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Chapter 9 Electronic Commerce Systems
James A. O'Brien, and George Marakas. Management Information Systems with MISource 2007, 8th ed. Boston, MA: McGraw-Hill, Inc., 2007. ISBN: 13 9780073323091
Chapter 9 Electronic Commerce Systems 2
Identify the major categories and trends of e-commerce applications
Identify the essential processes of an e-commerce system, and give examples of how they are implemented in e-commerce applications
Identify and give examples of several key factors and Web store requirements need to succeed in e-commerce
Identify and explain the business value of several types of e-commerce marketplaces
Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives
Learning Objectives
Chapter 9 Electronic Commerce Systems 3
Introduction to e-Commerce Electronic commerce encompasses the entire
online process ofDevelopingMarketingSellingDeliveringServicingPaying for products and services
It relies on the Internet and other information technologies to support every step of the process
Chapter 9 Electronic Commerce Systems 4
Case 1 eBay, Running the Right Play eBay is one of the fastest-growing companies in
history, and business is surging31 sites around the world$1.1 billion in international sales in 2004, and
growing twice as fast as the domestic marketHalf of their 125 million registered users are
outside of the United States eBay keeps a playbook
Several hundred pages of wisdom collected from worldwide managers
Chapter 9 Electronic Commerce Systems 5
Case Study Questions Why has eBay become such a successful and
diverse online marketplace? What do you think of eBay’s playbook concept?
Why do they call it a playbook? Is eBay’s move into the international arena a
good long-term strategy?
Chapter 9 Electronic Commerce Systems 8
Categories of e-Commerce Business-to-Consumer
Virtual storefronts, multimedia catalogs, interactive order processing, electronic payment, online customer support
Business-to-BusinessElectronic business marketplaces, direct links
between businesses, auctions and exchanges Consumer-to-Consumer
Online auctions, posting to newspaper sites, personal websites, e-commerce portals
Chapter 9 Electronic Commerce Systems 10
Access Control and Security E-commerce processes must establish mutual
trust and secure access between partiesUser names and passwordsEncryption keyDigital certificates and signatures
Restricted access areasOther people’s accountsRestricted company dataWebmaster administration areas
Chapter 9 Electronic Commerce Systems 11
Profiling and Personalizing Profiling gathers data on you and your website
behavior and choicesUser registrationCookie files and tracking softwareUser feedback
Profiling is used forPersonalized (one-to-one) marketingAuthenticating identityCustomer relationship managementMarketing planningWebsite management
Chapter 9 Electronic Commerce Systems 12
Search Management Search processes help customers find the
specific product or service they wantE-commerce software packages often include
a website search engineA customized search engine may be acquired
from companies like Google or Requisite Technology
Searches are often on content or by parameters
Chapter 9 Electronic Commerce Systems 13
Content and Catalog Management Content Management Software
Helps develop, generate, deliver, update, and archive text and multimedia information at e-commerce websites
Catalog Management SoftwareHelps generate and manage catalog content
Catalog and content management software works with profiling tools to personalize content Includes product configuration and
mass customization
Chapter 9 Electronic Commerce Systems 14
Workflow Management E-business and e-commerce workflow
management depends on a workflow software engineContains software model of business
processes Workflow models express predefined
Sets of business rulesRoles of stakeholdersAuthorization requirementsRouting alternativeDatabases usedTask sequences
Chapter 9 Electronic Commerce Systems 16
Event Notification Most e-commerce applications are event driven
Responds to such things as customer’s first website visit and payments
Monitors all e-commerce processesRecords all relevant events, including problem
situationsNotifies all involved stakeholdersWorks in conjunction with user-profiling
software
Chapter 9 Electronic Commerce Systems 17
Collaboration and Trading Processes that support vital collaboration
arrangements and trading servicesNeeded by customers, suppliers, and other
stakeholders Online communities of interest
E-mail, chat, discussion groupsEnhances customer serviceBuilds loyalty
Chapter 9 Electronic Commerce Systems 18
Electronic Payment Processes Complex processes
Near-anonymous and electronic nature of transactions
Many security issuesWide variety of debit and credit alternativesFinancial institutions may be part of the
process
Chapter 9 Electronic Commerce Systems 19
Electronic Payment Processes Web Payment Processes
Shopping cart processCredit card payment processDebit and other more complex processes
Electronic Funds Transfer (EFT)Major payment system in banking, retailVariety of information technologies capture
and process money and credit card transfersMost point-of-sale terminals in retail stores
are networked to bank EFT systems
Chapter 9 Electronic Commerce Systems 21
Securing Electronic Payments Network sniffers easily recognize credit card
formatsEncrypt data between customer and merchantEncrypt data between customer and financial
institutionTake sensitive information off-line
Chapter 9 Electronic Commerce Systems 23
Case 2 Battle for e-Commerce Supremacy eBay commands more than 90 percent of the
online auction marketGrowth is at least 40 percent per year
CraigsList is an online classifieds meeting placeBuying and selling, but no payment systemOnline classifieds growing faster than
auctions Google and Microsoft entering the market with
added featuresSearch by zip code, online maps, free listings
Chapter 9 Electronic Commerce Systems 24
Case Study Questions Do you agree with Google and Microsoft that
eBay is now vulnerable to their assaults via Google Base and Windows Live Expo?
What are the major advantages and limitations of Google Base and Windows Live Expo?Which do you prefer, or would you use both?
Are eBay’s development of Kijiji, acquisition of Skype, alliance with Yahoo, and other acquisitions enough to ward off the competitive assaults of Google and Microsoft?
Chapter 9 Electronic Commerce Systems 25
E-Commerce Success Factors Some of the success factors in e-commerce
Selection and valuePerformance and serviceLook and feelAdvertising and incentivesPersonal attention (one-to-one marketing)Community relationshipsSecurity and reliability
Chapter 9 Electronic Commerce Systems 28
Developing a Web Store Build a website
Choose or set up web hostingUse simple design tools and templates Include a shopping cart and payment support
Market the website Include Web page and e-mail advertising
and promotionsExchange advertising with other Web storesRegister with search engines and directoriesSign up for affiliate programs
Chapter 9 Electronic Commerce Systems 29
Serving Your Customers Convert visitors into loyal customers
Develop one-to-one relationship with customers
Create incentives to encourage registrationUse Web cookies to identify visitorsUse tracking services to record and analyze
website behavior and customer preferencesCreate an attractive, friendly, efficient storeOffer fast order processing and paymentNotify when orders are processed and
shippedProvide links to related websites
Chapter 9 Electronic Commerce Systems 30
Managing a Web Store Manage both the business and the website
Record and analyze traffic, inventory, salesUse CRM features to help retain customersLink sales, inventory data to accounting
systems Operate 24 hours a day, seven day a week Protect transactions and customer records
Use security monitors and firewallsUse redundant systems and power sourcesEmploy passwords and encryptionOffer 24-hour tech support
Chapter 9 Electronic Commerce Systems 31
B2B E-Commerce B2B is the wholesale and supply side of
the commercial processBusinesses buy, sell, or trade with other
businesses Relies on multiple electronic information
technologiesCatalog systemsTrading systemsData interchangeElectronic funds transfers
Chapter 9 Electronic Commerce Systems 32
E-Commerce Marketplaces One to Many
Sell-side marketplacesOne supplier dictates product offerings and
prices Many to One
Buy-side marketplacesMany suppliers bid for the business of a buyer
Some to ManyDistribution marketplacesUnites suppliers who combine their product
catalogs to attract a larger audience
Chapter 9 Electronic Commerce Systems 33
E-Commerce Marketplaces Many to Some
Procurement marketplacesUnites major buyers who combine purchasing
catalogsAttracts more competition and thus lower
prices Many to Many
Auction marketplacesDynamically optimizes prices
Chapter 9 Electronic Commerce Systems 34
E-Commerce Portals B2B e-commerce portals offer multiple
marketplacesCatalogsExchangesAuctions
Often developed and hosted by third-party market-maker companies Infomediaries serve as intermediaries in
e-business and e-commerce transactions
Chapter 9 Electronic Commerce Systems 36
Clicks and Bricks Success will go to those who can integrate
Internet initiatives with traditional operationsMerging operations has trade-offs
See Figure 9.18
Chapter 9 Electronic Commerce Systems 37
E-Commerce Integration The business case for merging e-commerce
with traditional business operationsMove strategic capabilities in traditional
operations to the e-commerce business Integrate e-commerce into the traditional
businessSharing of established brandsSharing of key business informationJoint buying power and distribution
efficiencies
Chapter 9 Electronic Commerce Systems 38
Other Clicks and Bricks Strategies Partial e-commerce integration
Joint ventures and strategic partnerships Complete separation
Spin-off of an independent e-commerce company
Barnes and Noble’s experienceSpun off independent e-commerce companyGained venture capital, entrepreneurial
culture, and flexibilityAttracted quality managementAccelerated decision makingFailed to gain market share
Chapter 9 Electronic Commerce Systems 39
E-Commerce Channel Choices An e-commerce channel is the marketing or
sales channel created by a company for its e-commerce activitiesThere is no universal strategy or e-commerce
channel choiceBoth e-commerce integration and separation
have major business benefits and shortcoming
Most businesses are implementing some measure of clicks and bricks integration
Chapter 9 Electronic Commerce Systems 40
E-Commerce Strategy Checklist Questions to ask and answer
What audiences are we attempting to reach?What action do we want those audiences to
take?Who owns the e-commerce channel within the
organization? Is the e-commerce channel planned alongside
other channels? Is there a process for generating, approving,
releasing, and withdrawing content?Will our brand translate to the new channel?How will we market the channel itself?
Chapter 9 Electronic Commerce Systems 41
Case 3 Yahoo and Flickr Flickr is a photo sharing site
14,000 images per hour are uploadedThere are 1.5 million users80 percent of the 60 million photos are publicMore than half have user-created labels that
make them searchable Yahoo purchased Flickr
The user-generated content (social media) will be used in the war against Google
It would like to apply the same concept to web content as well
Chapter 9 Electronic Commerce Systems 42
Case 3 Yahoo and Flickr Google takes an automated approach to
searchesArmies of Ph.D.s and servers Creates more relevant searches by using
algorithms Yahoo’s strategy
Also uses algorithms, but not as well Is gambling that the collective intelligence
of its audience will produce more relevant search results
Chapter 9 Electronic Commerce Systems 43
Case Study Questions How does the Web foster the growth of social
media and social networking? What business benefits does Yahoo hope to
gain from its acquisition of Flickr and drive to “Flickize” its business?How realistic are such planned benefits?
Can social media and networking serve as a strategic competitive differentiator that enables Yahoo to overtake Google in the multibillion-dollar targeted search ads market?
Chapter 9 Electronic Commerce Systems 44
Case 4 Today’s Web; Anything but Usual Customers aren’t just reading these days
They’re writing and watching as well Community features
Interactive webcastsNewsgroupsOnline chat forums
Customer-to-customer interactions help Microsoft learn which product features work, and which don’t
Chapter 9 Electronic Commerce Systems 45
Case 4 Today’s Web; Anything but Usual Federated will be using FedAd software to
Coordinate the efforts of 4,000 marketing staffers in six divisions
Buy and publish the company’s newspaper, radio, and TV ads
Pay invoicesShip ads to publicationsManage marketing expenses against the
company’s budget
Chapter 9 Electronic Commerce Systems 46
Case 4 Today’s Web; Anything but Usual Dell’s initiatives
Redesign of its website to make it easier to use
Make IT costs smaller by being more efficientCombine the website re-launch with an
e-commerce consolidation
Chapter 9 Electronic Commerce Systems 47
Case Study Questions
What is the primary driver behind the Web upgrade activities of Microsoft and Dell?
What is the business value of Microsoft’s Web-based, live-feedback program?
What lessons on developing successful e-commerce projects can be gained from the information in this case?