1. Management Information Systems Lection 08 E-commerce CLARK UNIVERSITY College of Professional and Continuing Education (COPACE)

2. Electronic commerce E-commerce is a type of industry where buying and selling of product or service is conducted over electronic systems such as the Internet and other computer networks. E-commerce is conducting business activities electronically over computer networks.

3. 5 aspects of e-commerce Business processes - replacement business processes to electronic sphere Services - tools of reducing the cost of providing services Education - the engine of online education Cooperation - a platform for cooperation among organizations Community - a platform for interaction between members of some community

4. E-business E-business is more than a broad definition of e-commerce, it includes not only the buying and selling of goods and services, but also customer services, interaction with business partners and the management of electronic transactions within the organization.

5. Forms of e-commerce

6. Forms of e-commerce organizations Clear physical organization carry out their business off-line. Virtual organizations conduct the business mainly on-line. For mixed organizations the e-commerce is an additional marketing channel.

7. Sphere of e-commerce electroniс data interchange (EDI) electronic funds transfer (EFS) e-trade e-cash e-marketing e-banking e-insurance

8. Networks used by the e-commerce Internet Intranet (LAN) VAN is a private network that provide specialized services (e.g., access to commercial databases, e- mail and video-conference, etc.). It allows controlled access from the outside, for specific business or educational purposes. Separate automated working place (vending machines)

9. E-commerce applications Direct marketing Search jobs Online banking E-government E-purchasing B2B exchanges B2C exchanges C2C exchanges C-commerce M-commerce Auctions Travel Online publishing Consumer services

10. Support services People: Buyers, Sellers, Intermediaries, Service, Managers Public Policy: Taxes, Legal, Privacy Issues, Regulations, Technical Standards Marketing and Advertisement: Market Research, Promotions, Web content Support Services:, Logistics, Payments, Content, Security system development Business Partnerships: Affiliate programs, Joint ventures, Exchanges, E-marketplaces, Consortia

11. Electronic Payment Systems Credit card Charge card Debit card Smart card: a credit card-sized device with an embedded microchip to provide electronic memory and processing capability

12. Infrastructure Common business services infrastructure (security, smart cards, authentication electronic payments, catalogs) Messaging and information distribution infrastructure (EDI, e-mail, hypertext transfer protocol, chat rooms) Multimedia content and network publishing infrastructure (HTML, Java, XML, VRML) Network infrastructure (telecom, cable TV wireless, internet) Interfacing infrastructure (with databases, business partners applications).

13. Classification of e-commerce (on the role of participants) 1.B2B 2.B2C 3.B2B2C 4.C2B 5.C2C 6.B2E 7.P2P 8.m-commerce 9.c-commerce 10.e-learning 11.e-government

14. Business-to-business (B2B) All participants are organizations (for instance, relationships between the company “Dell” with the component suppliers). Useful tool for connecting business partners in a virtual supply chain to cut the supply time and to reduce costs.

15. Business-to-consumer (B2C) The organization sells some goods to the final customer (e-tailing). Customers deal directly with an organization and avoid intermediaries. Advantages: – can lead to higher profits – can lead to lower prices for consumers – many goods and services are cheaper online – easily comparison of prices, features and value

16. Business-to-business-to-consumer (B2B2C) Organization provides products or services to the other organization that provides goods and services to their own consumers (company employees), without surcharge Social projects

17. Consumer-to-business (C2B) Private persons sell goods and services to the organizations. The private persons are seeking sellers at the stated price (coral.ru, tez-tour.com).

18. Consumer-to-consumer (C2C) Consumer sells directly to another customer. 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, WeBidz…

19. Business-to-employees (B2E) Organization provides services, information or products of employees (usually via the intranet)

20. Peer-to-peer (P2P) It is a technology that allows to exchange the data directly between computers. It is used in C2C, B2B and B2C types of e- commerce.

21. Mobile commerce (m-commerce) The transactions are made through the wireless networks. Devices are personal digital assistants, cell phones, smart phones, communicators, tablet PC and other. 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.

22. Collaborative commerce (c-commerce) A private person or a group of persons communicate and collaborate online. Aims: – to sell products or services more efficiently — increase leads, improve win rates, and lower customer support costs – to buy goods and services more effectively — negotiate best-value agreements to get the most return from every penny at the lowest possible risk – to manage cash more strategically — streamline and improve invoicing and payment, and optimize working capital

23. E-learning Training and education online It refers to the use of various kinds of electronic media and information and communication technologies in education (text, audio, images, animation, streaming video, audio or video tape, satellite TV, CD- ROM…)

24. E-government The state buys or provides goods, services, information to organizations and citizens or vice-a-versa. Forms of e-Government – Government-to-consumer (G2C) – Government-to-business (G2B) – Government-to-government (G2G)

25. Multistage Model for E-commerce (B2B and B2C)

26. Product and information flows for HP printers ordered over the Web

27. 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

28. 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, invasion of privacy, lack of Internet access, return on investment, legal jurisdiction, taxation

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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

42. 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

43. History of e-commerce 1970 - Electronic Funds Transfer (EFT) 1983 - Electronic Data Interchange (EDI) 1990 - the commercialization of the Internet (WWW), the appearance of the term e-commerce 1995 - the appearance of various forms of e-commerce 1999 - the shift from B2C to B2B 2001 - the shift in the direction of B2E, e-government, e-learning 2005 - development of social networks, m-commerce