1. E-Business and E-Commerce
Part III. Web, Wireless, and Social Media Strategies
Chapter 6
E-Business and E-Commerce
Course
Copyright 2012 John Wiley & Sons, Inc.

2. Chapter 6 Outline
6.1 e-Business Challenges and Strategies 6.2 Business-to-Consumer (B2C) e-Commerce 6.3 Business-to-Business (B2B) e-Commerce and e-Procurement 6.4 e-Government 6.5 e-Commerce Support Services: Payment & Order Fulfillment 6.6 e-Business Ethics and Legal Issues
Copyright 2012 John Wiley & Sons, Inc.

3. Chapter 6 Learning Objectives
Describe e-business strategies and e-commerce operations.
Understand effective business-to-consumer e-commerce applications.
Understand business-to-business applications, logistics, procurement, order fulfillment, and payment systems.
Describe e-government activities and public sector e-commerce.
Understand e-commerce support services.
Identify and describe ethics and legal issues of e-business.
Copyright 2012 John Wiley & Sons, Inc.

4. 6.1 e-Business Challenges and Strategies
Mix of online channels & media gives consumers strong control over where and how they interact with a business or brand.
Managers need to know how to respond to changing consumer behavior & needs of business customers – and how to deal with IT software vendors and consulting firms.
Companies may outsource development or hosting of e-business systems w/ software as a service (SaaS) or cloud computing …but developing an effective e-business model and competitive strategy is done in-house.
If the business model and strategy are wrong, then implementation wouldn’t matter in the long-run.
Copyright 2012 John Wiley & Sons, Inc.

5. Figure 6.4. Changes in the Nasdaq during the dot-com era, which burst (started to decline) on March 10, 2000 and declined until October 2002.
Dot-com Era, 1995 to 2002
Adding the prefix “e” to “business” did not eliminate the need to focus on positive earnings and cash flow and to earn a profit.
Copyright 2012 John Wiley & Sons, Inc.

6. Types of E-Business Transactions
Business-to-business (B2B). Over 85% of EC volume is B2B.
Business-to-consumers (B2C). Also called e-tailing.
Consumers-to-business (C2B). Consumers make known a particular need for a product or service, and then suppliers compete to provide that product or service at the requested price; e.g., Priceline.com
Government-to-citizens (G2C) and to others. A government agency provides services to its citizens via EC technologies.
Mobile commerce (m-commerce). Transactions and activities are conducted via wireless networks.
Copyright 2012 John Wiley & Sons, Inc.

7. E-Business Web Site Requirements and Challenges
Availability relates to the server-side of e-business. An always on facility is needed to maintain the business critical apps.
Accuracy and Quick Response. Web software must be capable of searching, sorting, processing promotions and payments, verifying that the credit card number belongs to the person trying to use it, confirming the purchase in real-time, etc. In time-sensitive B2B, errors that delay delivery are intolerable.
Security and PCI DSS Compliance. PCI DSS (Payment Card Industry Data Security Standard) is a set of infosec requirements to help prevent credit card fraud.
Integrating EC systems with enterprise systems. Need better integration across all customer points of interactions.
Web analytics. Learning from Web traffic and log data.
Copyright 2012 John Wiley & Sons, Inc.

8. PCI Compliance
PCI Compliance is a complex process that requires every business that deals with payment card numbers in any way to strictly follow a detailed list of regulations.
PCI Data Security Standard (PCI DSS): All EC and brick-and- mortar merchants must be PCI DSS compliant to accept, hold, process, or exchange credit cardholder data of major credit cards.
Copyright 2012 John Wiley & Sons, Inc.

9. E-Business Model
Figure 6.6 E-commerce model
Objective of e-business: streamline and automate processes
Copyright 2012 John Wiley & Sons, Inc.

10. E-business Models Comparison shopping engines Affiliate marketing
Electronic marketplaces and exchanges
Information brokers and matching services
Memberships
Forward auctions
Reverse auctions
Name-your-own-price
Online auctions
Online direct marketing.
Viral marketing
Copyright 2012 John Wiley & Sons, Inc.

11. 6.2 B2C e-Commerce
Most well-known B2C site is Amazon.com, whose patented IT developments provide a competitive edge
ING Direct, largest online bank with high rates, high-volume, low-margins, and high profits
Online job market. Most companies and government agencies advertise job openings, accept résumés, and take applications via the Internet.
Despite B2C ongoing growth, many e-tailers still face challenges that interfere with the growth of its e-tailing efforts
Copyright 2012 John Wiley & Sons, Inc.

12. Issues in E-tailing
Resolving channel conflict between an online selling channel and physical selling channels
Resolving conflicts within click-and-mortar organizations.
Managing order fulfillment, logistics, and reverse logistics.
Determining viability and risk of online e-tailers.
Identifying appropriate revenue (business) models.
Copyright 2012 John Wiley & Sons, Inc.

13. 6.3 B2B e-Commerce & e-Procurement
comprises about 85% of e-commerce dollar volume.
covers apps that enable an enterprise to form electronic relationships with its distributors, resellers, suppliers, customers, and other partners.
By using B2B, organizations can restructure their supply chains and partner relationships.
Copyright 2012 John Wiley & Sons, Inc.

14. B2B Business Models Sell-side: Buy-side or e-sourcing:
Seller can be either a manufacturer (IBM.com), a distributor (Avnet.com), or a retailer (Walmart.com)
Primary methods are forward auctions and online catalogs, which can be customized for each buyer
Buy-side or e-sourcing:
E-sourcing refers to the many procurement methods.
Primary methods are auctions, RFQ processing, and private exchanges
Copyright 2012 John Wiley & Sons, Inc.

15. B2B E-procurement Public and Private Exchanges To control costs
To simplify processes to make them more efficient
Public and Private Exchanges
Vertical exchanges for direct materials—materials that are inputs to manufacturing; e.g., PlasticsNet.com
Vertical exchanges for indirect materials in one industry—e.g., ChemConnect.com and iSteelAsia.com
Horizontal exchanges for indirect materials, such as office supplies, light bulbs, and cleaning materials used by any industry; e.g., EcEurope.com and Alibaba.com
Functional exchanges. Needed services such as temporary help or extra space are traded on an as-needed basis; e.g., Employease.com
Copyright 2012 John Wiley & Sons, Inc.

16. 6.4 E-Government E-commerce models apply to government & the public sector
E-government is the use of Internet technology to deliver information and public services to citizens, business partners and suppliers of government entities
Benefits
Improves the efficiency and effectiveness of govn’t functions, including the delivery of public services
Increases transparency by giving access to govn’t information
Citizens can provide feedback and more actively participate in democratic institutions and processes
Copyright 2012 John Wiley & Sons, Inc.

17. E-Government in the Cloud
Budget pressures are a leading factor moving governments into cloud computing solutions
45% of local governments are using some form of cloud computing for applications or services
2 iPhone Apps to Curb Drunk Driving
R-U-Buzzed was released by the Colorado DOT to estimate blood-alcohol content
Mashup program Stumble Safely gives Washington, D.C., pedestrians a safe route home after a night at the bar.
Copyright 2012 John Wiley & Sons, Inc.

18. 6.5 E-Commerce Support Services: Payment and Order Fulfillment
B2B and B2C requires support services, e.g., payment and order fulfillment
Major e-commerce support services:
e-infrastructure: technology consultants, system developers, integrators, hosting, security, wireless, and networks
e-processes: payments and logistics
e-markets: marketing and advertising
e-communities: citizens, audiences and business partners
e-services: CRM, PRM, and directory services
e-content: supplied by content providers
Copyright 2012 John Wiley & Sons, Inc.

19. Advertising Strategies and Revenue Models
Affiliate marketing and advertising: an organization refers consumers to other companies’ Web sites.
Viral marketing: word-of-mouth marketing; customers promote a product or service by telling many others about it, often via tweets or texts.
Customizing ads: marketing managers can customize display ads based on users’ profiles.
Copyright 2012 John Wiley & Sons, Inc.

20. E-payment systems Electronic funds transfer (EFT) Electronic checks
Electronic credit cards
Purchasing e-cards
e-Cash—smart cards
e-Cash—person-to-person
Electronic bill presentment and payments
Pay at ATMs
Micropayments
B2B special methods
Copyright 2012 John Wiley & Sons, Inc.

21. Figure 6.10 Sequence of activities in e-credit card processing

22. IT at Work 6.6 E-Money: The Future Currency
The growing e-money lifestyle in Japan is making life more convenient for consumers by allowing transactions via mobiles.
The Mobile Suica system was debuted by NTT DoCoMo in 2006.
Mobile Suica is a phone-based smartcard that can be used for buying rail tickets or accessing buildings.
Figure 6.11 Contactless Mobile Suica on mobile phone; based on RFID
Copyright 2012 John Wiley & Sons, Inc.

23. Order fulfillment activities
Figure 6.12 Order fulfillment and logistics system
Copyright 2012 John Wiley & Sons, Inc.

24. 6.6 E-Business Ethics and Legal Issues
Privacy: Most e-payment systems know who the buyers are; therefore, it’s necessary to protect the buyers’ identities.
Web tracking: By using tracking software and log files, companies can track individuals’ movements on the Internet.
Job loss: EC may eliminate jobs.
Disintermediation: Technology eliminates the need for intermediaries, such as travel and insurance agents.
Copyright 2012 John Wiley & Sons, Inc.

25. Chapter 6 Link Library
Amazon.com’s 1st Web site, digitalenterprise.org/images/amazon.gif
e-Business forum ebusinessforum.com
Google Merchant Center google.com/merchants
Google Product Search google.com/products
Shopzilla shopzilla.com
U.S. Federal Trade Commission ftc.gov
PCI Security Standards Council pcisecuritystandards.org/index.shtml
Internet statistics internetworldstats.com
Many Eyes (beta) data sets and visualization tools manyeyes.alphaworks.ibm.com/manyeyes/
Washington, DC Data Catalog data.octo.dc.gov/
Copyright 2012 John Wiley & Sons, Inc.