Intro to Information Systems

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Transcript Intro to Information Systems

Chapter 8
Electronic Commerce Systems
©2008,The McGraw-Hill Companies, All Rights Reserved
Learning Objectives
1. Identify the major categories and trends of ecommerce applications
2. Identify the essential processes of an ecommerce system, and give examples of how
they are implemented in e-commerce
3. Identify and give examples of several key
factors and Web store requirements needed to
succeed in e-commerce.
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Learning Objectives
4. Identify and explain the business value of
several types of e-commerce marketplaces.
5. Discuss the benefits and trade-offs of several
e-commerce clicks and bricks alternatives.
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Case 1: eBay versus Google and Microsoft:
The Competitive Battle for e-Commerce
• eBay enjoyed virtual monopoly in online auction for
almost a decade.
• Now it is facing competition from Google & Microsoft.
• Analysts think that search and advertising will define the
future of e-Commerce.
• Windows Live Expo is Microsoft’s competitive weapon in
its battle with eBay and Google for the online classifieds
• eBay is addressing these challenges by acquiring
companies like Skype,, and other
international classified sites.
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Case Study Questions
1. Do you agree with Google and Microsoft that
eBay is now vulnerable to their assaults via
Google Base and Windows Live Expo? Why or
why not?
2. What are the major advantages and limitations
of Google Base and Windows Live Expo?
Which do you prefer, or would you use both?
Why? Go to their Internet Web sites and read
reviews at other sites to help you answer.
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Case Study Questions
3. Are eBay’s development of Kijiji, acquisition of
Skype, alliance with Yahoo, and other
acquisitions as noted in this case enough to
ward off the competitive assaults of Google
and Microsoft? Defend your position.
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Real World Internet Activity
1. Go to the Internet to discover the latest developments
in eBay’s auctions performance and its use of its
acquisitions in its battle for the online classifieds
market with Google and Microsoft. Have any new
entrants appeared to seriously challenge these major
players, including Craigslist? Which players appear to
be the winners and losers in this competition? Defend
your position to the class.
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Real World Group Activity
2. Personalized online classifieds Web pages that
are accessible to others online have a great
potential for serious security, privacy, fraud,
and spam assaults by online criminals,
hackers, and spammers.
– Use the Internet to research how the companies in
this case are protecting users of their products from
such assaults.
– Discuss this issue, your research results, and other
steps that users and the companies could take to
improve the security of online classifieds.
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Electronic Commerce
• More than just buying and selling products online
• Includes the entire online process of
– Developing, marketing, selling, delivering, servicing and
paying for products and services
– Transacted on the internetworked global marketplaces
of customers
– With the support of a worldwide network of business
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Processes involved in E-commerce
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E-commerce technologies
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Categories of e-Commerce
• Business-to-Consumer (B2C) – businesses
develop attractive electronic marketplaces to sell
products and services to consumers
• Business-to-Business (B2B) – involves both
electronic business marketplaces and direct
market links between businesses
• Consumer-to-Consumer (C2C) – online auctions
where consumers can buy and sell with each
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Essential e-commerce process
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Access Control and Security
• E-commerce processes must establish mutual
trust and secure access
• Between the parties in an e-commerce
• By authenticating users, authorizing access, and
enforcing security features
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Profiling and Personalizing
• Gather data on you and your website behavior
and choices
• Build electronic profiles of your characteristics
and preferences
• Profiles are used to recognize you and provide
you with a personalized view of the contents of
the site with product recommendations and
personalized advertising
• One-to-one marketing strategy
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Search Management
• Search processes that helps customers find the
specific product or service they want to evaluate
or buy
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Content and Catalog
• Content Management – software that helps ecommerce companies develop, generate,
deliver, update, and archive text data and
multimedia information at e-commerce websites
• Catalog Management – software that helps
generate and manage catalog content
• May support customer self-service and masscustomization of products, e.g., Dell Computer
configuration management
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Workflow Management
• Software that helps employees electronically
collaborate to accomplish structured work tasks
within knowledge-based business processes
• Ensure proper transactions, decisions, and work
activities are performed and the correct data and
documents are delivered to the right employee,
customer, or supplier
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Catalog/content management and
workflow example
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Event Notification
• Most e-commerce applications are event-driven
• Respond to events such as customer’s first
website access, payment, delivery
• Event notification software monitors e-commerce
• Records all relevant events including problem
• Notifies all involved stakeholders
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Collaboration and Trading
• Processes that support the vital collaboration
arrangements and trading services
• Needed by customers, suppliers, and other
• Online communities of interest
– E-mail, chat, and discussion groups
– Enhance customer service and build customer loyalty
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Electronic Payment Processes
• Web Payment Processes
– Shopping cart process
– Credit card payment process
– Other more complex payment processes
• Electronic Funds Transfer (EFT)
– Capture and process money and credit transfers
between banks and businesses and their customers
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Secure Electronic Payment Example
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Securing Electronic Payments
• Network sniffers
– Software that recognizes and intercepts credit card
number formats
• Security measures to combat
– Encrypt (code and scramble) data between customer
and merchant
– Encrypt credit card authorizations
– Take sensitive information off-line
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Case 2: Entellium, Digg, Peerflix,
Zappos, and Jigsaw: Success for
Second Movers in e-Commerce
• For many internet companies, the second-mover
advantage seems even more substantial.
• Entellium is an example of a company that has
successfully implemented a second mover strategy
on the Web.
• The second-movers can use the same approach as
first mover with better products and services at
much lower cost.
• Another strategy is to use combinations of business
models that are successful.
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Case Study Questions
1. Is the second-mover advantage always a good business
strategy? Defend your answer with examples of the
companies in this case.
2. What can a front-runner business do to foil the assaults
of second movers? Defend your answer using the
examples of the front-runner companies in the case.
3. Do second movers always have the advantage in Web
based business success? Why or why not? Evaluate
the five strategies given in the case and the companies
that used them to help defend your answer.
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Real World Internet Activity
1. Use the Internet to research the current business
status of all of the many companies in this case. Are
the second movers still successfully using their
strategies, or have the first movers foiled their
attempts? Have new strong players entered the
markets of the first and second movers, or have
business, economic, or societal developments
occurred to change the nature of competition in these
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Real World Group Activity
2. Assume you will start an Internet-based
business similar to one of those mentioned in
this case or another one of your choice. Would
you be a first, second, or later mover in the
market you select?
How would you differentiate yourself from other
competitors or prospective new entrants?
Share your ideas and attempt to agree on the best
Web-based business opportunity of the group.
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e-Commerce Trends
Source: Adapted from Jonathan Rosenoer, Douglas Armstrong, and J. Russell Gates, The Clickable Corporation:
Successful Strategies for Capturing the Internet Advantage (New York: The Free Press, 1999), p. 24.
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e-Commerce Success Factors
• Selection and Value
– Attractive product selections, competitive prices,
satisfaction guarantees, and customer support after the
• Performance and Service
– Fast, easy navigation, shopping, and purchasing, and
prompt shipping and delivery
• Look and Feel
– Attractive web storefront, website shipping areas,
multimedia product catalog pages, and shopping
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e-Commerce Success Factors
• Advertising and Incentives
– Targeted web page advertising and e-mail promotions, discounts
and special offers, including advertising at affiliate sites
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e-Commerce Success Factors
• Personal Attention
– Personal web pages, personalized product
recommendations, Web advertising and e-mail notices,
and interactive support for all customers
• Community Relationships
– Virtual communities of customers, suppliers, company
representatives, and others via newsgroups, chat
rooms, and links to related sites
• Security and Reliability
– Security of customer information and website
transactions, trustworthy product information, and
reliable order fulfillment
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Web Store Requirements
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Developing a Web Store
• Build website
– Use simple website design tools
– Predesigned templates
– Build your own website or use outside contractor
• Market website to attract visitors and transform
them into loyal customers
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Serving Customers
• Serve customers by creating user profiles,
personal Web pages and promotions that help
develop a one-to-one relationship
• Transact with customers by providing an
attractive, friendly, and efficient Web store
• Support customers with
– Self-help menus, tutorials, FAQs
– E-mail correspondence with customer service
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Managing a Web Store
• Manage both the business and the website
– Record and analyze traffic, inventory and sales
– Link to accounting system
• Operate twenty-four hours a day, seven days a
• Protect transactions and customer records, use
firewalls, and repel hacker attacks
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B2B e-Commerce
• B2B e-commerce is the wholesale and supply
side of the commercial process, where
businesses buy, sell, or trade with other
• Factors for building a successful retail website
also apply to websites for B2B e-commerce.
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e-Commerce Marketplaces
• One to Many – sell-side marketplaces host one
major supplier who dictates product catalog
offerings and prices
• Many to One – buy-side marketplaces attract
many suppliers that flock to these exchanges to
bid on the business of a major buyer
• Some to Many – distribution marketplaces unite
major suppliers who combine their product
catalogs to attract a larger audience of buyers
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e-Commerce Marketplaces
• Many to Some – procurement marketplaces
unite major buyers who combine their
purchasing catalogs to attract more suppliers
and thus more competition and lower prices
• Many to Many – auction marketplaces used by
many buyers and sellers that can create a
variety of buyers’ or sellers’ auctions to
dynamically optimize prices
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e-Commerce Portals
• B2B e-commerce portal can provide several
types of marketplaces in one site
• Often developed and hosted by third-party
market-maker companies who serve as
infomediaries that bring buyers and sellers
together in catalog, exchange, and auction
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B2B e-Commerce Web Portal
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Clicks and Bricks
• Should we integrate our e-commerce business
operations with our traditional physical business
• Or should we keep them separate?
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e-Commerce Channel
• The marketing or sales channel created by a
company to conduct and manage its chosen ecommerce activities
• Issue is whether the e-commerce channel should
be integrated with traditional sales channel.
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Checklist for Channel
• What audiences are attempting to reach?
• What action do we want these audiences to
– Learn about us, give us information, make an inquiry, to
buy something from website, or buy through another
• Who owns the e-commerce channel within the
• Is the e-commerce channel planned alongside
other channels?
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Checklist for Channel
• Do we have a process for generating, approving,
releasing, and withdrawing content?
• Will our brands translate to the new channel or
will they require modification?
• How will we market the channel itself?
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Case 3: Yahoo and Flickr: Will Social Media
and Social Networking Give Yahoo a
Competitive Edge on the Web?
• Flickr is the online photo management and sharing
application where people make their photos available to
their family and friends.
• Flickr also helps people give their friends and family to
organize their photos and add comments, notes, & tagas.
• User-generated content, or “social media,” or “social
networking” that provides information sharing and
personal connecting experience is becoming a key
competitive weapon.
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Case Study Questions
1. How does the Web foster the growth of social media
and social networking Web sites? What potential
benefits could such Web sites offer a business? Visit
several sites like Flickr, MySpace, Facebook, and
YouTube to support your answer.
2. What business benefits does Yahoo hope to gain from
its acquisition of Flickr and drive to “Flickrize” its
business? How realistic are such planned benefits for
Yahoo at the present time, given the acquisition of
MySpace by News Corp. and YouTube by Google?
Defend your position.
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Case Study Questions
3. Can social media and social networking serve
as a strategic competitive differentiator for
Yahoo, enabling it to overtake Google in the
multibillion-dollar targeted search ads market?
Why or why not?
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Real World Internet Activity
1. Visit the main Yahoo Web site and evaluate the status of
Yahoo’s current integration of social networking into its
many Web-based businesses such as Yahoo Autos, Local,
Shopping, Travel, My Web, and Yahoo Search. Is such
integration easily apparent? Does it seem to improve the
value of the services offered? Present your findings to the
2. How are News Corp. and Google capitalizing on their
respective acquisitions of MySpace and YouTube? Visit their
Web sites and search the Internet for information that will
enable you evaluate how these companies are integrating
social networking into their business initiatives.
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Real World Group Activity
3. As in personalized online classifieds Web pages, social
media and social networking sites offer personalized
Web pages that are accessible to others online.
Unfortunately, this ability may provide the potential for
serious security, privacy, fraud, and spam assaults by
online criminals, hackers, and spammers. Use the
Internet to research how Yahoo and others are
protecting users of their social networking sites from
such assaults.
– Discuss this issue, your research results, and other steps
that users and the companies could take to improve the
security of social networking sites.
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