2. Electronic Commerce Systems
Chapter 9
Electronic Commerce Systems

3. Learning Objectives
Identify the major categories and trends of e-commerce applications
Identify the essential processes of an e-commerce system, and give examples of how they are implemented in e-commerce applications
Identify and give examples of several key factors and Web store requirements need to succeed in e-commerce

4. Learning Objectives
Identify and explain the business value of several types of e-commerce marketplaces
Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives

5. Introduction to e-Commerce
Electronic commerce encompasses the entire online process of
Developing
Marketing
Selling
Delivering
Servicing
Paying for products and services
It relies on the Internet and other information technologies to support every step of the process

6. Case 1: eBay, Running the Right Play
eBay is one of the fastest-growing companies in history, and business is surging
31 sites around the world
$1.1 billion in international sales in 2004, and growing twice as fast as the domestic market
Half of their 125 million registered users are outside of the United States
eBay keeps a playbook
Several hundred pages of wisdom collected from worldwide managers

7. Case Study Questions
Why has eBay become such a successful and diverse online marketplace?
What do you think of eBay’s playbook concept?
Why do they call it a playbook?
Is eBay’s move into the international arena a good long-term strategy?

8. The Scope of e-Commerce

9. E-Commerce Technologies

10. Categories of e-Commerce
Business-to-Consumer
Virtual storefronts, multimedia catalogs, interactive order processing, electronic payment, online customer support
Business-to-Business
Electronic business marketplaces, direct links between businesses, auctions and exchanges
Consumer-to-Consumer
Online auctions, posting to newspaper sites, personal websites, e-commerce portals

11. Essential e-Commerce Architecture

12. Access Control and Security
E-commerce processes must establish mutual trust and secure access between parties
User names and passwords
Encryption key
Digital certificates and signatures
Restricted access areas
Other people’s accounts
Restricted company data
Webmaster administration areas

13. Profiling and Personalizing
Profiling gathers data on you and your website behavior and choices
User registration
Cookie files and tracking software
User feedback
Profiling is used for
Personalized (one-to-one) marketing
Authenticating identity
Customer relationship management
Marketing planning
Website management

14. Search Management
Search processes help customers find the specific product or service they want
E-commerce software packages often include a website search engine
A customized search engine may be acquired from companies like Google or Requisite Technology
Searches are often on content or by parameters

15. Content and Catalog Management
Content Management Software
Helps develop, generate, deliver, update, and archive text and multimedia information at e-commerce websites
Catalog Management Software
Helps generate and manage catalog content
Catalog and content management software works with profiling tools to personalize content
Includes product configuration and mass customization

16. Workflow Management
E-business and e-commerce workflow manage-ment depends on a workflow software engine
Contains software model of business processes
Workflow models express predefined
Sets of business rules
Roles of stakeholders
Authorization requirements
Routing alternative
Databases used
Task sequences

17. Example of Workflow Management

18. Event Notification Most e-commerce applications are event driven
Responds to such things as customer’s first website visit and payments
Monitors all e-commerce processes
Records all relevant events, including problem situations
Notifies all involved stakeholders
Works in conjunction with user-profiling software

19. Collaboration and Trading
Processes that support vital collaboration arrangements and trading services
Needed by customers, suppliers, and other stakeholders
Online communities of interest
, chat, discussion groups
Enhances customer service
Builds loyalty

20. Electronic Payment Processes
Complex processes
Near-anonymous and electronic nature of transactions
Many security issues
Wide variety of debit and credit alternatives
Financial institutions may be part of the process

21. Electronic Payment Processes
Web Payment Processes
Shopping cart process
Credit card payment process
Debit and other more complex processes
Electronic Funds Transfer (EFT)
Major payment system in banking, retail
Variety of information technologies capture and process money and credit card transfers
Most point-of-sale terminals in retail stores are networked to bank EFT systems

22. Electronic Payment Example

23. Securing Electronic Payments
Network sniffers easily recognize credit card formats
Encrypt data between customer and merchant
Encrypt data between customer and financial institution
Take sensitive information off-line

24. E-Commerce Application Trends

25. Case 2: Battle for e-Commerce Supremacy
eBay commands more than 90 percent of the online auction market
Growth is at least 40 percent per year
CraigsList is an online classifieds meeting place
Buying and selling, but no payment system
Online classifieds growing faster than auctions
Google and Microsoft entering the market with added features
Search by zip code, online maps, free listings

26. Case Study Questions
Do you agree with Google and Microsoft that eBay is now vulnerable to their assaults via Google Base and Windows Live Expo?
What are the major advantages and limitations of Google Base and Windows Live Expo?
Which do you prefer, or would you use both?
Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions enough to ward off the competitive assaults of Google and Microsoft?

27. E-Commerce Success Factors
Some of the success factors in e-commerce
Selection and value
Performance and service
Look and feel
Advertising and incentives
Personal attention (one-to-one marketing)
Community relationships
Security and reliability

28. Differences in Marketing

29. Web Store Requirements

30. Developing a Web Store Build a website Market the website
Choose or set up web hosting
Use simple design tools and templates
Include a shopping cart and payment support
Market the website
Include Web page and advertising and promotions
Exchange advertising with other Web stores
Register with search engines and directories
Sign up for affiliate programs

31. Serving Your Customers
Convert visitors into loyal customers
Develop one-to-one relationship with customers
Create incentives to encourage registration
Use Web cookies to identify visitors
Use tracking services to record and analyze website behavior and customer preferences
Create an attractive, friendly, efficient store
Offer fast order processing and payment
Notify when orders are processed and shipped
Provide links to related websites

32. Managing a Web Store Manage both the business and the website
Record and analyze traffic, inventory, sales
Use CRM features to help retain customers
Link sales, inventory data to accounting systems
Operate 24 hours a day, seven day a week
Protect transactions and customer records
Use security monitors and firewalls
Use redundant systems and power sources
Employ passwords and encryption
Offer 24-hour tech support

33. B2B E-Commerce
B2B is the wholesale and supply side of the commercial process
Businesses buy, sell, or trade with other businesses
Relies on multiple electronic information technologies
Catalog systems
Trading systems
Data interchange
Electronic funds transfers

34. E-Commerce Marketplaces
One to Many
Sell-side marketplaces
One supplier dictates product offerings and prices
Many to One
Buy-side marketplaces
Many suppliers bid for the business of a buyer
Some to Many
Distribution marketplaces
Unites suppliers who combine their product catalogs to attract a larger audience

35. E-Commerce Marketplaces
Many to Some
Procurement marketplaces
Unites major buyers who combine purchasing catalogs
Attracts more competition and thus lower prices
Many to Many
Auction marketplaces
Dynamically optimizes prices

36. E-Commerce Portals B2B e-commerce portals offer multiple marketplaces
Catalogs
Exchanges
Auctions
Often developed and hosted by third-party market-maker companies
Infomediaries serve as intermediaries in e-business and e-commerce transactions

37. B2B E-Commerce Web Portal

38. Clicks and Bricks
Success will go to those who can integrate Internet initiatives with traditional operations
Merging operations has trade-offs
Insert Figure 9.18 here

39. E-Commerce Integration
The business case for merging e-commerce with traditional business operations
Move strategic capabilities in traditional operations to the e-commerce business
Integrate e-commerce into the traditional business
Sharing of established brands
Sharing of key business information
Joint buying power and distribution efficiencies

40. Other Clicks and Bricks Strategies
Partial e-commerce integration
Joint ventures and strategic partnerships
Complete separation
Spin-off of an independent e-commerce company
Barnes and Noble’s experience
Spun off independent e-commerce company
Gained venture capital, entrepreneurial culture, and flexibility
Attracted quality management
Accelerated decision making
Failed to gain market share

41. E-Commerce Channel Choices
An e-commerce channel is the marketing or sales channel created by a company for its e-commerce activities
There is no universal strategy or e-commerce channel choice
Both e-commerce integration and separation have major business benefits and shortcoming
Most businesses are implementing some measure of clicks and bricks integration

42. E-Commerce Strategy Checklist
Questions to ask and answer
What audiences are we attempting to reach?
What action do we want those audiences to take?
Who owns the e-commerce channel within the organization?
Is the e-commerce channel planned alongside other channels?
Is there a process for generating, approving, releasing, and withdrawing content?
Will our brand translate to the new channel?
How will we market the channel itself?

43. Case 3: Yahoo and Flickr Flickr is a photo sharing site
14,000 images per hour are uploaded
There are 1.5 million users
80 percent of the 60 million photos are public
More than half have user-created labels that make them searchable
Yahoo purchased Flickr
The user-generated content (social media) will be used in the war against Google
It would like to apply the same concept to web content as well

44. Case 3: Yahoo and Flickr
Google takes an automated approach to searches
Armies of Ph.D.s and servers
Creates more relevant searches by using algorithms
Yahoo’s strategy
Also uses algorithms, but not as well
Is gambling that the collective intelligence of its audience will produce more relevant search results

45. Case Study Questions
How does the Web foster the growth of social media and social networking?
What business benefits does Yahoo hope to gain from its acquisition of Flickr and drive to “Flickize” its business?
How realistic are such planned benefits?
Can social media and networking serve as a strategic competitive differentiator that enables Yahoo to overtake Google in the multibillion-dollar targeted search ads market?

46. Case 4: Today’s Web; Anything but Usual
Customers aren’t just reading these days
They’re writing and watching as well
Community features
Interactive webcasts
Newsgroups
Online chat forums
Customer-to-customer interactions help Microsoft learn which product features work, and which don’t

47. Case 4: Today’s Web; Anything but Usual
Federated will be using FedAd software to
Coordinate the efforts of 4,000 marketing staffers in six divisions
Buy and publish the company’s newspaper, radio, and TV ads
Pay invoices
Ship ads to publications
Manage marketing expenses against the company’s budget

48. Case 4: Today’s Web; Anything but Usual
Dell’s initiatives
Redesign of its website to make it easier to use
Make IT costs smaller by being more efficient
Combine the website re-launch with an e-commerce consolidation

49. Case Study Questions
What is the primary driver behind the Web upgrade activities of Microsoft and Dell?
What is the business value of Microsoft’s Web-based, live-feedback program?
What lessons on developing successful e-commerce projects can be gained from the information in this case?