1. Electronic Commerce Systems
Chapter 9
Electronic Commerce Systems
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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
Identify and give examples of several key factors and Web store requirements need to succeed in e-commerce
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3. Learning Objectives
Identify and explain the business value of several types of e-commerce marketplaces
Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives
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4. Case 1: KitchenAid and the Royal Bank of Canada
Companies that do business online must police unauthorized use of their brand names, logos and other trademarks to protect their investments.
Companies such as BrandProtect, MarkMonitor, and NameProtect are stepping in to offer companies some artillery in the fight for control of their brands and reputations.
The challenge of brand protection, however, has grown exponentially for companies operating in the online world.
Other type of violation is using logos without permission because it is so easy for someone to go to a company’s web site and grab a logo and put it somewhere else.
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5. Case Questions
Consider your own online shopping patterns. How much weight do you place on the presence of a name or logo or other trademark (such as the KitchenAid silhouette) on a Web site when purchasing goods or services? Do you ever stop to consider whether you may have been misled? How could you tell the difference?
Brian Maynard of KitchenAid notes that the development of the Internet changed the problem of brand policing. What are some of these changes? What new challenges can you think of that did not exist in the preonline world? Provide several examples.
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6. Case Questions
The companies mentioned in the case (e.g., Kitchen-Aid, RBC, Disney, and Coke) were well established and enjoyed strong brand recognition well before the advent of the Internet. Do you think online-only companies face the same problems as they do? Why or why not? Justify the rationale for your answer.
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7. Introduction to e-Commerce
Electronic commerce encompasses the entire online process of
Developing
Marketing
Selling
Delivering
Servicing
Paying for products and services
It relies on the Internet and other information technologies to support every step of the process
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8. The Scope of e-Commerce
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9. E-Commerce Technologies
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10. Categories of e-Commerce
Business-to-Consumer
Virtual storefronts, multimedia catalogs, interactive order processing, electronic payment, online customer support
Business-to-Business
Electronic business marketplaces, direct links between businesses, auctions and exchanges
Consumer-to-Consumer
Online auctions, posting to newspaper sites, personal websites, e-commerce portals
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11. Essential e-Commerce Architecture
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12. Access Control and Security
E-commerce processes must establish mutual trust and secure access between parties
User names and passwords
Encryption key
Digital certificates and signatures
Restricted access areas
Other people’s accounts
Restricted company data
Webmaster administration areas
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13. Profiling and Personalizing
Profiling gathers data on you and your website behavior and choices
User registration
Cookie files and tracking software
User feedback
Profiling is used for
Personalized (one-to-one) marketing
Authenticating identity
Customer relationship management
Marketing planning
Website management
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14. Search Management
Search processes help customers find the specific product or service they want
E-commerce software packages often include a website search engine
A customized search engine may be acquired from companies like Google or Requisite Technology
Searches are often on content or by parameters
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15. Content and Catalog Management
Content Management Software
Helps develop, generate, deliver, update, and archive text and multimedia information at e-commerce websites
Catalog Management Software
Helps generate and manage catalog content
Catalog and content management software works with profiling tools to personalize content
Includes product configuration and mass customization
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16. Workflow Management
E-business and e-commerce workflow manage-ment depends on a workflow software engine
Contains software model of business processes
Workflow models express predefined
Sets of business rules
Roles of stakeholders
Authorization requirements
Routing alternative
Databases used
Task sequences
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17. Example of Workflow Management
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18. Most e-commerce applications are event driven
Event Notification
Most e-commerce applications are event driven
Responds to such things as customer’s first website visit and payments
Monitors all e-commerce processes
Records all relevant events, including problem situations
Notifies all involved stakeholders
Works in conjunction with user-profiling software
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19. Collaboration and Trading
Processes that support vital collaboration arrangements and trading services
Needed by customers, suppliers, and other stakeholders
Online communities of interest
, chat, discussion groups
Enhances customer service
Builds loyalty
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20. Electronic Payment Processes
Complex processes
Near-anonymous and electronic nature of transactions
Many security issues
Wide variety of debit and credit alternatives
Financial institutions may be part of the process
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21. Electronic Payment Processes
Web Payment Processes
Shopping cart process
Credit card payment process
Debit and other more complex processes
Electronic Funds Transfer (EFT)
Major payment system in banking, retail
Variety of information technologies capture and process money and credit card transfers
Most point-of-sale terminals in retail stores are networked to bank EFT systems
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22. Electronic Payment Example
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23. Securing Electronic Payments
Network sniffers easily recognize credit card formats
Encrypt data between customer and merchant
Encrypt data between customer and financial institution
Take sensitive information off-line
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24. E-Commerce Application Trends
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25. Case 2: Entellium, Digg, Peerflix, Zappos, and Jigsaw
For many internet companies, the second-mover advantage seems even more substantial.
Entellium is an example of a company that has successfully implemented a second mover strategy on the Web.
The second-movers can use the same approach as first mover with better products and services at much lower cost.
Another strategy is to use combinations of business models that are successful.
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26. Case Study Questions
Is the second-mover advantage always a good business strategy? Defend your answer with examples of the companies in this case.
What can a front-runner business do to foil the assaults of second movers? Defend your answer using the examples of the front-runner companies in the case.
Do second movers always have the advantage in Web based business success? Why or why not? Evaluate the five strategies given in the case and the companies that used them to help defend your answer.
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27. E-Commerce Success Factors
Some of the success factors in e-commerce
Selection and value
Performance and service
Look and feel
Advertising and incentives
Personal attention (one-to-one marketing)
Community relationships
Security and reliability
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28. Differences in Marketing
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29. Web Store Requirements
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30. Developing a Web Store Build a website Market the website
Choose or set up web hosting
Use simple design tools and templates
Include a shopping cart and payment support
Market the website
Include Web page and advertising and promotions
Exchange advertising with other Web stores
Register with search engines and directories
Sign up for affiliate programs
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31. Serving Your Customers
Convert visitors into loyal customers
Develop one-to-one relationship with customers
Create incentives to encourage registration
Use Web cookies to identify visitors
Use tracking services to record and analyze website behavior and customer preferences
Create an attractive, friendly, efficient store
Offer fast order processing and payment
Notify when orders are processed and shipped
Provide links to related websites
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32. Managing a Web Store Manage both the business and the website
Record and analyze traffic, inventory, sales
Use CRM features to help retain customers
Link sales, inventory data to accounting systems
Operate 24 hours a day, seven day a week
Protect transactions and customer records
Use security monitors and firewalls
Use redundant systems and power sources
Employ passwords and encryption
Offer 24-hour tech support
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33. B2B is the wholesale and supply side of the commercial process
B2B E-Commerce
B2B is the wholesale and supply side of the commercial process
Businesses buy, sell, or trade with other businesses
Relies on multiple electronic information technologies
Catalog systems
Trading systems
Data interchange
Electronic funds transfers
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34. E-Commerce Marketplaces
One to Many
Sell-side marketplaces
One supplier dictates product offerings and prices
Many to One
Buy-side marketplaces
Many suppliers bid for the business of a buyer
Some to Many
Distribution marketplaces
Unites suppliers who combine their product catalogs to attract a larger audience
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35. E-Commerce Marketplaces
Many to Some
Procurement marketplaces
Unites major buyers who combine purchasing catalogs
Attracts more competition and thus lower prices
Many to Many
Auction marketplaces
Dynamically optimizes prices
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36. B2B e-commerce portals offer multiple marketplaces
Catalogs
Exchanges
Auctions
Often developed and hosted by third-party market-maker companies
Infomediaries serve as intermediaries in e-business and e-commerce transactions
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37. B2B E-Commerce Web Portal
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38. Clicks and Bricks
Success will go to those who can integrate Internet initiatives with traditional operations
Merging operations has trade-offs
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39. E-Commerce Integration
The business case for merging e-commerce with traditional business operations
Move strategic capabilities in traditional operations to the e-commerce business
Integrate e-commerce into the traditional business
Sharing of established brands
Sharing of key business information
Joint buying power and distribution efficiencies
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40. Other Clicks and Bricks Strategies
Partial e-commerce integration
Joint ventures and strategic partnerships
Complete separation
Spin-off of an independent e-commerce company
Barnes and Noble’s experience
Spun off independent e-commerce company
Gained venture capital, entrepreneurial culture, and flexibility
Attracted quality management
Accelerated decision making
Failed to gain market share
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41. E-Commerce Channel Choices
An e-commerce channel is the marketing or sales channel created by a company for its e-commerce activities
There is no universal strategy or e-commerce channel choice
Both e-commerce integration and separation have major business benefits and shortcoming
Most businesses are implementing some measure of clicks and bricks integration
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42. E-Commerce Strategy Checklist
Questions to ask and answer
What audiences are we attempting to reach?
What action do we want those audiences to take?
Who owns the e-commerce channel within the organization?
Is the e-commerce channel planned alongside other channels?
Is there a process for generating, approving, releasing, and withdrawing content?
Will our brand translate to the new channel?
How will we market the channel itself?
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43. Case 3: eBay versus Google and Microsoft:
eBay enjoyed virtual monopoly in online auction for almost a decade.
Now it is facing competition from Google & Microsoft.
Analysts think that search and advertising will define the future of e-Commerce.
Windows Live Expo is Microsoft’s competitive weapon in its battle with eBay and Google for the online classifieds market.
eBay is addressing these challenges by acquiring companies like Skype, Shopping.com, and other international classified sites.
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44. Case Study Questions
Do you agree with Google and Microsoft that eBay is now vulnerable to their assaults via Google Base and Windows Live Expo? Why or why not?
What are the major advantages and limitations of Google Base and Windows Live Expo? Which do you prefer, or would you use both? Why? Go to their Internet Web sites and read reviews at other sites to help you answer.
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45. Case Study Questions
Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions as noted in this case enough to ward off the competitive assaults of Google and Microsoft? Defend your position.
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46. Case 4: eBay, Running the Right Play
eBay is one of the fastest-growing companies in history, and business is surging
31 sites around the world
$1.1 billion in international sales in 2004, and growing twice as fast as the domestic market
Half of their 125 million registered users are outside of the United States
eBay keeps a playbook
Several hundred pages of wisdom collected from worldwide managers
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47. Why has eBay become such a successful and diverse online marketplace?
Case Study Questions
Why has eBay become such a successful and diverse online marketplace?
What do you think of eBay’s playbook concept? Why do they call it a playbook?
Is eBay’s move into the international arena a good long-term strategy?
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