1. Introduction to E-Commerce Electronic Commerce is the buying, selling, and trading of goods on the Internet. Internet Technology Provides the Vehicle for E-Commerce

2. Introduction to E-Commerce Benefits of E-Commerce

3. Introduction to E-Commerce  Improved Customer Service Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365 Shop-at-home convenience Detailed product information Customer controls transaction Simplified ordering Open 24/7/365

4. Introduction to E-Commerce  Expanded Markets Elimination of Boundaries Direct to customer (no middleman) Elimination of Boundaries Direct to customer (no middleman)

5. Introduction to E-Commerce  Cost Cutting Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs Streamlined order processing Fewer errors in order entry Increased speed Lower marketing costs

6. Introduction to E-Commerce  Higher Profits Additional sales channel User fee income Advertising Income Lower marketing costs Additional sales channel User fee income Advertising Income Lower marketing costs

7. Introduction to E-Commerce E-Commerce Challenges Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience Security & privacy Scams & Fraud Down time & poor service Awkward design & functionality Lack of retail experience

8. Introduction to E-CommerceIntroduction to E-Commerce Where to Use E-Commerce Value Chain Analysis SWOT Analysis Value Chain Analysis SWOT Analysis

9. Value Chain Analysis

10. Chapter 2 Technology Infrastructure: The Internet and the World Wide Web

11. Technology Overview Computer networks and the Internet form the basic technology structure for electronic commerce.Computer networks and the Internet form the basic technology structure for electronic commerce. The computers in these networks run such software as:The computers in these networks run such software as: Operating systems, database managers, encryption software, multimedia creation and viewing software, and the graphical user interfaceOperating systems, database managers, encryption software, multimedia creation and viewing software, and the graphical user interface

12. Packet-Switched Networks A local area network (LAN) is a network of computers close together.A local area network (LAN) is a network of computers close together. A wide area network (WAN) is a network of computers connected over a great distance.A wide area network (WAN) is a network of computers connected over a great distance. Circuit switching is used in telephone communication.Circuit switching is used in telephone communication. The Internet uses packet switchingThe Internet uses packet switching Files are broken down into small pieces (called packets) that are labeled with their origin, sequence, and destination addresses.Files are broken down into small pieces (called packets) that are labeled with their origin, sequence, and destination addresses.

13. Routing Packets The computers that decide how best to forward each packet in a packet-switched network are called ‘routers’.The computers that decide how best to forward each packet in a packet-switched network are called ‘routers’. The programs on these routers use ‘routing algorithms’ that call upon their ‘routing tables’ to determine the best path to send each packet.The programs on these routers use ‘routing algorithms’ that call upon their ‘routing tables’ to determine the best path to send each packet. When packets leave a network to travel on the Internet, they are translated into a standard format by the router.When packets leave a network to travel on the Internet, they are translated into a standard format by the router. These routers and the telecommunication lines connecting them are referred to as ‘the Internet backbone’.These routers and the telecommunication lines connecting them are referred to as ‘the Internet backbone’.

14. Routing Packets

15. Internet Protocols A protocol is a collection of rules for formatting, ordering, and error-checking data sent across a network.A protocol is a collection of rules for formatting, ordering, and error-checking data sent across a network.

16. Internet Protocols The open architecture has four key rules that have contributed to the success of the Internet.The open architecture has four key rules that have contributed to the success of the Internet. Independent networks should not require any internal changes to be connected to the network.Independent networks should not require any internal changes to be connected to the network. Packets that do not arrive at their destinations must be retransmitted from their source network.Packets that do not arrive at their destinations must be retransmitted from their source network. Router computers act as receive-and-forward devices; they do not retain information about the packets that they handle.Router computers act as receive-and-forward devices; they do not retain information about the packets that they handle. No global control exists over the network.No global control exists over the network.

17. Internet Protocols The Transmission Control Protocol (TCP) and the Internet Protocol (IP) are the two protocols that support the Internet operation (commonly referred to as TCP/IP).The Transmission Control Protocol (TCP) and the Internet Protocol (IP) are the two protocols that support the Internet operation (commonly referred to as TCP/IP). The TCP controls the disassembly of a message into packets before it is transmitted over the Internet and the reassembly of those packets when they reach their destination.The TCP controls the disassembly of a message into packets before it is transmitted over the Internet and the reassembly of those packets when they reach their destination. The IP specifies the addressing details for each packet being transmitted.The IP specifies the addressing details for each packet being transmitted.

18. IP Addresses IP addresses are based on a 32-bit binary number that allows over 4 billion unique addresses for computers to connect to the Internet.IP addresses are based on a 32-bit binary number that allows over 4 billion unique addresses for computers to connect to the Internet. IP addresses appear in ‘dotted decimal’ notation (four numbers separated by periods).IP addresses appear in ‘dotted decimal’ notation (four numbers separated by periods).

19. Domain Names To make the numbering system easier to use, an alternative addressing method that uses words was created.To make the numbering system easier to use, an alternative addressing method that uses words was created. An address, such as www.course.com, is called a domain name.An address, such as www.course.com, is called a domain name. The last part of a domain name (i.e., ‘.com’) is the most general identifier in the name and is called a ‘top-level domain’ (TLD).The last part of a domain name (i.e., ‘.com’) is the most general identifier in the name and is called a ‘top-level domain’ (TLD).

20. Top-level Domain Names

21. Web Page Delivery Hypertext Transfer Protocol (HTTP) is the set of rules for delivering Web pages over the Internet.Hypertext Transfer Protocol (HTTP) is the set of rules for delivering Web pages over the Internet. HTTP uses the client/server modelHTTP uses the client/server model A user’s Web browser opens an HTTP session and sends a request for a Web page to a remote server.A user’s Web browser opens an HTTP session and sends a request for a Web page to a remote server. In response, the server creates an HTTP response message that is sent back to the client’s Web browser.In response, the server creates an HTTP response message that is sent back to the client’s Web browser. The combination of the protocol name and the domain name is called a uniform resource locator (URL).The combination of the protocol name and the domain name is called a uniform resource locator (URL).

22. Hypertext Markup Language HTML is a simplified programming language that includes tags defining the format and style of text elements in a document.HTML is a simplified programming language that includes tags defining the format and style of text elements in a document.

23. HTML Tags An HTML document contains both document text and elements.An HTML document contains both document text and elements. Tags are codes that are used to define where an HTML element starts and (if necessary) where it ends.Tags are codes that are used to define where an HTML element starts and (if necessary) where it ends. In an HTML document, each tag is enclosed in brackets (<>).In an HTML document, each tag is enclosed in brackets (<>). A two-sided tag set has an opening tag and a closing tag.A two-sided tag set has an opening tag and a closing tag.

24. HTML Links Hyperlinks are bits of text that connect the current document to:Hyperlinks are bits of text that connect the current document to: another location in the same documentanother location in the same document another document on the same host machineanother document on the same host machine another document on the Internetanother document on the Internet Hyperlinks are created using the HTML anchor tag.Hyperlinks are created using the HTML anchor tag.

25. HTML Editors HTML documents can be created in any general- purpose text editor or word processor.HTML documents can be created in any general- purpose text editor or word processor. Sophisticated editors can create full-scale, commercial-grade Web sites with database access, graphics, fill-in forms, and display the Web page along with the HTML code.Sophisticated editors can create full-scale, commercial-grade Web sites with database access, graphics, fill-in forms, and display the Web page along with the HTML code. Microsoft FrontPage and Macromedia Dreamweaver are examples of Web site builders.Microsoft FrontPage and Macromedia Dreamweaver are examples of Web site builders.

26. International Nature of Electronic Commerce Companies with established reputations –Often create trust by ensuring that customers know who they are –Can rely on their established brand names to create trust on the Web Customers’ inherent lack of trust in “strangers” on the Web – Logical and to be expected

27. This Cartoon from The New Yorker Illustrates Anonymity on the Web

28. Language Issues To do business effectively in other cultures –Must adapt to culture Researchers have found that –Customers are more likely to buy products and services from Web sites in their own language Localization –Translation that considers multiple elements of local environment

29. Culture Issues Important element of business trust –Anticipate how the other party to a transaction will act in specific circumstances Culture –Combination of language and customs –Varies across national boundaries –Varies across regions within nations

30. Infrastructure Issues Internet infrastructure includes –Computers and software connected to Internet –Communications networks over which message packets travel Organization for Economic Cooperation and Development’s ( OECD) –Statements on Information and Communications Policy Deal with telecommunications infrastructure development issues

31. Infrastructure Issues (Continued) Flat-rate access system –Consumer or business pays one monthly fee for unlimited telephone line usage –Contributed to rapid rise of U.S. electronic commerce Targets for technological solutions –Paperwork and processes that accompany international transactions

32. Revenue Models

33. Revenue model of selling goods and services on the Web –Based on mail order catalog revenue model that predates the Web SpiegelSpiegel Mail order or catalog model –Proven to be successful for wide variety of consumer items Web catalog revenue model –Taking the catalog model to the Web

34. Computers and Consumer Electronics Apple, Dell, Gateway, and Sun MicrosystemsAppleDellGatewaySun Microsystems –Have had great success selling on the Web Dell –Created value by designing entire business around offering high degree of configuration flexibility to its customers

35. Books, Music, and Videos Retailers using the Web catalog model to sell books, music, and videos –Among the most visible examples of electronic commerce Jeff Bezos –Formed Amazon.comAmazon.com Jason and Matthew Olim –Formed online music store they called CDnow CDnow –Used the Web catalog revenue model

36. Luxury Goods People are still reluctant to buy through a Web site Web sites of Vera Wang and VersaceVera Wang Versace –Constructed to provide information to shoppers, not to generate revenue Web site of EvianEvian –Designed for a select, affluent group of customers

37. Clothing Retailers Lands’ End –Pioneered idea of online Web shopping assistance with its Lands’ End Live feature in 1999 Personal shopper –Intelligent agent program that learns customer’s preferences and makes suggestions Virtual model –Graphic image built from customer measurements

38. Flowers and Gifts 1-800-Flowers –Created online extension to its telephone order business Chocolatier GodivaGodiva –Offers business gift plans on its site

39. Digital Content Revenue Models Firms that own intellectual property –Have embraced the Web as a new and highly efficient distribution mechanism Lexis.com –Provides full-text search of court cases, laws, patent databases, and tax regulations ProQuest –Sells digital copies of published documents

40. Advertising-Supported Revenue Models Broadcasters provide free programming to an audience along with advertising messages KOMO KING KOMOKING Success of Web advertising hampered by –No consensus has emerged on how to measure and charge for site visitor views Stickiness of a Web site: ability to keep visitors and attract repeat visitors –Very few Web sites have sufficient visitors to interest large advertisers

41. Web Portals Web directory –A listing of hyperlinks to Web Pages Portal or Web portal –Site used as a launching point to enter the Web –Almost always includes a Web directory and search engine –Example: Yahoo, AOL, AltavistaYahooAltavista

42. Advertising-Subscription Mixed Revenue Models Subscribers –Pay a fee and accept some level of advertising –Typically subjected to much less advertising Used by –The New York Times and The Wall Street JournalThe New York Times The Wall Street Journal

43. Advertising-Subscription Mixed Revenue Models (continued) Business Week –Offers some free content at its Business Week online site –Requires visitors to buy subscription to Business Week print magazine Business Week

44. Fee-for-Transaction Revenue Models Businesses offer services and charge a fee based on number or size of transactions processed PayPalPayPal Disintermediation –Removal of an intermediary from value chain Reintermediation –Introduction of a new intermediary

45. Fee-for-Service Revenue Models Fee based on value of service provided Services –Range from games and entertainment to financial advice Online games –Growing number of sites include premium games in their offerings –Site visitors must pay to play these premium games

46. Fee-for-Service Revenue Models (Continued) Concerts and films –As more households obtain broadband access to the Internet Companies are providing streaming video of concerts and films to paying subscribers Professional Services –State laws One of the main forces preventing U.S. professionals from extending their practices to the Web

47. Revenue Models in Transition Subscription to Advertising-Supported Model –Microsoft founded its Slate magazine Web site An upscale news and current events publication Charged annual subscription fee after a limited free introductory period Was unable to draw sufficient number of paid subscribers Now operated as an advertising-supported site

48. Advertising-Supported to Advertising-Subscription Mixed Model Salon.com –Operated for several years as an advertising- supported site –Now offers optional subscription version of its site –Subscription offering Motivated by company’s inability to raise additional money from investors

49. Advertising-Supported to Fee- for-Services Model Xdrive Technologies –Opened its original advertising-supported Web site in 1999 –Offered free disk storage space online to users –After two years, was unable to pay costs of providing the service with the advertising revenue generated –Later switched to a subscription-supported model

50. Advertising-Supported to Subscription Model Northern Light –Founded in August 1997 as a search engine with a twist –Revenue model Combination of advertising-supported model plus a fee-based information access service –January 2002 Converted to a new revenue model that was primarily subscription supported

51. Multiple Transitions Encyclopædia Britannica –Original offerings The Britannica Internet Guide –Free Web navigation aid Encyclopædia Britannica Online –Available for a subscription fee or as part of CD package –1999 Converted to a free, advertiser-supported site –2001 Returned to a mixed model

52. If you build it they will come – you hope! If you build it they will come – you hope! Exploring E-Commerce Marketing on the Web

53. Marketing The management process responsible for identifying, anticipating, and satisfying customer’s requirements The management process responsible for identifying, anticipating, and satisfying customer’s requirements. Exploring E-Commerce The commercial functions involved in transferring goods from producer to consumer.

54. Product-based Strategies: product categories Staples Home Depot Home Depot Costco Musical Instruments Musical Instruments More Musical Instruments More Musical Instruments Staples Home Depot Home Depot Costco Musical Instruments Musical Instruments More Musical Instruments More Musical Instruments Exploring E-Commerce

55. Customer-based Strategies: Meeting specific needs Sabre Business Services Business Services Web Marketing Web Marketing Sabre Business Services Business Services Web Marketing Web Marketing Exploring E-Commerce

56. Target Marketing Micromarketing (go for the “niche”) Geographic Marketing Demographic Marketing Psychographic Marketing Micromarketing (go for the “niche”) Geographic Marketing Demographic Marketing Psychographic Marketing Exploring E-Commerce

57. Micromarketing Body Jewelry Body Jewelry Manx Cats Manx Cats Body Jewelry Body Jewelry Manx Cats Manx Cats Exploring E-Commerce

58. Geographic Marketing Living in France Living in France Coastal California Coastal California Living in France Living in France Coastal California Coastal California Exploring E-Commerce

59. Demographic Marketing Retired People Retired People Generation X,Y, Z Generation X,Y, Z Retired People Retired People Generation X,Y, Z Generation X,Y, Z Exploring E-Commerce

60. Psychographic Marketing Goth Stuff Goth Stuff High IQ High IQ Goth Stuff Goth Stuff High IQ High IQ Exploring E-Commerce

61. Customer Behavior Strategies BrowsersBuyersShoppersBrowsersBuyersShoppers Exploring E-Commerce

62. Customer Behavior Strategies Browsers – use of “triggers”. Sports Outfitter Sports Outfitter Browsers – use of “triggers”. Sports Outfitter Sports Outfitter Exploring E-Commerce

63. Customer Behavior Strategies Buyers – ready to buy. Barnes and Noble Barnes and Noble Buyers – ready to buy. Barnes and Noble Barnes and Noble Exploring E-Commerce

64. Advertising Strategies Acquiring – cost. Conversion – cost. Retain – cost. Acquiring – cost. Conversion – cost. Retain – cost. Exploring E-Commerce

65. NEXT: Advertising on the Web Exploring E-Commerce

66. Banner Ads Most advertising on the Web uses banner ads.Most advertising on the Web uses banner ads. A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site.A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site. The most common sizes of banner ads are:The most common sizes of banner ads are: –Full banner –Half banner –Square button Most advertising on the Web uses banner ads.Most advertising on the Web uses banner ads. A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site.A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site. The most common sizes of banner ads are:The most common sizes of banner ads are: –Full banner –Half banner –Square button

67. Banner Ad Placement There are three different ways to arrange for other Web sites to display your banner ads.There are three different ways to arrange for other Web sites to display your banner ads. A banner exchange network coordinates ad- sharing so that other sites run your ad while your site runs other exchange members’ ads.A banner exchange network coordinates ad- sharing so that other sites run your ad while your site runs other exchange members’ ads. The second way is to find Web sites that appeal to one of the company’s market segments and then pay them to carry the ads.The second way is to find Web sites that appeal to one of the company’s market segments and then pay them to carry the ads. A third way is to use a banner advertising network.A third way is to use a banner advertising network. There are three different ways to arrange for other Web sites to display your banner ads.There are three different ways to arrange for other Web sites to display your banner ads. A banner exchange network coordinates ad- sharing so that other sites run your ad while your site runs other exchange members’ ads.A banner exchange network coordinates ad- sharing so that other sites run your ad while your site runs other exchange members’ ads. The second way is to find Web sites that appeal to one of the company’s market segments and then pay them to carry the ads.The second way is to find Web sites that appeal to one of the company’s market segments and then pay them to carry the ads. A third way is to use a banner advertising network.A third way is to use a banner advertising network.

68. Other Web Ad Formats Another format of Web advertising is the pop-up ad.Another format of Web advertising is the pop-up ad. A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page.A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page. Another type of pop-up ad is called the pop- behind ad.Another type of pop-up ad is called the pop- behind ad. A pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original windowA pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original window –The window is parked behind the user browser waiting to appear when the browser is closed. Another format of Web advertising is the pop-up ad.Another format of Web advertising is the pop-up ad. A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page.A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page. Another type of pop-up ad is called the pop- behind ad.Another type of pop-up ad is called the pop- behind ad. A pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original windowA pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original window –The window is parked behind the user browser waiting to appear when the browser is closed.

69. E-Mail Marketing Unsolicited e-mail is often considered to be Spam.Unsolicited e-mail is often considered to be Spam. Sending e-mail messages to Web site visitors who have expressly requested the e-mail messages is a completely different story.Sending e-mail messages to Web site visitors who have expressly requested the e-mail messages is a completely different story. The practice of sending e-mail messages to people who have requested them is a part of marketing strategy called permission marketing.The practice of sending e-mail messages to people who have requested them is a part of marketing strategy called permission marketing. Unsolicited e-mail is often considered to be Spam.Unsolicited e-mail is often considered to be Spam. Sending e-mail messages to Web site visitors who have expressly requested the e-mail messages is a completely different story.Sending e-mail messages to Web site visitors who have expressly requested the e-mail messages is a completely different story. The practice of sending e-mail messages to people who have requested them is a part of marketing strategy called permission marketing.The practice of sending e-mail messages to people who have requested them is a part of marketing strategy called permission marketing.

70. Search Engine Positioning Potential customers find Web sites in many different ways.Potential customers find Web sites in many different ways. Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television.Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television. Many site visitors will be directed to the site by a search engine.Many site visitors will be directed to the site by a search engine. Potential customers find Web sites in many different ways.Potential customers find Web sites in many different ways. Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television.Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television. Many site visitors will be directed to the site by a search engine.Many site visitors will be directed to the site by a search engine.

71. Search Engine Positioning A search engine helps people find things on the Web.A search engine helps people find things on the Web. A search engine has three major partsA search engine has three major parts –The first part is called a spider, a crawler, or a robot –The second part is called its index or database –The third part of the search engine is the search utility A search engine helps people find things on the Web.A search engine helps people find things on the Web. A search engine has three major partsA search engine has three major parts –The first part is called a spider, a crawler, or a robot –The second part is called its index or database –The third part of the search engine is the search utility

72. Search Engine Positioning Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings.Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings. The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning.The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning. Search engine positioning is also called:Search engine positioning is also called: –Search engine optimization –Search engine placement Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings.Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings. The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning.The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning. Search engine positioning is also called:Search engine positioning is also called: –Search engine optimization –Search engine placement

73. Web Site Naming Issues The legal and marketing aspects of Web site naming can be complicated.The legal and marketing aspects of Web site naming can be complicated. Obtaining identifiable names to use for branded products on the Web is important.Obtaining identifiable names to use for branded products on the Web is important. URL brokers sell or auction domain names.URL brokers sell or auction domain names. The Internet Corporation for Assigned Names and Numbers (ICANN) maintains a list of accredited domain name registrars.The Internet Corporation for Assigned Names and Numbers (ICANN) maintains a list of accredited domain name registrars. The legal and marketing aspects of Web site naming can be complicated.The legal and marketing aspects of Web site naming can be complicated. Obtaining identifiable names to use for branded products on the Web is important.Obtaining identifiable names to use for branded products on the Web is important. URL brokers sell or auction domain names.URL brokers sell or auction domain names. The Internet Corporation for Assigned Names and Numbers (ICANN) maintains a list of accredited domain name registrars.The Internet Corporation for Assigned Names and Numbers (ICANN) maintains a list of accredited domain name registrars.