Transcript Internet - Southeast Missouri State University

Chapter 5
Enabling Commerce Using
the Internet
5-1
“…[W]e can hardly keep up with
the Fortune 500 companies who
are contacting us.”
Sibley Verbeck, CEO
and founder of the
Electric Sheep
Company
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
How Did the Internet Get Started?
4-2
 Internet—derived from internetworking
 1960s—U.S. Defense Advanced Research Project
(DARPA)

ARPANET—WAN that linked universities and research
centers
 1986—U.S. National Science Foundation
 NSFNET—became major component of the Internet
 Other networks ultimately connected
 BITNET, CSNET, NSINET, ESNET, NORDUNET
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Packet-Switching Technology
4-3
 Problem: Concurrent data transmission
 One wire and several users
 Solution: Turn taking
 Messages divided into packets and sent
 Packets travel independently
 Reassembled by receiver
 Header contains address of source and destination
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
EC Business Strategies
5-4
 Differentiated, based on levels
of physical/virtual presence

Brick & mortar (Traditional Stores)
 Physical locations only
 Cons: Limited geographical reach

Click Only (virtual companies)
 Business
conducted in cyberspace—no physical location
 Cons: Customers uncomfortable with online transactions
No face-to-face interaction with customers

Clicks-and-mortar
 Bricks-and-clicks
business strategy
 Hybrid
strategy
 Cons: Added complexity combining two different environments
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Most Common Types of E-Commerce
5-5
 EC just a portion of E-Business
 Business-to-consumer (B2C) - target.com
 Business-to-business (B2B) - Grainger.com
 Business-to-employee (B2E) - Southeast portal
 Consumer-to-consumer (C2C) - eBay
 Government-to-citizen (G2C) – income tax filing
 http://www.cra-arc.gc.ca/menu-e.html
 Government-to-business (G2B) – procurement
 Government-to-government (G2G)  G8 Summit
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Data Exchange
5-6
 Internet
 Intranet
Requires login & password
 Extranet – Access to a portion of an intranet.

 Electronic Data Interchange (EDI)
Used prior to the introduction of the Internet for B2B
Digital or electronic transmission of business documents between
organizations




Value-added networks (VAN)
Dedicated circuit between companies
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Consumer E-Tailing
5-7
 Benefits:
 Product - Unlimited number & variety
 Available
24/7/365 anytime, anywhere globally
 Easier comparison shopping

Price - High inventory turnover = lower costs

No expenditures for physical retail space
 Disadvantages
 Product delivery-Delay between purchase & delivery


Exception: Digital delivery
Product experience
Lack of sensory information (Smell, taste, feel)
 Lack of the social element
 Addressed by: Blogs, Twitter, Facebook, other Web 2.0

IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Attracting and Retaining Online Customers
5-8

Basic rule of commerce


Offer valuable products/services at fair prices
Additional e-commerce rules
1.
2.
3.
4.
5.
6.
The Web site should offer something unique.
The Web site must be aesthetically pleasing.
The Web site must be easy to use and fast.
The Web site must motivate people to visit, stay, & return.
You must advertise your presence on the Web.
You should learn from your Web site.
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Search Engine Marketing
5-9
 Search engine optimization

Position within search results based on complex formula
 Optimization based on:
• Web site updates
• Use of key terms
• Unethical “tricks”
 Paid inclusion (Fee paid to search engine to appear in results)
 Cannot influence order, thus companies may use:

Search engine advertising
 Sponsored search


Pay to ensure a spot on top of search results page
Pay-per-click
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Auctions & 3rd Party Payment Services
5-10
 Forward auction - Highest bid wins
 Sellers post goods or services for sale
 Reverse auction – Lowest seller bid wins
 Buyers post a request for quote (RFQ) used in B2B
 Seller proposes a bid
 Third Party Payment Services


Online transactions without sharing private information with
actual seller
Examples:

PayPal (owned by eBay) – Send & receive $ with email account

Can send & receive money if you have an e-mail account
Google Checkout – Linked with Google sear
 E-Gold - Service backed by real gold

IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Conducting Safe Transactions Online
5-11
1. Use a secure browser with the latest encryption
2.
3.
4.
5.
6.
7.
capabilities
Check the site’s privacy policy
Read and understand refund and shipping policies
Keep personal information private
Give payment information only to those you know
and trust
Keep records of online transaction
Review your monthly credit card and bank
statements
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Legislative & Tax Issues
5-12
 The USA PATRIOT Act introduced after 9/11/01
 Increased power given to U.S. government agencies to protect

Increased ability for government surveillance
 The Internet Tax Freedom Act—1998
 Created as an incentive for EC businesses

No sales taxes paid in states where the company has no presence


Problem:
Loss of tax incomes & Unfair advantage for e-tailers
Solutions:
 Use tax – consumer pays state’s sales tax or taxed on income
tax returns
 Streamlined
Sales Tax Project – Tax code simplified
COPA – Child Online Protection Act
 Age
verification
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016
Moving toward Internet v2
5-13
 L-Commerce – “Always on” connectivity
 Real-time transfer of data over 3G and 4G cellular networks
 Based on location - (GPS functionality & Bluetooth)


Pull-based—consumers seeking information
Push-based—companies sending (unrequested) information to the
consumer
 IPv6
 Net Neutrality
 Data sent over the Internet is handled in a neutral manner


All traffic treated the same way
ISPs and telephone companies argue for prioritization

Traditional Internet traffic suffers (e-mail) due to high bandwidth
applications
 Example: YouTube.com not paying fair share, should be deprioritized
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/7/2016