Prof Rushen Chahal

Chapter 14 Electronic Commerce

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Learning Objectives
Describe the concepts involved in electronic commerce. Understand auctions and portal mechanisms. Know the applications involved in e-commerce. Learn about electronic market research, eCRM, and online advertising. Define collaborative commerce and B2B applications. Understand e-government activities. Describe mobile commerce and pervasive computing. Learn e-commerce infrastructure and support services. Understand the ethical and legal issues involved in e-commerce.

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E-commerce Provides Decision Support to Hi-Life Corp. Vignette

Convenience store chain needs accurate stock count
Overstocking expensive Understocking results in customer dissatisfaction Losses due to shrinkage Manual counts used data collection sheets
Expensive, labor intensive

Solution based on handheld computer

Counts entered relayed immediately to headquarters Bar code scanner employed to shorten process, minimize errors Allows for real time product totals Dramatic reduction in labor involved Lower inventory levels and quicker response time

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E-commerce
Process of buying, selling, transferring, exchanging products, services, or information over computer networks Pure versus partial
Based on degree of digitization
Product Process Intermediary

Pure requires all three components to be fully digitized

Internet versus non-Internet

Most are Internet based May be value-added networks or local area networks

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E-commerce Transactions
Business-to-business (B2B) Business-to-consumer (B2C) Consumer-to-consumer (C2C) Consumer-to-business (C2B) Government-to-citizens (G2C) Collaborative commerce between partners Business to employees Intrabusiness/Intraorganizational commerce Mobile commerce (M-commerce)

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Scope of E-commerce
Applications supported by infrastructure
Hardware Software
Messaging, multimedia, interfaces, business services

Networks
communications

Support areas
People Legal and public policy and regulations Marketing and advertisements Support services ranging from payments to order delivery Business partnerships like joint ventures, e-marketplaces, affiliations

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Advantages
Advantages: Expands marketplace globally Expands availability of resources Shortens marketingdistribution channels Decreases expenses Reduces inventory Aids small businesses in competing Enables specialized niches Quicker delivery of information Enables individuals to work from home Facilitates delivery of public services Allows for purchase of goods at lowered prices Enables customization, personalization Decreases costs to customers, while increasing their choices Allows for 24 hour shopping Makes electronic auctions possible Enables people to interact in electronic communities

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Limitations
Limitations: Lack of universal standards Insufficient bandwidth Software-development tools are still evolving Integration difficulties Need for special Web servers in addition to network servers Accessibility expensive Unresolved legal issues Lack of national and international governmental regulations Lack of mature methodologies to measure benefits and justify Customer resistance Security questions Insufficient number of buyers and sellers for profitable e-commerce operations

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DSS and E-commerce

DSS supports e-commerce
DSS allows for scheduling and transportation optimization Match buyers to sellers Improves market operations Conducts risk analysis Optimizes selection of transportation routes Assists in running B2C operations Data collection Business intelligence

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DSS and E-commerce

E-commerce facilitates decision support
Efficient transfer of information Enhances decision-support process Data collection and storage

E-commerce works with DSS

Inventory management Produce strategic change in call center by integration of simulation decision support Marketing database applications and distribution systems Streaming financial reports Comparison shopping engines Data transfer and storage for BI analysis

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E-commerce Mechanisms
Electronic auctions
Competitive market mechanisms
Forward auctions
Sellers place offers and buyers make sequential bids

Reverse auctions
Sellers are invited to submit bids on product or service buyer wants

Bartering
Exchange of goods or services without money transactions

Portals
Information gateways
Single point of access through Web browser

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Portals
Commercial
Offer content to broad audiences
Routine Little personalization

Publishing
Based on specific interests
Extensive search capabilities

Personal
Target specific filtered information
Narrow content Personalized

Mobile
Accessible through mobile devices
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Portals
Voice
Audio interfaces Accessible through phones

Corporate
Access to business information located both within and outside of organization
Rich content Limited communities Organized focal point
Suppliers Customers Employees Supervisors

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Business to Consumer Applications

E-tailing
Storefronts
General or specialized May be extensions of physical stores

E-Malls
Collection of stores under single Internet address

Manufacturers may sell direct Retailers may act as intermediaries

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DSS Support
Channel conflict resolution through GDSS tools DSS and GDSS can be used for conflict resolution on pricing, resource allocation, logistics services DSS can aid in order fulfillment and logistics of small quantities DSS models can foster strategies and determine viability Identification of appropriate revenue models Risk analysis with DSS modeling

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Online Service Industries

Electronic banking International banking Securities trading Online job market Travel Real estate

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Market Research
E-commerce model of consumer behavior
Independent uncontrollable variables
Personal characteristics
Age, gender, demographics

Environmental characteristics
Social, cultural, available information, government regulations, legal constraints

Intervening variables
Vendor controlled Market stimuli E-commerce systems
Physical environment, logistics support, customer services

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Market Research
Decision making process
Influenced by independent and intervening variables Feeds into buyers decisions

Dependent variables
Buyers decisions

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Market Research
Decision-making process
Generic model
Identification of needs, information search, evaluation of alternatives, purchase and delivery, after-purchase evaluation

Consumer decision support system model

Support facilities from CDSS and Internet and Web produce framework for Web purchasing

Online buyer decision support model

Customer decision-making guided by Web purchasing models

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Discovering Customer Desires

Software agent search engines Intelligent agents
Monitor site activity Searching and filtering agents for customers Comparison agents

Electronic questionnaires Site tracking

Cookies, Web bugs, spyware

Collaborative filtering through inference of interest

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E-commerce CRM
During life cycle of product
Determine customer requirements Help customer acquire product or service Ongoing support Aid in disposal FAQs E-mail messaging Track status of order Personalization of Web pages and information at vendor s site Chat rooms and communities Web-based call centers

Tools available

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Online Advertising
Media rich, dynamic, interactive Types
Banners Pop-ups and pop-unders E-mail advertisements Electronic catalogs and brochures Advertisement postings in chatrooms, communities, and newsgroups Online classifieds

Issues
Spam
Permission marketing Viral marketing

Passive, mass market advertising

Interactive advertising

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B2B Applications
Sell-side marketplaces
Private e-marketplaces operated by seller
Electronic catalogs Forward auctions

Buy-side marketplaces
Reverse auction Third-party bidding marketplace or buyer s Web site Procurement models
Group purchasing Desktop purchasing

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B2B Applications
Electronic exchanges
E-marketplaces with many sellers and buyers

Types
Systematic sourcing by vertical distributors of direct materials Indirect materials sold on as needed basis with dynamic pricing Systematic sourcing for indirect materials at fixed pricing Spot sourcing of services on as needed basis

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Collaborative E-commerce
Non-sales based e-commerce transactions between organizations Electronic support of communication, information sharing, joint decision making Types
Retailers/suppliers Vendor-managed inventories supplied to retailers Product design Collaborative manufacturing through outsourcing of components and subassemblies

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Collaborative E-commerce
Collaborative workflow management
Planning and scheduling Design New product information Product-content management Order management Sourcing and procurement

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Intrabusiness E-commerce
B2E
Intranet-enabled business between business and employees

E-commerce between business units

Organization units sell and buy materials and products from each other

E-commerce between corporate employees

Classified ads

Sales force automation

Empowerment of salespersons

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E-government
Use of Internet technologies and e-commerce to deliver information and services to citizens
Gives citizens more access to information Allows for more feedback from citizens Facilitates fundamental changes in relationships between citizen and government

Types
Government-to-citizens (G2C)
Electronic benefits transfer, payment of taxes

Government-to-business (G2B)
RFQs, RFBs, reverse auctions

Government-to-government (G2G)
Sharing of databases, information
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E-learning
Online delivery of information for educational or training purposes Benefits
Eliminates barriers of time, distance, socioeconomic status Saves money, reduces travel time Increases access to experts Enables large numbers to take classes Provides on-demand, self-paced learning

Limitations
Special training for instructors and students Requires special equipment and support services Lack of face-to-face interaction

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Customer to Customer E-commerce

Buyers and sellers not businesses Types
Auctions Classified ads Personal services Bartering

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Variants of E-Commerce
Mobile commerce
E-commerce through use of mobile computing devices on wireless networks
Advantages
Mobility People can be reached at any time

L-commerce
Location-based mobile commerce
Information pushed out to recipient based on their current location

Pervasive computing
Computations become part of the environment
Embodied in things Based on intelligent systems

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E-commerce Support Systems

Electronic payments
Electronic checks Electronic credit cards Virtual credit cards Purchasing cards Electronic cash
Stored value money cards Smart cards with microprocessors Person-to-person payments

Payment of bills online

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Security in Electronic Payments Authentication of all parties Protection of data from alteration or destruction during transmission Protection from buyer s unjustified repudiation Privacy Customer safety Protection of information at seller s end
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Order Fulfillment in Electronic Commerce Provide customers with ordered goods Goods must be quickly packaged, shipped, and delivered Payment collection system must be in force Handle the return of unwanted or defective merchandise Customer relations

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Legal and Ethical Issues

Fraud
Seller s and buyer s

Buyer protection Seller protection

Unwarranted repudiation Intellectual property rights Domain names

Privacy issues
Cookies Web tracking Sales of lists Monitoring e-mails and site visits

Taxation Disintermediation Intellectual Property issues

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