chapter 4-5-6 - ecommerce - m- commerece

7/27/2019 Chapter 4-5-6 - ECommerce - M- CommerEce

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Chapter 5 1

Chapter5

Information Technology For Management 6th EditionTurban, Leidner, McLean, Wetherbe

Lecture Slides by L. Beaubien, Providence College

John Wiley & Sons, Inc.

E-Business and E-

Commerce


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Chapter 5 2

Learning Objectives

Describe electronic commerce, its scope, benefits,limitations, and types

Understand auctions and bartering

Describe the major applications of business-to-consumercommerce, including service industries, and major issuesfaced by e-tailers

Describe business-to-business applications

Describe emerging EC applications such as intrabusiness

and B2E commerce


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Chapter 5 3

Learning Objectives (Continued)

Describe e-government activities and consumer-to-consumere-commerce

Describe the e-commerce support services, specificallypayments and logistics

Discuss the importance and activities of online advertising

Discuss some ethical and legal EC issues

Describe EC failures and strategies for success


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9-4

Identify the major categories and trends ofe-commerce applications

Identify the essential processes of an

e-commerce system, and give examples ofhow they are implemented in e-commerce

applications

Identify and give examples of several key factorsand Web store requirements need to succeed in

e-commerce

Learning Objectives


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9-5

Learning Objectives

Identify and explain the business value of severaltypes of e-commerce marketplaces

Discuss the benefits and trade-offs of several

e-commerce clicks and bricks alternatives


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Chapter 5 6

The Structure of E-Commerce


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Introduction to e-Commerce

Electronic commerce encompasses the entireonline process of

Developing

Marketing

Selling

Delivering

Servicing

Paying for products and services

It relies on the Internet and other information

technologies to support every step of the process


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9-9

E-Commerce Technologies


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Categories of e-Commerce

Business-to-Consumer

Virtual storefronts, multimedia catalogs, interactive order processing, electronic

payment, online customer support e.g beliscity

Business-to-Business

Electronic business marketplaces, direct links between businesses, auctions and

exchanges

Intell mircroproceser to Dell Consumer-to-Consumer

Online auctions, posting to newspaper sites, personal websites, e-commerce portals

Ebay, olx

Consmer to business (C2B)

Elance freelance website


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Essential e-Commerce Architecture


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Access Control and Security

E-commerce processes must establish mutualtrust and secure access between parties

User names and passwords

Encryption key transformation of plain text into

ciphertext.

Digital certificates and signatures

Restricted access areas

Other peoples accounts

Restricted company data

Webmaster administration areas


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Profiling and Personalizing

Profiling gathers data on you and your websitebehavior and choices

User registration

Cookie files and tracking software

User feedback

Profiling is used for

Personalized (one-to-one) marketing

Authenticating identity Customer relationship management

Marketing planning

Website management


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Search Management

Search processes help customers find thespecific product or service they want

E-commerce software packages often include

a website search engine

A customized search engine may be acquired

from companies like Google or Requisite

Technology

Searches are often on content or by parameters


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Content and Catalog Management

Content Management Software Helps develop, generate, deliver, update, and

archive text and multimedia information at

e-commerce websites

Catalog Management Software

Helps generate and manage catalog content

Catalog and content management software works

with profiling tools to personalize content

Includes product configuration and

mass customization


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Example of Workflow Management


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Event Notification

Most e-commerce applications are event driven Responds to such things as customers first

website visit and payments

Monitors all e-commerce processes

Records all relevant events, including problem

situations

Notifies all involved stakeholders

Works in conjunction with user-profiling

software


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Electronic Payment Processes

Complex processes Near-anonymous and electronic nature

of transactions

Many security issues

Wide variety of debit and credit alternatives

Financial institutions may be part of the process


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Electronic Payment Processes

Web Payment Processes Shopping cart process

Credit card payment process

Debit and other more complex processes

Electronic Funds Transfer (EFT)

Major payment system in banking, retail

Variety of information technologies capture

and process money and credit card transfers

Most point-of-sale terminals in retail stores

are networked to bank EFT systems


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Electronic Payment Example


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Securing Electronic Payments

Network sniffers easily recognize credit cardformats Encrypt data between customer and merchant

Encrypt data between customer and financial

institution Take sensitive information off-line


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Components of EC (Continued)

Chapter 5 24

To execute these applications, companies need the rightinformation, infrastructure, and support services. Asshown:

People: Sellers, buyers, intermediaries, information systems

specialists and other employees, and any other participants Publ ic pol icy: Legal and other policy and regulating issues, such as

privacy protection and taxation

Market ing and advert isin g: Like any other business, EC usually

requires the support of marketing and advertising

Suppo rt services: Many services are needed to support EC. Theyrange from payments to order delivery and content creation

Business partnerships: Joint ventures, e-marketplaces, and

partnerships are some frequently occurring relationships in e-

business


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Auctions

Chapter 5 25

The major mechanism for buying and selling on theInternet is the electronic catalog. Common mechanisms

used in its implementation: electronic auctions

Electronic Auctions (e-Auctions): A market mechanism bywhich sellers place offers and buyers make sequential bids

Forward auctions are auctions where sellers place items at

sites for auction and buyers bid continuously for the items.

Reverse auctions, have one buyer, usually an organization,that wants to buy a product or a service. Suppliers are invited

to submit bids.

Auctions are used in B2C, B2B, C2B, e-government, andC2C commerce


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Developing a Web Store

Build a website Choose or set up web hosting

Use simple design tools and templates

Include a shopping cart and payment support

Market the website

Include Web page and e-mail advertising

and promotions

Exchange advertising with other Web stores

Register with search engines and directories

Sign up for affiliate programs


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Serving Your Customers

Convert visitors into loyal customers Develop one-to-one relationship with customers

Create incentives to encourage registration

Use Web cookies to identify visitors

Use tracking services to record and analyze

website behavior and customer preferences

Create an attractive, friendly, efficient store

Offer fast order processing and payment

Notify when orders are processed and shipped

Provide links to related websites


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Managing a Web Store

Manage both the business and the website Record and analyze traffic, inventory, sales

Use CRM features to help retain customers

Link sales, inventory data to accounting systems

Operate 24 hours a day, seven day a week

Protect transactions and customer records

Use security monitors and firewalls Use redundant systems and power sources

Employ passwords and encryption

Offer 24-hour tech support

Seven Design Elements


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gof Customer Interface

Context Functional look and feel How it is presented

Content What is presented

Community

Consumers and firm Consumers to consumers Chat room and message board

Customization Ability to modify itself

Communication Dialog between website and its users

Connection Links between the site and other sites

Commerce Transactional capacity


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Individualizing a Website:

Customization

Commonly used customization features:

E-mail accounts: Users can send and receive e-mail from the site, using afree, unique e-mail address

Content and layout configuration: Users can design their own homepage,

within limits, by choosing background colors, layout design, and contentsources

Storage: Users can store e-mail, URLs, favorite content, or items they want tobuy

Agents: Computer programs can perform simple tasks upon request, such asnotifying a user via e-mail when a product is in stock

Personalization by User Example


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Personalization by User ExampleMyLook.com


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Personalization by User Example mylook.com


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Tailoring by Site Example

Tailoring Example Amazon Homepage


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Tailoring ExampleAmazon Homepage

for Two Users

Amazon com Homepage for Two


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Amazon.com Homepage for Two

Different Customers


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Keeping in Touch with Users:


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Keeping in Touch with Users:

Communication

Communication Archetypes

One-to-Many, Non-Responding User: Site messages areannouncements that users receive without needing to respond

One-to-Many, Responding User: Site messages are invitations tousers to submit their comments and responses

One-to-One, Non-Responding User: User receives personalized

messages to address specific interests or needs without a need to respond

One-to-One, Responding User: User responds to personalizedmessages sent by the site


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9-39

B2B E-Commerce

B2B is the wholesale and supply side ofthe commercial process Businesses buy, sell, or trade with other

businesses

Relies on multiple electronic informationtechnologies Catalog systems

Trading systems Data interchange

Electronic funds transfers


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9-40

E-Commerce Portals

B2B e-commerce portals offer multiplemarketplaces Catalogs

Exchanges

Auctions

Often developed and hosted by third-party

market-maker companies

Infomediaries serve as intermediaries ine-business and e-commerce transactions


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Market Research for EC

market segmentation

The process of dividing a consumer market into logical

groups for conducting marketing research, advertising, andsales

Segmentation is done with the aid of tools such

as data modeling and data warehousing


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Electronic Commerce


Tracking Customer Movements

transaction log

A record of user activities at a companys Web

site

clickstream behavior

Customer movements on the Internet


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Web bugsTiny graphics files embedded on e-mail messages

and in Web sites that transmit information aboutthe users and their movements to a Web server

spyware

Software that gathers user information over anInternet connection without the users knowledge


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Limitations of Online Market Research Too much data may be available To use data properly, it should be organized, edited, condensed,

and summarized The solution to this problem is to automate the process by using

data warehousing and data mining Some of the limitations of online research methods are:

Accuracy of responses Loss of respondents because of equipment problems

The ethics and legality of Web tracking Lack of representativeness in samples of online users


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Electronic Commerce

Web Advertising

Some Internet Advertising Terminologyad viewsThe number of times users call up a page that has a banner on it

during a specific time period; known as impressions orpage views

Button

Page

click (click-through or ad click)A count made each time a visitor clicks on an advertising banner to

access the advertiser s Web site


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Web Advertising

CPM (cost per thousand impressions)The fee an advertiser pays for each 1,000 times a

page with a banner ad is shown

conversion rateThe percentage of visitors who actually make a

purchase

click-through rate (or ratio)The percentage of visitors that are exposed to a

banner ad and click on it


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Web Advertising

click-through ratioThe ratio between the number of clicks on a banner ad and

the number of times it is seen by viewers; measures the

success of a banner in attracting visitors to click on the ad

hitA request for data from a Web page or file

visit

A series of requests during one navigation of a Web site; apause of a certain length of time ends a visit


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Electronic Commerce

Web Advertising

unique visit

A count of the number of visitors to a site,

regardless of how many pages are viewed per visit

stickiness

Characteristic that influences the average length

of time a visitor stays in a site


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Electronic Commerce

Web Advertising

Why Internet Advertising? Television viewers are migrating to the Internet Advertisers are limited in the amount of

information they can gather about the televisionand print ads Other reasons why Web advertising is growing

rapidly: Cost Richness of format Personalization Timeliness Location-basis Digital branding

Ad i i M h d


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Electronic Commerce

Advertising Methods

Bannersbanner

On a Web page, a graphic advertising display linked to theadvertisers Web page

keyword banners

Banner ads that appear when a predetermined word is

queried from a search enginerandom banners

Banner ads that appear at random, not as the result of the

users action

Ad ti i M th d


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Advertising Methods

Benefits of Banner Ads By clicking on them users are transferred to an

advertisers site, and frequently directly to theshopping page of that site

The ability to customize them for individual

surfers or a market segment of surfers

Viewing of banners is fairly high because forcedadvertising is used

Banners may include attention-grabbing

multimedia

Ad ti i M th d


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Electronic Commerce

Advertising Methods

Limitations of Banner Ads Cost

A limited amount of information can be placed onthe banner

Viewers have become somewhat immune to

banners and simply do not notice them as they

once did

Ad ti i M th d


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Electronic Commerce

Advertising Methods

banner swapping

An agreement between two companies to eachdisplay the others banner ad on its Web site

Ad ti i M th d


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Electronic Commerce

Advertising Methods

pop-up ad

An ad that appears in a separate window before,during, or after Internet surfing or when reading e-mail

pop-under adAn ad that appears underneath the current browserwindow, so when the user closes the activewindow, he or she sees the ad

interstitialAn initial Web page or a portion of it that is usedto capture the users attention for a short timewhile other content is loading

Ad ti i M th d


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Advertising Methods

E-Mail Advertising E-Mail Advertising ManagementFour

guidelines that marketers should consider to

leverage customer insights throughout the e-mailmarketing campaign lifecycle:

1. Thinking about customer experience;2. Making privacy protection a part of their brand

promise;3. Ensuring their recipients know about their privacyprotection; and

4. Measuring impact.

Advertising Strategies


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Electronic Commerce

d e s g S a eg es

and Promotions Online

affiliate marketingA marketing arrangement by which an organizationrefers consumers to the selling companys Web site

viral marketingWord-of-mouth marketing by which customers promotea product or service by telling others about it

S i l Ad ti i T i


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Electronic CommercePrentice Hall 2006

57

Special Advertising Topics

Permission Advertising

spamming

Using e-mail to send unwanted ads (sometimesfloods of ads)

permission advertising (permission marketing)

Advertising (marketing) strategy in whichcustomers agree to accept advertising and

marketing materials

E C St t Ch kli t


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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?


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Chapter 559

Managerial Issues

Managing resistance to change. Electronic commerce can result in afundamental change in how business is done. Resistance to change from

employees, vendors, and customers may develop. Education, training,

and publicity over an extended time period offer possible solutions to the

problem.

Integration of e-commerce into the business environment. E-

commerce needs to be integrated with the rest of the business. Integration

issues involve planning, competition for corporate resources with other

projects, and interfacing EC with databases, existing IT applications, and

infrastructure.

Lack of qualified personnel and outsourcing. Very few people have

expertise in e-commerce. There are many implementation issues thatrequire expertise, such as when to offer special promotions on the Internet,

how to integrate an e-market with the information systems of buyers and

sellers, and what kind of customer incentives are appropriate under what

circumstances. For this reason, it may be worthwhile to outsource some e-

commerce activities.


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Chapter 560

Managerial Issues (Continued)

Alliances. It is not a bad idea to join an alliance or consortium ofcompanies to explore e-commerce. Alliances can be created at any time.

Some EC companies (e.g., Amazon.com) have thousands of alliances.

The problem is which alliance to join, or what kind of alliance to form and

with whom.

Implementation plan. Because of the complexity and multifaceted nature

of EC, it makes sense to prepare an implementation plan. Such a plan

should include goals, budgets, timetables, and contingency plans. It

should address the many legal, financial, technological, organizational,

and ethical issues that can surface during implementation.

Choosing the companys strategy toward e-commerce. Generally

speaking there are three major options: (1) Lead: Conduct large-scaleinnovative e-commerce activities. (2) Watch and wait: Do nothing, but

carefully watch what is going on in the field in order to determine when EC

is mature enough to enter it. (3) Experiment: Start some e-commerce

experimental projects (learn by doing).


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Chapter 561

Managerial Issues (Continued)

Privacy. In electronic payment systems, it may be necessary to protect

the identity of buyers. Other privacy issues may involve tracking of

Internet user activities by intelligent agents and cookies, and in-house

monitoring of employees Web activities.

Justifying e-commerce by conducting a cost-benefit analysis is verydifficult. Many intangible benefits and lack of experience may produce

grossly inaccurate estimates of costs and benefits. Nevertheless, a

feasibility study must be done, and estimates of costs and benefits must

be made.

Order fulfillment. Taking orders in EC may be easier than fulfilling them.

Managing the impacts. The impacts of e-commerce on organizational

structure, people, marketing procedures, and profitability may be dramatic.

Therefore, establishing a committee or organizational unit to develop

strategy and to manage e-commerce is necessary.


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Chapter 5

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