Chapter 6

E-Commerce

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to employee

• Infrastructure

• Problems

What is E-Commerce?

“Electronic commerce is the exchange of products, services, information, or money with the support of computers and networks. It is business done on-line.”

Terminology

From narrowest to broadest:– E-Shopping– E-Business– E-Commerce– E-Economy– E-Culture

Types of E-Commerce

• Business to Business– 80% of dollar volume– $7.29 trillion by 2002

• Business to Customer– 20% of dollar volume– $10 billion by 2002

Benefits

• Improve internal operations

• Decrease operating expenses

• Eliminate middlemen

Internal Operations

• Smaller inventory

• JIT manufacturing

• Customize products

• Automatic billing

• Electronic collections

Operating expenses

• Lower overhead– Location is irrelevant

• Eliminate paperwork

• Reduce cycle time

• Produce greater variety at the same cost

Middlemen

• Eliminate transfer costs

• Only used when adding value to product or service– Travel Agent?– Stock Broker?– Retail Store?

Amazon.com

• On-line book-store– Expanding services

• No physical plant

• No inventory

• Negative asset intensity– Customer pays for books (which they don’t

have) up front

Problems

• Data & system incompatibility• Privacy• Bandwith• Cybercrime

Data & System Incompatibility

• Information glut

• Slow to find anything– No standards– No search content consistency

• Delivery structure: one to one (customer) not one to many (wholesale)

Bandwith

• Twisted copper wire– Analog

• Reverting to– Fiber optics– Satellites– Digitization

Cybercrime

• Credit cards

• Electronic money

• Authentication

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to employee

• Infrastructure

• Problems

Channels

• Internet

• Extranet

• Private networks

• Electronic data interchange (EDI)

Benefits

• Internal process

• Business reengineering

• Enterprise model

• Alliance

Internal Processes

• Reduce paper output

• Improve accuracy

• Increase throughput– Errorless transactions input per day

Reengineering

• Reduce cycle time– Order to customer receipt

• Reduce in labor costs

• Reduce open accounts-receivable days– Cash flow

Enterprise Models

• Increase productivity

• Increase cash flow

• Increase product quality

• Increase customer service and satisfaction

Alliances

• Increase efficient

• Increase market share

• Increase profitability

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to employee

• Infrastructure

• Problems

Uses

• Direct sales– Product– Service– Information

• Brand enhancement

• Cross sales

Know You’re There

• Critical mass Internet customer growth

• Off Internet advertising– TV commercials– Magazines

Finding You

• Gateway ads (AOL)

• Search engines

• Portal sites– Major advertisers

Holding attention

• “3 click” rule

• Site thickness– Chat rooms– Frequent ask question page– Dark page– Telephone no.

• Convenient navigation path

Return Next Time

• Satisfaction with first time

• Offering something new for next visit

Attributes of an Offer• S. Davis and C. Meyer,

Blur (Warner Books, 1999)

• Products and services are

blending (blurring)

• Result is an “offer”

• Authors list 10 attributes of a successful offer in future

Offer Attributes

• Anytime• Real time• Online• Interactive• Anyplace

Offer Attributes

• Learning

• Anticipating

• Filtering

• Customizing

• Upgrading

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to employee

• Infrastructure

• Problems

Intranet

• Usages– E-mail– Workflow– Education– Communication– Collaboration

Benefits

• Productivity

• Cost

• Knowledge

• Convenient

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to employee

• Infrastructure

• Problems

Infrastructure

• Networks• Web servers• Supporting tools

– Tracking software, database connectivity, electronic form, on-line discussion group, etc.

• Internet access components– Protocols, browser

• Web page design• Transaction processing system

Agenda

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to Employee

• Infrastructure

• Problems

Problems - Payment

• Security

• Privacy

• Micropayment

• Inconvenience

• Imcompatibility

Countermeasures

• Encryption & decryption

• Private key & public key

• Digital signature

• Electronic certificates

• Secure electronic transaction protocol (SET)

Points to Remember

• What is E-Commerce?

• Business to Business

• Business to Customer

• Business to Employee

• Infrastructure

• Problems

Discussion Questions

• What are the impacts of e-commerce on the issues of human, social, and legal?

• Does your organization have a e-commerce? What type?

• What will it take for the general public (or you) to feel reasonably comfortable with using credit cards over the Internet?

Discussion Questions

• What is the future of e-business?

• What is the future of e-education?

Assignment

• Review technology guides 1,2,4 & chapters 1- 6

• Read chapter 7

• Exam 1

• Group Assignment

• Research paper