1. E-Business and E-Commerce

2. Learning Objectives
Explain what e-business and e-commerce are and some of their benefits and risks.
Describe the purpose of the following common e-business applications: EDI, ERP, EAI, CRM, and SCM.
Identify a variety of e-commerce business models and discuss their similarities and differences.
Discuss the types of Web sites that can be used to implement e-commerce.

3. Learning Objectives, cont’d.
List 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 implemented using the Web.
Discuss some important security issues that are involved with performing financial transactions over the Internet.

4. Overview This chapter covers:
The difference between e-commerce and e-business
E-business and e-commerce applications and models
Issues regarding implementation of e-commerce
Sales and marketing strategies

5. What Are E-Business and E-Commerce?
E-business describes any business with an online presence.
E-commerce describes performing financial transactions over a network.
E-commerce has been conducted for decades, but now most e-commerce takes place over the Internet.

6. Benefits of E-Commerce
To organizations:
Reduced costs
Increased customer satisfaction
More effective management tools
Potentially higher sales
To customers:
Convenience
Easier comparison shopping
Higher degree of selection
Potential cost savings

8. Limitations and Risks of E-Commerce
Pressure to be “always open”
Customer hesitation to shop online
Risk of fraudulent credit card transactions
Ease of entry for competitors
High rate of failure
Expense to the customer of returning merchandise

9. Electronic Data Interchange (EDI)
EDI: the transfer of data between different companies using networks, such as the Internet.
Can increase efficiency and lower costs
New EDI applications will result from:
Validity of digital signatures
Increased acceptance of electronic document submission

11. Enterprise Resource Planning and Enterprise Application Integration
Enterprise resource planning: special type of large, integrated system that ties together all types of a business’s activities.
Enterprise application integration: when information from an ERP or other type of internal system is exchanged with other applications or organizations.

12. Customer Relationship Management (CRM)
CRM: a company’s customer service system.
Goal of CRM system is to build ongoing relationships with customers to increase satisfaction and loyalty, which, in turn, can result in higher sales.
Many CRM activities today take place via the Web.

13. Supply Chain Management (SCM)
Supply chain management: oversight of materials, information, and finances as they move from the supplier to the consumer.
Value chain management: process of maximizing flow of products, services, and information from raw materials to final consumer through value-added network of suppliers.
Just-in-time (JIT) systems are used to eliminate waste, and reduce inventory and facility costs.

15. E-Commerce Business Models
A company’s business model consists of its policies, operations, and technology—in essence, a description of how it generates revenue.

16. Business to Consumer (B2C)
With the B2C model, businesses sell goods or services to the end consumer.

17. Business to Business (B2B)
The B2B business model includes any type of e-commerce transaction between two businesses.
Many B2B activities focus on exchanging business information:
To facilitate the supply chain
To procure goods and services needed for normal business activities

18. Consumer to Consumer (C2C)
The C2C business model consists primarily of consumer auctions.
Individuals bid on or sell items.

19. Business to Government (B2G)
B2G organizations sell goods and services to the government.
B2G will likely become more prominent as the government sector participates more actively in e-commerce.
When consumers make payments to the government online, it is referred to as C2G e-commerce.

21. Intermediary Hubs
Intermediary hub: e-commerce model where a business brings buyers and sellers together.
Vertical hubs match buyers and sellers within a particular industry.
Horizontal hubs focus on providing the same type of products or services across different industries.

23. Types of E-Commerce Web Sites
Manufacturer and e-tailer Web sites
E-malls
Brokerage and auction sites
Online auctions
Financial brokerages
Market exchanges

25. Implementing Web-Based E-Commerce
Implementing a Web-based e-commerce system usually involves the five steps listed here.

26. Step 1: Selecting Appropriate Business Models and Types of Web Sites
Identify the current business models and additional models to be used.
Then, select the types of Web sites (e-tailer, auction, brokerage, etc.).

27. Step 2: Selecting the Desired E-Commerce/E-Business Applications
Identify the appropriate applications:
Online selling
EDI
ERP
SCM
CRM

28. Step 3: Determining How to Handle Electronic Financial Transactions
Credit card processing
Online checks and online payment transfers
Smart cards
Digital wallets
B2B considerations

30. Step 4: Designing and Developing an Effective Web Site
Web site design: the planning of the site.
Web site development: the actual creation, testing, and maintenance of the site.
E-commerce sites should be designed carefully to ensure that they are easy to use, quick to load, and secure.

31. Step 5: Implementing Appropriate Sales and Marketing Strategies
Customer service features
Taxes
Privacy policies and security statements
Appropriate domain names and urls
Web site promotion
Data warehousing and mining

33. Security Issues Secure financial transactions.
Secure sensitive documents and files.
Authenticate online business partners.