2. Principles of Information Systems
Chapter 8
Electronic and Mobile Commerce

3. Principles and Learning Objectives
Electronic commerce and mobile commerce are evolving, providing new ways of conducting business that present both opportunities for improvement and potential problems
Describe the current status of various forms of e-commerce, including B2B, B2C, and C2C
Outline a multistage purchasing model that describes how e-commerce works
Define m-commerce and identify some of its unique challenges
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4. Principles and Learning Objectives (continued)
E-commerce and m-commerce can be used in many innovative ways to improve the operations of an organization
Identify several e-commerce and m-commerce applications
Identify several advantages associated with the use of e-commerce and m-commerce
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5. Principles and Learning Objectives (continued)
Although e-commerce and m-commerce offer many advantages, users must be aware of and protect themselves from many threats associated with this technology
Identify the major issues that represent significant threats to the continued growth of e-commerce and m-commerce
Organizations must define and execute a strategy to be successful in e-commerce
Outline the key components of a successful e-commerce strategy
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6. Principles and Learning Objectives (continued)
E-commerce and m-commerce require the careful planning and integration of a number of technology infrastructure components
Identify the key components of technology infrastructure that must be in place for e-commerce and m-commerce to work
Discuss the key features of the electronic payment systems needed to support e-commerce
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7. Why Learn About Electronic and Mobile Commerce?
Most organizations have an Internet presence
Sales/marketing manager involved with e-commerce
Customer service employees help develop the Web site
Human resource or public relations manger may provide Web content for employees and investors
Must learn about e-commerce and m-commerce
Principles of Information Systems, Eighth Edition

8. An Introduction to Electronic Commerce
Electronic commerce: conducting business activities electronically over computer networks
Types of business activities that are strong candidates for conversion to e-commerce
Paper based
Time-consuming
Inconvenient for customers
Principles of Information Systems, Eighth Edition

9. Business-to-Business (B2B) E-Commerce
Subset of e-commerce
All the participants are organizations
Useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs
Principles of Information Systems, Eighth Edition

10. Organizations and Information Systems (cont.)
Figure 2.2: The Value Chain of a Manufacturing Company

11. Business-to-Consumer (B2C) E-Commerce
Form of e-commerce in which customers deal directly with an organization and avoid intermediaries
Squeezes costs and inefficiencies out of supply chain
Can lead to higher profits
Can lead to lower prices for consumers
E-commerce via the Internet
Many goods and services are cheaper online
The Internet allows consumers to easily compare prices, features, and value
Principles of Information Systems, Eighth Edition

12. Consumer-to-Consumer (C2C) E-Commerce
Subset of e-commerce that involves consumers selling directly to other consumers
Example: eBay
Customers buy and sell items directly to each other through the site
181 million users buy and sell items valued at more than $44 billion
Other popular online auction Web sites: Craigslist, uBid, Yahoo! Auctions, Onsale, and WeBidz
Principles of Information Systems, Eighth Edition

13. Consumer-to-Consumer (C2C) E-Commerce
Example: eBay
Other popular online auction Web sites: Craigslist, uBid, Yahoo! Auctions, Onsale, and WeBidz
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14. eGovernment
Use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizen and government
Forms of eGovernment
Government-to-consumer (G2C)
Government-to-business (G2B)
Government-to-government (G2G)
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15. Multistage Model for E-commerce
Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)
Principles of Information Systems, Eighth Edition

16. Multistage Model for E-commerce (continued)
Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web
Principles of Information Systems, Eighth Edition

17. E-Commerce Challenges
Defining an effective e-commerce model and strategy
Community, content, and commerce
Changing distribution systems and work processes to manage shipments of individual units directly to consumers
B2C systems must be able to handle split-case distribution
Integrating Web-based order processing with traditional systems
Principles of Information Systems, Eighth Edition

18. E-Commerce Challenges (continued)
Figure 8.3: Three Basic Components of a Successful E-Commerce Model
Principles of Information Systems, Eighth Edition

19. E-Commerce Challenges (continued)
Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional Back-End Systems
Principles of Information Systems, Eighth Edition

20. An Introduction to Mobile Commerce
Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business
Handset manufacturers are working with communications carriers to develop appropriate wireless devices, related technology, and services
Content providers and mobile service providers are working together more closely than ever
Principles of Information Systems, Eighth Edition

21. Mobile Commerce in Perspective
Only 12 to 14 percent of the world’s 1.8 billion mobile phone users have ever used the Web from their phones
Internet Corporation for Assigned Names and Numbers (ICANN) created a .mobi domain to help attract mobile users to the Web
Market for m-commerce in North America is maturing much later than in Western Europe and Japan
Principles of Information Systems, Eighth Edition

22. Technology Needed for Mobile Commerce
Improved interface between the wireless device and its user
Improved network speed
Security
Encryption, digital certificates
Web applications that are accessible for handheld users
Principles of Information Systems, Eighth Edition

23. Technology Needed for Mobile Commerce (continued)
Wireless application protocol (WAP): standard set of specifications for Internet applications that run on handheld, wireless devices
Effectively serves as a Web browser for such devices
Uses the Wireless Markup Language (WML), which is designed for effectively displaying information on small devices
Principles of Information Systems, Eighth Edition

24. Electronic and Mobile Commerce Applications
Many B2B, B2C, C2C, and m-commerce applications are being used in:
Retail and wholesale
Manufacturing
Marketing
Investment and finance
Auction arenas
Principles of Information Systems, Eighth Edition

25. Retail and Wholesale
Electronic retailing (e-tailing): direct sale from business to consumer through electronic storefronts
Electronic storefronts are typically designed around an electronic catalog and shopping cart model
Cybermall: single Web site that offers many products and services at one Internet location
Manufacturing, repair, and operations (MRO) goods and services
Principles of Information Systems, Eighth Edition

26. Manufacturing
To raise profitability and improve customer service, many manufacturers move their supply chain operations onto the Internet
Electronic exchange: electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations
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27. Manufacturing (continued)
Figure 8.5: Model of an Electronic Exchange
Principles of Information Systems, Eighth Edition

28. Marketing
Market segmentation: identification of specific markets to target them with advertising messages
Technology-enabled relationship management: use of detailed information about a customer’s behavior, preferences, needs, and buying patterns to customize the entire relationship with that customer
Principles of Information Systems, Eighth Edition

29. Investment and Finance
Online stock trading
Online tools for doing research and analysis
Online banking
Customers can check account balances, transfer money among accounts, pay bills, etc.
Electronic bill presentment
Principles of Information Systems, Eighth Edition

30. Auctions eBay Hundreds of other online auction sites
Has become synonymous with online auctions
Customer complaints: increased fees and problems with unscrupulous (ไม่พิถีพิถัน) buyers
Constantly trying to expand and improve its services: Skype, Verisign
Hundreds of other online auction sites
Example: Priceline.com
Principles of Information Systems, Eighth Edition

31. Anywhere, Anytime Applications of Mobile Commerce
M-commerce devices are ideal for accessing personal information and receiving targeted messages for a particular consumer
Through m-commerce, companies can establish one-to-one marketing relationships with individual consumers anytime and anywhere
The most successful m-commerce applications suit local conditions and people’s habits and preferences
Examples: banking, stock trading, information services, retail, advertisements
Principles of Information Systems, Eighth Edition

32. Advantages of Electronic and Mobile Commerce
Global reach: helps reduce gap between rich and poor countries
Reduces costs: increases speed and accuracy
Speeds the flow of goods and information
Increases accuracy: eliminates human data-entry error
Improves customer service: information about delivery status and ability to meet customer demand
Principles of Information Systems, Eighth Edition

33. Threats to Electronic and Mobile Commerce
Businesses must ensure that e-commerce and m-commerce transactions are safe and consumers are protected
Number of threats to the continued growth of e-commerce and m-commerce
Security, theft of intellectual property, fraud (การโกง), invasion of privacy, lack of Internet access, return on investment, legal jurisdiction, taxation
Principles of Information Systems, Eighth Edition

34. Security Methods to increase security
Payment Card Industry security standard
Address Verification System
Card Verification Number technique
Visa’s Advanced Authorization process
Federal Financial Institutions Examination Council’s “Authentication in an Internet Banking Environment” guidelines
Biometric technology
Principles of Information Systems, Eighth Edition

35. Theft of Intellectual Property
Intellectual property: works of the mind that are distinct somehow and are owned or created by a single entity
For example: books, films, music, processes, and software
Copyright law protects authored works such as books, film, images, music, and software from unauthorized copying
Patents can protect software, business processes, formulae, compounds, and inventions
Principles of Information Systems, Eighth Edition

36. Theft of Intellectual Property (continued)
Trade secrets
Digital Rights Management (DRM): use of any of several technologies to enforce policies for controlling access to digital media
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37. Fraud
Phishing: sending bogus messages purportedly from a legitimate institution to pry personal information from customers by convincing them to go to a “spoof” Web site
Click fraud: arises in a pay-per-click online advertising environment when additional clicks are generated beyond those that come from actual, legitimate users
Online auction fraud
Principles of Information Systems, Eighth Edition

38. Invasion of Consumer Privacy
Online profiling: practice of Web advertisers’ recording online behavior to produce targeted advertising
Clickstream data: data gathered based on the Web sites you visit and the items you click on
Principles of Information Systems, Eighth Edition

39. Lack of Internet Access
Digital divide: difference between people who do and people who don’t have access or capability to use high-quality, modern information and communications technology to improve their standard of living
Exists between:
More and less developed countries
Economic classes
The educated and uneducated
Those who live in cities and those who live in rural areas
Principles of Information Systems, Eighth Edition

40. Return on Investment
The investment required for a large firm to establish and operate a B2B or B2C Web site can be in the millions of dollars
Common problem with determining return on investment: difficult to forecast project costs and benefits
Principles of Information Systems, Eighth Edition

41. Legal Jurisdiction
When conducting e-commerce, sales must not violate county, state, or country legal jurisdictions
Examples
Selling stun guns and similar devices
Selling cigarettes or alcohol to underage customers
Principles of Information Systems, Eighth Edition

42. Taxation
U.S. Supreme Court ruling: Internet-based merchants must apply sales tax only when buyers live in a state where the company has physical facilities, or “nexus”
Most businesses set up separate companies to avoid dealing with nonstandard rules of the more than 7,500 taxing districts nationwide
Consumers are responsible for voluntarily remitting sales taxes
Difficult for states to collect sales taxes on Internet purchases
Principles of Information Systems, Eighth Edition

43. Strategies for Successful E-Commerce
Companies must develop effective Web sites that include the following characteristics:
Easy to use
Accomplish the goals of the company
Safe and secure
Affordable to set up and maintain
Principles of Information Systems, Eighth Edition

44. Defining the Web Site Functions
Decide which tasks the site must accomplish
Create an attractive presence for the company
Meet the needs of its visitors
Examples: obtaining information about the organization and its products, buying products or services, getting advice, registering complaints
Redefining your site’s basic business model to capture new business opportunities
Principles of Information Systems, Eighth Edition

45. Establishing a Web Site
Web site hosting companies
Allow you to set up a Web page and conduct e-commerce within a matter of days
Little up-front cost
Storefront broker: companies that act as middlemen between your Web site and online merchants that have the products and retail expertise
Principles of Information Systems, Eighth Edition

46. Building Traffic to Your Web Site
Obtain and register a domain name
Make your site search-engine-friendly
Meta tag: special HTML tag that contains keywords representing your site’s content
Keywords are used by search engines to build indexes pointing to your Web site
Web site traffic data analysis software
Adapting Web site design for global consumers
Principles of Information Systems, Eighth Edition

47. Maintaining and Improving Your Web Site
Be alert to new trends and developments in e-commerce
Be prepared to take advantage of new opportunities
Personalization: tailoring Web pages to specifically target individual consumers
Explicit: captures user-provided information
Implicit: captures data from customer Web sessions
Principles of Information Systems, Eighth Edition

48. Technology Infrastructure Required To Support E-commerce and M-commerce
Successful implementation of e-business requires significant changes to existing business processes and substantial investment in IS technology
Poor Web site performance drives consumers to abandon some e-commerce sites in favor of those with better, more reliable performance
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49. Figure 8.6: Key Technology Infrastructure Components
Technology Infrastructure Required To Support E-commerce and M-commerce (continued)
Figure 8.6: Key Technology Infrastructure Components
Principles of Information Systems, Eighth Edition

50. Hardware
Storage capacity and computing power required of the Web server depends on:
Software that will run on the server
Volume of e-commerce transactions
E-commerce solutions should be designed to be highly scalable
Web site hosting: third-party Web service provider
Principles of Information Systems, Eighth Edition

51. Security and identification Access controls Encryption
Web Server Software
Security and identification
Access controls
Encryption
Retrieving and sending Web pages
Web site tracking
Web log file
Web site development
HTML/visual Web page editor, software development kits
Principles of Information Systems, Eighth Edition

52. Web Server Software (continued)
Web page construction
Web editors and extensions
Static Web page: contains same information
Dynamic Web page: responds to a specific Web user’s request
Examples of Web server software packages: Apache HTTP Server, Microsoft Internet Information Server
Principles of Information Systems, Eighth Edition

53. E-Commerce Software E-commerce software tools
Catalog management: provides standard format
Product configuration: build product online to meet user needs
Shopping cart facilities
Transaction processing
Web traffic data analysis
Web services: software modules supporting specific business processes that users can interact with over a network as needed
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54. E-Commerce Software (continued)
Figure 8.7: Electronic Shopping Cart
Principles of Information Systems, Eighth Edition

55. Electronic Payment Systems
Digital certificate: attachment to an message or data embedded in a Web page that verifies the identity of a sender or a Web site
Certificate authority (CA): trusted third party that issues digital certificates
Secure Sockets Layer (SSL): communications protocol used to secure sensitive data
Electronic cash: amount of money that is computerized, stored, and used as cash for e-commerce transactions
Principles of Information Systems, Eighth Edition

56. Electronic Payment Systems (continued)
Credit card
Charge card
Debit card
Smart card: a credit card–sized device with an embedded microchip to provide electronic memory and processing capability
Principles of Information Systems, Eighth Edition

57. Summary
Electronic commerce (or e-commerce): conducting business activities electronically over computer networks
Types of e-commerce: business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C)
eGovernment: use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizen and government
Principles of Information Systems, Eighth Edition

58. Summary (continued)
Multistage model for e-commerce: includes search and identification, selection and negotiation, electronic purchasing, delivery, and after-sales service
Mobile commerce (m-commerce): uses wireless devices to place orders and conduct business
B2B, B2C, C2C, and m-commerce applications are being used in retail and wholesale, manufacturing, marketing, investment and finance, and auction arenas
Principles of Information Systems, Eighth Edition

59. Summary (continued)
Issues affecting growth of e- and m-commerce: security, theft of intellectual property, fraud, invasion of consumer privacy, lack of Internet access, return on investment, legal jurisdiction, and taxation
An effective Web site should be easy to use, accomplish the goals of the company, be safe and secure, and be affordable to set up and maintain
Successful implementation of e-business requires significant changes to existing business processes and substantial investment in IS technology
Principles of Information Systems, Eighth Edition

61. Review question #8

62. ส วั ส ดี