1. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 5-1 Chapter 5 Enabling Commerce Using the Internet “…[W]e can hardly keep up with the Fortune 500 companies who are contacting us.” Sibley Verbeck, CEO and founder of the Electric Sheep Company “…[W]e can hardly keep up with the Fortune 500 companies who are contacting us.” Sibley Verbeck, CEO and founder of the Electric Sheep Company

2. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-2

3. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-3

4. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Electronic Commerce 5-4 Online exchange of goods, services, and money 2007:  3.4 percent of total retail revenue  $136.4 billion in revenue

5. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Most Common Types of E-Commerce 5-5 Business-to-consumer (B2C)  A person buys a book from Amazon.com Business-to-business (B2B)  Retailer like Wal-Mart ordering from distributors Business-to-employee (B2E)  Employee uses the Web to change employee benefits Consumer-to-consumer (C2C)  One person purchases from another on eBay

6. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Other Types of E-Commerce 5-6 Government-to-citizen (G2C)  A person filing income taxes online Government-to-business (G2B)  Government purchases supplies using Internet-enabled procurement system Government-to-government (G2G)  Foreign government accessing U.S. federal regulations

7. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Key Capabilities of the Web 5-7

8. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Information Dissemination 5-8 Firms across the world have access to customers Economical medium for marketing products and services Increased geographical reach

9. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Integration 5-9 Integration of information via Web sites Real-time access to personalized information No time lag between company decisions and customers’ ability to access these

10. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Example: Integration 5-10 Alaska Airlines customers can access their mileage program any time  Real-time link between company database and customer

11. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Mass Customization 5-11 Meeting particular customers’ needs on a large scale Timbuk2.com  Custom Messenger Bag Builder  Customers create a virtual bag  Preference-tracking helps Timbuk2 in marketing efforts

12. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Interactive Communication 5-12 Immediate feedback between company and customers  E-mail notifications  Customer service online chat Best Buy  Geek Squad  24-hour computer support

13. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Transaction Support 5-13 Internet and the Web:  Reduced transaction costs  Enhanced operational efficiency Dell—automated transaction support  Cost savings per sale  Disintermediation Reintermediation  Reintroduction of middlemen  E.g., Orbitz.com

14. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Commerce Business Strategies 5-14 Differentiated, based on levels of physical/virtual presence

15. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Brick-and-Mortar Business Strategy 5-15 Physical locations only Traditional stores Cons: Limited geographical reach

16. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Click-Only Business Strategy 5-16 Business conducted in cyberspace—no physical location Virtual companies Cons: Customers uncomfortable with online transactions No face-to-face interaction with customers

17. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Click-and-Mortar Business Strategy 5-17 Bricks-and-clicks business strategy Hybrid strategy Cons: Added complexity combining two different environments

18. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Example: Click-and-Mortar Company 5-18

19. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Components of a Business Model 5-19 A plan of how to achieve EC success

20. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Typical Revenue Models for EC 5-20 Most important ingredient of business model How will the firm earn revenue?

21. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-21

22. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Business-to-Business E-Commerce 5-22 Extranet  Enables firms to do business together (B2B)  One of best ways for organizations to gain return on technology-based investments  Boeing  1,000 authorized business partners  Nearly all Fortune 1,000 companies deploy some type of B2B applications

23. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Electronic Data Interchange (EDI) 5-23 Used prior to the introduction of the Internet EDI used for B2B systems However:  Costly  Need for dedicated telecommunications networks

24. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Extranets 5-24 New, more affordable alternative to EDI Advantages  Improved timelines and accuracy of information  Cost effective  Central management of documents  Technology integration  Cross-platform nature  Low cost-High Value  No specific user training required  Positive impacts on a company’s bottom line

25. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Extranet System Architecture 5-25 Internet-based application Use of firewalls and Virtual private networks (VPN) to secure information transmission Used to manage supply chains

26. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranets 5-26 Business-to-employee (B2E) electronic commerce Internet based private network using Web technologies Used to facilitate secured transmission of proprietary information within companies Intranets offer similar benefits as extranets Boeing  Intranet serves more than 200,000 employees  More than 1 million pages

27. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet System Architecture 5-27 Internet-based application Use of firewalls and Virtual private networks (VPN) to secure information transmission

28. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Training 5-28 Boeing Company  200,000 employees get trained  Quality eTraining program  Catalogue of courses  Online course content  Standardized courses  Business improvements  Cost reduction  Eliminated travel cost

29. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Personalized Intranet Pages 5-29 Customized pages for different employees  Same look and feel  Pages draw on same underlying data  Customization depending on job function or geographical location  Employees have only access to the information they need  Sometimes customized according to user’s language

30. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Application Integration 5-30 Information from separate applications can be consolidated and presented to the user Netegrity SiteMinder

31. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Online Entry of Information 5-31 Use of Web browsers to enter information online Example: Microsoft MSExpense  Prior to MSExpense  136 different report templates  Outdated versions  With MSExpense  Online submission of expense records  Easy and centralized updates to templates  Savings of $4.3 million a year  Shortened period for reimbursement from 3 weeks to 3 days

32. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Real-Time Access to Information 5-32 Manage, update, distribute, and access corporate information  Boeing  News releases uploaded to the Intranet  Previously sent to all corporate offices as videotapes  Reduced distribution costs Efficient information sharing Company-wide access

33. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Intranet: Collaboration 5-33 Boeing  Information shared between employees across the world  Reduced product development cycles  Ability to stay current on projects  Ability to stay current with the changing market conditions

34. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-34

35. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Use of Internet Technologies 5-35 Characteristics of the Internet, intranet and extranet B2B, B2E rely on extranet and intranet Internet provides an opportunity for B2C commerce

36. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Stages of B2C E-Commerce 5-36 Web sites range from passive to active

37. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Tailing 5-37 Selling goods and services online Click-and-mortar  Walmart.com Click only  Amazon.com Virtual company  Priceline.com  Reverse pricing vs. menu-driven pricing

38. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Tailing Benefits 5-38 Product benefits  Unlimited number and variety of products  Easier comparison shopping  Examples: AllBookstores, BizRate, or SideStep Place benefits  Anywhere, anytime  Purchasing on global scale Price benefits  Higher inventory turnover rate  No expenditures for physical retail space

39. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 The Long Tail 5-39 Traditional stores  Focus on mainstream needs  Target the average customer  Example: Blockbuster E-Tailers  Can focus on niche markets  Example: Netflix

40. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Tailing Drawbacks 5-40 Product delivery drawbacks  Delay between product order and delivery  Except for products that can be downloaded Direct product experience drawbacks  Lack of sensory information  Smell, taste, feel  Lack of the social element  Cannot replace going to the mall with friends

41. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Attracting and Retaining Online Customers 5-41 Basic rule of commerce  Offer valuable products/services at fair prices Additional e-commerce rules 1. The Web site should offer something unique. 2. The Web site must be aesthetically pleasing. 3. The Web site must be easy to use and fast. 4. The Web site must motivate people to visit, stay, and return. 5. You must advertise your presence on the Web. 6. You should learn from your Web site.

42. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 1 5-42 Offer something unique  Offer hard-to-find goods  Global audience  Reasonable prices

43. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 2 5-43 Web site must be aesthetically pleasing  Use of color schemes, backgrounds, high quality images  Clear, concise, and consistent layout  Increases chances of return  Can separate a Web site from the competition

44. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 3 5-44 Web site must be easy to use and fast  Easy navigation  Fast download speed  Average user will wait only a couple of seconds for a Web site to download  Present brief summary information with hyperlinks  Allows users to “drill down”

45. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 4 5-45 Web site must motivate people to visit, stay, and return  Create a community  BMW Car Club of America (BMWCCA) Users share tips on maintenance, repair, and other items, and follow electronic links to other BMW resources. Buy from each other

46. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 5 5-46 Advertise your presence on the Web  Pull marketing  A passive method of attracting to a specific site  Include the Web site address on all promotional materials  Advertise your Web site on other sites

47. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 5-47 Advertise your presence on the Web (cont’d)  Pay-per-click  Only pay for advertising when user clicks on it  Click-through rate  Conversion rate  Affiliate marketing—Website owners post ads on their site  Money earned fro referrals or ensuing sales  Problem: click fraud—artificially clicking on ads to create revenue Network click fraud Competitive click fraud Web Site Rules: Rule 5 (cont’d)

48. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Web Site Rules: Rule 6 5-48 Learn from your Web site  Who are your customers?  What are they doing? Web analytics  Analyze behavior of visitors  Path the visitors take  Length of the visit  Number of pages viewed  Page from which they exit

49. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Search Marketing 5-49 Strategies to enhance visibility in search engines’ results Paid inclusion  Fee paid to the search engine to appear in the results  Cannot influence order, thus companies may use:  Search engine advertising  Search engine optimization

50. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Search Advertising 5-50 Sponsored search  Pay to ensure a spot on top of search results page  E.g., AdWords  Bid for being listed in sponsored search results  Placement depends on relevance  Pay-per-click  Can get costly

51. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Search Engine Optimization 5-51 Position within search results based on complex formula Site owner has no control over the position of the ad Optimization based on:  Web site updates  Use of key terms  Unethical “tricks”

52. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Securing Payments in the Digital World 5-52 90% of users have changed online behavior because of fear of identity theft 1/3 of online purchasers cut back on the volume of purchasing More than 1/2 of shopping carts are abandoned Need for secure forms of online payment

53. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Credit and Debit Cards 5-53 Customer Verification Value (CVV)  Three-digit code on the back of a card  Added to combat fraud in online purchases  Not included in the magnetic strip information  Code used for authorization by bank

54. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Conducting Safe Transactions Online 5-54 1. Use a secure browser with the latest encryption capabilities 2. Check the site’s privacy policy 3. Read and understand refund and shipping policies 4. Keep personal information private 5. Give payment information only to those you know and trust 6. Keep records of online transaction 7. Review your monthly credit card and bank statements

55. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Payment Services 5-55 Online transactions without sharing private information with actual seller Payment service keeps information secure  PayPal (owned by eBay)  Can send and receive money if you have an e-mail account  Google Checkout  Linked with Google search  Users can see if merchants offer this option

56. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Managing Financial Transactions in the Digital World 5-56 Financial institutions offer:  Online banking  Management of credit card, checking, and savings accounts  Electronic bill pay  Bill payment online  Online investing  Growing in popularity Extensive use of Internet for obtaining financial information

57. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-57

58. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Types of C2C E-Commerce 5-58 C2C commerce has always been present 17% of American adults have sold online C2C relationships characterized by  Number of buyers  Number of sellers

59. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Opportunities and Threats of C2C E-Commerce 5-59

60. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Auctions 5-60 Forward auction  Sellers post goods or services for sale  Buyers bid on these items  Highest bid wins Reverse auction  Buyers post a request for quote (RFQ)  Seller proposes a bid  Lowest seller bid wins  Used frequently in B2B e-commerce

61. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Auction Fraud 5-61 E-auctions marred with more fraud than any other Internet activity  45% of all Internet fraud-related complaints  Average loss: $724 Types of e-Auction fraud  Bid luring  Reproductions  Bid shielding  Shipping fraud  Payment failure  Nonshipment

62. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 M-Commerce 5-62 Electronic transactions using wireless mobile devices Mobile networks  Wireless  Switched public network Smart phones  High-speed data transfer  “Always-on” connectivity

63. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 M-Commerce Applications 5-63

64. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Location-Based M-Commerce 5-64 Highly personalized mobile services Based on location  GPS functionality  Bluetooth Pull-based—consumers seeking information Push-based—companies sending (unrequested) information to the consumer

65. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Enhanced 911 and Phone Locator 5-65 e911  Federal mandate  Correct routing of emergency calls  GPS specifies location within 50 meters Phone locator  Location of family members’ cell phones  Alerting system when child leaves a certain area

66. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Location-Based Services 5-66 Next thing: cell phone social networking

67. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Key Drivers of M-Commerce 5-67 General interest in adoption of the Internet and e-commerce Real-time transfer of data over 3G and 4G cellular networks  “Always-on” connectivity Growth in mobile telephony 2007 M-commerce market: $19 billion  Predicted to grow to $88 billion by 2009

68. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Mobile Entertainment 5-68 Slingbox  Acts as a personal media server  “Placeshifts” television content to any Internet-enabled device  Television signal received at the user’s house  Relayed over the Internet to be accessed from anywhere

69. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Learning Objectives 1. Describe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace. 2. Explain the differences between extranets and intranets and show how organizations utilize these environments. 3. Describe the stages of business-to-consumer electronic commerce and understand the keys to successful electronic commerce applications. 4. Describe emerging trends in consumer-to- consumer e-commerce and the key drivers for the emergence of mobile commerce. 5. Explain different forms of e-government as well as regulatory threats to e-commerce. 5-69

70. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Government 5-70 Providing information about public services  To citizens  To organizations  To other governmental agencies 1998—Government Paperwork Elimination Act

71. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Government-to-Citizens 5-71 Interactions between the government and its constituents  IRS—e-filing  Grants.gov  e-voting initiatives

72. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Government-to-Business 5-72 Relationships between businesses and the government  E-procurement  Forward auctions  Businesses buy surplus government equipment  AuctionRP.com  Online application for export licenses

73. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Government-to-Government 5-73 Interactions between countries  Regulations.gov  Export.gov Interactions between different levels of government

74. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Issues in E-Commerce 5-74 The USA PATRIOT Act Taxation Net Neutrality Censorship

75. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Issues in E-Commerce (cont’d) 5-75 The USA PATRIOT Act  Introduced after 9/11 terrorist attacks in 2001  More power given to governmental agencies to protect Americans  Critics—Civil Liberties Union  Reduced checks and balances on surveillance  Lack of focus on terrorism  Surveillance on Americans

76. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Examples of Provisions Allowed by the USA PATRIOT Act 5-76

77. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Internet Taxation 5-77 The Internet Tax Freedom Act—1998  Created as an incentive for EC businesses  Internet sales treated as mail-order sales  No sales taxes paid in states where the company has no presence Problem  Loss of tax incomes  Unfair advantage for e-tailers

78. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Internet Taxation (cont’d) 5-78 Solutions:  Use tax  Consumers required to pay their state’s sales tax  Part of some income tax returns  Streamlined Sales Tax Project  Simplification of tax codes  Collection of taxes by out-of-state sellers

79. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Arguments For and Against Internet Taxation 5-79

80. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Net Neutrality 5-80 Data sent over the Internet should be handled in a neutral manner All traffic treated the same way ISPs and telephone companies argue for prioritization  Traditional Internet traffic suffers (e-mail) due to high bandwidth applications  Example: YouTube.com not paying their fair share, should be deprioritized

81. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Censorship 5-81 Governmental attempts to control Internet traffic  Limiting citizens from viewing content  Examples: China, North Korea  Strict guidelines on what can be viewed  Key words and topics blocked  United States  Child Online Protection Act (COPA) Age verification for certain content

82. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 End of Chapter Content 5-82

83. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Opening Case— Doing Virtual Business: Second Life 5-83 Commerce in MMOGs (massively multiplayer online game)?  8.5 million “residents”  Avatars can:  Buy property  Build businesses and homes  Shop for clothing and other virtual items What do users do there? Only 1.6 million active users Reebok, Scion, Coca-Cola, H&R Block entering SL

84. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Virtual Crime 5-84 $11,500 ATM theft…in Second Life International Problem  South Korean crime gangs  Chinese MMOG player loaned a virtual sword to another player, who then sold the sword. The loaner then killed the seller.  Japanese teen arrested for stealing from in-world accounts Crime-based games Crime inherent in some games

85. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 E-Business is BIG Business 5-85 Growing numbers of online consumers  2007 revenues—$175 billion  2012 expected revenue—$335 billion

86. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Monitoring Productive Employees 5-86 “You have zero privacy, get over it” ( Scott McNeely) Use of company provided Internet connection can be legally monitored American Management Association survey (2005)  75% of employers monitor employee’s Internet use  65% use software to block access to certain Web sites  30% monitor key strokes  50% review and retain employee e-mails  80% of the companies disclose the practices to the employees  26% fired employees for Internet misuse  25% fired employees for e-mail abuse

87. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Human-Powered Search Engines: ChaCha 5-87 Search service for mobile phones Guides read, then answer questions Guides must apply and be trained Technology “learns” from guides’ answers

88. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 YouTube’s Steve Chen and Chad Hurley 5-88 Former PayPal employees Went online in 2005 30 million videos a day 9.1 million users Sold to Google for $1.76 billion

89. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Transforming Communication: Ribbit 5-89 Open platform for telephony innovation One number for  Land line  Cell  Voice over IP When phone rings, they all ring When one phone is answered, the others stop ringing Speech to text conversion Capability for 911 calls

90. IS Today (Valacich & Schneider) Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 10/2/2016 Retailing 5-90 Systems have improved brick-and-mortar experience  Computerized Point of Sale (POS)  Bar code scanners  Inventory control Emerging  RFID (Radio frequency identification) technology  “Smart” shelves  “Smart” dressing rooms