Introduction to Electronic Commerce 3/e - · PDF fileIntroduction to Electronic Commerce 3/e ... 1.2 THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION, CONTENT, ... Beijing 2008: A Digital

Introduction toElectronic Commerce 3/e

Efraim TurbanUniversity of Hawaii

David KingJDA Software Group, Inc.

Judy Lang

Lang Associates

with contributions from

Linda LaiMacau Polytechnic University, China

Carol PollardAppalachian State University

Deborrah C. TurbanUniversity of Santo Tomas, Philippines

Linda VoloninoCanisius College

Ivan C. Seballos IILa Salle Lipa, Philippines

Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris

Montreal Toronto Delhi Mexico City Sao Paulo SydneyHong Kong Seoul Singapore Taipei Tokyo

Contents

PREFACE 35

1 Introduct ion to E-Commerce and E-Marketplares 45

CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE 45

Zappos Wows Their Customers 46

1.1 ELECTRONIC COMMERCE: DEFINITIONS

AND CONCEPTS 48

Defining Electronic Commerce 48

Defining E-Business 48

Major EC Concepts 49

Electronic Markets and Networks 50

1.2 THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION,

CONTENT, AND HISTORY 50

An EC Framework 51

Classification of EC by the Nature of the Transactions

and the Relationships Among Participants 52

Case 1.1 E C A p p l i c a t i o n : Want to Buy Chocolate Online?Try Godiva.com 54

A Brief History of EC 55

The Future of EC 56

1.3 E-COMMERCE 2.0: FROM WEB 2.0 TO ENTERPRISE

SOCIAL NETWORKING AND VIRTUAL WORLDS 57

Social Computing 57

Web 2.0 57

Social Networks and Social Network Services 58

Business-Oriented Social Networks 60

Enterprise Social Networks 60

Case 1.2 EC A p p l i c a t i o n : MySpace: A World's PopularSocial Networking Web Site 61

Virtual Worlds and Second Life 62

The Major Tools of Web 2.0 63

1.4 THE DIGITAL WORLD: ECONOMY, ENTERPRISES,

AND SOCIETY 64

The Digital Economy 64

The Digital Enterprise 66

The Digital Society 67

1.5 ELECTRONIC COMMERCE DRIVERS AND THE CHANGING

BUSINESS ENVIRONMENT 69

The Drivers of EC and Its Growth 69

Performance, Business Pressures,

and Organizational Responses 71

10 Contents

1.6 ELECTRONIC COMMERCE BUSINESS MODELS 73The Structure and Properties of Business Models 74Typical EC Business Models 76

1.7 BENEFITS, LIMITATIONS, AND IMPACTS OF ELECTRONICCOMMERCE 77

The Benefits and Impacts of EC 78The Limitations and Barriers of EC 79Why Study E-Commerce? 80

1.8 OVERVIEW OF THIS BOOK 80

Case 1.3 EC Appl icat ion: How College StudentsBecome Entrepreneurs 81

Part 1 : Introduction to E-Commerceand E-Marketplaces 82

Part 2: Internet Consumer Retailing 82Part 3: Business-to-Business E-Commerce 82Part 4: Other EC Models and Applications 83Part 5: EC Support Services 83Part 6: EC Strategy and Implementation 83Online Part 7: Application and Site Development 83Online Tutorial 83Online Appendices ' 83Online Supplements 83

MANAGERIAL ISSUES 83

SUMMARY 84

KEY TERMS 85

QUESTIONS FOR DISCUSSION BY INDIVIDUAL STUDENTS 85

TOPICS FOR CLASS DISCUSSION 86

INTERNET EXERCISES 86

TEAM ASSIGNMENTS AND PROJECTS 87

Closing tase: Beijing 2008: A Digital Olympics 88

ONLINE RESOURCES AVAILABLE ATpearsonhighered.com/turban 90

CHAPTER 2 E-MARKETPLACES: MECHANISMS, TOOLS,AND IMPACTS OF E-COMMERCE 9 1Web 2.0 Tools at Eastern Mountain Sports 92

2.1 ELECTRONIC COMMERCE MECHANISMS: AN OVERVIEW . . . 94EC Activities and Mechanisms 94Sellers, Buyers, and Transactions 94

2.2 E-MARKETPLACES 96Electronic Markets 96E-Marketplace Components and Participants 98Disintermediation and Reintermediation 99Types of E-Marketplaces 100

Contents 11

2.3 CUSTOMER INTERACTION MECHANISMS:

STOREFRONTS, MALLS, AND PORTALS 100

Electronic Storefronts 101

Electronic Malls and Large Retailers 101

Types of Stores and Malls 102

Web (Information) Portals 102

The Roles and Value of Intermediaries

in E-Marketplaces 104

Case 2.1 EC A p p l i c a t i o n : WebMD 105

2.4 ELECTRONIC CATALOGS, SEARCH ENGINES,

AND SHOPPING CARTS 106

Electronic Catalogs 106

EC Search Activit ies, Types, and Engines 107

Shopping Carts 109

2.5 AUCTIONS, BARTERING, AND NEGOTIATING ONLINE 109

Definition and Characteristics 109

Traditional Auctions Versus E-Auctions 110

Innovative Auctions 111

Dynamic Pricing and Types of Auctions 111

Benefits, Limitations, and Impacts of E-Auctions 113

Online Bartering 114

Online Negotiating 115

2.6 WEB 2.0 TOOLS AND SERVICES: FROM BLOGS

TO WIKIS TO TWITTER 115

Blogging (Weblogging) 116

Mechanism Aids for Web 2.0 Tools: Tags,

Folksonpmy, and Social Bookmarks 118

Wikis 119

Social Network Services 119

Case 2.2 EC A p p l i c a t i o n : Craigslist: The UltimateOnline Classified Site 120

2.7 VIRTUAL WORLDS AS AN ELECTRONIC

COMMERCE MECHANISM 121

Avatars 121

Business Activities and Value in Virtual Worlds 121


SUMMARY 123

KEY TERMS 124





Closing Case: Second Life 127


12 Contents ""

2 Internet Consumer Retailing 12SL

CHAPTER 3 RETAILING IN ELECTRONIC COMMERCE:PRODUCTS AND SERVICES 129Amazon.Com: E-Tailing Grows Despite

the Slumping Economy 130

3.1 INTERNET MARKETING AND ELECTRONIC RETAILING 132Overview of Electronic Retailing 132

J-- Size and Growth of the B2C Market 133What Sells Well on the Internet 133Considered Commerce 135Characteristics and Advantages

of Successful E-Tailing 135

3.2 E-TAILING BUSINESS MODELS 137Classification of Models by Distribution Channel 137

Insights and Additions 3.1: Selling Cars Online:Build-to-Order

Other B2C Models and Special Retailing 141B2C in Social Networks . 142

3.3 TRAVEL AND TOURISM (HOSPITALITY)SERVICES ONLINE 143

Services Provided 143Special Services Online 143Benefits and Limitations of Online Travel Services 144

Case 3.1 EC Application: WAYN: A Social Networkfor Travelers 145

Corporate Travel 145

3.4 EMPLOYMENT PLACEMENT AND THE JOBMARKET ONLINE 146

The Internet Job Market 146

Insights and Additions 3.2: Social NetworkingSites for Business Professionals . .

Benefits and Limitations of the ElectronicJob Market 149

3.5 REAL ESTATE, INSURANCE, AND STOCKTRADING ONLINE 150

Real Estate Online 150Insurance Online 151Online Stock Trading 152

3.6 BANKING AND PERSONAL FINANCE ONLINE 153Home Banking Capabilities 154

t Virtual Banks 154International and Multiple-Currency Banking 155Online Financial Transaction

Implementation Issues N 156

Contents 13

Case 3.2 EC Application: Security for OnlineBank Transactions 156

Online Billing and Bill Paying 157

3.7 ON-DEMAND DELIVERY OF PRODUCTS, DIGITAL ITEMS,ENTERTAINMENT, AND GAMING 158

On-Demand Delivery of Products 158Online Delivery of Digital Products, Entertainment,

and Media 159Online Entertainment 160

3.8 ONLINE PURCHASE-DECISION AIDS 161Shopping Portals 162Shopbots Software Agents 162Business Ratings Sites 163Trust Verification Sites 163Other Shopping Tools 164

3.9 ISSUES IN E-TAILING AND LESSONS LEARNED 164Disintermediation and Reintermediation 164Channel Conflict 165Determining the Right Price 166Product and Service Customization

and Personalization 166Fraud and Other Illegal Activities 166Lessons Learned from Failures

and Lack of Success . 166


SUMMARY 168

KEY TERMS 169





Closing Case: Walmart Powers Online 171


CHAPTER 4 ONLINE CONSUMER BEHAVIOR,MARKET RESEARCH, AND ADVERTISEMENT 174Netflix Increases Sales Using DVD

Recommendations and Advertisements 175

4.1 LEARNING ABOUT CONSUMER PURCHASING ONLINE 176A Generic Purchasing-Decision Model 176Customer Decision Support in Web Purchasing 177Players in the Consumer Decision Process 177One-to-One Marketing 178

Contents

4.2 PERSONALIZATION, LOYALTY, SATISFACTION,AND TRUST IN EC

Personalization and Behavioral Targetingin E-Commerce

Insights and Additions 4.1: Cookiesin E-Commerce

Customer LoyaltySatisfaction in ECTrust in EC

4.3 MARKET RESEARCH FOR ECMethods for Conducting Market Research Online

Case 4.1 EC Application: Internet Market ResearchExpedites Time-to-Market at Procter & Gamble

What are Marketers Looking for in ECMarket Research?

Market Segmentation ResearchMarket Research for One-to-OneLimitations of Online Market Research and How

to Overcome ThemBiometric Marketing

4.4 WEB ADVERTISINGOverview of Web AdvertisingSome Basic Internet Advertising TerminologyWhy Internet Advertising?

4.5 ONLINE ADVERTISING METHODSBannersPop-Up and Similar AdsE-Mail AdvertisingClassified AdsSearch Engine AdvertisementViral Marketing and Advertising

Insights and Additions 4.2: Google's MajorAdvertisement Methods

4.6 ADVERTISING IN SOCIAL NETWORKSAND THE WEB 2.0 ENVIRONMENT

Social Network AdvertisingAdvertising in Chat Rooms and ForumsVideo Ads on the Web and in Social NetworkingViral Marketing in Social Networks

179

179

180181182

182183

183

184184184

188188

189189190191

192192193193194194195

4.7 ADVERTISING STRATEGIES AND SPECIALADVERTISING TOPICS

Affiliate Marketing and AdvertisingAds as a Commodity (Paying People to Watch Ads)Selling Space by PixelsPersonalized Ads and Other PersonalizationOnline Events, Promotions, and Attractions

197198199199200

201201201201202202

Contents 15

4.8 SPECIAL ADVERTISING TOPICS 203

Permission Advertising 203

Advertisement as a Revenue Model 203

Measuring Online Advertising's Effectiveness 204

Mobile Marketing and Advertising 204

Ad Content 205

Software Agents in Marketing and Advertising

Applications 205

Localization 206


SUMMARY 207

KEY TERMS 208





Closing Case: Toyota Scion Goes Social for Advertising

and Market Research 210

ONLINE RESOURCES AVAILABLE AT

pearsonhighered.com/turban 212

I Bnsiness-to-Business E-Commerce £13_

CHAPTER 5 B2B E-COMMERCE 213Auction for Supplies Helps Portsmouth Hospitals 214

5.1 CONCEPTS, CHARACTERISTICS, AND MODELSOF B2B E-COMMERCE 215

Basic B2B Concepts 215Market Size and Content of B2B 215The Basic Types of B2B Transactions

and Activities 216The Basic Types of B2B E-Marketplaces

and Services 217B2B Characteristics 217Supply Chain Relationships in B2B 218Service Industries Online in B2B 218The Benefits and Limitations of B2B 219The Content of the B2B Field 220

5.2 ONE-TO-MANY: SELL-SIDE E-MARKETPLACES 221Sell-Side Models 221Selling from Catalogs 221Example: Cisco Systems 222

Case 5.1 EC Appl icat ion: Brady Corporation ReorganizesIts E-Catalog Production 223

16 Contents

• V .

, * " <

5.3 SELLING VIA DISTRIBUTORS AND OTHER

INTERMEDIARIES 224

Case 5.2 EC Appl icat ion: W.W. Grainger and GoodrichCorporation 224

5.4 SELLING VIA E-AUCTIONS 225Using Auctions on the Sell Side 225Auctioning from the Company's Own Site 225Auction Rules 226Using Intermediaries in Auctions 226Examples of B2B Forward Auctions 227

5.5 ONE-FROM-MANY: BUY-SIDE E-MARKETPLACESAND E-PROCUREMENT 227

Procurement Methods 228Inefficiencies in Traditional Procurement Management 229The Goals and Benefits of E-Procurement 230

5.6 BUY-SIDE E-MARKETPLACES: REVERSE AUCTIONS 231Conducting Reverse Auctions 232Group Reverse Auctions 233

5.7 OTHER E-PROCUREMENT METHODS 233An Internal Purchasing Marketplace: Aggregating'

Suppliers' Catalogs and Desktop Purchasing 233Buying at Sellers' E-Auctions 234Group Purchasing 234Buying at Sellers' Sites and Collaborative Commerce 236Acquisition Via Electronic Bartering 236

5.8 B2B ELECTRONIC EXCHANGES: DEFINITIONSAND CONCEPTS 236

Case 5.3 EC Applicat ion: Agentrics: A Giant RetailExchange 237

Functions of Exchanges 238Dynamic Pricing in B2B Exchanges 239Advantages, Limitations, and the Revenue

Model of Exchanges 240

5.9 B2B PORTALS, DIRECTORIES, AND OWNERSHIP

OF B2B MARKETPLACES 241

B2B Portals 241

Case 5.4 EC Appl icat ion: Alibaba.com 242

Ownership of B2B Marketplaces 244Comparing the Many-to-Many B2B Models 245

5.10 B2B IN THE WEB 2.0 ENVIRONMENT AND

SOCIAL NETWORKING 245The Opportunities 245The Use of Web 2.0 Tools in B2B 246Social Networks in the B2B Marketplace 246Examples of Other Activities of B2B Social Networks 247The Future of B2B Social Networking 247

Contents 17

5.11 INTERNET MARKETING IN B2B EC 247

Organizational Buyer Behavior 248

The Marketing and Advertising Processes in B2B 248

Methods for B2B Online Marketing 248

Affi l iate Programs, Infomediaries,

and Data Mining 249


SUMMARY 250

KEY TERMS . . ^ 252

QUESTIONS FOR DISCUSSION BY INDIVIDUAL

STUDENTS 252




Closing Case: iMarketKorea 254


CHAPTER 6 INNOVATIVE EC SYSTEMS: FROM E-GOVERNMENTAND E-LEARNING TO C2C E-COMMERCEAND COLLABORATIVE COMMERCE 257Caterpillar Champions E-Learning 258

6.1 E-GOVERNMENT: AN OVERVIEW 259Definition and Scope 259Govern ment-to-Citizens 260Govemment-to,-Business 263Government-to-Government 264Government-to-Employees and Internal

Efficiency and Effectiveness 264Implementing E-Govemment 265The Transformation to E-Government 265E-Government 2.0 and Social Networking 265M-Govemment 266

6.2 E-LEARNING 267The Basics of E-Learning: Definitions

and Concepts 267Benefits and Drawbacks of E-Learning 269Distance Learning and Online Universities 271Online Corporate Training 272Implementing E-Learning and E-Training 273Social Networks and E-Learning 273Learning in Virtual Worlds and Second Life 273Visual Interactive Simulation 274E-Learning Tools and Management 274Electronic Books 276

V

18 Contents

6.3 KNOWLEDGE MANAGEMENT, LEARNING,

AND ELECTRONIC COMMERCE 278

An Overview of Knowledge Management 278

KM Types and Activities 279

Case 6.1 EC A p p l i c a t i o n : Knowledge Managementat Infosys Technologies 280

How Is Knowledge Management Related

to E-Commerce? 281

Online Advice and Consulting 282

~ Employee Knowledge Networks

and Expert Location Systems 283

Case 6.2 EC A p p l i c a t i o n : How the U.S. Departmentof Commerce Uses an Expert Location System 285

6.4 CONSUMER-TO-CONSUMER ELECTRONIC COMMERCE 286

E-Commerce: C2C Applications 286

6.5 COLLABORATIVE COMMERCE 288

Essentials of Collaborative Commerce 288

Collaboration Hubs 288

Implementing C-Commerce 290

Barriers to C-Commerce 290


SUMMARY 291

KEY TERMS 292





Closing Case: Social Networking Initiatives

by the New Zealand Government 294



Other Ff Mnriek anrl Applications 2Q7

7 THE WEB 2.0 ENVIRONMENTAND SOCIAL NETWORKS 297Wikipedia and Its Problems of Content,

Quality, and Privacy Protection 298

7.1 THE WEB 2.0 REVOLUTION, SOCIAL MEDIA,

AND INDUSTRY DISRUPTORS 299

What Is Web 2.0? 299

Representative Characteristics of Web 2.0 300

Web 2.0 Companies and New Business Models 300

Social Media 301

Industry and Market Disruptors 302

Contents 19

7.2 VIRTUAL COMMUNITIES 302Characteristics of Traditional Online Communities

and Their Classification 303

7.3 ONLINE SOCIAL NETWORKING: BASICSAND EXAMPLES 305

A Definition and Basic Information 305Representative Social Networks Sites and Services 307Mobile Social Networking 308

7.4 MAJOR^OCIAL NETWORK COMPANIES:FROM FACEBOOK TO FLICKR 309

Facebook: The Network Effect 309Bebo 310Twitter Is Also for Businesses 311Flickr Ticks Off Some of Its Users 312

7.5 BUSINESS AND ENTERPRISE SOCIAL NETWORKS 313Definitions, Concepts, Types, and Examples 313Business Social Networking: Concepts and Benefits 313Business-Oriented Social Networking 314Enterprise Social Networks 314Other Social Networking Structures 316

7.6 COMMERCIAL ASPECTS OF WEB 2.0 AND SOCIAL

NETWORKING APPLICATIONS 317Why Is There an Interest? 317Advertising Using Social Networks, Blogs, and Wikis 318Shopping in Social Networks 320Feedback From Customers: Conversational Marketing 320Commercial Activities in Business

and Enterprise Social Networks 321Revenue-Generation Strategies in Social Networks 323Risks and Limitations When Interfacing

with Social Networks 324

Case 7.1 EC Application: Revenue Sources at YouTube . . . . 324Justifying Social Media and Networking 325

7.7 ENTERTAINMENT WEB 2.0 STYLE: FROM SOCIAL

NETWORKS TO MARKETPLACES 326

Entertainment and Social Networks 326

Mobile Web 2.0 Devices for Entertainment and Work 328

7.8 THE FUTURE: WEB 3.0 AND WEB 4.0 329

Web 3.0: What's Next? 329


SUMMARY 332

KEY TERMS 332





20 ' Contents

Closing Case: Linkedin: The Business-OrientedSocial Network 335


CHAPTER 8 MOBILE COMPUTING AND COMMERCE 337The Blooming of Food Lion 338

8.1 MOBILE COMMERCE: ATTRIBUTES, BENEFITS,-" AND DRIVERS 339

Attributes of M-Commerce 340Drivers of M-Commerce 341

8.2 COMPONENTS, TECHNICAL INFRASTRUCTURE,AND SERVICES OF MOBILE COMPUTING 342

Mobile Devices 342Mobile Computing Software and Services 343Wireless Telecommunications Networks 345

8.3 MOBILE FINANCIAL APPLICATIONS 348Mobile Banking 348Mobile Payments • 349

Case 8.1 EC Application: Closing the DigitalDivide with Mobile Microfinance 350

8.4 MOBILE MARKETING AND ADVERTISING 351Mobile Marketing Campaigns 351Mobile Marketing Guidelines 352

8.5 MOBILE WORKFORCE SOLUTIONS 353Needs of the Mobile Workforce 353

8/6 MOBILE ENTERTAINMENT 356Growth of the Mobile Entertainment Market 356Mobile Music and Video 356Mobile Games 357Mobile Gambling 358

8.7 LOCATION-BASED MOBILE COMMERCE 359L-Commerce Infrastructure 360Location-Based Services and Applications 362Barriers to Location-Based M-Commerce 363

8.8 SECURITY AND OTHER IMPLEMENTATION

ISSUES IN MOBILE COMMERCE 363M-Commerce Security Issues 364Technological Barriers to M-Commerce 364Ethical, Legal, and Health Issues in M-Commerce 365


SUMMARY 367

KEY TERMS , 368



Contents 21



Closing Case: Walmart Turns to Mobilefor Weather Alerts 370


\ pearsonhighered.com/turban 371

5 EC Support Sen/ires 373

CHAPTER 9 E-COMMERCE SECURITYAND FRAUD PROTECTION 373How Seattle's Hospital

Survived a Bot Attack 374

9.1 THE INFORMATION SECURITY PROBLEM 375What Is EC Security? 375The Drivers of EC Security Problems 378Why Is E-Commerce Security Strategy Needed? 380

9.2 BASIC E-COMMERCE SECURITY ISSUESAND LANDSCAPE 380

The Security Basic Terminology 381The EC Security Battleground 381Security Scenarios and Requirements

in E-Commerce 383The Defense: Defenders and Their Strategy 385

9.3 TECHNICAL ATTACK METHODS 386Technical and Nontechnical Attacks: An Overview 386Malicious Code: Viruses, Worms, and Trojan Horses 386

9.4 PHISHING, FINANCIAL FRAUD, AND SPAM 389Phishing 390Fraud on the Internet 391Spam and Spyware Attacks 393

Case 9.1 EC Application: Internet Stock Fraud Aidedby Spam 394

Social Networking Makes Social Engineering Easy 394

9.5 THE INFORMATION ASSURANCE MODELAND DEFENSE STRATEGY 396

Confidentiality, Integrity, and Availability 397Authentication, Authorization, and Nonrepudiation 397E-Commerce Security Strategy 398

9.6 THE DEFENSE I: ACCESS CONTROL, ENCRYPTION,

AND PKI 399Access Control 399Encryption and the One-Key (Symmetric) System 401Public Key Infrastructure (PKI) 402

9.7 THE DEFENSE I I : SECURING E-COMMERCE NETWORKS . . . 405Firewalls 405

22 Contents

Virtual Private Networks (VPNs) 406Intrusion Detection Systems (IDSs) 407Honeynets and Honeypots 407

9.8 THE DEFENSE I I I : GENERAL CONTROLSAND OTHER DEFENSE MECHANISMS 408

General Controls 408Application Controls 409Internal Control and Compliance Management 410Protecting Against Spam 411Protecting Against Pop-Up Ads 411Protection Against Phishing 412Protecting Against Spyware 412

9.9 BUSINESS CONTINUITY, SECURITY AUDITING,AND RISK MANAGEMENT 412

Business Continuity and DisasterRecovery Planning 413

Case 9.2 EC Appl icat ion: Business Continuityand Disaster Recovery 414

Risk-Management and Cost-Benefit Analysis 415

9.10 IMPLEMENTING ENTERPRISE-WIDE E-COMMERCESECURITY 416

Senior Management Commitment and Support 416EC Security Policies and Training 416EC Security Procedures and Enforcement 417Industry Standards for Credit Card Protection (PCI DSS) 417Why Is I t Difficult to Stop Internet Crime? 417


SUMMARY 420

KEY TERMS 422





Closing Case: UBS PaineWebber's Business OperationsDebilitated by Malicious Code 424


CHAPTER 10 ELECTRONIC COMMERCE PAYMENT SYSTEMS 427Pay-Per-View Pages: The Next iTunes 428

10.1 THE PAYMENT REVOLUTION 430

1 0 . 2 USING PAYMENT CARDS ONLINE 431Processing Cards Online 432Fraudulent Card Transactions 432

Contents 23

10.3 SMART CARDS 435Types of Smart Cards 436Applications of Smart Cards 437

Case 10.1 EC Applicat ion: TaiwanMoney Card 439

10.4 STORED-VALUE CARDS 440

10.5 E-MICROPAYMENTS 441

10.6 E-CHECKING 443

Case 10.2 EC .Application: To POP or BOC: Digital Checksin the Offline World 444


SUMMARY 448

KEY TERMS 449





Closing Case: Freemiums in the SocialGaming World 450



8 Strategy and Implementation 4-53

CHAPTER 11 EC STRATEGY ANDIMPLEMENTATION:JUSTIFICATION, GLOBALIZATION, SMES,AND REGULATORY AND ETHICAL ISSUES 453Travelocity's Successful E-Strategy 454

11.1 STRATEGY, PLANNING, AND IMPLEMENTATIONOF ELECTRONIC COMMERCE 455

Strategy and the Web Environment 455The Strategic Planning Process 457

Case 11.1 EC Appl icat ion: Strategic Planningat InternetNZ 460

Business Planning in E-Commerce 461Business Case 462E-Commerce Strategy: Concepts and Overview 462

11.2 JUSTIFICATION AND COST-BENEFIT ANALYSIS 464Other Reasons Why EC Justification Is Needed 465EC Investment Categories and Benefits 465How Is an EC Investment Justified? 465What Needs to Be Justified? When Should

Justification Take Place? 466Using Metrics in EC Justification 466

24 Contents

11.3 DIFFICULTIES IN MEASURING AND JUSTIFYINGE-COMMERCE INVESTMENTS AND SUCCESS 468

The EC Justification Process 468Difficulties in Measuring Productivity

and Performance Gains 468Determining E-Commerce Success 470

11.4 GLOBAL E-COMMERCE 471Benefits and Extent of Operations 472Barriers to Global EC 472Breaking Down the Barriers to Global EC 474

Case 11.2 EC Applicat ion: Pierre Lang ExpandsInto Eastern Europe 475

11.5 E-COMMERCE IN SMALL AND MEDIUM-SIZED

ENTERPRISES 476Supporting SMEs 476

11.6 INTELLECTUAL PROPERTY AND OTHER

REGULATORY ISSUES 477Laws Are Subject to Interpretation 477

Case 11.3 EC Applicat ion: Is eBay a Store ora Bulletin Board? 478

Personal and Property Rights 478Intellectual Property Law (A Civil Law) 480

11.7 ETHICS IN E-COMMERCE 481Ethical Principals and Guidelines 482Business Ethics 482EC Ethical Issues 483

11.8 PRIVACY, VIOLATION AND PROTECTION, AND THE

CONFLICT WITH FREE SPEECH 484Privacy Rights and Protection 484Free Speech Online Versus Privacy Protection 485The Price of Protecting an Individual's Privacy 485How Information About Individuals Is Collected 486Privacy Issues in Web 2.0 Tools and Social Networks 487Privacy Protection Using Ethical Principles 488The USA Patriot Act 489

11.9 EC AND GREEN COMPUTING 490Operating Greener Businesses and Ecofriendly

Data Centers 490

11.10THE FUTURE OF ELECTRONIC COMMERCE 492Integrating the Marketplace with the Marketspace 492Social Networks 493Future Trends 493


SUMMARY 495

KEY TERMS " 496


Contents 25




Closing Case: Why Is Disney Funding Chinese Pirates? . . . 498


CHAPTER 12 LAUNCHING A SUCCESSFUL ONLINE BUSINESSAND EC PROJECTS 500

REFERENCES 501

GLOSSARY 512

INDEX 526

Documents

Introduction to Electronic Commerce 3/e - · PDF fileIntroduction to Electronic Commerce 3/e ... 1.2 THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION, CONTENT, ... Beijing 2008: A Digital