e-commercemays m. khawaldeh1 business processes and relationships networks and infrastructure...

E-Commerce Mays M. Khawaldeh 1

Business Processes and Relationships

Networks and Infrastructure

TRANSACTION

Payment

Procurement

ShippingWeb Design

Order Processing

Inventory Management

Sales and Support

Marketing and Advertising

Market Intelligence

and Planning

Loyal andSatisfied

Customers

Business and Employment

E-Commerce


What is E-Commerce ? The process of distributing, buying, selling, marketing, and servicing of products or

services over electronic systems such as the Internet and other computer networks.

Both financial and informational electronically mediated transactions between an organization and any third-party it deals with (Chaffey, 2002).

Electronic commerce typically involves people using a worldwide network of computers – the Internet – to conduct business. This network can be accessed using devices such as computers, handheld (wireless) devices and mobile phones

Subdivided into three categories: business to business or B2B (Cisco), business to consumer or B2C (Amazon), consumer to consumer or C2C (eBay).


E-Commerce Emerging In the early 1970's e-commerce emerged with the birth of two technologies: Electronic

Data Interchange and Electronic Funds Transfer. These technologies allowed

companies to exchange commercial documents electronically.

In the 1980's the introduction of technologies such as credit cards, automatic teller

machines (ATMs), and telephone banking spread e-commerce to new levels. When

the internet was made public by the United States military, e-commerce reached

unprecedented heights.

Advertisements on websites began to pop up, and by 1995, it was ordinary for a

company to gain a significant amount of revenue from internet advertisements.

Today, e-commerce is an unavoidable part of our lives. Companies like Amazon and

Ebay that have revenues of more than ten billion dollars annually have more than a

million customers every year. The amount of sales generated by such websites

according to Forrester Research is 12.2 billion dollars.


Business Transaction Models

Business-to-consumer (B2C) Commercial transactions are between an organization and

consumers Business-to-business (B2B)

Commercial transactions are between an organization and other organizations

Consumer-to-consumer (C2C) Informational or financial transactions are between

consumers, but usually mediated through a business site Consumer-to-business (C2B)

Consumers approach the business with an offer


Strategic Directions Through The Internet 1. Market penetration.

The Internet can be used to sell more existing products into existing markets. This can be achieved by using the power of the Internet for advertising products to increase awareness of products and the profile of a company amongst potential customers in an existing market.

2. Market development. the Internet is used to sell into new markets, taking advantage of the low cost

of advertising internationally without the necessity for a supporting sales infrastructure in the customers’ country.

3. Product development. New products or services are developed which can be delivered by the

Internet. These are typically information products such as market reports which can be purchased using electronic commerce. This is innovative use of the Internet.

4. Diversification. In this sector, new products are developed which are sold into new markets.


Opportunities for using the Internet, extranets and intranets to supportmarketing functions

Level of managementInternetIntranet and extranet

StrategicEnvironmental scanningCompetitor analysisMarket analysisCustomer analysisSupply chain managementStrategic decision making

Internal data analysisManagement informationMarketing informationDatabaseOperations efficiencyBusiness planningMonitoring and controlSimulationsBusiness intelligence (data

warehouses)

Tactical and operationalAdvertising/promotionsDirect marketingPublic relationsDistribution/logisticsWorkgroupsMarketing researchPublishing

Electronic mailData warehousingRelationship marketingConferencingTrainingTechnology informationProduct/service informationCustomer serviceInternet tradingSponsorship


Internet Usefulness on Marketing Smith and Chaffey (2001) note that Internet technology can be used

to support these aims as follows: Identifying –the Internet be used for marketing research to find out customers

needs and wants

Anticipating – the Internet provides an additional channel by which customers can

access information and make purchases.

Satisfying – a key success factor in e-marketing is achieving customer satisfaction

through the electronic channel.

E-commerce Market

(E-Market)

BuyerSeller


Business Innovation and the Internet


Reasons for connecting to the Internet by business size (Sensis, May

2004)


Essential applications for the Internet (Sensis, May 2004)


Teleshopping

Teleshopping occurs when a customer telephones a

free toll number and orders a product.

To buy consumer products over the Internet or by

way of television using a telephone connection or an

interactive cable.

BBC World Service http://www.bbc.co.uk/worldservice/learningenglish/radio/specials/1412_weekender/ram_files/t

eleshopping.ram


Online Shopping

the use of the Internet and related digital technologies to achieve marketing

objectives and support the modern marketing concept. These technologies

include the Internet media and other digital media such as wireless mobile

media, cable and satellite.

Internet marketing:

The application of the Internet and related digital technologies in conjunction with

traditional communications to achieve marketing objectives.


Online Shopping

Internet marketing is the use of the internet to advertise and sell

goods and services.

Forms of online marketing include banner advertising, pay per

click advertising, email marketing, blog marketing, search engine

marketing, affiliate marketing, and interactive advertising.

Although online marketing allows companies to provide

consumers with a profuse amount of online ads, excessive

internet marketing has resulted in adverse effects such as

spamming and annoying pop ups that don't seem to go away.


Data Mining

Data mining (also known as Knowledge-Discovery in Databases, KDD) is the process of systematically searching large volumes of data. Data mining has evolved enormously in recent years with the surge in computer science. Data mining relates to the topic of e-commerce because consumers often search, or 'data mine,' for useful data that could help in their search for the product they are looking for. Today, data mining for product information is most commonly done on the internet using search engines like Google and Yahoo.


Foundation of Data Mining

Massive data collection Powerful multiprocessor computers Data mining algorithms


Steps in the Evolution of Data Mining Evolutionary StepBusiness QuestionEnabling TechnologiesProduct ProvidersCharacteristics

Data Collection (1960s)

"What was my total revenue in the last five years?"

Computers, tapes, disksIBM, CDCRetrospective, static data delivery

Data Access (1980s)

"What were unit sales in New England last March?"

Relational databases (RDBMS), Structured Query Language (SQL), ODBC

Oracle, Sybase, Informix, IBM, Microsoft

Retrospective, dynamic data delivery at record level

Data Warehousing & Decision Support(1990s)

"What were unit sales in New England last March? Drill down to Boston."

On-line analytic processing (OLAP), multidimensional databases, data warehouses

Pilot, Comshare, Arbor, Cognos, Microstrategy

Retrospective, dynamic data delivery at multiple levels

Data Mining (Emerging Today)

"What’s likely to happen to Boston unit sales next month? Why?"

Advanced algorithms, multiprocessor computers, massive databases

Pilot, Lockheed, IBM, SGI, numerous startups (nascent industry)

Prospective, proactive information delivery


Scope of Data Mining

Automated prediction of trends and behaviors Automates the process of finding predictive

information in large databases Automated discovery of previously

unknown patterns Sweeps through databases and identify

previously hidden patterns in one step


Data Mining Techniques

Artificial neural networks Decision trees Genetic algorithms Nearest neighbor method Rule induction


Data Mining Architecture The ideal starting point is a data warehouse containing a combination of internal data

tracking all customer contact coupled with external market data about competitor activity. Background information on potential customers also provides an excellent basis for prospecting. This warehouse can be implemented in a variety of relational database systems: Sybase, Oracle, Redbrick, and so on, and should be optimized for flexible and fast data access.

An OLAP (On-Line Analytical Processing) server enables a more sophisticated end-user business model to be applied when navigating the data warehouse.

The multidimensional structures allow the user to analyze the data as they want to view their business – summarizing by product line, region, and other key perspectives of their business.

The Data Mining Server must be integrated with the data warehouse and the OLAP server to embed ROI-focused business analysis directly into this infrastructure.


Data Mining Architecture An advanced, process-centric metadata template defines the data mining objectives

for specific business issues like campaign management, prospecting, and promotion optimization. Integration with the data warehouse enables operational decisions to be directly implemented and tracked. As the warehouse grows with new decisions and results, the organization can continually mine the best practices and apply them to future decisions.

This design represents a fundamental shift from conventional decision support systems. Rather than simply delivering data to the end user through query and reporting software, the Advanced Analysis Server applies users’ business models directly to the warehouse and returns a proactive analysis of the most relevant information. These results enhance the metadata in the OLAP Server by providing a dynamic metadata layer that represents a distilled view of the data. Reporting, visualization, and other analysis tools can then be applied to plan future actions and confirm the impact of those plans.


Spyware

Spyware is computer software that collects personal information about users without their informed consent. Spyware is a rather negative result of excessive e-commerce. Personal information is secretly recorded with a variety of techniques, including logging keystrokes, recording Internet web browsing history, and scanning documents on the computer's hard disk. Spyware has led to the creation of an anti-spyware industry.

How Spyware Works http://www.youtube.com/watch?v=Ux_RNem3bbo


Advantages (E-Commerce)

1. Cost reduction. Achieved through reducing the need for sales and marketing enquiries to be handled by telephone operators and the reduced need for printing and distributing marketing communications material, which is instead published on the web site.

2. Capability. The Internet provides new opportunities for new products and services and for exploiting new markets.

3. Competitive advantage. If a company introduces new capabilities before its competitors, then it will achieve an advantage until its competitors have the same capability.

4. Communications improvement. These include improved communications with customers, staff, suppliers and distributors.

5. Control. The Internet and intranets may provide better marketing research through tracking of customer behaviour and the way in which staff deliver services.

6. Customer service improvement. Provided by interactive queries of databases containing,


Advantages (E-Commerce)

Being able to conduct business 24 x 7 x 365. Access the global marketplace:

allows people to carry out businesses without the barriers of time or distance Market space:

Expands the marketplace and consequently, customers database Reduces the need for employees and other overhead factors.

Speed: faster and more convenient for the visitor

Opportunity to reduce costs. Performing financial transactions on the Internet, at an online store or over a secure

business-to-business extranet. Computer platform-independent . Efficient applications development environment Allowing customer self service and 'customer outsourcing'.


Disadvantages (E-Commerce)

Time for delivery of physical products

Physical product, supplier & delivery uncertainty

Perishable goods

Limited and selected sensory information.

Returning goods.

Privacy, security, payment, identity, contract.

Defined services & the unexpected .

Personal service .

Size and number of transactions.


Reasons for Consumer Complaints


Ethical IssuesIssuesMeaningRepresentative questions

PrivacyCollection, storage, and dissemination of information about an individual

– What information an individual is required to reveal?– What information an individual cannot be forced to reveal?– What kind of surveillance can an employer use on its employees?

AccuracyAuthenticity, fidelity, and accuracy of information collected and processed

– Who is responsible?– How is the injured party compensated?– How can one ensure that a proper and accurate processing and

presentation of information?– How can one ensure that errors are accidental?

PropertyOwnership and value of information and intellectual property

– Who is the owner?– What are the just and fair prices for its exchange?– Can corporate computers be used for private purposes?– How should one handle software piracy?– Under what circumstances can one use proprietary data?

AccessibilityRight to access information– Who is allowed to access information?– How much should be charged?– How can accessibility to computers be provided for employees

with disabilities?


Social Issues

IssueProtection/Solution

Privacy–Federal privacy laws –Federal Trade Commission (FTC)’s fair information practice principles–Self-regulation–Privacy-enhancing technologies –Platform for Privacy Preferences (P3P)

Property–Copyright–Patent–Trademark

Equity–Department of Education’s Community Technology Centers–National Science Foundation’s Advanced Networking Project

Welfare–Children’s Online Protection Act–Children’s Online Privacy Protection Act–Private pressure–Internet zoning


Social and Ethical Issues Equality of Access

Digital Divide; is unstable, expensive and insufficient in particular areas.

limitations for business in accessing wider markets.

If a business system's scalability is not sufficient and upgradeable, it will result in degradation, slowdown,

and eventually loss of customers.

Globalization and Cultural Diversity May reduce diversity in products; weaken local government control.

Security Increases vulnerability to viruses and hacking; increases likelihood of “information” crime and deception.

People and Machines Work and shopping invade family life; confuses issues of “nexus” to taxation. Increased “quantity” (e.g., surveys, emails); but decreased “quality” (e.g., customer emails are often handled

by “auto” mailers).

Reliability Increase in information availability increases use of false or misleading information reducing accuracy,

authenticity and trust; “Making sense” of plethora is extremely difficult for firms and people.

Privacy and Anonymity Generates possibility of intensive invasion of privacy for commercial and government purposes.


Videos to share and Discuss

E-Commerce http://www.youtube.com/watch?v=4xtotgvyjm4&feature=related http://www.youtube.com/watch?v=ZZUmz-MmoTk&NR=1

The future of online shopping http://www.youtube.com/watch?v=Z4omx3zef5o

Social Impacts: Internet Shopping http://www.youtube.com/watch?v=thsugBVpvzU&feature=related

online shopping - bbc watchdog http://www.youtube.com/watch?v=4LSnVYUbrzI

e-commercemays m. khawaldeh1 business processes and relationships networks and infrastructure...

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