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

2. © Paradigm Publishing Inc. 11-2 Overview An Overview of Electronic Commerce Online Shopping Online Services Peer-to-Peer Online Transactions Transaction Payment Methods Establishing an E-tailer 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? –Electronic commerce – buying and selling of products and services over the Internet –Business-to-consumer electronic commerce – companies use Internet to sell products and services to customers and receive payment –Business-to-business electronic commerce – companies use Internet to conduct a wide range of business activities with other companies

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

5. © Paradigm Publishing Inc. 11-5 An Overview of Electronic Commerce Popular Business-to- Consumer Shopping Sites

6. © Paradigm Publishing Inc. 11-6 Online Shopping What are the advantages of online shopping? –Convenience – consumers purchase what they want when they want from their own homes –Greater selection – online stores offer consumers almost unlimited products –Product information – consumers find detailed information on a wide variety of products –Ease of comparison shopping – consumers quickly find comparable items at similar stores

7. © Paradigm Publishing Inc. 11-7 Online Shopping Online Store –seller’s Web site where customers can view and purchase products and services –seller groups products or services in categories that link to a list of merchandise in each category –user clicks desired category to view pictures, descriptions, and prices

8. © Paradigm Publishing Inc. 11-8 Online Shopping Online superstores –offer an extensive array of products –products are grouped into departments –provides search features to find specific products Online shopping malls –connects its stores by hyperlinks on the mall’s home page

9. © Paradigm Publishing Inc. 11-9 Online Shopping Shopping agent continually scans data- bases for products and prices that are displayed when a user requests a price comparison.

10. © Paradigm Publishing Inc. 11-10 The online shopping process Online Shopping

11. © Paradigm Publishing Inc. 11-11 Online Shopping Tip checklist for shopping online

12. © Paradigm Publishing Inc. 11-12 Online Shopping Milestones in federal privacy legislation

13. © Paradigm Publishing Inc. 11-13 Online Shopping Data is coded when sent over Internet and decoded by recipient.

14. © Paradigm Publishing Inc. 11-14 Online Shopping Online shopping sites should provide –easy to find, read, and understand terms of sale –satisfactory degree of information about the product being offered –simple to follow directions for purchasing –high level of customer service

15. © Paradigm Publishing Inc. 11-15 Online Services Online Banking and Investing –Online banking involves using a computer, modem, and Internet to conduct routine banking. –Users pay bills, transfer funds among accounts, and transact other financial business online. –Brokerage firms maintain Web sites so consumers can purchase and sell stocks and other securities.

16. © Paradigm Publishing Inc. 11-16 Online Services Online Travel –allows users to research destinations, transportation, and prices –users can surf price and schedule combinations to sort options by airline, arrival and departure times, price, and duration of flight

17. © Paradigm Publishing Inc. 11-17 Peer-to-Peer Online Transactions –Peer-to-peer online transaction venue is a Web site forum where anyone may sell, buy, trade, or share goods with other individuals. –Online auction is a site to place an item for sale or bid on items being offered for auction. –Digital music distribution is the free distribution of music over the Internet.

18. © Paradigm Publishing Inc. 11-18 Transaction Payment Methods Electronic Funds Transfer (EFT) –any transfer of money over the Internet Check or Credit Card by Phone –Electronic check (e-check) initiates an electronic transfer of funds from customer’s checking account to merchant.

19. © Paradigm Publishing Inc. 11-19 Transaction Payment Methods Credit Account –represents a customer’s promise to pay for online purchases upon receipt of a periodic statement Credit Cards and Debit Cards –Credit card – small plastic card with information that enables user to make purchases on credit –Debit card – withdraws funds directly from purchaser’s current checking or savings account

20. © Paradigm Publishing Inc. 11-20 Transaction Payment Methods Smart Card –user swipes card through reader attached to computer and information is transmitted to e-tailer which completes payment transaction Digital Cash –allows customer to pay for online purchases by transmitting a number from one computer to another; the number represents a specified amount of money

21. © Paradigm Publishing Inc. 11-21 Transaction Payment Methods Electronic Wallet –encryption software stores user’s personal, credit card, and shipping information Micro Payments –enables buyers to purchase low-cost items on Internet Person-to-Person Payment Systems –allows consumers to transfer money through a credit card or bank account

22. © Paradigm Publishing Inc. 11-22 Establishing an E-tailer Web Site Registering the Domain Name Internet Corporation for Assigned Names and Numbers (ICANN) provides information about site registration, allows lookup to see if domain name is available, and provides information about how to register site’s address with registrar.

23. © Paradigm Publishing Inc. 11-23 Establishing an E-tailer Web Site Choosing Hardware and Software –Next step is to determine the type of hardware and software needed to create a storefront. –A Web hosting service allows individuals or businesses to use its Web servers to store Web pages.

24. © Paradigm Publishing Inc. 11-24 Establishing an E-tailer Web Site Processing Payments To process payments, you will need –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

25. © Paradigm Publishing Inc. 11-25 Establishing an E-tailer Web Site Checklist for designing an effective site

26. © Paradigm Publishing Inc. 11-26 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

27. © Paradigm Publishing Inc. 11-27 Establishing an E-tailer Web Site Advertising and Promoting the Site Electronic methods to let shoppers know about your site include – co-advertise and co-promote with other sites – links to other sites like yours, and vice versa – submit site to search engines

28. © Paradigm Publishing Inc. 11-28 Establishing an E-tailer Web Site Analyzing the Effectiveness of the Site Site analysis is 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.

29. © Paradigm Publishing Inc. 11-29 Establishing an E-tailer Web Site Developing a Customer Focus Customer relationship management (CRM) software electronically manages the business/customer relationship. It focuses on establishing and maintaining good relationships with online customers, suppliers, and other businesses.

30. © Paradigm Publishing Inc. 11-30 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. – Communicating with others in the supply chain can be done through Web sites, intranets, internets, extranets, and virtual private networks.

31. © Paradigm Publishing Inc. 11-31 The Supply Chain: A B2B Model Electronic commerce technologies allow businesses to conduct activities quickly and efficiently on a worldwide scale.

32. © Paradigm Publishing Inc. 11-32 The Supply Chain: A B2B Model Types of information shared in the B2B model

33. © Paradigm Publishing Inc. 11-33 The Supply Chain: A B2B Model An intranet allows departments within a business to share information quickly and easily.

34. © Paradigm Publishing Inc. 11-34 Major Types of B2B Technologies The electronic data interchange (EDI) process

35. © Paradigm Publishing Inc. 11-35 Major Types of B2B Technologies Payment and Transaction Systems –Financial electronic data interchange (FEDI) provides for electronic transmission of payment and remittance information among a payer, payee, and banks. –Automated clearinghouse (ACH) is established to transfer funds electronically from one account to another.

36. © Paradigm Publishing Inc. 11-36 Major Types of B2B Technologies Security Technologies –Authentication identifies and individual and confirms authorization to access a system. –Electronic signature is a digital code attached to a message to uniquely identify the sender. –Trusted operating system isolates OS functions into separate compartments and restricts access of unauthorized users to key areas of systems.

37. © Paradigm Publishing Inc. 11-37 B2B in the U.S. Economy General Electric Corporation –Customers can view high-resolution photos of engine parts they have sent in for repair. –Site describes the defect and recommends whether and how to fix it.

38. © Paradigm Publishing Inc. 11-38 B2B in the U.S. Economy Wal-Mart’s Customer Inventory System –Computers electronically transmit purchase orders, shipping lists, invoices, and payments; eliminates delays in shipping, obtains accurate pricing, and better serves customers. –Electronic funds transfers allows payments to be electronically credited to suppliers’ bank accounts.

39. © Paradigm Publishing Inc. 11-39 B2B in the U.S. Economy United Parcel Service (USP) –Employees use personal computers to enter information from customers who request package pick up or trace. –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.

40. © Paradigm Publishing Inc. 11-40 On the Horizon Based on the information presented in this chapter and your own experience, what do you think is on the horizon?