Principles of Information Systems Eighth Edition Chapter 8 Electronic and Mobile Commerce.

Principles of Information Systems

Eighth Edition

Chapter 8

Electronic and Mobile Commerce

2Principles of Information Systems, Eighth Edition

An Introduction to Electronic Commerce

• Electronic commerce: conducting business activities electronically over computer networks

• Types of business activities that are strong candidates for conversion to e-commerce– Paper based– Time-consuming– Inconvenient for customers


Business-to-Business (B2B) E-Commerce

• Subset of e-commerce

• All the participants are organizations

• Useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs


Business-to-Consumer (B2C) E-Commerce

• Form of e-commerce in which customers deal directly with an organization and avoid intermediaries– Squeezes costs and inefficiencies out of supply

chain– Can lead to higher profits– Can lead to lower prices for consumers

• E-commerce via the Internet– Many goods and services are cheaper online– The Internet allows consumers to easily compare

prices, features, and value


Consumer-to-Consumer (C2C) E-Commerce

• Subset of e-commerce that involves consumers selling directly to other consumers

• Example: eBay– Customers buy and sell items directly to each other

through the site– 181 million users buy and sell items valued at more

than $44 billion

• Other popular online auction Web sites: Craigslist, uBid, Yahoo! Auctions, Onsale, and WeBidz


eGovernment

• Use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizen and government

• Forms of eGovernment– Government-to-consumer (G2C)– Government-to-business (G2B)– Government-to-government (G2G)


Multistage Model for E-commerce

Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)


Multistage Model for E-commerce (continued)

Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web


E-Commerce Challenges

• Defining an effective e-commerce model and strategy– Community, content, and commerce

• Changing distribution systems and work processes to manage shipments of individual units directly to consumers– B2C systems must be able to handle split-case

distribution

• Integrating Web-based order processing with traditional systems


E-Commerce Challenges (continued)

Figure 8.3: Three Basic Components of a Successful E-Commerce Model


E-Commerce Challenges (continued)

Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional Back-End Systems


An Introduction to Mobile Commerce

• Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business

• Handset manufacturers are working with communications carriers to develop appropriate wireless devices, related technology, and services

• Content providers and mobile service providers are working together more closely than ever


Technology Needed for Mobile Commerce

• Improved interface between the wireless device and its user

• Improved network speed

• Security– Encryption, digital certificates

• Web applications that are accessible for handheld users


Technology Needed for Mobile Commerce (continued)

• Wireless application protocol (WAP): standard set of specifications for Internet applications that run on handheld, wireless devices– Effectively serves as a Web browser for such

devices– Uses the Wireless Markup Language (WML), which

is designed for effectively displaying information on small devices


Retail and Wholesale

• Electronic retailing (e-tailing): direct sale from business to consumer through electronic storefronts– Electronic storefronts are typically designed around

an electronic catalog and shopping cart model

• Cybermall: single Web site that offers many products and services at one Internet location

• Manufacturing, repair, and operations (MRO) goods and services


Investment and Finance

• Online stock trading– Online tools for doing research and analysis

• Online banking– Customers can check account balances, transfer

money among accounts, pay bills, etc.– Electronic bill presentment


Anywhere, Anytime Applications of Mobile Commerce

• M-commerce devices are ideal for accessing personal information and receiving targeted messages for a particular consumer

• Through m-commerce, companies can establish one-to-one marketing relationships with individual consumers anytime and anywhere

• The most successful m-commerce applications suit local conditions and people’s habits and preferences

• Examples: banking, stock trading, information services, retail, advertisements


Advantages of Electronic and Mobile Commerce

• Global reach: helps reduce gap between rich and poor countries

• Reduces costs: increases speed and accuracy

• Speeds the flow of goods and information

• Increases accuracy: eliminates human data-entry error

• Improves customer service: information about delivery status and ability to meet customer demand


Security

• Methods to increase security– Payment Card Industry security standard– Address Verification System– Card Verification Number technique– Visa’s Advanced Authorization process– Federal Financial Institutions Examination Council’s

“Authentication in an Internet Banking Environment” guidelines

– Biometric technology


Fraud

• Phishing: sending bogus messages purportedly from a legitimate institution to pry personal information from customers by convincing them to go to a “spoof” Web site

• Click fraud: arises in a pay-per-click online advertising environment when additional clicks are generated beyond those that come from actual, legitimate users

• Online auction fraud


Lack of Internet Access

• Digital divide: difference between people who do and people who don’t have access or capability to use high-quality, modern information and communications technology to improve their standard of living– Exists between:

• More and less developed countries

• Economic classes

• The educated and uneducated

• Those who live in cities and those who live in rural areas


Return on Investment

• The investment required for a large firm to establish and operate a B2B or B2C Web site can be in the millions of dollars

• Common problem with determining return on investment: difficult to forecast project costs and benefits


Taxation

• U.S. Supreme Court ruling: Internet-based merchants must apply sales tax only when buyers live in a state where the company has physical facilities, or “nexus”

• Difficult for states to collect sales taxes on Internet purchases


Strategies for Successful E-Commerce

• Companies must develop effective Web sites that include the following characteristics:– Easy to use– Accomplish the goals of the company– Safe and secure– Affordable to set up and maintain


Building Traffic to Your Web Site

• Obtain and register a domain name

• Make your site search-engine-friendly– Meta tag: special HTML tag that contains keywords

representing your site’s content• Keywords are used by search engines to build

indexes pointing to your Web site

• Web site traffic data analysis software

• Adapting Web site design for global consumers


Electronic Payment Systems

• Digital certificate: attachment to an e-mail message or data embedded in a Web page that verifies the identity of a sender or a Web site

• Certificate authority (CA): trusted third party that issues digital certificates

• Secure Sockets Layer (SSL): communications protocol used to secure sensitive data

• Electronic cash: amount of money that is computerized, stored, and used as cash for e-commerce transactions


Electronic Payment Systems (continued)

• Credit card

• Charge card

• Debit card

• Smart card: a credit card–sized device with an embedded microchip to provide electronic memory and processing capability

Principles of Information Systems Eighth Edition Chapter 8 Electronic and Mobile Commerce.

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