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Chapter 9 Electronic Commerce Systems James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8 th ed. Boston, MA: McGraw-Hill,

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Presentation on theme: "Chapter 9 Electronic Commerce Systems James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8 th ed. Boston, MA: McGraw-Hill,"— Presentation transcript:

1 Chapter 9 Electronic Commerce Systems James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8 th ed. Boston, MA: McGraw-Hill, Inc., ISBN:

2 Chapter 9 Electronic Commerce Systems2 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 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 Learning Objectives

3 Chapter 9 Electronic Commerce Systems3 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

4 Chapter 9 Electronic Commerce Systems4 Case 1 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

5 Chapter 9 Electronic Commerce Systems5 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?

6 Chapter 9 Electronic Commerce Systems6 The Scope of e-Commerce

7 Chapter 9 Electronic Commerce Systems7 E-Commerce Technologies

8 Chapter 9 Electronic Commerce Systems8 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

9 Chapter 9 Electronic Commerce Systems9 Essential e-Commerce Architecture

10 Chapter 9 Electronic Commerce Systems10 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

11 Chapter 9 Electronic Commerce Systems11 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

12 Chapter 9 Electronic Commerce Systems12 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

13 Chapter 9 Electronic Commerce Systems13 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

14 Chapter 9 Electronic Commerce Systems14 Workflow Management E-business and e-commerce workflow management 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

15 Chapter 9 Electronic Commerce Systems15 Example of Workflow Management

16 Chapter 9 Electronic Commerce Systems16 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

17 Chapter 9 Electronic Commerce Systems17 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

18 Chapter 9 Electronic Commerce Systems18 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

19 Chapter 9 Electronic Commerce Systems19 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

20 Chapter 9 Electronic Commerce Systems20 Electronic Payment Example

21 Chapter 9 Electronic Commerce Systems21 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

22 Chapter 9 Electronic Commerce Systems22 E-Commerce Application Trends

23 Chapter 9 Electronic Commerce Systems23 Case 2 Battle for e-Commerce Supremacy eBay commands more than 90 percent of the online auction market  Growth is at least 40 percent per year CraigsList is an online classifieds meeting place  Buying and selling, but no payment system  Online classifieds growing faster than auctions Google and Microsoft entering the market with added features  Search by zip code, online maps, free listings

24 Chapter 9 Electronic Commerce Systems24 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? What are the major advantages and limitations of Google Base and Windows Live Expo?  Which do you prefer, or would you use both? Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions enough to ward off the competitive assaults of Google and Microsoft?

25 Chapter 9 Electronic Commerce Systems25 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

26 Chapter 9 Electronic Commerce Systems26 Differences in Marketing

27 Chapter 9 Electronic Commerce Systems27 Web Store Requirements

28 Chapter 9 Electronic Commerce Systems28 Developing a Web Store Build a 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

29 Chapter 9 Electronic Commerce Systems29 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

30 Chapter 9 Electronic Commerce Systems30 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

31 Chapter 9 Electronic Commerce Systems31 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

32 Chapter 9 Electronic Commerce Systems32 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

33 Chapter 9 Electronic Commerce Systems33 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

34 Chapter 9 Electronic Commerce Systems34 E-Commerce Portals 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

35 Chapter 9 Electronic Commerce Systems35 B2B E-Commerce Web Portal

36 Chapter 9 Electronic Commerce Systems36 Clicks and Bricks Success will go to those who can integrate Internet initiatives with traditional operations  Merging operations has trade-offs See Figure 9.18

37 Chapter 9 Electronic Commerce Systems37 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

38 Chapter 9 Electronic Commerce Systems38 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

39 Chapter 9 Electronic Commerce Systems39 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

40 Chapter 9 Electronic Commerce Systems40 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?

41 Chapter 9 Electronic Commerce Systems41 Case 3 Yahoo and Flickr Flickr is a photo sharing site  14,000 images per hour are uploaded  There are 1.5 million users  80 percent of the 60 million photos are public  More than half have user-created labels that make them searchable Yahoo purchased Flickr  The user-generated content (social media) will be used in the war against Google  It would like to apply the same concept to web content as well

42 Chapter 9 Electronic Commerce Systems42 Case 3 Yahoo and Flickr Google takes an automated approach to searches  Armies of Ph.D.s and servers  Creates more relevant searches by using algorithms Yahoo’s strategy  Also uses algorithms, but not as well  Is gambling that the collective intelligence of its audience will produce more relevant search results

43 Chapter 9 Electronic Commerce Systems43 Case Study Questions How does the Web foster the growth of social media and social networking? What business benefits does Yahoo hope to gain from its acquisition of Flickr and drive to “Flickize” its business?  How realistic are such planned benefits? Can social media and networking serve as a strategic competitive differentiator that enables Yahoo to overtake Google in the multibillion- dollar targeted search ads market?

44 Chapter 9 Electronic Commerce Systems44 Case 4 Today’s Web; Anything but Usual Customers aren’t just reading these days  They’re writing and watching as well Community features  Interactive webcasts  Newsgroups  Online chat forums Customer-to-customer interactions help Microsoft learn which product features work, and which don’t

45 Chapter 9 Electronic Commerce Systems45 Case 4 Today’s Web; Anything but Usual Federated will be using FedAd software to  Coordinate the efforts of 4,000 marketing staffers in six divisions  Buy and publish the company’s newspaper, radio, and TV ads  Pay invoices  Ship ads to publications  Manage marketing expenses against the company’s budget

46 Chapter 9 Electronic Commerce Systems46 Case 4 Today’s Web; Anything but Usual Dell’s initiatives  Redesign of its website to make it easier to use  Make IT costs smaller by being more efficient  Combine the website re-launch with an e-commerce consolidation

47 Chapter 9 Electronic Commerce Systems47 Case Study Questions What is the primary driver behind the Web upgrade activities of Microsoft and Dell? What is the business value of Microsoft’s Web-based, live-feedback program? What lessons on developing successful e-commerce projects can be gained from the information in this case?

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