Chapter 10Electronic Commerce

Electronic Commerce

E-commerce is the buying and

selling of products and

services electronically

over the Internet.

Business-to-ConsumerElectronic Commerce

In business-to-consumer electronic commerce (B2C) transactions, companies use the Internet to sell products and services to consumers and to receive payments.

Business-to-Business Electronic Commerce (B2B)

Business-to-business electronic commerce (B2B) companies use the Internet to conduct routine business activities with other companies, including ordering manufacturing parts and purchasing inventories from wholesalers.

Venues of E-Commerce

The Web provides numerous business-to-consumer electronic commerce venues, which are types of Web sites where e-commerce transactions occur. Users can move from venue to venue on the Internet to search for, find, purchase, and pay for products and services.

Online Shopping

Also called electronic shopping or e-shopping,

online shopping is using a computer, modem, browser,

and the Internet to locate, examine, purchase, sell, and pay for products.

Advantages ofOnline Shopping

Online shopping offers several distinct advantages over traditional shopping methods.

Convenience Greater Selection

Increased Product Information

Ease of Comparison Shopping.

Online Shopping Venues

Consumers can visit a number of online shopping venues, including online stores, online superstores, and online shopping malls.

Online Store

An online store, also called a virtual store, is a seller’s Web site where customers can view, purchase, and pay for products and services.

Online Superstore

An online superstore offers a greater variety of products and contains departments that house similar kinds of products in one area.

Online Shopping Mall

An online shopping mall connects its stores by hyperlinks on the mall’s home page.

Guidelines for Shopping Online

In evaluating online shopping sites, a shopper should look for features such as:

Excellent customer service

Clearly stated selling and security terms

Satisfactory product information

Ease of making purchases

Assistance for E-Commerce

Some helps for online shoppers include online catalogs and shopping agents, or bots.

Online Services

The Web now offers numerous types of online services. Some are free, but most require the user to subscribe and pay a fee.

Health-related Information Services

Home-buying Services

Car-buying Services

Entertainment

Fashion

Financial Services (banking and investing)

Travel Services

Peer-To-PeerOnline Transactions

Peer-to-peer business-to-consumer transactions are those that take place between individuals, usually at a common forum-type Web site sponsored by a business.

WebSite

Buyer Seller

Online Auctions

A popular peer-to-peer transaction activity is online auctions, sites such as eBay or uBid where individuals can sell, bid on, or purchase items from other individuals around the world.

Digital Music Distribution

An early and popular type of peer-to-peer transaction was digital music distribution. Due to copyright infringement issues, this activity has evolved to a fee-based service through such companies as Apple Computer.

User Uploads Music User Downloads Music

Transaction Payment Methods

Electronic funds transfer (EFT) is a general term that refers to any transfer of money over the Internet.

Current Transaction Methods

Some current transaction methods include check or credit card by phone, credit accounts, credit cards, smart cards, digital cash, electronic wallets, micro payments, and electronic (digital) signatures.

Transaction Security and Encryption

Many shopping sites protect online transactions by encrypting information transmitted over the Internet.

Encryption

Encryption is the process of converting readable information, called plaintext, into unreadable information, called ciphertext, to prevent unauthorized access and usage.

Establishing an E-tailer Web Site

Some important considerations include:

Hardware and software needs

Methods for processing payments

Attractive and effective site design

Managing the site

Advertising and promoting the site.

Business-to-Business Electronic Commerce

In B2B electronic commerce, businesses use computers, networks, the Internet, and e-commerce technologies to conduct a variety of routine business activities with other companies.

Business-to-Business Electronic Commerce Transaction

In a business-to-business electronic commerce transaction, both the seller and buyer are business organizations.

B2B E-Commerce

With B2B e-commerce companies can:

Order Supplies

Enhance collaboration among employees

Improve customer response time

Share information

Coordinate operations

B2B E-Commerce

Order supplies

B2B E-Commerce

Enhance collaboration among employees

B2B E-Commerce

Improve customer response time

B2B E-Commerce

Process financial transactions.

B2B E-Commerce

Conduct numerous other business activities

Coordinate operations

Speed up product development

On the Horizon

Enhanced Web Phone Technology New technologies will allow users to perform all types of Internet activities

on their cell phones or other handheld devices. In the future, a single chip embedded in a cell phone’s SIM (subscriber information module) will be all users will need to identify themselves, replacing credit cards, identity cards, PIN numbers, and even passports.

Improved Capacity and Security in Web ServersAdvances in Internet and Web server capabilities will allow these technologies to handle many more online users concurrently. Additionally, servers will provide greater security, including improved firewall, virus, and hacker protection.

On the Horizon

Machine-To-Machine (M2M) Applications

Businesses in the future will use machine-to-machine e-commerce,

or M2M, to automate many routine business transactions.

Online Research and DevelopmentCompanies will speed up research and development by tapping into the power of the Internet to solicit consumer feedback online, an important aspect in measuring consumer interest in new products.

Expanded Use of Radio-Frequency Identification (RFID) TechnologyWal-Mart and other companies plan to implement RFID to track shipments through the supply chain. RFID uses an antenna and chip containing an electronic product code, which is embedded in a shipping pallet or cargo container. Electronic readers activate the chip, which then sends or receives information. Container break-ins can be recorded.