1. © Paradigm Publishing, Inc. 11-1 Chapter 11 Electronic Commerce Chapter 11 Electronic Commerce

2. © Paradigm Publishing, Inc. 11-2 Presentation Overview An Overview of Electronic Commerce Online Shopping and Services Peer-to-Peer Online Transactions Transaction Payment Methods Establishing an E-tiler Web Site Business-to-Business Electronic Commerce The Supply Chain: A B2B Model Major Types of B2B Technologies B2B in the U.S. Economy

3. © Paradigm Publishing, Inc. 11-3 An Overview of Electronic Commerce What is electronic commerce? The buying and selling of products and services over the Internet. Mobile commerce (M-commerce) is electronic commerce using cell phones. In business-to-business (B2B) electronic commerce, companies conduct business activities with other companies. In business-to-consumer (B2C) electronic commerce, companies use the Internet to sell products to consumers and receive payment.

4. © Paradigm Publishing, Inc. 11-4 An Overview of Electronic Commerce Popular Business-to-Consumer Shopping Sites

5. © Paradigm Publishing, Inc. 11-5 Online Shopping and Services What are the advantages of online shopping? –Convenience –Greater selection –More product information –Ease of comparison shopping

6. © Paradigm Publishing, Inc. 11-6 Online Shopping and Services Online Shopping Venues –An online store is a seller’s website where customers can view and purchase a merchant’s products and services. The site, or online storefront, groups the products and services in categories. –An online superstore offers an extensive array of products. –An online shopping mall connects its stores by hyperlinks on the mall’s homepage.

7. © Paradigm Publishing, Inc. 11-7 Online Shopping and Services When a user requests a price comparison, an online shopping agent continually scans databases for product and price information.

8. © Paradigm Publishing, Inc. 11-8 Online Shopping and Services The Online Shopping Process

9. © Paradigm Publishing, Inc. 11-9 Online Shopping and Services Tip Checklist for Shopping Online

10. © Paradigm Publishing, Inc. 11-10 Online Shopping and Services The U.S. government has enacted legislation to protect individuals who shop online. Milestones in federal privacy legislation:

11. © Paradigm Publishing, Inc. 11-11 Online Shopping and Services With data encryption, data is encoded when transmitted over the Internet and then decoded by the recipient. This helps to prevent unauthorized access to and usage of private data.

12. © Paradigm Publishing, Inc. 11-12 Online Shopping and Services Online shopping sites should provide –terms of sale that are easy to find, read, and understand –a satisfactory degree of information about the product being offered –directions for purchasing that are simple to follow –a high level of customer service

13. © Paradigm Publishing, Inc. 11-13 Online Shopping and Services Online Banking and Investing –Online banking involves using a computer, modem, and Internet to conduct routine banking. –Investment brokerage firms also maintain Web sites where consumers can purchase and sell stocks and other securities.

14. © Paradigm Publishing, Inc. 11-14 Online Shopping and Services Online Travel –Users can research fares and flights and purchase tickets online. –Users can surf price and schedule combinations to sort options by airline, arrival and departure times, price, and duration of flight.

15. © Paradigm Publishing, Inc. 11-15 Peer-to-Peer Online Transactions A peer-to-peer online transaction venue is a Web site forum on which any individual with an Internet hookup may sell, buy, trade, or share goods with other individuals. An online auction is a Web site consumers can visit to place an item for sale or bid on other items being offered for auction. Digital music distribution is the free distribution of music over the Internet.

16. © Paradigm Publishing, Inc. 11-16 Transaction Payment Methods An electronic funds transfer (EFT) is any transfer of funds over the Internet. Customers can use a check or credit card by phone if they do not want to supply financial data over the Internet. An electronic check (e-check) initiates an electronic transfer of funds from the customer’s checking account to the merchant.

17. © Paradigm Publishing, Inc. 11-17 Transaction Payment Methods A credit account represents a customer’s promise to pay for purchases upon receipt of a periodic statement from the seller. A credit card has a metallic strip that contains personal information and enables the user to make purchases on credit. A debit card withdraws funds directly from a user’s checking or savings account.

18. © Paradigm Publishing, Inc. 11-18 Transaction Payment Methods A smart card keeps personal and financial data on a small microprocessor embedded in the card, which is read by a special reader connected to the computer. Digital cash allows a customer to pay for online purchases by transmitting a number from one computer to another computer.

19. © Paradigm Publishing, Inc. 11-19 Transaction Payment Methods An electronic wallet (e-wallet) is encryption software that stores a user’s personal, credit card, and shipping information. A micro payment enables buyers to purchase low-cost items over the Internet. A person-to-person payment system allows consumers to transfer money through a credit card or a bank account.

20. © Paradigm Publishing, Inc. 11-20 Establishing an E-tailer Web Site Registering the Domain Name –You must find an available domain name (or Web address for your site). –The Internet Corporation for Name and Numbers (ICANN) is responsible for assigning domain names. –You can look up potential domain names on ICANN’s site to see if they are available.

21. © Paradigm Publishing, Inc. 11-21 Establishing an E-tailer Web Site Choosing Hardware and Software –You must determine the type of hardware and software necessary to create the storefront. –Factors to consider include Time limitations Funds for the enterprise The desired complexity of the site –A Web hosting service allows others to use its Web servers to store Web pages.

22. © Paradigm Publishing, Inc. 11-22 Establishing an E-tailer Web Site Processing Payments: Checklist –To obtain a merchant account –To provide secure order forms at the site –To use payment-processing software –An electronic order form –To use a commercial payment-processing service

23. © Paradigm Publishing, Inc. 11-23 Establishing an E-tailer Web Site Checklist for Designing an Effective Site

24. © Paradigm Publishing, Inc. 11-24 Establishing an E-tailer Web Site Managing the Site –Customers expect e-tailer sites to Reflect current product descriptions and prices Show specials, new products or services, updated information, or new images that encourage browsing the site frequently –If your site never changes, customers will have no reason to revisit it.

25. © Paradigm Publishing, Inc. 11-25 Establishing an E-tailer Web Site Advertising and Promoting the Site Electronic methods to let shoppers know about your site include Co-advertising and co-promoting with other sites Locating other sites like yours that will provide a link to your site, and vice versa Submitting your site to search engines

26. © Paradigm Publishing, Inc. 11-26 Establishing an E-tailer Web Site Analyzing the Effectiveness of the Site Site analysis refers to an organization’s ongoing evaluation of an e-commerce Web site and its activity. One form involves timing a Web site’s ordering or processing activities. Another form provides users with a simple online questionnaire that allows feedback.

27. © Paradigm Publishing, Inc. 11-27 Establishing an E-tailer Web Site Developing a Customer Focus –The information collected on an e-commerce site about customers and their purchases can be used to improve the company’s products and services. –Customer relationship management (CRM) software helps companies manage the business/customer relationship.

28. © Paradigm Publishing, Inc. 11-28 Business-to-Business Electronic Commerce How does the Internet support the supply chain in B2B e-commerce? –B2B e-commerce networks companies, suppliers, agents, customers, and others in a supply chain. –Procurement is finding products and services at the best possible prices. –Communication in the supply chain can be done through Web sites, internets, intranets, extranets, and virtual private networks.

29. © Paradigm Publishing, Inc. 11-29 The Supply Chain: A B2B Model Electronic commerce technologies allow businesses to conduct activities quickly and efficiently on a worldwide scale.

30. © Paradigm Publishing, Inc. 11-30 The Supply Chain: A B2B Model Types of Information Shared in the B2B Model

31. © Paradigm Publishing, Inc. 11-31 The Supply Chain: A B2B Model An intranet allows departments within a business to share information quickly and easily.

32. © Paradigm Publishing, Inc. 11-32 Major Types of B2B Technologies Many businesses use electronic data interchange (EDI) to exchange specially formatted business documents.

33. © Paradigm Publishing, Inc. 11-33 Major Types of B2B Technologies Payment and Transaction Systems –Financial electronic data interchange (FEDI) provides for the electronic transmission of payments and remittance information among a payer, payee, and banks. –An automatic clearinghouse (ACH) is established to transfer funds electronically from one account to another.

34. © Paradigm Publishing, Inc. 11-34 Major Types of B2B Technologies Security Technologies –Authentication identifies an individual and confirms that the individual is authorized to access a system. –An electronic signature is a digital code attached to an electronically transmitted message to uniquely identify the sender. –A trusted operating system (TOS) is a security-hardened version of a standard operating system.

35. © Paradigm Publishing, Inc. 11-35 B2B in the U.S. Economy Case Study: General Electric Corporation Customers can view high-resolution photos of engine parts they have sent in for repair. The site describes the defect and recommends whether and how to fix it. This reduces the “cycle time” for making decisions.

36. © Paradigm Publishing, Inc. 11-36 B2B in the U.S. Economy Case Study: Walmart Walmart uses EDI to link the company with is suppliers. Computers transmit purchase orders, shipping invoices, and payments. Electronic funds transfers allow payments to be electronically credited to suppliers’ bank accounts.

37. © Paradigm Publishing, Inc. 11-37 B2B in the U.S. Economy Case Study: United Parcel Service (UPS) –Employees use personal computers to enter information from customers who request that a package be picked up or traced. –Drivers use handheld devices to scan bar codes for product and destination information. –Shipping label information can track packages and inform customers of package status.

38. © Paradigm Publishing, Inc. 11-38 On the Horizon Based on the information presented in this chapter and your own experience, what do you think is on the horizon?