1. Chapter Extension 11 E-Commerce © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

2. CE11-2 Study Questions What is e-commerce? How does e-commerce improve market efficiency? What economic factors disfavor e-commerce? What Web technology is used for e-commerce? What is three-tier architecture?

3. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-3 What Is E-Commerce? Buying and selling of goods and services Over public and private computer networks Merchant companies – Take title to goods they sell – Sell their own services Non-merchant companies – Do not own goods – Arrange for purchase and sale – Sell services of others

4. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-4 E-Commerce Merchant Companies B2C – Business-to-consumer – Sales between supplier and retail costumer – Web storefront application employed Customers enter site Manage orders B2B – Business-to-business – Sales between companies

5. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-5 E-Commerce Merchant Companies, continued B2G – Business-to-government – Sales between companies and government agencies

6. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-6 B2B, B2G, and B2C Figure CE11-2

7. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-7 Non-Merchant E-Commerce E-commerce auctions – Online versions of standard auctions – Supports competitive bidding – Example: eBay Clearinghouses – Provide goods and services – Arrange for delivery – Do not take title – Example: electronic exchanges

8. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-8 How Does E-Commerce Improve Market Efficiency? For buyers: – Leads to disintermediation Elimination of middle layers in supply chain Distributor and associated inventories are unnecessary waste – Improves flow of price information Many sites offer price comparisons Avoid state tax Eliminate or reduce shipping expenses

9. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-9 How Does E-Commerce Improve Market Efficiency?, continued For sellers: – Produces information about price elasticity Amount that demand rises and falls based on price changes Allows companies to experiment on customers Allows management of prices through direct interaction

10. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-10 E-Commerce Market Consequences Figure CE11-4

11. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-11 What Economic Factors Disfavor E-Commerce? Companies consider: – Channel conflict Value of lost sales must be less than value of e-commerce sales – Price conflict Price offered online may cause conflicts with existing channels – Logistics expense Costs of entering and processing small quantities increases – Customer service expense Manufacturer will have to service small customers on one-by- one basis

12. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-12 What Web Technology Is Used for E-Commerce? SMTP – E-mail FTP – File exchange HTTP – Transmits Web pages over the Internet – Web pages encoded in HTML Defines structure and layout of Web pages

13. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-13 Web Pages Encoded in HTML – Tag used to define data element Attribute provides properties about tag – Hyperlinks point to other Web pages – Heading provides metadata about page – Body contains content Transmitted by Web servers Consumed by browsers – Program that processes HTTP protocol – Receives, displays, and processes HTML documents – Transmits responses

14. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-14 What Is Three-Tier Architecture? Commerce server applications use three-tier architecture – User tier Computers use browsers to request and process Web pages – Service tier Computers that run Web servers and generate Web pages – Database tier Computers that process SQL requests to retrieve and store data

15. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-15 Three-Tier Architecture Figure CE11-8

16. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke CE11-16 Active Review What is e-commerce? How does e-commerce improve market efficiency? What economic factors disfavor e-commerce? What Web technology is used for e-commerce? What is three-tier architecture?