Chapter 5 and Module BChapter 5 and Module B

ELECTRONIC COMMERCE: ELECTRONIC COMMERCE: Strategies For The New Strategies For The New

Economy Economy &&

THE WORLD WIDE WEB AND THE WORLD WIDE WEB AND THE INTERNETTHE INTERNET

WWW and the InternetWWW and the Internet

World Wide WebWorld Wide Web InternetInternet Web siteWeb site Web pageWeb page URL (uniform resource locator)URL (uniform resource locator) Top-level domainTop-level domain

Understanding AddressesUnderstanding Addresses

Consider Consider www.uts.edu.au (University of (University of Technology in Sydney)Technology in Sydney) http:// - starts most addresses but may be http:// - starts most addresses but may be

left offleft off www – World Wide Webwww – World Wide Web uts – the organizationuts – the organization edu – edu – top-level domaintop-level domain (organization type) (organization type) au – country location (if none, then current au – country location (if none, then current

country) country)

Top-Level DomainsTop-Level Domains com – commercial or com – commercial or

for-profit businessfor-profit business coop – cooperativecoop – cooperative edu – educational edu – educational

institutioninstitution gov – U.S. gov – U.S.

government agencygovernment agency mil – U.S. military mil – U.S. military

organizationorganization net – Internet net – Internet

administrative administrative organizationorganization

int – International int – International treaties organizationtreaties organization

info – general info – general informationinformation

biz – businessbiz – business museum – accredited museum – accredited

museummuseum name – personalname – personal pro – Accountant, pro – Accountant,

doctor, lawyer, etc.doctor, lawyer, etc. Many moreMany more

Note: Can also use specialized TLDs like .nba – requires a fee of $185,000

WEB 2.0WEB 2.0 Web 2.0 (Live Web)Web 2.0 (Live Web) – second generation of the – second generation of the

Web; focuses on online collaboration, users as Web; focuses on online collaboration, users as both creators and modifiers of content, dynamic both creators and modifiers of content, dynamic and customized information feeds, etc.and customized information feeds, etc. WikisWikis Social networking sitesSocial networking sites BlogsBlogs RSS feedsRSS feeds PodcastingPodcasting Many othersMany others

The Internet BackboneThe Internet Backbone Internet backbone Internet backbone -- -- major set of computer major set of computer

connections on Internetconnections on Internet Network access point (NAP)Network access point (NAP) Network service provider (NSP)Network service provider (NSP) Internet service provider (ISP)Internet service provider (ISP)

Internet ServersInternet Servers Internet server Internet server

computercomputer – – provides information provides information and services on the and services on the InternetInternet

Web serverWeb server – – provides information provides information and services on the and services on the WebWeb

Mail serverMail server – – provides e-mail provides e-mail services services

ftp (file transfer ftp (file transfer protocol) serverprotocol) server – – maintains files you maintains files you downloaddownload

IRC (Internet Relay IRC (Internet Relay Chat) serverChat) server – – supports discussion supports discussion groups and chat groups and chat rooms rooms

Communications ProtocolsCommunications Protocols

Information moves on the Internet Information moves on the Internet according to communications protocolsaccording to communications protocols

Communications protocol (protocol)Communications protocol (protocol) set of rules that every computer follows to set of rules that every computer follows to

transfer informationtransfer information Most widely usedMost widely used

TCP/IP (transport control protocol / Internet TCP/IP (transport control protocol / Internet protocol)protocol)

http (hypertext transfer protocol)http (hypertext transfer protocol) ftp (file transfer protocol)ftp (file transfer protocol)

Telecommunications Telecommunications HardwareHardware

To access and use the Web, you also To access and use the Web, you also need hardwareneed hardware

Mainly, some sort of modemMainly, some sort of modem TelephoneTelephone DSLDSL CableCable SatelliteSatellite

Opening Case: Opening Case: Advertising $$ go where the Advertising $$ go where the

Eyes areEyes are

The InternetThe Internet Adults spend 29% of their time thereAdults spend 29% of their time there Advertisers spend only 8% of $$ thereAdvertisers spend only 8% of $$ there

NewspaperNewspaper Adults spend only 8% of their time Adults spend only 8% of their time

therethere Advertisers spend 20% of $$ thereAdvertisers spend 20% of $$ there

Opening Case: Opening Case: Advertising $$ go where the Advertising $$ go where the

Eyes areEyes are

Electronic CommerceElectronic Commerce E-commerce is changing everythingE-commerce is changing everything

Electronic commerce (e-commerce)Electronic commerce (e-commerce)

Electronic business (e-business)Electronic business (e-business)

Mobile commerce (m-commerce)Mobile commerce (m-commerce)

Types of BusinessesTypes of Businesses

Brick-and-MortarBrick-and-Mortar

Click-and-Mortar (or Bricks-and-Click-and-Mortar (or Bricks-and-Clicks)Clicks)

Dot-Coms (or Pure Plays)Dot-Coms (or Pure Plays)

E-COMMERCE BUSINESS E-COMMERCE BUSINESS MODELSMODELS

B2B E-CommerceB2B E-Commerce

Business to Business e-commerceBusiness to Business e-commerce Where all the e-commerce money isWhere all the e-commerce money is Basically, it’s about businesses doing Basically, it’s about businesses doing

business with other businessesbusiness with other businesses Supply chain management (from Chapter Supply chain management (from Chapter

2) is a big part of B2B e-commerce2) is a big part of B2B e-commerce

B2C E-CommerceB2C E-Commerce

Business to Consumer e-commerce Business to Consumer e-commerce Business sells product/service to consumerBusiness sells product/service to consumer B2C is the glitzy e-commerce like iTunes, B2C is the glitzy e-commerce like iTunes,

eBay, etc.eBay, etc.

C2B E-CommerceC2B E-Commerce

Consumer to Business e-commerce Consumer to Business e-commerce True economic inversion of the B2C modelTrue economic inversion of the B2C model Fotolia is a good example (Fotolia is a good example (www.fotolia.com))

There you can post photos and videos and businesses There you can post photos and videos and businesses will pay you a royalty to use them (if they like what will pay you a royalty to use them (if they like what you offer)you offer)

You can also advertise businesses on your You can also advertise businesses on your personal Web site (called an personal Web site (called an affiliate programaffiliate program) ) and receive monies for visitors who jump from and receive monies for visitors who jump from your site to the business’ Web sitesyour site to the business’ Web sites

C2C E-CommerceC2C E-Commerce

Consumer to Consumer e-Consumer to Consumer e-commercecommerce You selling to another person (or the You selling to another person (or the

reverse)reverse) Usually occurs through an intermediary Usually occurs through an intermediary

such as eBaysuch as eBay

Government E-CommerceGovernment E-Commerce

Business to Government (B2G) e-commerceBusiness to Government (B2G) e-commerce Lockheed providing products and services to DoDLockheed providing products and services to DoD Fairly large e-commerce model in terms of revenueFairly large e-commerce model in terms of revenue Most U.S. government entities (for sure at the federal Most U.S. government entities (for sure at the federal

level) won’t do business with your business if you can’t do level) won’t do business with your business if you can’t do it electronicallyit electronically

Consumer to Government (C2G)e-commerceConsumer to Government (C2G)e-commerce You selling something to the governmentYou selling something to the government This market is quite smallThis market is quite small Most times, “you” must register as a business before Most times, “you” must register as a business before

selling something to the government, which would then selling something to the government, which would then become B2G e-commercebecome B2G e-commerce

Government E-CommerceGovernment E-Commerce Government to Business (G2B) e-commerceGovernment to Business (G2B) e-commerce

SBA providing surety guarantees, disaster assistance, etc to SBA providing surety guarantees, disaster assistance, etc to small businessessmall businesses

TSA holding auctions and selling off confiscated items (most TSA holding auctions and selling off confiscated items (most times, you must be a “business” to participate in these auctions)times, you must be a “business” to participate in these auctions)

U.S. Geological Survey (DOI) selling detailed survey data to U.S. Geological Survey (DOI) selling detailed survey data to businessesbusinesses

Government to Consumer (G2C) e-commerceGovernment to Consumer (G2C) e-commerce Does not fit well at all within the traditional supply-and-demand Does not fit well at all within the traditional supply-and-demand

e-commerce notione-commerce notion Paying taxes, registering vehicles, etcPaying taxes, registering vehicles, etc

Government to Government (G2G) e-commerceGovernment to Government (G2G) e-commerce Mainly about information sharing, not commerceMainly about information sharing, not commerce

E-COMMERCE RULES TO E-COMMERCE RULES TO LIVE BYLIVE BY

1.1. Understand your business, Understand your business, products, services, and customersproducts, services, and customers

2.2. Find customers and establish Find customers and establish relationshipsrelationships

3.3. Move money easily and securelyMove money easily and securely

1. UNDERSTAND YOUR BUSINESS, 1. UNDERSTAND YOUR BUSINESS, PRODUCTS, SERVICES, & PRODUCTS, SERVICES, &

CUSTOMERSCUSTOMERS To be successful, you must…To be successful, you must…

Define your products and servicesDefine your products and services Define your target customersDefine your target customers

B2B (other businesses)B2B (other businesses) B2C (individuals)B2C (individuals)

Define your customers perception of the Define your customers perception of the value of your products and servicesvalue of your products and services

Who Are Your Customers?Who Are Your Customers?

Business to BusinessBusiness to Business Other businessesOther businesses

Business to ConsumerBusiness to Consumer IndividualsIndividuals

Each is different and has different Each is different and has different needs and wantsneeds and wants

B2C: B2C: Convenience Convenience

Versus SpecialtyVersus Specialty ConvenienceConvenience

Lower pricedLower priced Purchased frequentlyPurchased frequently Example: common Example: common

food itemsfood items SpecialtySpecialty

Higher pricedHigher priced Purchased less Purchased less

frequentlyfrequently Example: Stereos, Example: Stereos,

computerscomputers

CommoditylikeCommoditylike Same no matter where Same no matter where

you purchase ityou purchase it Examples: books, Examples: books,

music, moviesmusic, movies Price and ease of Price and ease of

ordering are importantordering are important DigitalDigital

Purchased and Purchased and delivered over the delivered over the InternetInternet

Best product type for Best product type for B2C e-commerceB2C e-commerce

Examples: Music, Examples: Music, softwaresoftware

B2C: B2C: Commoditylike Commoditylike

and Digitaland Digital

B2C: Mass CustomizationB2C: Mass Customization

Mass customizationMass customization the ability of an organization to give its the ability of an organization to give its

customers the opportunity to tailor its customers the opportunity to tailor its products or servicesproducts or services Dell – customized computer purchasesDell – customized computer purchases Apple iTunes – only the music you want (not Apple iTunes – only the music you want (not

necessarily the whole album) necessarily the whole album)

B2B: MRO Versus DirectB2B: MRO Versus Direct

Maintenance, repair, and Maintenance, repair, and operations (MRO) materials operations (MRO) materials (indirect materials)(indirect materials) materials necessary for running a materials necessary for running a

company but do not relate to the company but do not relate to the company’s primary business activitiescompany’s primary business activities

Similar to convenience items in B2CSimilar to convenience items in B2C Office supplies, repair parts, lubricating Office supplies, repair parts, lubricating

oilsoils

B2B: Horizontal Versus B2B: Horizontal Versus VerticalVertical

B2B e-commerce takes advantage of e-B2B e-commerce takes advantage of e-marketplacesmarketplaces

Electronic marketplaceElectronic marketplace (e-marketplace)(e-marketplace) interactive business providing a central market interactive business providing a central market

where multiple buyers and sellers can engage in where multiple buyers and sellers can engage in e-commercee-commerce

Horizontal e-marketplacesHorizontal e-marketplaces Vertical e-marketplacesVertical e-marketplaces

E-MarketplacesE-Marketplaces

2. FIND CUSTOMERS AND 2. FIND CUSTOMERS AND ESTABLISH RELATIONSHIPSESTABLISH RELATIONSHIPS

You must first find customersYou must first find customers Then establish relationshipsThen establish relationships Otherwise, you can’t make a saleOtherwise, you can’t make a sale B2C and B2B techniques are very B2C and B2B techniques are very

differentdifferent

B2C Marketing Mix ToolsB2C Marketing Mix Tools

Registering with search enginesRegistering with search enginesOnline adsOnline adsViral marketingViral marketingAffiliate programsAffiliate programs

Registering with Search Registering with Search EnginesEngines

Some search engines will list your site Some search engines will list your site for freefor free

Others charge a feeOthers charge a fee For an additional fee, your site can For an additional fee, your site can

appear at top of a search list (every appear at top of a search list (every time)time)

Online AdsOnline Ads

Online ads (banner ads)Online ads (banner ads) small advertisements that appear on other sitessmall advertisements that appear on other sites Pop-up adPop-up ad – small Web page advertisement that – small Web page advertisement that

appears on your screen outside the current Web appears on your screen outside the current Web sitesite

Pop-under adPop-under ad – pop-up ad you do not see – pop-up ad you do not see until you close your current browser until you close your current browser windowwindow

Viral MarketingViral Marketing

Viral marketingViral marketing Encourages users to encourage friends to Encourages users to encourage friends to

join injoin in Example: Blue Mountain Arts (Example: Blue Mountain Arts (www.bluemountain.com))

Send a cardSend a card Card has link so the other person can send Card has link so the other person can send

you a card backyou a card back

Affiliate ProgramsAffiliate Programs

Affiliate programAffiliate program Directs users from one site to anotherDirects users from one site to another If viewers buy at the second site, the If viewers buy at the second site, the

second site pays a small fee to the first second site pays a small fee to the first sitesite

Usually a percentage of the saleUsually a percentage of the sale Click-throughClick-through Conversion rateConversion rate

B2B MarketingB2B Marketing Much more personalMuch more personal Not usually done with generic ads Not usually done with generic ads

designed for mass distributiondesigned for mass distribution Often take place in e-marketplacesOften take place in e-marketplaces Once a contact is made, the Once a contact is made, the

relationship must be established; this relationship must be established; this often requires face-to-face meetingsoften requires face-to-face meetings

Must also integrate the IT systems to Must also integrate the IT systems to the supplier business and customer the supplier business and customer businessbusiness

3. MOVE MONEY EASILY 3. MOVE MONEY EASILY AND SECURELYAND SECURELY

In e-commerce, most money In e-commerce, most money moves electronicallymoves electronically

Security becomes very importantSecurity becomes very important

B2C Payment SystemsB2C Payment Systems

Credit cardsCredit cards Financial cybermediariesFinancial cybermediaries Electronic checksElectronic checks Electronic Bill Presentment and Electronic Bill Presentment and

PaymentPayment Smart cardsSmart cards

B2B Payment SystemsB2B Payment Systems

Business customers…Business customers… Make large purchasesMake large purchases Will not pay with credit card or Will not pay with credit card or

financial cybermediaryfinancial cybermediary Use Use Financial EDIFinancial EDI Pay for many purchases at once Pay for many purchases at once

(perhaps the end of the month)(perhaps the end of the month)

Security: The Pervading Security: The Pervading ConcernConcern

Security is very important when Security is very important when moving moneymoving money

Some security measures…Some security measures… EncryptionEncryption Secure Sockets LayersSecure Sockets Layers Secure Electronic TransactionsSecure Electronic Transactions Many, many othersMany, many others

E-BUSINESS TRENDSE-BUSINESS TRENDS ““E” is certainly changing many thingsE” is certainly changing many things Many trends in every part of your lifeMany trends in every part of your life

1.1. CrowdsourcingCrowdsourcing when businesses provide enabling technologies when businesses provide enabling technologies

that allow people to create, modify, and oversee that allow people to create, modify, and oversee the development of a product or service.the development of a product or service.

2.2. Virtual GoodsVirtual Goods nonphysical objectnonphysical object

3.3. M-commerceM-commerce electronic commerce transactions conducted electronic commerce transactions conducted

over a wireless device such as a smartphone, over a wireless device such as a smartphone, laptop, or tablet PC.laptop, or tablet PC.