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What
is E-Commerce?
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Financial
business transaction that occurs over an electronic network. |
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Popular
types of retail e-commerce
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Half
of web users shop online |
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Half
of investors trade securities online |
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Eliminates
the barriers of time and distance for information transfer. |
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Allows easy search and selection and purchase of goods that are not locally available. |
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Center for Research in Electronic Commerce, University of Texas at
Austin: http://cism.bus.utexas.edu/ |
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The
Growth of E-Commerce
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Electronic
Data Interchange (EDI): A set of standards that control the
transfer of business data and information among computers both
within and among companies. |
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ATM
(Automated Teller Machine). ATMs have their own network. Therefore, electronic commerce can be done over something other than the Internet. |
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The telephone is also available for electronic commerce. |
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Internet
became available for commercial use in 1991. |
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Exponential growth for the consumer retail market did not hold up
as projected by our text. |
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The business-to-business market still offers significant growth
opportunities. |
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DEC 1999 Christmas e-commerce bust lessons:
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You still have to produce and deliver the goods.
Inadequate attention to shipping and handling operation. Orders
taken for goods not on hand. |
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Next trend: Using on-line chat and web-based queries for internal
and external handling of shipping, handling, billing, accounting,
customer service. |
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Buzzwords:
m-commerce (mobile commerce), bricks-and-mortar business,
clicks-and-mortar commerce. |
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Relationship Buzzwords of 2001: B2B, B2C, B2E, C2C, B2G, G2G, C2G, G2C (2="to",
B=Business, C=Consumer, G=government, E=employee) |
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E-Commerce
Business Models
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Business-to-Consumer
E-Commerce
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Retail
sales of goods and services, including financial services. |
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Disintermediation: (horrible buzz... ) Cutting out the middle man. |
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More
information for consumers. Beware: check your sources
for biases. Infomercials. (another buzz... ) |
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Consumer-to-Consumer
E-Commerce
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Online
auction |
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P2P,
Peer-to-Peer: An Internet network that enables users with the
same networking software to connect to each other's hard disks
and exchange files directly. MP3 piracy. |
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Business-to-Business
E-Commerce
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Expanding
fast |
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Supply
and logistics |
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Project
and production coordination |
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Vendor
(e-procurement), service, broker, infomediary [horrible
buzz...] (provides
specialized information about suppliers and other
businesses... Thomas Register) |
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Vertical
B2B: specialize in a particular industry |
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Business-to-Employee
E-Commerce
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Intra-business
e-commerce: activities that take place within a business. |
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Charging
overhead, direct charge activities, project use of centralized
services. |
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The
text describes information sharing rather than financial
transactions that generate revenue flow within a company. |
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Advantages
of E-Commerce
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Information exchange is rapid, low cost, and physical distance is
not as important. |
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Responsiveness is possible when all participants agree on the
need. |
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It also reduces human factors barriers related to
disability, racial prejudice, language, mannerisms, etc., that can impede a
business interaction. It is a great democratizer. |
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Vendors can post answers to frequently asked questions and
technical data which ordinarily are unknown by retail sales
personnel. Making this easily available to the retail sales
force may be a next step. |
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Cautions of E-Commerce
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The responsiveness might lead to impulsive commitments formerly
avoided by sufficient delay between concept and closure. |
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Absence of personal contact can lead to not being sensitive to
cultural and national pressures at the other end of an e-commerce
transaction. |
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Instant access to volumes of data is not identical to having
understanding. |
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E-Commerce
Revenue Streams: Sources of cash flow.
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Direct sales: Advertise on web, take order, arrange to ship goods or
deliver services. |
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Electronic Software Distribution (ESD): Distribute over internet to
avoid physical shipping costs. Shifts transportation cost to
consumer, who pays for the Internet connection and personnel time to
monitor the download. Allows the vendor to send you the latest
certified version of software. Problem: very large programs
take a long time to download. Distribution by CD is still
often a better choice. CD distribution also guarantees a
backup copy being immediately available if you must rebuild your
system. |
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Web Application, Application Service Provider (ASP): software rental.
Use vendor's hardware, software, data storage via the Web. The vendor
has the responsibility for updating software, hardware, and
administration. |
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Advertising and Public Relations business. |
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Information services via the Web by subscription:
electronic journals,
newsletters, news, weather, laws and court cases, criminal lists.
Electronic journal subscriptions is good for libraries that can
control access. This makes key word searching much
easier. Browsing is also easier. Caution: the means for
reading electronic copy changes rapidly. If you want a permanent
copy of an article, you should still print it. |
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Internet Service Provider. |
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Web server: Web site hosting, hosting web based services. |
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Online storage services: backup.
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The E-Retailing Market Sector
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Electronic storefront, online catalog. |
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Shopping cart: order collection, stored as cookies on customer
machine. |
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Collect payment and delivery information. |
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Verify existence of funds at customer's bank, notify customer of
approval. |
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Forward order to a fulfillment center for packaging, shipping,
updating inventory. |
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Notify bank of shipping, receive payment from bank electronically. |
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Post shipping information to the Internet for customer tracking. |
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Other
E-Commerce Market Sectors on the Web
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Shopbot [buzz... ]: Shopping robot. Supposedly searches for the
cheapest purchases for goods and services that meet your
specifications. Be skeptical about vendor conflicts of interest
and full disclosure; it is the same problem as with search engines and
some travel agencies. Advertisers pay for being listed first or
early. |
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Finance: online banking, online investing, credit investigation and
reporting |
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Entertainment
and Media: sales and distribution |
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Travel: reservations for travel, hotels, theme parks, concerts,
theaters. |
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Health
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Information that does not require professional advice of a medical
doctor. |
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Directories of medical doctors, dentists. |
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Pharmacy prescription refill order placement. |
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Online Physician's Desk Reference for drug effects and
interaction. |
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Other
Business Services |
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Creating
an Online Store
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Building
a Storefront
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Will you reach the audience you need to reach? |
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Build in-house or contract out? If you expect the business
to grow, negotiate into your contract a provision for transition to
an in-house system that includes transfer of data files developed to support
your business. Ensure that ownership and copyright of the
files belongs to you. See the copyright laws under the heading
"works for hire". |
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E-commerce software, e-commerce server or commerce server |
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Secure server: use for transaction services. |
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Managing
Payments
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Credit card payment system.
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Obtain a merchant's account.
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Between merchant and a bank, allows merchant to accept
credit card payment. |
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Provide a secure order form. (Chapter 12)
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Encryption of transmission. Look for https
in the URL before hitting send. |
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Encrypted data storage. |
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Use payment processing software |
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Electronic money, e-money, digital cash, e-cash
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Basics: (Chapter 12)
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CA: Certificate Authority |
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digital certificate |
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Bank issues an electronic voucher representing a specific
amount of money. |
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The retailer deposits the voucher in a participating
bank. |
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Electronic money is reusable and anonymous. |
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There are no standards yet. |
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Fulfillment Center [buzz...] or Warehousing
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This is particularly important for retail businesses without a
store available for stocking, display, and delivery of goods to
walk-in customers. |
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Managing and storing of inventory |
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packing and shipping |
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transaction status records |
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Fulfillment companies, logistics companies |
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Attracting
and Retaining Customers
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Convenience, efficiency, ease of use |
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8 second limit for page download |
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Minimize number of clicks needed to find a product and place an
order. |
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Provide service after the sale. This is a common source of
customer dissatisfaction. |
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Electronic Customer Relationship Management (eCRM)
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Use automatic email to confirm orders. |
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Display FAQs |
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Send surveys for customer feedback. |
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Use live chat rooms for customer assistance. |
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Allow customers to track shipments. |
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Allow customers to make returns and exchanges conveniently. |
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E-publishing. |
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Site
Management
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Page hit counter for each page.
Track number of hits by time of day, day of week, date. |
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Track customer path through web site through using cookies |
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Promoting
the Site
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Choose a domain name.
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Related to business function |
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Short and easy to remember and type |
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Register the domain name with search engines. Can use a
"submission service". |
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Advertise.
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Banner ads.
Pay for ad based on number of click-throughs. |
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Email and newsgroups.
Spam. Usually, spam generates
negative response. |
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