Introduction to Information Systems E-Business and E-Commerce

7.1 Overview of E-Business and E-Commerce Definitions and Concepts Types of E-Commerce E-Commerce and Search Major E-Commerce Mechanisms Benefits and Limitations of E-Commerce Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet. E-business is a broader definition of EC, including buying and selling of goods and services, and also servicing customers, collaborating with partners, conducting e-learning and conducting electronic transactions within an organization.

Definitions and Concepts Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet. Electronic business (E-business) is a broader definition of EC, including buying and selling of goods and services, and also servicing customers, collaborating with partners, conducting e-learning and conducting electronic transactions within an organization.

Definitions and Concepts (continued) Pure versus Partial Electronic Commerce depends on the degree of digitization involved. Pure vs. Partial EC --The product can be physical or digital. --The process can be physical or digital. --The delivery agent can be physical or digital.

Definitions and Concepts (continued) Brick-and-mortar organizations organizations are purely physical organizations. Virtual organizations are companies that are engaged only in EC. (Also called pure play) Click-and-mortar organizations organizations are those that conduct some e-commerce activities, yet their business is primarily done in the physical world. i.e. partial EC.

Bricks and Mortar, Partial EC, and Pure EC Example Buy books at university bookstore: bricks and mortar Use Internet to order physical book from Amazon: partial EC Order and download book from Amazon: pure EC

Types of E-Commerce Business-to-Consumer (B2C) the sellers are organizations and the buyers are individuals. Business-to-Business (B2B) both the sellers and buyers are business organizations. Consumer-to-Consumer (C2C) an individual sells products or services to other individuals. E-Government: the use of Internet Technology in general and e-commerce in particular to deliver information about public services to citizens (called Government-to-citizen [G2C EC]), business partners and suppliers (called government-to-business [G2B EC]), Mobile Commerce (m-commerce) refers to e-commerce that is conducted in a wireless environment. For example, using cell phone to shop over the Internet. Source: Don Farrall/Photodisc/Getty Images, Inc.

Types of E-Commerce (continued) Business-to-Employee (B2E) An organization uses e-commerce internally to provide information and services to its employees. Companies allow employees to manage their benefits, take training classes electronically; buy discounted insurance, travel packages, and event tickets. E-Government the use of Internet Technology in general and e-commerce in particular to deliver information about public services to citizens (called Government-to-citizen [G2C EC]), business partners and suppliers (called government-to-business [G2B EC]). Mobile Commerce (m-commerce) refers to e-commerce that is conducted in a wireless environment. For example, using cell phone to shop over the Internet.

Major E-Commerce Mechanisms Auctions is a competitive process in which either a seller solicits consecutive bids from buyers or a buyer solicits consecutive bids from sellers. Sellers use a Forward Auction as a channel to many potential buyers. Note that Sotheby’s uses forward auctions. In Reverse Auctions, one buyer, usually an organization, wants to buy a product or a service. The buyer posts a request for quotation (RFQ) on its Web site or on a third-party Web site. The RFQ contains detailed information on the desired purchase. Suppliers study the RFQ and submit bids, and the lowest bid wins the auction.

Forward and Reverse Auctions Bid price Bid price Time Time Forward Auction Reverse Auction

E-Commerce Business Models Online direct marketing manufacturers or retailers sell directly to customers. Electronic tendering system businesses (or governments) request quotes from suppliers; uses B2B (or G2B) with reverse auctions. Name-your-own-price customers decide how much they want to pay. Find-the-best-price customers specify a need and an intermediary compares providers and shows the lowest price.

E-Commerce Business Models (continued) Affiliate marketing Vendors ask partners to place logos or banners on partner’s site. If customers click on logo, go to vendor’s site, and buy, then vendor pays commission to partners.

Benefits of E-Commerce Benefits to organizations Makes national and international markets more accessible Lowering costs of processing, distributing, and retrieving information Benefits to customers Access a vast number of products and services around the clock (24/7/365)

Benefits of E-Commerce (continued) Benefits to Society Ability to easily and conveniently deliver information, services and products to people in cities, rural areas and developing countries.

Limitations of E-Commerce Technological Limitations Lack of universally accepted security standards Insufficient telecommunications bandwidth Expensive accessibility Non-technological Limitations Perception that EC is unsecure Unresolved legal issues Lacks a critical mass of sellers and buyers

7.2 Business-to-Consumer (B2C) Electronic Commerce Electronic storefronts Electronic malls is a Web site that represents a single store. are collections of individual shops under a single Internet address.

Online Service Industries Cyberbanking involves conducting banking activities from home, a place of business, or on the road instead of at a physical bank location.

Online Advertising Advertising is an attempt to disseminate information in order to influence a buyer-seller transaction. Online Advertising methods Banners are simply electronic billboards. Pop-up ad appears in front of the current browser window. Pop-under ad appears underneath the active window. Permission marketing asks consumers to give their permission to voluntarily accept online advertising and e-mail. Viral marketing refers to online “word-of-mouth” marketing.

7.3 Business-to-Business (B2B) Electronic Commerce In B2B e-commerce, the buyers and sellers are organizations. © Richard Thomas/Age Fotostock America, Inc.

B2B Sell-Side Marketplace In the sell-side marketplace, organizations sell their products or services to other organizations Electronically from their own Web site and/or from a third-party Web site. This model is similar to the B2C model in which the buyer comes to the seller’s site, views catalogs, and places an order. In the B2B sell-side marketplace, the buyers are organizations. © Richard Thomas/Age Fotostock America, Inc.

7.4 Electronic Payments Electronic payment systems enable you to pay for goods and services electronically.

Electronic checks (e-checks) are similar to paper checks and are used mostly in B2B. Electronic credit cards allow customers to charge online payments to their credit card account. Purchasing cards are the B2B equivalent of electronic credit cards and are typically used for unplanned B2B purchases. Electronic cash Stored-value money cards allow you to store a fixed amount of prepaid money and then spend it as necessary. Smart cards contain a chip called a microprocessor that can store a considerable amount of information and are multipurpose – can be used as a debit card, credit card or a stored-value money card. Person-to-person payments are a form of e-cash that enables two individuals or an individual and a business to transfer funds without using a credit card.

7.5 Ethical and Legal Issues Ethical Issues Privacy Privacy: ecommerce provides opportunities for businesses and employers to track individual activities on the WWW using cookies or special spyware. This allows private/personal information to be tracked, compiled, and stored as an individual profile. This profile can be used or sold to other businesses for target marketing or by employees to aide in personnel management decisions (i.e., promotions, raises, layoffs).

Legal Issues Specific to E-Commerce Fraud on the Internet i.e. stocks, investments, business opportunities, auctions. Domain Names problems with competition. Cybersquatting refers to the practice of registering domain names solely for the purpose of selling them later at a higher price.