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E-Commerce


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Succeeding with Technology, Third Edition 3

Objectives

Define m-commerce, and describe several m-commerce services

List the components of an e-commerce system,

and explain how they function together toprovide e-commerce services


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Succeeding with Technology, Third Edition

Chapter Content

The Roots of E-Commerce Overview of Electronic Commerce

E-Commerce Applications

Mobile Commerce

E-Commerce Implementation

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Electronic Commerce

Electronic commerce (e-commerce) Systems that support electronically executed

business transactions

The fundamental purpose of e-commerce is to

execute transactions

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Electronic Commerce

Electronic commerce (e-commerce)

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Electronic Commerce

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E-Commerce History

EDI Uses private communications networks (VANs) to

transmit standardized transaction data between

business partners and suppliers

Automating transactions using EDI

Drastically reduced the amount of paperwork and

the need for human intervention

Internet

Provided the ideal platform for conducting EDI

transactions

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E-Commerce History

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Transaction Processing

Transaction An exchange involving goods or services

Transaction processing system (TPS) Information system used to support and record transactions such as

paying for products or paying an employee (e.g. payroll system that calculatesan employees pay and cuts a check)

transaction processing systems share a common set of activities called the transactionprocessing cycle

Batch processing Transactions are collected over time and processed together in batches

useful in situations where transactions take place away from the computersystem

Online transaction processing Takes place at the point of sale critical to time-sensitive transactions such as selling concert tickets and making flight

reservations

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The Transaction Processing Cycle

Data collection The process of capturing transaction related data

Data editing

Checking the validity of data entered Data correction

Implemented if an error is found in the entered data

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Data manipulation Processing transaction data

Data storage

Altering databases to reflect the transaction Data output

Receipts, picking lists, and other documents

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Different Transaction Processing for

Different Needs

Order processing system Supports the sales of goods or services to customers

Arranges for shipment of products

Purchasing system Supports the purchase of goods and raw materials

from suppliers

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Different Transaction Processing for

Different Needs

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Types of E-Commerce

Business-to-consumer e-commerce (B2C) Connects individual consumers with sellers , cutting out

the middleman

E.g. Amazon.com

Business-to-business e-commerce (B2B) Supports business transactions on across private

networks, the Internet, and the Web

Consumer-to-consumer e-commerce (C2C)

Connects individual sellers with people shopping for useditems

E.g. ebay.com

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Types of E-Commerce

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E-Commerce from the Buyers Perspective

Process of buying or acquiring goods or services Realizing a need

Researching a product

Selecting a vendor

Providing payment

Accepting delivery Using product support

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E-Commerce from the Buyers Perspective

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E-Commerce from the Sellers Perspective

Sellers business practices Market research to identify customer needs

Manufacturing products or supplying services that

meet customer needs

Marketing and advertising to make customers aware

of available products and services

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Sellers business practices Providing a method for acquiring payments

Making arrangements for delivery of the product

Providing after-sales support

Supply chain management

From the sellers perspective, the process ofproducing and selling goods

Involves three areas of focus: demand planning,supply planning, and demand fulfillment Demand fulfillment: process of getting the product or service to the

customer

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Benefits and Challenges of E-Commerce

Buyers enjoy the convenience of shopping fromtheir desktop

B2C e-commerce

Levels the playing field between large and small

businesses Challenges

Established businesses must alter systems and businesspractices

Security, privacy, reliability: E-commerce can survive onlyif all involved can trust the system

Social concerns

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Benefits and Challenges of E-Commerce

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E-Commerce Applications

E-Commerce Playing an increasingly important role in our personal

and professional lives

Allows us to discover new and interesting products

Allows us to find better deals

Used to monitor bank accounts and transfer

electronic funds

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Retail E-Commerce: Shopping Online

E-tailing provides customers with Product information

The ability to comparison shop

E-tailing options Set up an electronic storefront

Lease space in a cybermall

Web site that allows users to browse through a wide

variety of products offered by several different retailers

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Retail E-Commerce: Shopping Online

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Online Clearing Houses, Web Auctions,

and Marketplaces

Provide a platform for businesses and individualsto sell their products and belongings

www.ubid.com

Provides a method for manufacturers to liquidate stock

and consumers to find a good deal

eBay.com

Most popular auction/marketplace

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B2B Global Supply Management

and Electronic Exchanges

Global supply management (GSM) Businesses can find the best deals for raw materials and

supplies needed to manufacture their products on the

global market

Electronic exchange

an industry-specific Web resource created to provide a

convenient centralized platform for B2B e-commerce

among manufacturers, suppliers, and customers

Promotes cooperation between competing companies

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Marketing

Web is used for Unsolicited advertising

Banner: A rectangular area embedded in the Web page contentfor advertising, often across the top of the page

Access to product information through business Web

sites Get better deals and make informed decisions

Market research Traditionally done by interviewing customers

Market segmentation divides customer opinions based on

various criteria E-commerce allows market segmentation to take place on an

individual level

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Marketing

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Banking, Finance, and Investment

Online banking provides Convenient access to bank balance information

Ability to transfer funds, pay bills, and obtain account

histories

Electronic funds transfer

Popular for paying bills and receiving paychecks

Online brokerages

Able to execute trades fast, within seconds

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Mobile Commerce (M- Commerce)

A form of e-commerce Takes place over wireless mobile devices such as

Handheld computers and cell phones

takes place in emerging technologies such as dashtopcomputers embedded in automobile dashboards

Presents unique opportunities and challenges

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Mobile Commerce


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M-Commerce Technology

Technologies and standards

Wireless Application Protocol (WAP)

a communication standard used by developers to create m-commerce applications

Wireless Markup Language (WML) Infrared or Bluetooth wireless networking technology

Near Field Communications (NFC)

Open Mobile Alliance (OMA)

Hundreds of mobile operators, device and networksuppliers and companies have joined together to createstandards and interoperability between mobile devices

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Types of M-Commerce Applications

Methods for delivering m-commerce services Directly from cell phone service providers

Via mobile Internet or Web applications

Location-based m-commerce applications

Using Short Message Service (SMS) text messaging or

Multimedia Messaging Service (MMS)

Using short-range wireless technology, such as

infrared Proximity payment system

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Types of M-Commerce Applications

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E-Commerce Implementation

Implementing e-commerce Requires large investment and expertise

E-Commerce host

A company that takes on some or all of theresponsibility of setting up and maintaining an e-

commerce system for a business or organization

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Infrastructure

E-Commerce requires significant infrastructurechanges

Businesses must have employees who are

technically savvy

B2C e-commerce

Often connects manufacturers directly with

consumers, cutting out the middleman

Requires shipping individual products directly to

consumers

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Infrastructure

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Hardware and Networking

Underestimating the amount of Web traffic Leads to network stalls and long wait times

Typical e-commerce Web site

Employs one or more server computers and a high-speed Internet connection

Outsourcing to a Web hosting company

Can operate 24 hours a day, 7 days a week

Load-balancing

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Software

Web Server Software Responds to requests for Web pages

Web Server Utility Programs

Provide statistical information about server usageand Web site traffic patterns

E-Commerce Software

Supports e-commerce activities

Includes catalog management, electronic shopping

cart, and payment software

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Software

Web Site Design Tools What-you-see-is-what-you-get (WYSIWYG)

applications or wizards

Graphics Applications

Design and create graphic elements of Web sites

Web Site Development Tools

Application programming interfaces (APIs)

Allow software engineers to develop Web-driven programs

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Software

Web services Programs that automate tasks by communicating

with each other over the Web

Systems developers can provide tools for automating

trivial or repetitive tasks

Important in transaction processing

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Building Traffic

The 3Cs Approach Content, community, and commerce

Keywords and Search Engines

Choose name and product names that best describebusiness purpose and features

Select descriptive domain names

Business-related keywords can be listed in the HTML

meta tag

Read by search engines and servers, but not displayed on

the page

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Building Traffic

Marketing Online advertising methods include banner ads, pop-

up ads, and e-mail

market segmentation: customer opinions are dividedinto demographic variables such as race, gender,

income, education, and age to determine which

segment a product appeals to most

Offline advertising methods include magazines,

newspapers, radio, and television

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Building Traffic

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Electronic Payment System

proximity payment system allows customers to transfer funds wirelessly between their mobile

device and a point-of-sale terminal

Electronic cash (e-cash or digital cash) Provides a private and secure method of transferring funds from a

bank account or credit card to online vendors or individuals

PayPal Best-known e-cash provider

E-cash benefits Privacy - hides account information from vendors

Convenient if seller cannot process a credit card

Smartcards Credit cards with embedded microchips that can store and process

data and can be used as electronic wallets

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International Markets

Internet users of all nationalities will have access to

your products

First consideration of a global e-commerce strategy

Visitors of all nationalities and cultures should feel

comfortable while viewing your Web content Costly approach

Create multiple versions of your Web site, each in a different

language

Once the international market is won over, e-tailer faces

other challenges

Foreign Currency, shipping, national taxes

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E-Commerce Security Issues

There are significant privacy and securityconcerns

Public network

No buyer or seller identity verification

Hacker attacks

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Digital certificate

A type of electronic business card

Attached to Internet transaction data

Verifies the sender of the data

Provided by certification authorities Encryption

Uses high-level mathematical functions and computer

algorithms to transform data so that it is unintelligible to

all but the intended recipient

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Securing data in transit Secure Sockets Layer (SSL)

Digital certificates combined allows for encrypted

communications to occur between Web browser and Web

server Transport Layer Security (TLS)

A URL associated with this begins with https

Allow for encrypted communication to occur between

browsers and servers

Secures usernames, passwords, credit card information

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Business Resumption Planning

Great pains are taken to ensure that transactionprocessing systems remain in working order

Business resumption planning (BRP)

Takes into account every possible disaster and

provides courses of action to minimize negative

effects

The goal is to protect data and keep key systems

operating until order is resumed

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Summary

E-Commerce Systems that support electronically executed

transactions

Transaction processing system (TPS)

Supports and records transactions

Three main types of e-commerce

Business-to-consumer (B2C)

Business-to-business (B2B)

Consumer-to-consumer (C2C)

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Summary

Retail Web sites

Allow consumers to comparison shop

Mobile commerce

A form of e-commerce that takes place over wirelessmobile devices

E-Commerce

Requires investment in networking, hardware, and awide variety of software

Requires changes in infrastructure

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