2Learning ObjectivesExplain what e-commerce is and describe some of the benefits and risks involved with implementing e-commerce.Discuss the types of Web sites that can be used to implement e-commerce.Identify a variety of e-commerce business models and discuss their similarities and differences.
3Learning ObjectivesList several strategies for implementing e-commerce using the Web, including some of the decisions that need to be made, the options available for accepting payments, and the process of designing and developing an effective Web site.Outline some sales and marketing strategies that can be used in conjunction with an e-commerce Web site.Discuss some security issues related to e-commerce transactions.
4Overview This chapter covers: Potential advantages and disadvantages of e-commerceTypes of e-commerce Web sites and e-commerce business modelsSteps for implementing Web-based e-commerceSales and marketing strategies for e-commerce Web sitesE-commerce security issues
5What Is E-Commerce?E-commerce: Act of doing business transactions over the Internet or similar communications technologyHas existed for years via private networks (electronic funds transfers, etc.)Now typically performed via the InternetE-commerce in the U.S. has continued to grow at a steady paceM-commerce (mobile commerce) is growingU-commerce (universal commerce) trend is also on the rise
6Advantages of E-Commerce For businesses:Reduced costsDot-coms are less expensive than brick-and-mortar stores because there is no physical storefront to maintainIncreased customer satisfactionIf shopping experience is convenient (open all the time, no driving, etc.)Broader customer base (less geographical restrictions)More effective sales and marketing tools (personalized s, customer relationship management tools, etc.)Potentially higher sales
7Advantages of E-Commerce For customers:ConvenienceEasier comparison shoppingHigher number of merchants to choose fromGeographical location is not an issueShopping bots and other comparison shopping tools are availableHigher degree of selectionPotential cost savingsCustomized products
9Disadvantages of E-Commerce For businesses:Pressure to be always open, site always workingLost business due to some customer hesitation to shop onlineRisk of fraudulent credit card transactionsEase of entry for competitors
10Disadvantages of E-Commerce For customers:Fraud and other potential security problemsBuyer protection programs and using credit cards can helpNot being able to see or touch the goods3D online stores may helpPossible expense of returning merchandise
11Types of E-Commerce Web Sites Manufacturer and e-tailer Web sites: Sell products and services directly to the end user
12Types of E-Commerce Web Sites Brokerage sites: Bring buyers and sellers together and earn revenue by charging commissions on sales made via the siteOnline auction sites: Allow individuals to auction products to other individualsBuyers bid and highest bidder at the time the auction closes buys the itemSeller pays a listing fee and a selling fee based on the final priceSellers set the starting bid and can specify a minimum sales priceMany sites bid automatically for each bidder up to his or her maximum stated price
14Types of E-Commerce Web Sites Financial brokerage sites: Allow individuals to sell stocks, bonds, etc.Market and commodity exchange sites: Match up buyers and sellers of commodities, such as equipment, energy, cattle, etc.
15E-Commerce Business Models Business model: The policies, operations, and technologies used by a business in order to generate revenueE-commerce business model: Description of the types of buyers and sellers in an e-commerce company, such as B2B, B2G, and so forthBusiness-to-consumer (B2C) modelBusiness-to-business (B2B) modelConsumer-to-consumer (C2C) modelBusiness-to-government (B2G) model (consumer-to-government - C2G)Intermediary hub modelVertical hubHorizontal hub
16Implementing Web-Based E-Commerce Step 1: Select appropriate business models and types of Web sitesMore than one can be selectedSome businesses add additional types later onSome business models are patentedStep 2: Select the desired e-commerce applicationsDetermine electronic customer relationship management (eCRM) activities to be includedDetermine which other business systems the Web site will be linked to
18Implementing Web-Based E-Commerce Step 3: Develop procedures for handling electronic financial transactionsNeed to determine which types will be acceptedMost sites accept credit cards; debit cards too
19Implementing Web-Based E-Commerce Customers can use virtual account numbers, and prepaid credit cards to limit risk and liabilityDigital cash options include:Electronic checks: Funds come out of customer’s checking accountOnline payment accounts (such as PayPal): Funds can be transferred to others from the customer’s accountCan transfer funds ahead of time or have money transferred from a credit card or bank account as neededSome transactions require a feeCan add or remove funds as neededElectronic gift certificates, gift cards, and coupons: Appropriate codes are entered into the Web site at time of purchase
21Implementing Web-Based E-Commerce Smart cards: Can hold a cash valueFor Web purchases, typically read by readers attached to a PCMany credit cards and campus IDs are smart cardsMany can be used with NFC technologySmart card readers may become common on vending machines, in taxis, and other public locations
22Implementing Web-Based E-Commerce Digital wallet: Electronic file that holds information to speed online transactionsCan hold credit card numbers, passwords, address, etc. to be used in e-commerce transactionsThird-party digital wallets: Standalone programs that automatically or manually transfer necessary information to an online order form as neededSite-specific digital wallets: Store this information for each customer on a business’ Web server for use with purchases on that site only
24Implementing Web-Based E-Commerce Special B2B considerations because of the volume of B2B transactionsB2B transaction processingAllows merchants to customize their payment processing plans to fit their needsCredit card, debit card, check, and digital cash settlementCredit checkingExpense trackingElectronic billingPayment settlement compatible with other widely used systemsConsolidation and reconciliation servicesEscrow services
25Implementing Web-Based E-Commerce Order-fulfillment companiesTake care of physically filling orders for a business including:Order managementDistributionCRM servicesMarketing toolsE-fulfillment strategic planningIntegration with existing systems
26Implementing Web-Based E-Commerce Step 4: Design and develop an effective Web siteSites should be carefully designed, developed, and testedSites should use adequate security measuresShould be attractive, fast loading, and easy to useMake checkout process easy to use to reduce shopping cart abandonmentConsider adding statements to encourage trustE-commerce features can be created using:Storefront software: Facilitates the creation of an online store (either packaged or Web-based)Shopping cart software: Designed to add only ordering capabilities to an existing Web site
30Implementing Web-Based E-Commerce Promote your Web site sufficientlyUse appropriate meta tags (description, keywords)
31Implementing Web-Based E-Commerce Submit your site to search sitesConsider paying for sponsored listings on search sitesConsider using banner adsUse of rich media ads is growingCan display sponsor banner ads on siteCan place banner ads on other sitesUse of behavioral (targeted) ads is growingUpdate your site regularly and consider adding incentives for return visits (contests, coupons, etc.)31
33Security Issues Security is essential for e-commerce Web sites Some guidelines for e-commerce sites:Secure financial transactions (use a secure Web server)Secure sensitive documents and files (use encryption)Authenticate online business partners (use digital certificates and digital signatures)
34Summary What Is E-Commerce? Types of E-Commerce Web Sites E-Commerce Business ModelsImplementing Web-Based E-CommerceSecurity Issues