Tomorrow’s Technology and You 9/e Chapter 13 E-Commerce and E-Business The Evolving Internet Economy Slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Objectives Describe several basic models of e-commerce and e- business Discuss the factors that have had an impact on the success and failure of dot-com enterprises Explain how Web 2.0 and cloud computing technologies are changing e-commerce Discuss some ethical issues related to electronic commerce Slide 2 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Jeff Bezos Takes Amazon into the Cloud Jeff Bezos created a business model that leveraged the Internet’s unique ability to deliver huge amounts of information rapidly and efficiently. He founded Amazon.com, Inc. with high ambitions in Amazon opened its virtual doors in July 1995 with a mission to use the Internet to transform book buying into the fastest, easiest, and most enjoyable shopping experience possible. Slide 3 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Jeff Bezos Takes Amazon into the Cloud Amazon’s growth seemed phenomenal—20 million customers in more than 160 countries bought $2.8 billion worth of merchandise in  Bezos is proud of Amazon’s performance, which is better than the performance of any other start-up company in history.  In 2005, Amazon had a net income of about $500 million. Added an MP3 download service to compete with Apple’s iTunes and quickly became second in popularity Added Kindle which is an electronic book designed to be downloadable Slide 4 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Business on Internet Time E-commerce (electronic commerce) is sharing business information, maintaining business relationships, and conducting business transactions through the use of telecommunications networks.  Much more than a set of Internet technologies  Sometimes used interchangeably with the term e-business  Since the development of the World Wide Web and the beginning of the commercial use of the Internet in the early 1990s, e-commerce has become Internet based. Slide 5 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales The dot-com bust of 2000–2001 has led some people to question the future of e-commerce.  One principal cause of the bust was excessive speculation.  When these start-up companies closed their doors, half a million people lost their jobs. Despite this, e-commerce remains a legitimate way for businesses to make money and to save money. The term e-business is sometimes interchanged with the term e-commerce to refer to a broader concept, where companies are able to reorganize internal business processes, foster business alliances, and create new consumer-oriented products and services. Slide 6 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales Basic idea of e-commerce is that at least two parties—seller and a buyer—exchange information, products, or services using network technology. Companies are able to sell to larger, more geographically dispersed markets. Slide 7 “E-commerce is not a technology play. It’s a relationship, partnering, communication, and organizational play, made possible by technology. -Tom Peters, best selling author and business consultant Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales There are several e-commerce models based on who is involved in the transaction:  B2B (business-to-business): B2B is an interorganizational information system in which a company handles transactions within its own value chain or with other businesses and organizations.  B2C (business-to-consumer): Retailing transactions between a company and individual customers are B2C transactions.  B2C is the most visible aspect of e-commerce from a consumer’s point of view.  C2C (consumer-to-consumer): Individuals selling and buying directly with each other via a Web site are using C2C.  The best known example of C2C is eBay.  B2E (business-to-employee): Focus is primarily on handling the activities that take place within the organization.  Mid-sized and larger companies have intranet sites to handle B2E business. Slide 8 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2E: intranets for internal communication  Intranet: an internal information system based on Internet client/server activities between individuals and departments within an organization Slide 9 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales Slide 10 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2E: intranets for internal communication (cont.)  Businesses use intranets to support their internal business processes in several ways including:  Information access for employees  Collaboration and teamwork  Internal business transactions  Distribution of information management tools Slide 11 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2B: extranets for commerce and communication  An extranet, or extended intranet, is a private inter- organizational information system connecting the intranets of two or more trusted business partners.  Organizations can set up an extranet in one of three ways:  A secure private network  A public network  A VPN (virtual private network) – Data is specially coded, or encapsulated, for sending transactions over the Internet. Slide 12 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2B: extranets for commerce and communication (cont.)  Organizations can set up an extranet in one of three ways:  Secure private network » A secure private network physically attaches intranets with private leased telephone lines. Slide 13 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2B: extranets for commerce and communication (cont.)  Organizations can set up an extranet in one of three ways: (cont.)  Public network – A public network uses a public communications network, such as a public utility telecommunication network or the Internet. Slide 14 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2B: extranets for commerce and communication (cont.)  Organizations can set up an extranet in one of three ways: (cont.)  VPN (virtual private network) A VPN uses a public network with special protocols that provide a secure, private “tunnel” across the network between business partners’ intranets. An extranet is called an Internet VPN when the public network used is the Internet. Slide 15 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2B: extranets for commerce and communication (cont.)  An intranet can improve a business’s bottom line by:  Increasing the speed of B2B transactions  Reducing errors on intercompany transactions  Reducing costs of telecommunications  Increasing the volume of business with partners  Facilitating the exchange of B2B documents  Providing instant access to inventory and order status from suppliers  Facilitating collaboration with business partners on joint projects Slide 16 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales B2C: online retail sales and service  Message encryption standards use software for authenticating the parties involved in a credit card purchase on the Internet.  Electronic payment systems allow people to make purchases without revealing their credit card numbers.  For example, Paypal  SEO (search engine optimization) is the process of increasing Web site traffic by improving search engine rankings for targeted keywords.  Spamdexing is the less-than-ethical alternative to SEO. Slide 17 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 1.0: Intranets, Extranets, and E-Sales C2C: making consumer connections  Most fall into a few broad categories:  The digital equivalent of a newspaper’s classified ad For example, Craigslist  The online auction For example, eBay  The reseller model For example, Amazon’s partners program Slide 18 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Disaggregation: commerce in the cloud  Disaggregation: separating commerce into its component parts and outsourcing those parts that can better be handled somewhere else Slide 19 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Enhancing the interactive experience  Most online shopping carts are abandoned before checkout.  Online retailers are allowing buyers to personalize and customize their purchases in ways that aren’t possible at the physical mall. Slide 20 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Mobile commerce  M-commerce (mobile commerce): the use of smart phones, PDAs, laptops, and other portable electronic devices to conduct commerce while on the move  Trends that have caused an increase in mobile commerce use:  The growing popularity of laptop computers as a result of the total PC market  The widespread availability of wireless Internet connections through Wi-Fi hotspots and 3G networks  The popularity of mobile phones with GPS technology and Web access  The development of smart phones with Web access and applications that aren’t significantly compromised by size  The development of software tools that can take advantage of a variety of mobile technologies Slide 21 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Mobile commerce (cont.)  M-commerce applications that will become common:  Mobile ticketing for automobiles  Mobile coupons will replace paper or plastic ones  Mobile purchasing  Location-based m-commerce will allow customization of ads based on current location. Slide 22 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Selling stuff online  Tips for using online commerce sites:  Choose the right option for your business  Keep it simple  Show off the goods  Your reputation is your most powerful marketing tool  Offer payment options  Don’t let yourself get scammed  Help search engines find you, and customers will follow  Factor the costs of the transaction services into your prices Slide 23 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce The long tail  The tail of the statistical curve that appears when you rank books, movies, or tunes by popularity as reflected in sales or rentals. Slide 24 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce Web marketing 2.0  Many consumers read customer reviews before buying products.  Many companies encourage customers to post reviews.  Many retailers have a presence on MySpace, Facebook, and other social networking sites, counting on recommendations from “friends” to increase sales.  Affiliate programs, like Amazon’s, allow links to products with the potential to earn financial awards based on sales. Slide 25 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 E-Business 2.0: Reinventing Web Commerce The “free” market  There are a growing number of e-commerce sites that make money by giving things away. Instead, they make money from advertising for other Web sites.  For example, Google gives away search results, maps, driving directions, etc.  Many “free” services, from games to Internet phone services, hope to entice users to pay for “premium” versions of the same service.  The open source community is responsible for many of the best free sites and products.  When people visit “free” Web sites, they are paying with their time and attention. Slide 26 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall “The rise of “freeconomics” is being driven by the underlying technologies that power the Web… the trend lines that determine the cost of doing business online all point the same way: to zero” – Chris Anderson, Wired editor

Tomorrow’s Technology and You 9/e Chapter 13 Ethical Issues of E-Commerce An organization’s code of ethics should include a:  statement of the organization’s privacy policy  statement that a person’s permission must be secured before his or her ID, photo, ideas, or communications are used or transmitted  statement on how the company will inform customers of the intended uses of personal information gathered during an online transaction and how to secure permission from customers for those uses  statement that addresses issues of ownership with respect to network postings and communications  policy of how company tracks user behavior on the Web site Slide 27 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Lesson Summary E ‑ business is sharing business information, maintaining business relationships, and conducting business transactions through the use of telecommunications networks, especially the Internet. E-business is also about reorganizing internal business processes and external business alliances and creating new consumer-oriented products globally. There are three main e-commerce configurations using the Internet: intranets, extranets, and public Web sites. Slide 28 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Lesson Summary (cont.) An intranet is an internal information system based on Internet technology, including TCP/IP protocols and Web tools that supports value chain activities between individuals and departments within an organization. An intranet comprises physical technology and information content. An extranet is a private interorganizational information system connecting the intranets of two or more companies in a business alliance. Slide 29 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Tomorrow’s Technology and You 9/e Chapter 13 Lesson Summary (cont.) An extranet extends the cross-functional activities between trusted business partners and facilitates their working relationships. E-commerce also means conducting business transactions with customers. Although e-commerce has many technical requirements, Web server and e-commerce software requirements are particularly important. A company conducting business on the Internet should develop and adhere to an information code of ethics that ensures that users of the Web site will be aware of the company’s e-commerce policies, especially regarding consumer information privacy. Slide 30 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall