1 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall James A. Senn’s Information Technology, 3 rd Edition Chapter 9 Electronic Commerce and Electronic Business

2 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Objectives (Continued) Describe the meaning of electronic commerce. Identify the two principal segments of electronic commerce. Describe the seven advantages that participants in electronic commerce enjoy compared to traditional commerce.

3 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Objectives Distinguish between the four business-to-consumer forms of electronic commerce. Discuss supply chain integration and the reason companies are making it an e-commerce objective. Identify the characteristics of electronic procurement. Explain the purpose of electronic exchanges and identify the three forms that have emerged.

4 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Definition Electronic Commerce (e-commerce): Use of communication networks, including the public Internet, to conduct commercial transactions between businesses or with consumers.

5 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Types of Electronic Commerce Business-to-Consumer (B2C) E-Commerce: Electronic commerce carried out by an enterprise in order to serve its consumer customers. Business-to-business (B2B) E-Commerce: Companies doing business electronically with other businesses.

6 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Types of Electronic Commerce (Continued)

7 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Types of Electronic Commerce (Continued)

8 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Benefits of E-Commerce Geographic Reach Speed Productivity Information Sharing New Features

9 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Benefits of E-Commerce (Continued) Lower Costs Competitive Advantage

10 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Benefits of E-Commerce (Continued)

11 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Growth of E-Commerce

12 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall What is Electronic Commerce? Growth of E-Commerce (Continued)

13 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E-Commerce Applications Online Retailing and Electronic Storefronts Online Retailing: Shoppers visit a store over the Internet and check out the products. Electronic Storefront: Home page of an online retailing business.

14 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Electronic Markets Electronic Markets (e-markets): A collection of individual shops accessible through a single location on the World Wide Web. Auctions: Shoppers make bids to determine the sale price of an item rather than relying on predetermined fixed prices. Brick and Mortar: Any physical store or building, regardless of how it is constructed or where it is located.

15 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Electronic Markets (Continued) Forward Auction: Shoppers bid on a desired item with the knowledge that the seller will take the highest offer. Reverse Auction: The direct opposite of a traditional auction. The bidders list their product or service requirements and the maximum price they are willing to pay for it. Potential sellers who can provide the good or service reverse bid against each other by posting their bids for buyers. The bidder offering the requested products or services at the best price wins the bid.

16 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Electronic Markets (Continued) Dutch Auctions: On electronic markets, the market operator displays a high opening price for an item and asks for buyers willing to pay the price. At prespecified intervals, the price is lowered until a bidder is willing to pay the displayed price.

17 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Portal Portal: A gateway or hub site, such as Yahoo!, that provides chat rooms. Content Aggregator: An e-commerce portal that assembles information (that is, content) from a variety of sources, organizing the information into a form that is useful to visitors to the Web site. Infomediary: A Web site that locates, retrieves, and organizes specialized information for potential users. The term is a composite of information and intermediary.

18 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Online Services Electronic Banking/Cyberbanking: Customers conduct their banking activities without going to a physical bank office. –Virtual Bank: Operates exclusively over the Internet. Personal Finance and Bill Payment –Automatic Transfer of Bank Loan and Mortgage Payments –Automatic Payment of Utility Bills –Online Bill Payment –Electronic Bill Presentment –Combined Electronic Bill Presentment and Payment

19 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Online Services (Continued)

20 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Consumer E- Commerce Applications Online Services (Continued) Securities and Investments Travel Services

21 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Functions Performed by B2C E- Commerce Site Common Functions of B2C sites Catalog and Content Management –Content: Information distributed over the Internet. Shopping and Checkout Back Office Processing –Back Office: Deals with the final steps in the sale. Processing Customer Payment Updating Inventory Records Preparing Item for Distribution

22 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Functions Performed by B2C E- Commerce Site Common Functions of B2C sites (Continued) Advertising –Search Engines –Banner Ads –Interactive Marketing: The use of customer advertising prepared to fit the profile of a specific visitor to a site. Interactive Coupon: Offered online. – Spam: Unsolicited advertising by .

23 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management Supply Chain Characteristics –Supply Chain: The flow of parts, components, materials, funds, and information between a company’s sources and its customers. –Supply Chain Management: The oversight of activities interconnecting suppliers and buyers.

24 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued)

25 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued) Supply Chain Software –Capacity Requirements Planning –Demand Planning Module –Manufacturing Planning Module –Distribution Planning Module –Logistics Planning Module –Transportation Planning Module

26 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued) Supply Chain Integration Strategies –Supply Chain Integration: The synchronization of all parties involved in making a product or delivering a service in order to meet buyer, seller, and customer needs. –Efficient Consumer Response/Continuous Replenishment: Data and information on products are captured at the point of sale and shared with suppliers periodically (usually daily) so that both can work together to jointly forecast future demand for replenishable items, monitor trends, and detect opportunities for new items.

27 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued)

28 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued) Supply Chain Integration Strategies –Efficient Consumer Response/Continuous Replenishment Disintermediation: Name given to removing intermediaries (like brokers and distributors) from the supply chain. –Vendor-Managed Inventory: Companies deal directly with vendor, that is, manufacturers or suppliers.

29 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Supply Chain Management (Continued)

30 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications E-Procurement Electronic Procurement (e-procurement): Give employee access to catalogs of products and services from multiple suppliers. Direct Spending: To obtain materials or components from suppliers for use in the manufacture of a product or delivery of a service. Indirect Spending/Maintenance, Repair, and Operations (MRO): Buys goods and services that support operation of the company as a whole.

31 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications E-Procurement E-Procurement Objectives –Reducing Purchasing Costs –Providing Employee Self-Service –Increasing Leverage with Suppliers

32 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Electronic Exchange Electronic Exchange/B2B hub: Commerce sites on the Internet where buyers and sellers can come together to shop, exchange information, or carry out transactions to buy or sell products and services. Public Exchange/Independent Exchange: A third party – the market maker – operates the electronic market, displays the market’s information content, and provides electronic tools for conducting trade. –Vertical Exchange: Structured to serve members of a specific industry.

33 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Electronic Exchange (Continued) Public Exchange/Independent Exchange –Horizontal Exchange: Seeks to simultaneously serve the interests of companies across different industries. Customers seek their services because of functional expertise rather than industry expertise. Consortia-led Exchange: Industry players combine forces to create a common forum for the exchange of goods and services.

34 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Electronic Exchange (Continued)

35 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Electronic Exchange (Continued) Private Exchange: An Internet-base trading forum (I.e., an electronic market) implemented by a single company with a select group of suppliers and customers.

36 Senn, Information Technology, 3 rd Edition © 2004 Pearson Prentice Hall Business-to-Business E- Commerce Applications Electronic Exchange (Continued)