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^-commerce

business, technology, society.


F I F T H E D I T I O N

Kenneth C. Laudon
New York University

Carol Guercio Traver


Azimuth Interactive, Inc.

PEARSON

Prentice Hall
Prentice Hall, Upper Saddle River, New Jersey 07458

C o n t e n t s

PARTI Introduction to E-commerce


THE REVOLUTION IS JUST BEGINNING

1-1

Learning Objectives

1-1 1-2

MySpace and Facebook: It's All About You

1.1 E-commerce: The Revolution Is Just Beginning

1-5

The First Thirty Seconds 1-9 What Is E-commerce? 1-9 The Difference between E-commerce and E-business 1-10 Why Study E-commerce? 1-11 Eight Unique Features of E-commerce Technology 1-11 Ubiquity 1-13 Global Reach 1-13 Universal Standards 1-13 Richness 1-14 Interactivity 1-14 Information Density 1-15 Personalization/Customization 1-16 Social Technology: User Content Generation and Social Networking Web 2:0: Play My Version 1-17 Types of E-commerce 1-19 Business-to-Consumer (B2C) E-commerce 1-19 Business-to-Business (B2B) E-commerce 1-19 Consumer-to-Consumer (C2C) E-commerce 1-20 Peer-to-Peer (P2P) E-commerce 1-20 Mobile Commerce (M-commerce) 1-21 Growth of the Internet and the Web 1-21 Origins and Growth of E-commerce 1-23

1-16

Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the Deep

xviii

Contents

Web

1-25 1-27 1-28

Technology and E-commerce in Perspective 1.2 E-commerce: A Brief History 1-29 1-29 1-34 1-36 1-36

Potential Limitations on the Growth of B2C E-commerce E-commerce 1995-2000: Innovation Insight on Business: Dot-com De'ja vu E-commerce 2001-2006: Consolidation E-commerce 2006-Present: Reinvention Predictions for the Future: More Surprises 1.3 Technology: Infrastructure Business: Basic Concepts Society: Taming the Juggernaut 1-42 1-44 1-44

Assessing E-commerce: Successes, Surprises and Failures 1-39 Understanding E-commerce: Organizing Themes

1-36 1-42 ^

Insight on Society: Holding On To Your Privacy Online Academic Disciplines Concerned with E-commerce

1-45

1-48

1.4 1.5

Technical Approaches 1-48 Behavioral Approaches 1-49 Case Study: P2P Networks Rock, Music Industry Review 1-54
1-54 1-59 1-59 Key Concepts Projects , 1-58 Questions Web Site Resources

Rolls

1-50

E-COMMERCE BUSINESS MODELS AND CONCEPTS Learning Objectives 2-1 2-2 2-5 2-5 '

2-1

Online Groceries: Up from the Embers 2.1 E-commerce Introduction Business 2-5 2-6 2-7 2-9 Models

Eight Key Elements of a Business Model Value Proposition Revenue Model Market Opportunity Competitive Advantage Market Strategy Management Team 2-12 2-12 2-13

Competitive Environment

2-10 2-11

Organizational Development

Categorizing E-commerce Business Models: Some Difficulties

2-13

Contents

xix

2.2

Major Business-to-Consumer (B2C) Business Models


Portal E-tailer 2-14 2-16

2-14

Insight on Technology: Search, Ads and Apps: The Future for Google (and Microsoft) 2-17

Content Provider 2-20 Transaction Broker 2-21 Market Creator 2-22 Service Provider 2-23 Community Provider 2-24 2.3 Major Business-to-Business
E-distributor E-procurement Exchanges 2-27 2-28 2-25 2-26

(B2B) Business

Models

2-25

Insight on Business: Onvia Evolves

Industry Consortia 2-29 Private Industrial Networks 2.4

2-30 Areas
2-31

Business Models in Emerging E-commerce


Consumer-to-Consumer (C2C) Business Models Peer-to-Peer (P2P) Business Models M-commerce Business Models 2-32 2-32

2-31

E-commerce Enablers: The Gold Rush Model

2-34

Insight on Society: Is Privacy Possible in'a Wireless World? 2.5 How the Internet and the Web Change Business: and Process 2-37 Industry Structure 2-37 Industry Value Chains 2-40 Firm Value Chains 2-41 Firm Value Webs 2-42 Business Strategy 2-43 Case Study: Priceline.com Works 2-47 Review
Key Concepts Projects Questions 2-53 2-53 2-54

2-35 Structure,

Strategy,

2.6 2.7

and the Search for a Business Model

that

2-51
2-51 ^

Web Site Resources

xx

Contents

PART 2 Technology Infrastructure for E-commerce

THE INTERNET AND WORLD WIDE WEB: E-COMMERCE INFRASTRUCTURE Learning Objectives All Mashed Up 3-2 3-.1

3.1

The Internet: Technology Background 3-5 The Evolution of the Internet 1961The Present 3-6 The Internet: Key Technology Concepts 3-7 Packet Switching 3-10 Transmission Control Protocol/Internet Protocol (TCP/IP) IP Addresses 3-12 Domain Names, DNS, and URLs 3-14 Client/Server Computing 3-14
Insight on Business: Peer-to-Peer Networks Rescue Hollywood and TV Studios 3-17

3-12

3.2

3.3.

Other Internet Protocols and Utility Programs 3-20 Internet Protocols: HTTP, E-mail Protocols, FTP, Telnet, and SSL 3-20 Utility Programs: Ping, Tracert, and Pathping 3-21 The Internet Today 3-22 The Internet Backbone 3-24 Internet Exchange Points 3-25 Campus Area Networks (CANs) 3-25 Internet Service Providers 3-27 Intranets and Extranets 3-28 Who Governs the Internet? 3-29 Insight on Society: Government Regulation of the Internet 3-31 Internet II: The Future Infrastructure 3-33 Limitations of the Current Internet 3-33 The Internet2 Project 3-34 The Larger Internet II Technology Environment: The First Mile and the Last Mile 3-35 Fiber Optics and the Bandwidth Explosion in the First Mile 3-36 The Last Mile: Mobile Wireless Internet Access 3-37 Benefits of Internet II Technologies 3-45 IP Multicasting 3-45

Contents

xxi

Latency Solutions 3-45 Guaranteed Service Levels and Lower Error Rates Declining Costs 3-47 3.4 The World Wide Web 3-47 Hypertext 3-48 Markup Languages 3-49 Standardized Generalized Markup Language (SGML) HyperText Markup Language (HTML) 3-49 Extensible Markup Language (XML) 3-51 Web Servers and Clients 3-53 Web Browsers 3-54 The Internet and the Web: Features E-mail 3-55 Instant Messaging 3-55 Search Engines 3-56 Intelligent Agents (Bots) 3-59 Online Forums and Chat 3-60 3-55

3-47

3-49

3.5

Insight on Technology: Chatterbots Meet Avatars 3-61 Streaming Media 3-62 Cookies 3-63 Web 2.0 Features and Services 3-63 Blogs 3-63 ' Really Simple Syndication (RSS) ; 3-64 Podcasting 3-65 Wikis 3-66 New Music and Video Services 3-66 Internet Telephony 3-66 Internet Television 3-68 Video Conferencing 3-69 Online Software and Web Services: Web Apps, Widgets and Gadgets M-commerce Applications: The Next Big Thing 3-70 3.6 3.7 Case Study: Akamai Technologies: The Web's Jukebox 3-71 Review 3-75 Key Concepts 3-75 Projects 3-78 Questions 3-79 Web Site Resources 3-79

3-69

xxii

Contents

BUILDING AN E-COMMERCE WEB SITE Learning Objectives Right-Sizing a Web Site 4-1 4-2

4-1

4.1

Building an E-commerce Web Site: A Systematic Approach


Pieces of the Site-Building Puzzle 4-4 - 4-5 Planning: The Systems Development Life Cycle and Information Requirements 4-6 4-8 4-8

4-4

Systems Analysis/Planning: Identify Business Objectives, System Functionality, System Design: Hardware and Software Platforms Building the System: In-House versus Outsourcing Build Your Own versus Outsourcing Host Your Own versus Outsourcing Testing the System 4-15 4-15 4-16 , 4-18 4-18 4-20 4-21 4-22 4-25 4-8 4-12

Insight on Business: Curly Hair and Tattoos: Getting Started on the Cheap
Implementation and Maintenance . 4.2 Web Site Budgets Choosing Software Web Server Software 4-17

4-13

Factors in Optimizing Web Site Performance

Simple versus Multi-tiered Web Site Architecture Site Management Tools Application Servers Online Catalog Shopping Carts 4-24 4-26 4-26 4-26

. Dynamic Page Generation Tools

E-commerce Merchant Server Software Functionality

Credit-Card Processing

Merchant Server Software Packages (E-commerce Suites) Choosing an E-commerce Suite


%

4-26

4-27

Building Your Own E-commerce Site: Web Services and Open Source Options 4-28 Choosing the Hardware for an E-commerce Site 4-29 4-30 4-33 Right-Sizing Your Hardware Platform: The Demand Side Right-Sizing Your Hardware Platform: The Supply Side

4.3

4.4

Other E-commerce Site Tools Tools for Web Site Optimization

4-37 4-37 4-40 4-40 4-39

Web Site Design: Business Considerations Tools for Interactivity and Active Content

Bling for Your Blog: Web 2.0 Design Elements

Contents

xxiii

CGI (Common Gateway Interface) 4-41 Active Server Pages (ASP) 4-41 Java, Java Server Pages (JSP), and JavaScript

4-41

Insight on Technology: Pumping Up the Customer Experience Using AJAXand Flash 4-43

ActiveX and VBScript 4-44 ColdFusion 4-44 Personalization Tools 4-45 The Information Policy Set 4-45 Insight on Society: Designing for Accessibility with Web 2.0 4.5 4.6 Case Study: REI Climbs the Web Mountain Review 4-54 Key Concepts 4-54 Projects 4-57 , Questions 4-58 Web Site Resources 4-59 4-49

4-46

ONLINE SECURITY AND PAYMENT SYSTEMS

5-l_

Learning Objectives
Cyberwar Becomes a Reality

5-1
5-2

'

5.1

The E-commerce Security Environment

5-4

5.2

The Scope of the Problem 5-4 / The Underground Economy Marketplace: The Value of Stolen Information 5-8 What Is Good E-commerce Security? 5-9 Dimensions of E-commerce Security 5-10 The Tension Between Security and Other Values 5-12 Ease of Use 5-12 Public Safety and the Criminal Uses of Security 5-12 Security Threats in the E-commerce Environment 5-14 Malicious Code 5-15 Unwanted Programs 5-17 Phishing and Identity Theft ^ 5-19 Hacking and Cybervandalism 5-21 Credit Card Fraud/Theft 5-22 Spoofing (Pharming) and Spam (Junk) Web Sites 5-23 Denial of Service (DoS) and Distributed Denial of Service (dDoS) Attacks Sniffing 5-24 Insider Attacks 5-25 Poorly Designed Server and Client Software 5-25

5-24

xxiv

Contents

5.3

Technology Solutions Encryption 5-26

5-26 5-26

Protecting Internet Communications Symmetric Key Encryption Public Key Encryption Digital Envelopes 5-32 5-29 5-28

Public Key Encryption Using Digital Signatures and Hash Digests Digital Certificates and Public Key Infrastructure (PKI) Limitations to Encryption Solutions Securing Channels of Communication Secure Sockets Layer (SSL) 5-35 5-36 5-38 5-35 5-35 . 5-32

5-29

Insight on Society: In Pursuit of E-mail Security Secure Hypertext Transfer Protocol (S-HTTP) Virtual Private Networks (VPN) Protecting Networks Firewalls 5-39 5-40 5-39 5-39

Protecting Servers and Clients Anti-Virus Software 5.4 Management 5-41

Operating System Security Enhancements ' Procedures, 5-42 Policies, Business

5-40 . and PublicLaws / 5-42

A Security Plan: Management Policies

Insight on Technology: Securing Your Information: Cieversafe Hippie Storage 5-45 j The Role .of Laws and Public Policy 5-46 / Private and Private-Public Cooperation Efforts OECD Guidelines 5.5 5-48

5-48 5-48

Government Policies and Controls on Encryption Software Payment Systems 5-49 Types of Payment Systems 5-49 Cash 5-49 Checking Transfer 5-50 Credit Card 5-50 Stored Value 5-51 Accumulating Balance 5-51 5.6 - E-commerce Payment Systems 5-53 Online Credit Card Transactions 5-54 Credit Card E-commerce Enablers 5-55 Limitations of Online Credit Card Payment Systems Digital Wallets 5-56 Digital Cash 5-57 Online Stored Value Systems 5-57 Digital Accumulating Balance Payment Systems 5-59 Digital Checking Payment Systems 5-59

5-56

Contents

xxv

Wireless Payment Systems 5.7 Market Size and Growth EBPP Business Models

5-60 318 5-61

Electronic Billing Presentment and Payment

Insight on Business: Mobile Payment's Future: WavePayMe, TextPayMe 5-62 5-64

5.8 Case Study: PayPal Has Company 5.9 Review 5-71


Key Concepts Projects Questions 5-76 5-77 5-77 5-71

5-67

Web Site Resources

PART 3

;iness Concepts and Social Issues

E-COMMERCE MARKETING CONCEPTS Learning Objectives 6-1 6-2

6-1

Netflix Develops and Defends Its Brand

6.1 Consumers Online: The Internet Audience and Consumer Behavior 6-5 /
The Internet Audience 6-5 6-6 6-6 6-6 6-10 6-11 6-12 Internet Traffic Patterns: The Online Consumer Profile Intensity and Scope of Usage Demographics and Access

Type of Internet Connection: Broadband Impacts Community Effects: Social Contagion Lifestyle and Sociological Impacts Channels 6-12 6-12 6-15 6-16 6-17 6-22 6-20

Media Choices and Multitasking : The Internet versus Other Media Consumer Behavior Models Profiles of Online Consumers The Online Purchasing Decision Shoppers: Browsers and Buyers

A Model of Online Consumer Behavior What Consumers Shop for and Buy Online Why More People Don't Shop Online

Intentional Acts: How Shoppers Find Vendors Online 6-23 Trust, Utility, and Opportunism in Online Markets

6-22 6-24

xxvi

Contents

6.2

Basic Marketing Concepts

6-24

Feature Sets - 6-25 Products, Brands, and the Branding Process 6-26 Segmenting, Targeting, and Positioning 6-28 Are Brands Rational? 6-29 Do Brands Last Forever? 6-30 Can Brands Survive the Internet? Brands and Price Dispersion on the Internet 6-31 6.3 Internet Marketing Technologies 6-33 The Revolution in Internet Marketing Technologies 6-33 Web Transaction Logs 6-35 Supplementing the Logs: Cookies and Web Bugs 6-37 Databases, Data Warehouses, and Data Mining: Developing Profiles
Insight on Society: Marketing with Web Bugs Databases 6-42 6-43 6-46'
J

"

6-39

6-40

Data Warehouses and Data Mining

Insight on Technology: The Long Tail: Big Hits and Big Misses

Customer Relationship Management (CRM) Systems 6.4

6-48 6-50

B2C and B2B E-commerce Marketing and Branding Strategies Market Entry Strategies 6-50 Establishing the Customer Relationship 6-52 Advertising Networks 6-52 Permission Marketing 6-54 Affiliate Marketing 6-55 Viral Marketing in the Web 2.0 Milieu 6-56 Blog Marketing 6-57 Social Network Marketing and Social Shopping 6-58 Leveraging Brands 6-58 *
Insight on Business: Social Network Marketing: New Influences Among the Chattering Masses 6-59

. .

Customer Retention: Strengthening the Customer Relationship Personalization and One-to-One Marketing 6-61 Customization and Customer Co-Production 6-63 Transactive Content 6-64
'

6-61

Customer Service 399 Net Pricing Strategies 6-66 It's Free! 6-68 Versioning 6-68 Bundling 6-69 Dynamic Pricing 6-70 Channel Strategies: Managing Channel Conflict

6-71

Contents

xxvii

6.5 6.6

Case Study: Liquidation.com: B2B Marketing Success Story Review 6-77 Key Concepts 6-77 Projects 6-80 Questions 6-81 Web Site Resources 6-82

6-73

E-COMMERCE MARKETING COMMUNICATIONS

7-l_

Learning Objectives 7.1

7-1 7-2

Video Ads Cure Banner Blindness: String Master

Marketing Communications 7-5 Online Advertising 7-5 Display Ads: Banners and Pop-Ups 7-7 Rich Media/Video Ads 7-10 Search Engine Advertising: Paid Search Engine Inclusion and Placement Sponsorships 7-19 Referrals (Affiliate Relationship Marketing) 7-19 E-mail Marketing and the Spam Explosion 7-20 Online Catalogs 7-24 Social Marketing: Blogs, Social Networks and Games 7-26 Blog Advertising 7-26 Social Network Advertising 7-27 Game Advertising 7-27 Behavioral Targeting: Getting Personal 7-28
Insight on Society: Marketing to Children of the Web in the Age of Social Networks 7-29

7-12

7.2

Mixing Offline and Online Marketing Communications 7-33 Understanding the Costs and Benefits of Online Marketing Communications 7-34 Online Marketing Metrics: Lexicon 7-34
Insight on Business: The Very Rich Are Different from You and Me: Nieman Marcus,

'

7.3

TiffanyftCo., and Armani 7-35 How Well Does Online Advertising Work? 7-40 The Costs of Online Advertising 7-43 Software for Measuring Online Marketing Results 7-45 The Web Site as a Marketing Communications Tool Domain Names 7-46 Search Engine Optimization 7-47
Web Site Functionality 7.-50

7-45

Insight on Technology: It's 10 P.M. Do You Know Who Is On Your Web Site?

7-48

xxviii

Contents

7.4

7.5

Case Study: Adware, Spy ware, Ad Bombs, Ambush Marketing, and Customer Hijacking: Invasive Marketing Techniques Grow on the Web 7-53 Review 7-59 Key Concepts 7-59 Projects 7-62 Questions 7-62 Web Site Resources . 7-63 . :

'.

ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE .

8-1 1

t j.

Learning Objectives 8.1

8-1
8-2

Second Life Gets a Life: Discovering Law and Ethics in Virtual Worlds

8.2

Understanding Ethical, Social, and Political Issues in E-commerce 8-4 A Model For Organizing the Issues 8-5 . Basic Ethical Concepts: Responsibility, Accountability, and Liability Analyzing Ethical Dilemmas 8-9 " Candidate Ethical Principles 8-9 Privacy and Information Rights 8-11 Information Collected at E-commerce Sites 8-12 Profiling and Behavioral Targeting 8-13 The Internet and Government Invasions of Privacy: E-commerce Surveillance 8-17 Legal Protections 8-19 Informed Consent 8-19 The FTC's Fair Information Practices Principles 8-22 The European Directive on Data Protection 8-24 ', Private Industry Self-Regulation 8-25 Privacy Advocacy Groups 8-26
Technological Solutions 8-26 8-28 8-32 Insight on Business: Chief Privacy Officers Insight on Technology: The Privacy Tug of War

, 8-7

j I ; | I 1 I

8.3

Intellectual Property Rights 8-32 Types,of Intellectual Property Protection 8-34 Copyright: The Problem of Perfect Copies and Encryption Look and Feel 8-36 Fair Use Doctrine 8-36 l The Digital Millennium Copyright Act of 1998 8-37 Patents: Business Methods and Processes ,8-39 E-commerce Patents 8-41 Patent Reform 8-41

8-35

Contents

xxix

Trademarks: Online Infringement and Dilution Trademarks and the Internet Cybersquatting Cyberpiracy Metatagging Keywording Linking Framing 8.4 Governance 8-45 8-45 8-47 8-48 8-49 8-44

8-44

8-49 8-50

Challenge: Balancing the Protection of Property with Other Values 8-51 8-51 8-53 Who Governs E-commerce and the Internet? Can the Internet Be Controlled? Public Government and Law Taxation 8.5 8-54 8-56 8-57 8-57 Net Neutrality 8-54

Public Safety and Welfare Protecting Children

Cigarettes, Gambling, and Drugs: Is the Web Really Borderless?

8-58

Insight on Society: The Internet Drug Bazaar 8-61 8.6 Case Study: Print the Library [Online]: Is Google Playing Fair, or Just Out to Make a Buck? 8-63 8.7 Review 8-66
Key Concepts, Projects Questions 8-70 8-71 8-72 8-66 '' j

Web Site Resources

PART 4

hrnmerce in Action
9-1

ONLINE RETAILING AND SERVICES Learning Objectives 9-1 9-2 9-6

Blue Nile Sparkles For Your Cleopatra 9.1 The Online Retail Sector The Retail Industry Online Retailing 9-7 9-9

E-commerce Retail: The Vision The Online Retail Sector Today Multi-channel Integration 9-13

9-9 9-11

xxx

Contents

9.2

Analyzing the Viability of Online Firms


Strategic Analysis Financial Analysis 9-14 9-15

9-14

9.3

E-commerce in Action: E-tailing Business Models


Virtual Merchants 9-17 9-18 9-26 E-commerce in Action: Amazon.com Multi-channel Merchants: Brick-and-Clicks Catalog Merchants Manufacturer-Direct 9-28 9-29 9-31 9-32

9-17

Common Themes in Online Retailing 9.4

The Service Sector: Offline and Online What Are Services? 9-35 9-35 9-35 9-36

Insight on Technology: Using the Web to Shop 'Till You Drop Categorizing Service Industries Personalization and Customization

9-33

Knowledge and Information Intensity

9.5

Online Financial Services


Financial Services Industry Trends

9-36
9-36 9-38 9-40 9-39 9-41

Online Financial Consumer Behavior Online Banking and Brokerage

Multi-channel vs. Pure Online Financial Services Firms Financial Portals and Account Aggregators Online Mortgage and Lending Services Online Insurance Services Online Real Estate Services 9.6 Online Travel Services 9-44 9-45 9-48 9-42

Insight on Society: Turf Wars-Antitrust and the Online Real Estate Market Why Are Online Travel Services So Popular? The Online Travel Market Insight on Business: Zipcars 9-52 9-54 9-55 9-57 9-58 9-64 Online Travel Industry Dynamics 9-51 '

9-49

Opportunities for Disintermediation and Re-intermediation E-commerce in Action: Expedia.com

9.7

Online Career Services


Recruitment Market Segments

9-64
9-67

It's Just Information: The Ideal Web Business?

Online Recruitment Industry Dynamics: Consolidation, Diversification, Localization, and Job Search Engines 9-67 9.8 9.9 Case Study: IAC/InterActiveCorp: Review Key Concepts 9-74 9-74 Online Services Spin-off ^9-69

Contents

XXXI

Projects 9-81 Questions 9-82 Web Site Resources

9-83

ONLINE CONTENT AND MEDIA

10-1

Learning Objectives

10-1
10-2

The Wall Street Journal Online Discovers Web 2.0

10.1 Online Content 10-5 Content Audience and Market: Where Are the Eyeballs and the Money? 10-5 Media Utilization 10-6 Internet and Traditional Media: Cannibalization Versus Complementarity 10-7 Media Revenues 10-8 Two Models of the Digital Content Delivery: Paid and User-Generated Content 10-9 Free or Fee: Attitudes About Paying for Content and the Tolerance for Advertising 10-11 Media Industry Structure 10-12 Media Convergence: Technology, Content, and Industry Structure 10-13 Technological Convergence 10-13 Content Convergence 10-13 Industry Convergence 10-15 ' Online Content Revenue Models and Business Processes 10-16 Making a Profit with Online Content: From Free to Fee 10-18 Key Challenges Facing Content Producers and Owners 10-19 Technology 10-19 Cost 10-20 Distribution Channels and Cannibalization 10-21 Digital Rights Management (DRM) 10-21

10.2 The Online Publishing Industry


Online Newspapers 10-22

10-22
10-23

Insight on Business: DRM: Who Owns Your Files? Audience Size and Growth 10-25

Online Newspaper Revenue Models and Results 10-27 Convergence 10-28 Challenges: Disruptive Technologies 10-29 Books: The Evolution of E-books 10-30 E-books 10-31 Book Audience Size and Growth 10-33 Content: Advantages and Disadvantages of E-books 10-34 E-book Industry Revenue Models 10-35

xxxii

Contents

Convergence

10-37 10-40 10-42 10-47 10-48 , 10-49' 10-51 10-49

Insight on Society: The Future of Books 10.3 The Online Entertainment Industry Online Traditional Entertainment Content 10-50 10-51

E-commerce in Action: CNET Networks, Inc. Online Entertainment Audience Size and Growth User-Generated Content: Where Does It Fit? Online Entertainment Industry Revenue Models Convergence

Insight on Technology: Hollywood Needs a New Script: Pass_ the Cash Cow Please 10-55

10.4 Case Study: Google and YouTube Together: Can Google Monetize YouTube? 10-58 10.5 Review 10-61
Key Concepts Projects Questions 10-61 10-67 10-68
d

10-67

Web Site Resources

SOCIAL NETWORKS, AUCTIONS, AND PORTALS Learning Objectives


i

11-1

11-1 11-2

Social Network Fever Spreads to the Professions What Is an Online Social Network? 11-5

11.1 Social Networks and Online* Communities


The Difference Between Social Networks and Portals Turning Social Networks Into Businesses Social Network Features and Technologies The Future of Social Networks 11.2 Online Auctions 11-11 11-10 11-7

11-4
11-5 1^-6

The Growth of Social Networks and Online Communities Types of Social Networks and Their Business Models 11-10 11-8

Defining and Measuring the Growth of Auctions and Dynamic Pricing Insight on Technology: Social Operating Systems: Facebook vs. Google Insight on Society: Dynamic Pricing: Is This Price Right? Benefits of Auctions 11-18 11-19 11-15 11-18 Why Are Auctions So Popular? Benefits and Costs of Auctions Risks and Costs of Auctions for Consumers and Businesses Types and Examples of Auctions Internet Auction Basics 11-21 11-21

11-11 11-12

Market-Maker Benefits: Auctions as an E-commerce Business Model

11-21

Contents

xxxiii

Types of Auctions 11-23 When to Use Auctions (and for What) in Business 11-28 Seller and Consumer Behavior at Auctions 11-30 Seller Profits: Arrival Rate, Auction Length, and Number of Units Auction Prices: Are They the Lowest? 11-31 Consumer Trust in Auctions 11-32 When Auction Markets Fail: Fraud and Abuse in Auctions 11-33 11.3 E-commerce Portals 11-33 The Growth and Evolution of Portals 11-35 Types of Portals: General Purpose and Vertical Market Insighton Business: Battle of the Portals 11-37 Portal Business Models 11-41
E-commerce in Action: Yahoo! Inc. 11-42

11-30

11-36

11.4 Case Study: iVillage Discovers the Path to Success, But Has It Since Lost Its Way? 11-50 11.5 Review 11-52
Key Concepts 11-52 Projects 11-57 Questions 11-58 Web Site Resources 11-58
B2B E-COMMERCE: SUPPLY CHAIN MANAGEMENT AND COLLABORATIVE COMMERCE
i

766_

Learning Objectives

12-1

''
12-2

Volkswagen Builds Its B2B, Net Marketplace

12.1 B2B E-commerce and Supply Chain Management

12-5

Defining and Measuring the Growth of B2B Commerce 12-5 The Evolution of B2B Commerce 12-6 The Growth of B2B E-commerce 2001 -2012 12-8 Industry Forecasts 12-8 Potential Benefits of B2B E-commerce 12-10 The Procurement Process and the Supply Chain 12-10 Types of Procurement 12-11 The Role of Existing Legacy Computer Systems 12-13 Trends in Supply Chain Management and Collaborative Commerce Supply Chain Simplification 12-14 Electronic Data Interchange (EDI) 12-14 Supply Chain Management Systems 12-17 Collaborative Commerce 12-18
Insight on Technology: RFID Autoidentification: Making Your Supply Chain Visible 12-19

12-14 -

xxxiv

Contents

Main Types of Internet-based B2B Commerce 12-22 12.2 Net Marketplaces ' 12-23 ? The Variety and Characteristics of Net Marketplaces 12-23 Types of Net Marketplaces 12-23 E-distributors 12-25 E-procurement 12-26 E-commerce in Action: Ariba 12-28 Exchanges 12-35 Industry Consortia 12-37 The Long-Term Dynamics of Net Marketplaces 12-40 12.3 Private Industrial Networks 12-41 What Are Private Industrial Networks? 12-41 Insight on Society: Are Net Marketplaces Anti-competitive Cartels? 12-42 Characteristics of Private Industrial Networks r 12-44 Private Industrial Networks and Collaborative Commerce 12-45 Insight on Business: Wal-Mart Develops a Private Industrial Network 12-47 Implementation Barriers 12-48 Industry-Wide Private Industrial Networks 12-49 The Long-Term Dynamics of Private Industrial Networks 12-49 12.4 Case Study: Siemens Clicks with Click2procure 12-52 12.5 Review 12-55 Key Concepts 12-55 Projects 12-59 Questions 12-60 Web Site Resources 12-60 References R-l Index 1-1 Credits C-l