E-Commerce: Digital Markets, Digital Goods Chapter 10 E-Commerce: Digital Markets, Digital Goods

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods LEARNING OBJECTIVES Describe the unique features of e-commerce, digital markets, and digital goods. Analyze how Internet technology has changed value propositions and business models. Describe the various types of e-commerce and how e-commerce has changed consumer retailing and business-to-business transactions.

Compare the principal payment systems for electronic commerce. Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods LEARNING OBJECTIVES (cont’d) Evaluate the role of m-commerce in business and describe the most important m-commerce applications. Compare the principal payment systems for electronic commerce.

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Major League Baseball Hits a Home Run with Information Systems Problem: Declining revenue from traditional sales channels, declining customer base, increasing costs. Solutions: MLB Web sites and cell phone ticketing enable electronic ticketing and delivery of online information and games, which increase sales. SAS customer analysis software and Web site tracking tools help identify good sales prospects. Demonstrates IT’s role in reducing cost, opening new sales channels, and building community with customers. Illustrates the emerging digital firm landscape where businesses can use tools to analyze critical data and leverage expertise in emerging technologies to offer services to other businesses.

E-commerce: the use of the Internet and the web to transact business. Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods E-commerce: the use of the Internet and the web to transact business. Unique Features of E-commerce: Ubiquity: Internet is available everywhere, anytime. Global reach: the technology reaches across national boundaries. Universal standards: one set of technology standards. Richness: video, audio and text messages are possible. Interactivity: the technology works through interaction with the user. Information density: the technology reduces information costs and raises quality. Personalization/customization: the technology allows personalized messages to be delivered to individuals as well as groups.

Key concepts in E-commerce: Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE Key concepts in E-commerce: Disintermediation: The elimination of organizations or business process layers responsible for certain intermediary steps in a value chain, reducing costs to the consumer

The Benefits of Disintermediation to the Consumer Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE The Benefits of Disintermediation to the Consumer Figure 10-2

Internet Business Models Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Internet Business Models Business Model: Defines an enterprise Describes how the enterprise delivers a product or service Shows how the enterprise creates wealth

Internet Business Models Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Internet Business Models Virtual storefront: Sells goods or services online (Amazon.com) Online marketplace: Provides a trading platform for individuals and firms (eBay.com)

Internet Business Models (Continued) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Internet Business Models (Continued) Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com) Online service provider: Provides online services for individuals and businesses (Xdrive.com) Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com) Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)

Types of Electronic Commerce Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce Types of Electronic Commerce Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com) Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com) Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )

Interactive Marketing and Personalization Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Interactive Marketing and Personalization Clickstream tracking tools: Collect data on customer activities at Web sites and store them in a log

Web Site Visitor Tracking Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE Web Site Visitor Tracking Figure 10-3

Create unique personalized Web pages for each customer Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE Web Personalization Create unique personalized Web pages for each customer Increased closeness to customer increases value to the customer, while reducing costs of interacting with the customer

Web Site Personalization Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ce ELECTRONIC COMMERCE Web Site Personalization Figure 10-4

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Blogs: Personal Web page that contains a series of chronological entries by its author, and links to related Web pages. Business-to-business (B2B) electronic commerce: New efficiencies and relationships EDI Procurement Private industrial networks (private exchanges) Net marketplaces Exchanges

EDI is being replaced by more powerful Web-based alternatives. Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Business-to-Business Electronic Commerce: New Efficiencies and Relationships Electronic Data Interchange (EDI): Enables the computer-to-computer exchange between two organizations of standard transactions. Currently 80% of B2B e-commerce uses this system. EDI is being replaced by more powerful Web-based alternatives.

Electronic Data Interchange (EDI) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods Electronic Commerce Electronic Data Interchange (EDI) Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment. Suppliers can automatically send data about shipments to purchasing firms. The purchasing firms can use EDI to provide production and inventory requirements and payment data to suppliers. Figure 10-5

Private Industrial Networks Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE Private Industrial Networks The largest Web-based form of B2B commerce Private B2B extranets that focus on continuous business process coordination between a small group of companies for collaboration and supply chain management. Wal-Mart uses its own private network to coordinate more than 15,000 suppliers to its stores.

A Private Industrial Network Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE A Private Industrial Network Figure 10-6

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods ELECTRONIC COMMERCE Net marketplaces (e-hubs) provide a single marketplace for many different buyers and sellers.

A Net Marketplace Management Information Systems Figure 10-7 Chapter 10 E-Commerce: Digital Markets, Digital Goods A Net Marketplace Figure 10-7

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-commerce: The use of the Internet for purchasing goods and services and also for transmitting messages using wireless mobile devices

M-Commerce Services and Applications Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce Services and Applications Information-based services: Instant messaging, e-mail, searching for a movie or restaurant using a cell phone or handheld PDA Transaction-based services: Purchasing stocks, concert tickets, music, or games; searching for the best price for an item using a cell phone and buying it in a physical store or on the Web

M-Commerce Services and Applications (Continued) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce Services and Applications (Continued) Personalized services: Services that anticipate what a customer wants based on that person’s location or data profile, such as updated airline flight information or beaming coupons for nearby restaurants

M-Commerce Challenges Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce Challenges Slow data transfer speeds on second-generation cellular networks, resulting in higher costs to customer Limited memory and power supplies

M-Commerce Challenges (Continued) Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods M-Commerce Challenges (Continued) More Web sites need to be designed specifically for small wireless devices. Keyboards and screens on cell phones are still tiny and awkward to use.

Electronic Commerce Payment Systems Management Information Systems Chapter 4 The Digital Firm: Electronic Business and Electronic Commerce ELECTRONIC COMMERCE Electronic Commerce Payment Systems Digital wallets Electronic storage of I.D. and digital cash. Accumulated balance Used for micro payments. Similar to monthly telephone bills. Stored value Used for micro payments. Pre-payment of funds, debited on use. Smart Cards I.D. and credit information stored on a chip attached to a card. Used in Europe. Digital cash Electronic currency that can be transferred over the Web. Peer-to-Peer payment Interpersonal transfer of funds such as PayPal. Digital checking Electronic checks with digital signatures, used most often in B2B commerce. Electronic billing presentment and payment Used by consumers to pay bills online, provided by many banks. Credit cards The most common form of payment.