copyright © 2014 pearson education, inc. 1 the internet and world wide web are extremely well...

Copyright © 2014 Pearson Education, Inc. 1

The Internet and World Wide Web are extremely well suited for conducting

business electronically on a global basis

Chapter 4 - Enabling Business-to-Consumer Electronic Commerce


Before We Begin

• Laptops• Cellphones• Questions about life?• Project 1 is up!

– Due in class Feb 11/12


Agenda

• What eCommerce IS?– It is IS

• Types of eCommerce business models• Changes brought by eCommerce• Long Tail

We’ve talked quite about how we would assess an industry. Now lets talk about how to exploit one.


“There is no physical analog for what Amazon.com is becoming.”

Jeff BezosCofounder and long-time CEO of Amazon.com

Complete the following sentences:1.Amazon.com is ____________________2.In the physical world, Amazon.com is like

_________________________________


Chapter 4 Learning ObjectivesAfter this chapter, you will be able to:

Electronic Commerce Defined• Describe electronic commerce, how it has evolved, and the strategies that companies

are adopting to compete in cyberspace.

Business-to-Consumer E-Commerce and Internet Marketing• Describe the stages of business-to-consumer electronic commerce, understand the keys to

successful electronic commerce applications, and explain the different forms of Internet marketing.

Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC• Describe mobile commerce, consumer-to-consumer electronic commerce, and

consumer-to-business electronic commerce.

Managing Finances and Navigating Legal Issues in EC• Describe how to conduct financial transactions and navigate the legal issues of

electronic commerce.

E-Government• Explain different forms of electronic government.


Electronic Commerce Defined

Electronic Commerce DefinedDescribe electronic commerce, how it has evolved, and the strategies that companies are adopting to compete in cyberspace.

Business-to-Consumer E-Commerce and Internet MarketingDescribe the stages of business-to-consumer electronic commerce, understand the keys to successful electronic commerce applications, and explain the different forms of Internet marketing.

Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.

Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.

E-GovernmentExplain different forms of electronic government.


Electronic Commerce Defined

• Electronic Commerce“the exchange of goods, services, and money among firms, between firms and their customers, and between customers, supported by communication technologies and, in particular, the Internet”


Question

• What are the most common types of E-Commerce? (There are really only two)– B2C – Business to Customer/Consumer– B2B – Business to Business

• There are also pedantic ones like C2C or G2C, these are foolish and don’t matter much


Where is the money…B2B or B2C?

This is where the media isThis is where the big money is

Management Information Systems for the Information Age, Haag and Cummings

97% 3%


Question 2

• Well, the presence of the internet gives rise to some interesting capabilities on the part of firms…

• Such as?– Information Dissemination– Information Integration– Mass Customization– Interactive Communication– Transaction Support– Disintermediation (probably the biggest one)


Information Dissemination


Information Integration


Mass Customization


Interactive Communication


Transaction Support


Disintermediation (This is the big one)


These opportunities give rise to newly possible business strategies

All of this is possible through this new fango thing we call the internet…


The Internet . . . A network of networks

• Computers and other devices capable of communicating– Servers, desktops and laptops– Phones, PDAs and other mobile devices– Xbox 360, Wii– Vending machines, appliances, etc.

• The infrastructure that connects them (fiber optics, copper, modems, routers, microwave, etc.)

• The software tools and protocols that make communication possible

• It is more than the World Wide Web!


21

Web Services

ProductLookup Application

Credit verification application

Stock DB

AccountDB

Shopping Application

BigStore.com

The Gap

GiantBank

“In stock”

confirmatio

n

Credit card confirmationClient

The BigStore.com application can check whether a product is in stock at The Gap, or the verify a customer’s credit card at GiantBank.

BigStore.com doesn’t have to know the technology in use at the Gap or at GiantBank.


Business-to-Consumer E-Commerce and Internet Marketing







Stages of B2C e-Commerce

• Range from passive to active


Three Stages of Evolution

• e-Information– Dissemination of marketing material and product

info• e-Integration

– Dynamic access to customized information• e-Transaction

– Real time access to trading and markets for exchange


This leads naturally to electronic retail

• Benefits?– Product: Unlimited number of products – Place: Virtual Storefronts are unconstrained

geographically– Price: Frictionless pricing (but do they?)

• Drawbacks?– Delivery: Delayed– Direct product Experience: None


The Long Tail

• Recall that in information goods our MC 0• The other benefit is that shelf space becomes

infinite• Before Digitization

– Only Selling the red• After Digitization

– We can offer all of the blue products as well!– The sum of the blue products far exceeds red!


Physical Economy

• Two Primary Limitations– We need to find local audiences

• People need to be nearby to purchase our goods

– We are also constrained by the physics of the world

• The radio spectrum is not infinite• The size of our shelves is not infinite

• People have varying tastes – how can we offer them everything they want


In a Digital World

• Because MC 0 we can offer as much of any good as we want

• We can offer it to anyone with a modem• We can offer as many goods as we want

because our only shelf constraint is physical memory


How to Harness the Long Tail

• Three Rules– Make everything available

• Increase variety to account for varying tastes

– Reduce the price by half and lower it• Incentivize purchase

– Help me find it• Reduce Search Costs


Critical Thinking

• Is there value in the long tail?• The Cello Suites: Johan Sebastian Bach

– More than 200 versions on iTunes– Does this variety actually grow the market?

• Reducing Search Costs…– Does it actually matter if consumers don’t know the

item exists?• Consolidating the market

– If the blockbuster is all people want why go through the effort and spend the money to get everything else?


Time for a Break

• What eCommerce IS?– It is IS

• Types of eCommerce business models• Changes brought by eCommerce• Long Tail


Take 10


Before the break

• What eCommerce IS?• Types of eCommerce business models• Changes brought by eCommerce• Long Tail


Remainder of Class

• Mobile Commerce• Online Auctions• Financial management in the online age• E-Government


Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business EC



Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.



Mobile Commerce (mCommerce)

• In addition to influencing the products firm’s can carry the Internet has influenced consumer access– i.e. exploiting the

“always on” society


Mobile EC - Types

• Location-Based M-Commerce– Services can be offered tailored to a person’s needs based

on their current location• Information on the Go

– Customers can get further information about a product wherever they are, including in the store, but this can lead to “showrooming”

• Product and Content Sales– Consumers use mobile apps to make purchases while on-

the-go• When will these items increase revenue for the firm?


E-Auctions

• It has similarly given rise to the auction economy– Forward– Reverse

• Forward auction– English or Dutch– Highest offer wins

• Reverse auction (traditional bid process for projects)– Buyers post a request for quote (RFQ).– Seller proposes a bid.– Lowest seller bid wins.– This is frequently in B2B e-commerce.

• You will encounter this frequently in your professional life


Managing Finances and Navigating Legal Issues in EC



Mobile Commerce, Consumer-to-Consumer EC, and Consumer-to-Business ECDescribe mobile commerce, consumer-to-consumer electronic commerce, and consumer-to-business electronic commerce.Managing Finances and Navigating Legal Issues in ECDescribe how to conduct financial transactions and navigate the legal issues of electronic commerce.E-GovernmentExplain different forms of electronic government.


E-Banking

• Online Banking– Convenience– Security Concerns– Mobile banking

• Online Investing– Increased access to financial information and

analytical tools– Online investing– Mobile investing


Payment Services

• Online transactions without sharing private information with actual seller

• Payment service keeps information secure.– PayPal (owned by eBay)

• Can send and receive money if you have an e-mail account.

– Google Checkout• Linked with Google search• Users can see if merchants offer this option.

• Conceptually this is funding escrow


Securing Payments in the Digital World

• Credit and Debit Cards– Credit Cards are a simple mechanism– Consumers have to transfer a lot of personal information

to the seller– Difference between the European and American

methods…• Managing Risk

– Businesses are financially liable for fraudulent transactions– Businesses have to look for fraud indicators and

sometimes reject risky transactions – How can firms leverage analytics to assist with this?


Legal Issues in EC

• Digital Rights Management– Preventing unauthorized duplication– Restrict which devices can play media– Limit number of times media can be played

• Taxation– Sales Taxes


Legal Issues in EC—Taxation

The Internet Tax Freedom Act (1998) Moratorium on online commerce taxation

Internet Tax Nondiscrimination Act (2004) Replication of the ITFA

Internet sales treated as mail-order salesNo sales taxes paid in states where the company has

no presenceCritical thinking: is this a progressive or regressive tax?


E-Government







E-Government

• Government-to-Citizens– e-Filing of taxes– Licensure

• Government-to-Business– Taxation– Procurement– Contracting

• Government-to-Government– Law enforcement– Information Sharing– Health informatics


Critical Thinking: Amazon and Alibaba

• Amazon and Alibaba are online retail stores based in Seattle, WA and Hangzhou, China providing B2C, C2C, and B2B sales of goods via their respective web portals

• In 2014 they were valued at $157.52B and $168.0B respectively.• Consider the relative market position of each firm and their

relative dominance in their focal markets. Why might Alibaba be at an advantage? Why might Amazon be at an advantage?


Recap

• What eCommerce IS?• Types of eCommerce business models• Changes brought by eCommerce• Long Tail• Mobile Commerce• Online Auctions• Financial management in the online age• E-Government


Administrivia

• Project 1– Due in class Feb 11/12

copyright © 2014 pearson education, inc. 1 the internet and world wide web are extremely well...

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