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© Paradigm Publishing Inc. 11-1
Chapter 11Electronic Commerce
© 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
© 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
© Paradigm Publishing Inc. 11-4
An Overview of Electronic Commerce
Popular
Business-to-
Consumer
Shopping
Sites
© Paradigm Publishing Inc. 11-5
An Overview of Electronic Commerce
Popular
Business-to-
Consumer
Shopping
Sites
© 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
© 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
© 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
© Paradigm Publishing Inc. 11-9
Online ShoppingShopping agent continually scans data-bases forproducts and prices that are displayed when a user requests a price comparison.
© Paradigm Publishing Inc. 11-10
The online shopping process
Online Shopping
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Online ShoppingTip checklist for shopping online
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Online ShoppingMilestones
in federal privacy legislation
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Online Shopping
Data is coded when sent over Internet and decoded by recipient.
© 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
© 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.
© 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
© 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.
© 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.
© 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
© 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
© 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
© Paradigm Publishing Inc. 11-22
Establishing an E-tailer Web Site
Registering the Domain NameInternet 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.
© 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.
© Paradigm Publishing Inc. 11-24
Establishing an E-tailer Web Site
Processing PaymentsTo 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
© Paradigm Publishing Inc. 11-25
Establishing an E-tailer Web Site
Checklist for designing an effective site
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Establishing an E-tailer Web Site
Managing the SiteCustomers 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
© Paradigm Publishing Inc. 11-27
Establishing an E-tailer Web Site
Advertising and Promoting the SiteElectronic 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
© Paradigm Publishing Inc. 11-28
Establishing an E-tailer Web Site
Analyzing the Effectiveness of the SiteSite 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.
© Paradigm Publishing Inc. 11-29
Establishing an E-tailer Web Site
Developing a Customer FocusCustomer 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.
© Paradigm Publishing Inc. 11-30
Business-to-Business Electronic CommerceHow 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.
© 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.
© Paradigm Publishing Inc. 11-32
The Supply Chain: A B2B Model
Types of information shared in the B2B model
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The Supply Chain: A B2B ModelAn intranet allows departments within a business to share information quickly and easily.
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Major Types of B2B Technologies
The electronic data interchange (EDI) process
© 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.
© 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.
© 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.
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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.
© 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.
© 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?
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