1. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-1 Introduction to Information Technology 2 nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. Electronic Commerce Prepared by: Roberta M. Roth, Ph.D. University of Northern Iowa

2. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-2 Chapter Preview  In this chapter, we will study:  Forms and uses of business-to-consumer electronic commerce  Forms and uses of business-to-business electronic commerce  New forms of EC  Technical and non-technical requirements needed to make EC work  Legal and ethical issues associated with EC

3. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-3 E-Commerce / E-Business  Electronic Commerce: buying and selling of products, services and information via computer networks, primarily the Internet  Electronic Business: a broader definition that includes  buying and selling, plus  servicing customers  collaborating with business partners  conducting electronic transactions within an organization

4. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-4 Types of E-Commerce  Business-to-business EC (B2B)  Collaborative commerce (c-commerce)  Business-to-consumer EC (B2C)  Consumer-to-businesses (C2B)  Consumer-to-consumer (C2C)  Intrabusiness (intraorganizational) commerce  Government-to-citizens (G2C) and others  Mobile commerce (m-commerce)

5. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-5 E-Commerce History and Scope  History  Began in the early 1970s (long before the Internet was open to commercial use)  Limited to large businesses initially  Electronic Fund Transfer (EFT) and Electronic Data Interchange (EDI)  Scope Today Includes  advertising  home banking  shopping in electronic stores and malls  buying stocks  finding a job  conducting an auction  collaborating electronically with business partners around the globe  providing customer service

6. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-6 E-Commerce Framework

7. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-7 EC Benefits to Organizations  Increased customer base:  Broaden markets  Find niche markets (e.g. www.dogtoys.com)www.dogtoys.com  Reduced cost:  Reach a large number of customers at little cost  Procure material and services from other companies at less cost  Allow lower inventories by facilitating “ pull ” -type supply chain management  Shorten marketing distribution channels and reduce marketing costs  Decrease the cost of creating, processing, distributing, storing, and retrieving paper-based information  Lower telecommunications costs because the Internet is much cheaper than value-added networks (VANs)  Reduced cycle time:  Procure material and services from other companies rapidly  Reduce the time between the outlay of capital and the receipt of products and services  Helps small businesses compete against large companies

8. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-8 EC Benefits to Customers  Choice  Consumers can select from many vendors and many more products than they could locate otherwise  Consumers can get customized products, from PCs to cars, at competitive or bargain prices  Consumers can find unique products and collectors ’ items through virtual auctions that might otherwise require them to travel long distances to a particular auction place at a specific time  Convenience  Consumers can conduct online quick comparisons to find less expensive products and services  Customers can shop or make other transactions 24 hours a day, year round, from almost any location  Product information immediately available 24 hours a day, year round, from almost any location  Consumers can interact with other consumers in electronic communities and can exchange ideas as well as compare experiences

9. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-9 EC Benefits to Society  Convenience  Enables more individuals to work at home and to do less traveling  Access  Allows some merchandise to be sold at lower prices - less affluent people can buy more and increase their standard of living  Enables people in less developed countries and rural areas to enjoy products and services that otherwise are not available to them  Facilitates delivery of public services, such as government entitlements, reducing the cost of distribution and fraud, and increasing the quality of the social services, police work, health care and education

10. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-10 Technical Limitations of EC  A few technical challenges remain for organizations wishing to conduct EC:  Lack of universally accepted standards for quality, security, and reliability  Insufficient telecommunications bandwidth  Still-evolving software development tools  Difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases  Need for special Web servers in addition to the network servers (added cost)  Expensive and/or inconvenient Internet accessibility for many people  All of these will diminish over time

11. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-11 Non-Technical Limitations of EC  Legal and economic concerns:  Many legal issues are yet unresolved  Lack of national and international regulations and standards  Difficulty in measuring benefits of EC and justifying EC  Insufficient number (critical mass) of sellers and buyers exists for profitable EC operations  Cultural resistance:  Distrust of the new: Many sellers and buyers are waiting for EC to stabilize before they take part  Customer resistance to the change from a physical to virtual stores  Perception that electronic commerce is expensive and unsecured, so many do not want even to try it

12. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-12 Business-to-Consumer EC  Electronic Storefronts and Malls  Electronic retailing can be conducted via solo storefront or as a part of cybermall  Issues of e-tailing  May be channel conflict and conflict with existing stores  Difficult to fulfill large quantity of very small orders  Incorrect business model (advertising revenue versus profitable sales)

13. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-13 Business-to-Consumer EC (continued)  Services Online  Banking (www.sfnb.com)www.sfnb.com  Securities trading (Schwab Online)Schwab Online  Job markets (Monster Board)Monster Board  Travel (Expedia.com)Expedia.com  Real estate ( Realtor.com ) Realtor.com  Auctions ( eBay.com ) eBay.com

14. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-14 Business-to-Consumer EC (continued)  Personalization – ability to customize product, service, advertisement, or customer service  B2C EC enables personalization at low cost  Internet enables marketing research  Questionnaires Usually involve some inducement  Direct behavior observation Cookies or site tracking services

15. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-15 Business-to-Consumer EC (continued)  Use of intelligent agents  Help customers determine what to buy  Search for and compare vendor prices  Collect information and develop customer profiles  Online advertising  Banners Keyword banners Random banners  Direct email  Pop-up windows

16. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-16 Business-to-Consumer EC (continued)  Advertising Approaches and Issues  Permission marketing – offer incentives to consumers to receive advertising  Viral (advocacy) marketing – online word of mouth advertising (send this ad to a friend and get … )  Customizing ads – base ads on consumers ’ profile  Interactive marketing – tailor ads based on stored customer data  Attracting visitors to a site Making the top list of a search engine Online events, promotions, and attractions  Electronic catalogs / customized catalogs  Coupons online

17. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-17 Business-to-Consumer EC (continued)  Providing Customer Service  Help customer determine needs  Help customer acquire product or service  Support customer during ownership of product or service  Help customer dispose of product or service

18. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-18 Business-to-Business EC  Composes the majority of EC volume  Enables organizations to form electronic relationships  Covers all activities along the supply chain  Business Models:  Sell-Side Marketplace Organizations sell products to other organizations electronically.  Buy-Side Marketplace Buyers post needs; sellers submit bids  Electronic Exchanges Electronic marketplaces link many buyers and many sellers

19. Introduction to Information Technology, 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc. 9-19 Business-to-Business EC (continued)  Collaborative Commerce – non- buying/selling activities between businesses  Planning and scheduling  Design  New product information  Product content management  Order management  Sourcing and procurement