1 Chapter 11 Understanding Computers, 11 th Edition 11 E-Commerce TODAY AND TOMORROW 11 th Edition CHAPTER

1Chapter 11 Understanding Computers, 11th Edition

11 E-Commerce

TODAY AND TOMORROW

11th Edition

CHAPTERCHAPTER


Learning Objectives Explain what e-commerce is and describe some of

the benefits and risks involved with implementing e-commerce.

Discuss the types of Web sites that can be used to implement e-commerce.

Identify a variety of e-commerce business models and discuss their similarities and differences.


Learning Objectives, Cont’d List several strategies for implementing e-commerce

using the Web, including some of the decisions that need to be made, the options available for accepting payments, and the process of designing and developing an effective Web site.

Outline some sales and marketing strategies that can be used in conjunction with an e-commerce Web site.

Discuss some security issues related to e-commerce transactions


Overview This chapter covers:

Potential advantages and disadvantages of e-commerce

Types of e-commerce Web sites and e-commerce business models

Steps for implementing Web-based e-commerce

Sales and marketing strategies for e-commerce Web sites

E-commerce security issues


What Is E-Commerce? E-commerce: act of doing business transactions

over the Internet or similar technology

E-commerce in the U.S. has continued to grow at a steady pace

M-commerce (mobile commerce) is growing

U-commerce (universal commerce) trend being strongly supported by Visa is on the rise


Advantages of E-Commerce To businesses

Reduced costs Dot-coms are less expensive than brick-and-

mortar store because there is no physical storefront to maintain

Increased customer satisfaction If shopping experience is convenient (open all the

time, no driving, etc. More effective sales and marketing tools

(personalized e-mails, customer relationship management tools, etc.)

Potentially higher sales


Advantages of E-Commerce, Cont’d To customers

Convenience Easier comparison shopping

Higher number of merchants to choose from Geographical location is not an issue Shopping bots and other comparison shopping

tools are available Higher degree of selection Potential cost savings



Disadvantages of E-Commerce To businesses

Pressure to be “always open”

Lost business due to customer hesitation to shop online

Risk of fraudulent credit card transactions

Ease of entry for competitors


Disadvantages of E-Commerce, Cont’d

To customers

Fraud and other potential security problems

Not being able to see or touch the goods

Possible expense to the customer of returning merchandise


Types of E-Commerce Web Sites Manufacturer and e-tailer sites: sell products and

services directly to the end user


Types of E-Commerce Web Sites, Cont’d

Brokerage sites: sites that bring buyers and sellers together Online auction sites: sites where individuals

auction products to other individuals Buyers bid and highest bidder at the time the

auction closes buys the item Seller pays a listing fee and a selling fee based

on the final price Sellers set the starting bid and can specify a

minimum sales price Many sites bid automatically for each bidder up to

his or her maximum stated price



Types of E-Commerce Web Sites, Cont’d

Brokerage sites, cont’d

Financial brokerage sites (allow individuals to sell stocks, bonds, etc.

Market and commodity exchange sites (match up buyers and sellers of commodities, such as equipment, energy, cattle, etc.


E-Commerce Business Models Business model: description of how a company

does business E-commerce business model: description of the

types of buyers and sellers in an e-commerce company, such B2B, B2G, and so forth Business-to-consumer (B2C) model Business-to-business (B2B) model Consumer-to-consumer (C2C) model Business-to-government (B2G) model Intermediary hub model

Vertical hub Horizontal hub


Implementing Web-Based E-Commerce

Step 1: Select appropriate business models and types of Web sites More than one model and type of Web site can

be selected Some businesses at additional types later on

Step 2: Select the desired e-commerce applications Determine electronic customer relationship

management (eCRM) activities to be included Determine which other business systems the

Web site will be linked to



Implementing Web-Based E-Commerce, Cont’d

Step 3: Develop procedures for handling electronic financial transactions Need to

determine which types will be accepted

Most sites accept credit cards



Other digital cash options include:

Electronic checks: funds come out of customer’s checking account

Online payment accounts (such as PalPal): funds can be transferred to others from the customer’s account

Can transfer funds ahead of time or have money transferred from a credit card or bank account as needed




Other digital cash options, cont’d

Electronic gift certificates, gift cards, and coupons

Appropriate codes are entered into the Web site at time of purchase

Smart cards: holds a cash value

Typically read by readers attached to a PC

Smart card readers may becomecommon on vending machines, in taxis, and other public locations



Other digital cash options, cont’d

Digital wallets: electronic file that holds information to speed online transactions

Can hold credit card numbers, passwords, address, etc. to be automatically or manually transferred to an online order form as needed

Site-specific digital wallets store this information for each customer on a business’ Web server for use with purchases on that site only




Special considerations for B2B financial transactions: because of the volume of transactions businesses may consider using:

B2B transaction processing Can take care of transaction processing for a

business, including processing payments, electronic billing, etc.

Order-fulfillment companies Take care of physically filling orders for a

business including order management, distribution, CRM services, etc.



Step 4: Design and develop an effective Web site Sites should be carefully designed Can consider using:

Storefront software: facilitates the creation of an online store (either packaged or Web-based)

Shopping cart software: designed to add only ordering capabilities to an existing Web site




Step 5: Implement appropriate sales and marketing strategies

Include adequate customer service features Collect taxes from customers if required by law Display a privacy policy and security statement Use an appropriate domain name and URL

URL should be easy to remember and type Visitors should not have to type a page name

(such as index.html) to view the home page of the site



Step 5: Implement appropriate sales and marketing strategies, cont’d

Promote your Web site sufficiently Use appropriate meta tags Submit your site to search sites Consider paying for sponsored listings on search

sites Consider using banner ads on other sites Update your site regularly and consider adding

incentives for return visits (contests, coupons, etc.)




Step 5: Implement appropriate sales and marketing strategies, cont’d

Data warehousing and mining Data warehouse: a collection of data about a

company and its customers Data mining: the use of intelligent software to

analyze a data warehouse to find patterns and relationships that would not otherwise be obvious



Security Issues Security is essential for e-commerce Web sites

Some guidelines for e-commerce sites:

Secure financial transactions (use a secure Web server)

Secure sensitive documents and files (use encryption)

Authenticate online business partners (use digital certificates and digital signatures)


Summary What Is E-Commerce?

Types of E-Commerce Web Sites

E-Commerce Business Models

Implementing Web-Based E-Commerce

Security Issues

Documents

1 Chapter 11 Understanding Computers, 11 th Edition 11 E-Commerce TODAY AND TOMORROW 11 th Edition CHAPTER