unite major suppliers who combine their purchasing catalogs to attract more suppliers.
More competition, lower prices

52. e-Commerce Marketplaces (continued)
Many-to-Many
Auction marketplaces. Used by many buyers and sellers that can create a variety of buyers’ or sellers’ auctions to dynamically optimize prices.

53. Clicks and Bricks Alternatives E-Commerce Integration
E-commerce is integrated into the traditional business operations of a company.
Business case for integration
Capitalizing on unique strategic capabilities that exist in a company’s traditional business operations

54. Clicks and Bricks (continued)
Alternatives (continued)
Gaining strategic benefits such as..
Sharing established brands
Sharing key business information
Joint buying power
Distribution efficiencies

55. Clicks and Bricks (continued)
Alternatives (continued)
Partial e-commerce integration using joint ventures and strategic partnerships
Complete separation via the spin-off of an independent e-commerce company

56. Clicks and Bricks (continued)
E-Commerce Channel Choices
An e-commerce channel is the marketing or sales channel created by a company to conduct and manage its chosen e-commerce activities

57. Clicks and Bricks (continued)
Revenue-generating alternatives
Additive channel
New offer channel
Subscription
Advertising
Sponsorship
Licensing
Portaling
Commission
Tolling

58. Discussion Questions
Do you agree that most businesses should engage in electronic commerce on the Internet?
Are you interested in investing in, owning, managing, or working for a business that is primarily engaged in electronic commerce on the Internet?

59. Discussion Questions (continued)
Why do you think there have been so many business failures among “dot-com” companies that were devoted only to retail e-commerce?
Do the e-commerce success factors discussed in the chapter guarantee success for an e-commerce business venture?
What else could go wrong & how would you confront those challenges?

60. Discussion Questions (continued)
If personalizing a customer’s website experience is a key success factor, then electronic profiling processes to track visitor website behavior are necessary. Do you agree? What are the ethical implications?
All corporate procurement should be accomplished in e-commerce auction marketplaces, instead of using B2B websites that feature fixed-price catalogs or negotiated prices. Do you agree?

61. Discussion Questions (continued)
If you were starting an e-commerce web store, which of the business requirements listed in this chapter would you primarily do yourself, and which would you outsource to a Web development or hosting company?
Which of the e-commerce clicks and bricks alternatives discussed in this chapter would you recommend to Barnes & Noble? Amazon.com? Wal-Mart? Any business?

62. Real World Case 1 – Yahoo, Inc.
How is Yahoo doing financially right now?
Is Yahoo making the right moves toward continuing e-commerce profitability?

63. Real World Case 1 (continued)
What are several other things Terry Semel could do to make Yahoo more successful?
Will Yahoo be able to compete successfully with AOL and MSN as an online service and e-commerce portal?

64. Real World Case 2 – ChemConnect & Heritage Services
What are the business benefits and limitations of using public B2B exchanges like ChemConnect?
What is the business value of private B2B exchanges for a company?

65. Real World Case 2 (continued)
Should a small business use public or private B2B exchanges, or should they use exchanges like eBay, that attract both consumers and small businesses?

66. Real World Case 2 (continued)
How can ChemConnect broaden its customer base?

67. Real World Case 3 – Staples, Steelcase, Countrywide, & HSN
Does the fact that customers who shop online and in other channels generate more sales, as Staples and HSN have found, mean that most companies should have an e-commerce website?

68. Real World Case 3 (continued)
Do you agree with Steelcase that it is better for people to get product information online than from a salesperson?

69. Real World Case 3 (continued)
Do the Steelcase and Countrywide websites do a good job of encouraging customers and visitors to buy their products and use their services?

70. Real World Case 4 – eBags, Economy.com, & Classmates Online
Do you feel that eBags will be able to sustain its recent profitability?
How else could Economy.com increase its products, markets, and profitability?

71. Real World Case 4 (continued)
How could other kinds of businesses use the Classmates Online business model to help strengthen their e-commerce success?

72. Real World Case 5 – Office Depot, Lands’ End, & Others
Which website, Office Depot or Lands’ End, does a better job of helping users find the products they want?

73. Real World Case 5 (continued)
When comparing the business value of the integration of customer information at Martha Stewart, retailer information at Panasonic, and inventory information at NextWine, which capability is of greatest importance to the success of an e-commerce business?

74. Real World Case 5 (continued)
Which website capability or feature would you most like to see added to e-commerce websites?