Introduction to E-Commerce Benefits of E-Commerce

Introduction to E-Commerce  Improved Customer Service Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365 Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365

Introduction to E-Commerce  Expanded Markets Elimination of Boundaries Direct to customer (no middleman) Elimination of Boundaries Direct to customer (no middleman)

Introduction to E-Commerce  Cost Cutting Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs

Introduction to E-Commerce  Higher Profits Additional sales channel User fee income Advertising Income Lower marketing costs Additional sales channel User fee income Advertising Income Lower marketing costs

Introduction to E-Commerce E-Commerce Challenges Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience

Chapter 2 Technology Infrastructure: The Internet and the World Wide Web

Routing Packets

Internet Protocols A protocol is a collection of rules for formatting, ordering, and error-checking data sent across a network.A protocol is a collection of rules for formatting, ordering, and error-checking data sent across a network.

IP Addresses IP addresses are based on a 32-bit binary number that allows over 4 billion unique addresses for computers to connect to the Internet.IP addresses are based on a 32-bit binary number that allows over 4 billion unique addresses for computers to connect to the Internet. IP addresses appear in ‘dotted decimal’ notation (four numbers separated by periods).IP addresses appear in ‘dotted decimal’ notation (four numbers separated by periods).

Domain Names To make the numbering system easier to use, an alternative addressing method that uses words was created.To make the numbering system easier to use, an alternative addressing method that uses words was created. An address, such as is called a domain name.An address, such as is called a domain name. The last part of a domain name (i.e., ‘.com’) is the most general identifier in the name and is called a ‘top-level domain’ (TLD).The last part of a domain name (i.e., ‘.com’) is the most general identifier in the name and is called a ‘top-level domain’ (TLD).

Web Page Delivery Hypertext Transfer Protocol (HTTP) is the set of rules for delivering Web pages over the Internet.Hypertext Transfer Protocol (HTTP) is the set of rules for delivering Web pages over the Internet. HTTP uses the client/server modelHTTP uses the client/server model A user’s Web browser opens an HTTP session and sends a request for a Web page to a remote server.A user’s Web browser opens an HTTP session and sends a request for a Web page to a remote server. In response, the server creates an HTTP response message that is sent back to the client’s Web browser.In response, the server creates an HTTP response message that is sent back to the client’s Web browser. The combination of the protocol name and the domain name is called a uniform resource locator (URL).The combination of the protocol name and the domain name is called a uniform resource locator (URL).

Hypertext Markup Language HTML is a simplified programming language that includes tags defining the format and style of text elements in a document.HTML is a simplified programming language that includes tags defining the format and style of text elements in a document.

HTML Editors HTML documents can be created in any general- purpose text editor or word processor.HTML documents can be created in any general- purpose text editor or word processor. Sophisticated editors can create full-scale, commercial-grade Web sites with database access, graphics, fill-in forms, and display the Web page along with the HTML code.Sophisticated editors can create full-scale, commercial-grade Web sites with database access, graphics, fill-in forms, and display the Web page along with the HTML code. Microsoft FrontPage and Macromedia Dreamweaver are examples of Web site builders.Microsoft FrontPage and Macromedia Dreamweaver are examples of Web site builders.

Globalization Issues

Language Issues To do business effectively in other culturesTo do business effectively in other cultures –Must adapt to culture Researchers have found thatResearchers have found that –Customers are more likely to buy products and services from Web sites in their own language LocalizationLocalization –Translation that considers multiple elements of local environment

Culture Issues Important element of business trustImportant element of business trust –Anticipate how the other party to a transaction will act in specific circumstances CultureCulture –Combination of language and customs –Varies across national boundaries –Varies across regions within nations

Infrastructure Issues Internet infrastructure includesInternet infrastructure includes –Computers and software connected to Internet –Communications networks over which message packets travel Organization for Economic Cooperation and Development’s ( OECD)Organization for Economic Cooperation and Development’s ( OECD) –Statements on Information and Communications Policy Deal with telecommunications infrastructure development issuesDeal with telecommunications infrastructure development issues

Infrastructure Issues (Continued) Flat-rate access systemFlat-rate access system –Consumer or business pays one monthly fee for unlimited telephone line usage –Contributed to rapid rise of U.S. electronic commerce Targets for technological solutionsTargets for technological solutions –Paperwork and processes that accompany international transactions

Revenue Models

Revenue model of selling goods and services on the WebRevenue model of selling goods and services on the Web –Based on mail order catalog revenue model that predates the Web Spiegel Spiegel Mail order or catalog modelMail order or catalog model –Proven to be successful for wide variety of consumer items Web catalog revenue modelWeb catalog revenue model –Taking the catalog model to the Web

Computers and Consumer Electronics Apple, Dell, Gateway, and Sun MicrosystemsApple, Dell, Gateway, and Sun MicrosystemsAppleDellGatewaySun MicrosystemsAppleDellGatewaySun Microsystems –Have had great success selling on the Web DellDell –Created value by designing entire business around offering high degree of configuration flexibility to its customers

Books, Music, and Videos Retailers using the Web catalog model to sell books, music, and videosRetailers using the Web catalog model to sell books, music, and videos –Among the most visible examples of electronic commerce Jeff BezosJeff Bezos –Formed Amazon.com Amazon.com Jason and Matthew OlimJason and Matthew Olim –Formed online music store they called CDnow CDnow –Used the Web catalog revenue model

Luxury Goods People are still reluctant to buy through a Web sitePeople are still reluctant to buy through a Web site Web sites of Vera Wang and VersaceWeb sites of Vera Wang and VersaceVera Wang VersaceVera Wang Versace –Constructed to provide information to shoppers, not to generate revenue Web site of EvianWeb site of EvianEvian –Designed for a select, affluent group of customers

Clothing Retailers Clothing Retailers Lands’ EndLands’ EndLands’ EndLands’ End –Pioneered idea of online Web shopping assistance with its Lands’ End Live feature in 1999 Personal shopperPersonal shopper –Intelligent agent program that learns customer’s preferences and makes suggestions Virtual modelVirtual model –Graphic image built from customer measurements

Flowers and Gifts Flowers1-800-Flowers1-800-Flowers –Created online extension to its telephone order business Chocolatier GodivaChocolatier GodivaGodiva –Offers business gift plans on its site

Digital Content Revenue Models Firms that own intellectual propertyFirms that own intellectual property –Have embraced the Web as a new and highly efficient distribution mechanism Lexis.comLexis.comLexis.com –Provides full-text search of court cases, laws, patent databases, and tax regulations ProQuestProQuestProQuest –Sells digital copies of published documents

Advertising-Supported Revenue Models Broadcasters provide free programming to an audience along with advertising messages KOMO KINGBroadcasters provide free programming to an audience along with advertising messages KOMO KINGKOMOKINGKOMOKING Success of Web advertising hampered bySuccess of Web advertising hampered by –No consensus has emerged on how to measure and charge for site visitor views Stickiness of a Web site: ability to keep visitors and attract repeat visitorsStickiness of a Web site: ability to keep visitors and attract repeat visitors –Very few Web sites have sufficient visitors to interest large advertisers

Web Portals Web directoryWeb directory –A listing of hyperlinks to Web Pages Portal or Web portalPortal or Web portal –Site used as a launching point to enter the Web –Almost always includes a Web directory and search engine –Example: Yahoo, AOL, Altavista YahooAltavistaYahooAltavista

Advertising-Subscription Mixed Revenue Models SubscribersSubscribers –Pay a fee and accept some level of advertising –Typically subjected to much less advertising Used byUsed by –The New York Times and The Wall Street Journal The New York Times The Wall Street JournalThe New York Times The Wall Street Journal

Fee-for-Transaction Revenue Models Businesses offer services and charge a fee based on number or size of transactions processed PayPalBusinesses offer services and charge a fee based on number or size of transactions processed PayPalPayPal DisintermediationDisintermediation –Removal of an intermediary from value chain ReintermediationReintermediation –Introduction of a new intermediary

Fee-for-Service Revenue Models Fee based on value of service providedFee based on value of service provided ServicesServices –Range from games and entertainment to financial advice Online gamesOnline games –Growing number of sites include premium games in their offerings –Site visitors must pay to play these premium games

Fee-for-Service Revenue Models (Continued) Concerts and filmsConcerts and films –As more households obtain broadband access to the Internet Companies are providing streaming video of concerts and films to paying subscribersCompanies are providing streaming video of concerts and films to paying subscribers Professional ServicesProfessional Services –State laws One of the main forces preventing U.S. professionals from extending their practices to the WebOne of the main forces preventing U.S. professionals from extending their practices to the Web

If you build it they will come – you hope! If you build it they will come – you hope! Exploring E-Commerce Marketing on the Web

Marketing The management process responsible for identifying, anticipating, and satisfying customer’s requirements The management process responsible for identifying, anticipating, and satisfying customer’s requirements. Exploring E-Commerce The commercial functions involved in transferring goods from producer to consumer.

Product-based Strategies: product categories Staples Home Depot Home Depot Costco Musical Instruments Musical Instruments More Musical Instruments More Musical Instruments Staples Home Depot Home Depot Costco Musical Instruments Musical Instruments More Musical Instruments More Musical Instruments Exploring E-Commerce

Customer-based Strategies: Meeting specific needs Sabre Business Services Business Services Web Marketing Web Marketing Sabre Business Services Business Services Web Marketing Web Marketing Exploring E-Commerce

Target Marketing Micromarketing (go for the “niche”) Geographic Marketing Demographic Marketing Psychographic Marketing Micromarketing (go for the “niche”) Geographic Marketing Demographic Marketing Psychographic Marketing Exploring E-Commerce

Customer Behavior Strategies Browsers – use of “triggers”. Sports Outfitter Sports Outfitter Browsers – use of “triggers”. Sports Outfitter Sports Outfitter Exploring E-Commerce

Customer Behavior Strategies Buyers – ready to buy. Barnes and Noble Barnes and Noble Buyers – ready to buy. Barnes and Noble Barnes and Noble Exploring E-Commerce

Advertising on the Web

Banner Ads Most advertising on the Web uses banner ads.Most advertising on the Web uses banner ads. A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site.A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site. The most common sizes of banner ads are:The most common sizes of banner ads are: –Full banner –Half banner –Square button Most advertising on the Web uses banner ads.Most advertising on the Web uses banner ads. A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site.A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site. The most common sizes of banner ads are:The most common sizes of banner ads are: –Full banner –Half banner –Square button

Other Web Ad Formats Another format of Web advertising is the pop-up ad.Another format of Web advertising is the pop-up ad. A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page.A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page. Another type of pop-up ad is called the pop- behind ad.Another type of pop-up ad is called the pop- behind ad. A pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original windowA pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original window –The window is parked behind the user browser waiting to appear when the browser is closed. Another format of Web advertising is the pop-up ad.Another format of Web advertising is the pop-up ad. A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page.A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page. Another type of pop-up ad is called the pop- behind ad.Another type of pop-up ad is called the pop- behind ad. A pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original windowA pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original window –The window is parked behind the user browser waiting to appear when the browser is closed.

Marketing Unsolicited is often considered to be Spam.Unsolicited is often considered to be Spam. Sending messages to Web site visitors who have expressly requested the messages is a completely different story.Sending messages to Web site visitors who have expressly requested the messages is a completely different story. The practice of sending messages to people who have requested them is a part of marketing strategy called permission marketing.The practice of sending messages to people who have requested them is a part of marketing strategy called permission marketing. Unsolicited is often considered to be Spam.Unsolicited is often considered to be Spam. Sending messages to Web site visitors who have expressly requested the messages is a completely different story.Sending messages to Web site visitors who have expressly requested the messages is a completely different story. The practice of sending messages to people who have requested them is a part of marketing strategy called permission marketing.The practice of sending messages to people who have requested them is a part of marketing strategy called permission marketing.

Search Engine Positioning Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings.Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings. The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning.The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning. Search engine positioning is also called:Search engine positioning is also called: –Search engine optimization –Search engine placement Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings.Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings. The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning.The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning. Search engine positioning is also called:Search engine positioning is also called: –Search engine optimization –Search engine placement

Chapter 5 - Business to Business Strategies: From Electronic Data Interchange to Electronic Commerce

Supply Chain Purchasing activitiesPurchasing activities Supply chainSupply chain ProcurementProcurement Supply managementSupply management SourcingSourcing E-procurement or e-sourcingE-procurement or e-sourcing

Supply Chain Vendor Customer Product information Pricing Shipping Order status Invoice

Vendor Customer Product specifications Inventory levels Purchase order Payment Supply Chain

Chapter 6 - Web Auctions, Virtual Communities, Web Portals Types of Auctions (English, Dutch)Types of Auctions (English, Dutch) Auction related services (directories, escrow, price monitoring)Auction related services (directories, escrow, price monitoring) Virtual communities (gathering place; narrow interests)Virtual communities (gathering place; narrow interests) Portal strategies (gathering place plus revenue)Portal strategies (gathering place plus revenue)

Chapter 7 –Legal, Ethical, and Tax Issues Web content issues – copyright; trademarkWeb content issues – copyright; trademark Privacy ObligationsPrivacy Obligations CybersquattingCybersquatting Taxation – Nexus = “connection”Taxation – Nexus = “connection” Sales TaxSales Tax Borders and jurisdiction “power, effects, legitimacy, notice”Borders and jurisdiction “power, effects, legitimacy, notice”

Power Power, in the form of control over physical space and the people and objects that reside in that space, is a defining characteristic of statehood.Power, in the form of control over physical space and the people and objects that reside in that space, is a defining characteristic of statehood. Effective law enforcement requires power.Effective law enforcement requires power. The ability of a government to exert control over a person or corporation is called jurisdiction.The ability of a government to exert control over a person or corporation is called jurisdiction.

Effects Laws in the physical world are grounded in the relationship between physical proximity and the effects of a person’s behavior.Laws in the physical world are grounded in the relationship between physical proximity and the effects of a person’s behavior. Government-provided trademark protection is a good example.Government-provided trademark protection is a good example. The characteristics of laws are determined by the local culture’s acceptance of or reluctance to various kinds of effects.The characteristics of laws are determined by the local culture’s acceptance of or reluctance to various kinds of effects.

Legitimacy Most people agree that the legitimate right to create and enforce laws derives from the mandate of those who are subject to those laws.Most people agree that the legitimate right to create and enforce laws derives from the mandate of those who are subject to those laws. Legitimacy is the idea that those subject to laws should have some role in formulating them.Legitimacy is the idea that those subject to laws should have some role in formulating them.

Notice The physical boundary, when crossed, provides notice that one set of rules has been replaced by a different set of rules.The physical boundary, when crossed, provides notice that one set of rules has been replaced by a different set of rules. Borders provide this notice in the physical world.Borders provide this notice in the physical world.

Chapter 8 – Web Server Hardware and Software What is a server? Web page; database; What is a server? Web page; database; E-commerce siteE-commerce site Dynamic contentDynamic content Multi-tier structuresMulti-tier structures Software – operating system; web server; ; FTP; searchSoftware – operating system; web server; ; FTP; search Measuring performanceMeasuring performance Buy or find a host?Buy or find a host?

Chapter 9 – Electronic Commerce Software Catalog displayCatalog display Shopping CartShopping Cart Transaction processingTransaction processing MiddlewareMiddleware Web servicesWeb services Technology-enabled Customer Relationship ManagementTechnology-enabled Customer Relationship Management

Chapter 10 – Electronic Commerce Security Security policySecurity policy SecrecySecrecy IntegrityIntegrity NecessityNecessity

Secrecy refers to protecting against unauthorized data disclosure and ensuring the authenticity of the data’s source.Secrecy refers to protecting against unauthorized data disclosure and ensuring the authenticity of the data’s source. Integrity refers to preventing unauthorized data modification.Integrity refers to preventing unauthorized data modification. Necessity refers to preventing data delays or denials.Necessity refers to preventing data delays or denials.

Security Overview

Types of Encryption “Asymmetric encryption,” or public-key encryption, encodes messages by using two mathematically related numeric keys: a public key and a private key.“Asymmetric encryption,” or public-key encryption, encodes messages by using two mathematically related numeric keys: a public key and a private key. “Symmetric encryption,” or private-key encryption, encodes a message using a single numeric key to encode and decode data.“Symmetric encryption,” or private-key encryption, encodes a message using a single numeric key to encode and decode data.

Firewalls A firewall is a computer and software combination that is installed at the entry point of a networked system.A firewall is a computer and software combination that is installed at the entry point of a networked system. The firewall provides the first line of defense between a network and the Internet or other network that could pose a threat.The firewall provides the first line of defense between a network and the Internet or other network that could pose a threat. Acting as a filter, firewalls permit selected messages to flow into and out of the protected network.Acting as a filter, firewalls permit selected messages to flow into and out of the protected network.

Payment Systems for Electronic Commerce Chapter 11

Advantages and Disadvantages of Payment Cards Advantages:Advantages: Payment cards provide fraud protection.Payment cards provide fraud protection. They have worldwide acceptance.They have worldwide acceptance. They are good for online transactions.They are good for online transactions. Disadvantages:Disadvantages: Payment card service companies charge merchants per-transaction fees and monthly processing fees.Payment card service companies charge merchants per-transaction fees and monthly processing fees.

Planning for Electronic Commerce Chapter 12

Linking Objectives to Business Strategies Businesses can use downstream strategies, which are tactics that improve the value that the business provides to its customers.Businesses can use downstream strategies, which are tactics that improve the value that the business provides to its customers. –Toyota, Real Estate ToyotaReal EstateToyotaReal Estate Businesses can pursue upstream strategies that focus on reducing costs or generating value by working with suppliers or inbound logistics.Businesses can pursue upstream strategies that focus on reducing costs or generating value by working with suppliers or inbound logistics. –RFID strategy, Private e-markets RFID strategyPrivate e-marketsRFID strategyPrivate e-markets

Comparing Benefits to Costs If the benefits exceed the cost of a project by a comfortable margin, the company invests in the project.If the benefits exceed the cost of a project by a comfortable margin, the company invests in the project. Companies should evaluate each element of their electronic commerce strategies using this cost/benefit approach.Companies should evaluate each element of their electronic commerce strategies using this cost/benefit approach. Managers often use return on investment (ROI) to evaluate any capital investment.Managers often use return on investment (ROI) to evaluate any capital investment.