Electronic Commerce

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					             Electronic Commerce




                        Prof Rushen Chahal

12-02-2012                                   Page 1
                         Learning Objectives


   •   Describe the concepts involved in electronic commerce.
   •   Understand auctions and portal mechanisms.
   •   Know the applications involved in e-commerce.
   •   Learn about electronic market research, eCRM, and online
       advertising.
   •   Define collaborative commerce and B2B applications.
   •   Understand e-government activities.
   •   Describe mobile commerce and pervasive computing.
   •   Learn e-commerce infrastructure and support services.
   •   Understand the ethical and legal issues involved in e-commerce.




12-02-2012                                                           Page 2
     E-commerce Provides Decision Support to Hi-
                Life Corp. Vignette
   • Convenience store chain needs accurate stock count
       –     Overstocking expensive
       –     Understocking results in customer dissatisfaction
       –     Losses due to shrinkage
       –     Manual counts used data collection sheets
              • Expensive, labor intensive
   • Solution based on handheld computer
       –     Counts entered relayed immediately to headquarters
       –     Bar code scanner employed to shorten process, minimize errors
       –     Allows for real time product totals
       –     Dramatic reduction in labor involved
       –     Lower inventory levels and quicker response time




12-02-2012                                                            Page 3
                              E-commerce
   • Process of buying, selling, transferring, exchanging
     products, services, or information over computer
     networks
   • Pure versus partial
       – Based on degree of digitization
             • Product
             • Process
             • Intermediary
       – Pure requires all three components to be fully digitized
   • Internet versus non-Internet
       – Most are Internet based
       – May be value-added networks or local area networks


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             E-commerce Transactions
   •   Business-to-business (B2B)
   •   Business-to-consumer (B2C)
   •   Consumer-to-consumer (C2C)
   •   Consumer-to-business (C2B)
   •   Government-to-citizens (G2C)
   •   Collaborative commerce between partners
   •   Business to employees
   •   Intrabusiness/Intraorganizational commerce
   •   Mobile commerce (M-commerce)


12-02-2012                                          Page 5
                 Scope of E-commerce
   • Applications supported by infrastructure
       – Hardware
       – Software
              • Messaging, multimedia, interfaces, business services
       – Networks
              • communications
   • Support areas
       –     People
       –     Legal and public policy and regulations
       –     Marketing and advertisements
       –     Support services ranging from payments to order delivery
       –     Business partnerships like joint ventures, e-marketplaces,
             affiliations

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                               Advantages
             •   Advantages:                         – Allows for purchase of
                  – Expands marketplace                goods at lowered prices
                    globally                         – Enables customization,
                  – Expands availability of            personalization
                    resources
                                                     – Decreases costs to
                  – Shortens marketing-                customers, while
                    distribution channels
                                                       increasing their choices
                  – Decreases expenses
                  – Reduces inventory                – Allows for 24 hour
                                                       shopping
                  – Aids small businesses in
                    competing                        – Makes electronic
                  – Enables specialized niches         auctions possible
                  – Quicker delivery of              – Enables people to
                    information                        interact in electronic
                  – Enables individuals to work        communities
                    from home
                  – Facilitates delivery of public
                    services

12-02-2012                                                               Page 7
                             Limitations
   •   Limitations:
        – Lack of universal standards
        – Insufficient bandwidth
        – Software-development tools are still evolving
        – Integration difficulties
        – Need for special Web servers in addition to network servers
        – Accessibility expensive
        – Unresolved legal issues
        – Lack of national and international governmental regulations
        – Lack of mature methodologies to measure benefits and justify
        – Customer resistance
        – Security questions
        – Insufficient number of buyers and sellers for profitable e-commerce
           operations




12-02-2012                                                                  Page 8
             DSS and E-commerce

   • DSS supports e-commerce
       – DSS allows for scheduling and transportation
         optimization
       – Match buyers to sellers
       – Improves market operations
       – Conducts risk analysis
       – Optimizes selection of transportation routes
       – Assists in running B2C operations
       – Data collection
       – Business intelligence

12-02-2012                                              Page 9
             DSS and E-commerce
   • E-commerce facilitates decision support
       – Efficient transfer of information
       – Enhances decision-support process
       – Data collection and storage
   • E-commerce works with DSS
       – Inventory management
       – Produce strategic change in call center by integration of
         simulation decision support
       – Marketing database applications and distribution systems
       – Streaming financial reports
       – Comparison shopping engines
       – Data transfer and storage for BI analysis


12-02-2012                                                           Page 10
             E-commerce Mechanisms
   • Electronic auctions
       – Competitive market mechanisms
             • Forward auctions
                – Sellers place offers and buyers make sequential bids
             • Reverse auctions
                – Sellers are invited to submit bids on product or service buyer
                  wants
   • Bartering
       – Exchange of goods or services without money
         transactions
   • Portals
       – Information gateways
             • Single point of access through Web browser


12-02-2012                                                                   Page 11
                                    Portals
   • Commercial
       – Offer content to broad audiences
             • Routine
             • Little personalization
   • Publishing
       – Based on specific interests
             • Extensive search capabilities
   • Personal
       – Target specific filtered information
             • Narrow content
             • Personalized
   • Mobile
       – Accessible through mobile devices

12-02-2012                                      Page 12
                                   Portals
   • Voice
       – Audio interfaces
       – Accessible through phones
   • Corporate
       – Access to business information located both within
         and outside of organization
             • Rich content
             • Limited communities
             • Organized focal point
                 –   Suppliers
                 –   Customers
                 –   Employees
                 –   Supervisors


12-02-2012                                                Page 13
               Business to Consumer
                    Applications
   • E-tailing
       – Storefronts
             • General or specialized
             • May be extensions of physical stores
       – E-Malls
             • Collection of stores under single Internet address
       – Manufacturers may sell direct
       – Retailers may act as intermediaries


12-02-2012                                                     Page 14
                    DSS Support
   • Channel conflict resolution through GDSS tools
   • DSS and GDSS can be used for conflict resolution on
     pricing, resource allocation, logistics services
   • DSS can aid in order fulfillment and logistics of small
     quantities
   • DSS models can foster strategies and determine viability
   • Identification of appropriate revenue models
   • Risk analysis with DSS modeling




12-02-2012                                               Page 15
             Online Service Industries

   •   Electronic banking
   •   International banking
   •   Securities trading
   •   Online job market
   •   Travel
   •   Real estate



12-02-2012                               Page 16
                      Market Research
   • E-commerce model of consumer behavior
       – Independent uncontrollable variables
             • Personal characteristics
                 – Age, gender, demographics
             • Environmental characteristics
                 – Social, cultural, available information, government regulations,
                   legal constraints
       – Intervening variables
             • Vendor controlled
             • Market stimuli
             • E-commerce systems
                 – Physical environment, logistics support, customer services



12-02-2012                                                                      Page 17
                    Market Research

       – Decision making process
             • Influenced by independent and intervening
               variables
             • Feeds into buyers’ decisions
       – Dependent variables
             • Buyers’ decisions




12-02-2012                                                 Page 18
                    Market Research

       – Decision-making process
             • Generic model
                – Identification of needs, information search, evaluation of
                  alternatives, purchase and delivery, after-purchase
                  evaluation
             • Consumer decision support system model
                – Support facilities from CDSS and Internet and Web
                  produce framework for Web purchasing
             • Online buyer decision support model
                – Customer decision-making guided by Web purchasing
                  models


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12-02-2012   Page 20
      Discovering Customer Desires
   • Software agent search engines
   • Intelligent agents
       – Monitor site activity
       – Searching and filtering agents for customers
       – Comparison agents
   • Electronic questionnaires
   • Site tracking
       – Cookies, Web bugs, spyware
   • Collaborative filtering through inference of
     interest

12-02-2012                                              Page 21
                     E-commerce CRM
   • During life cycle of product
       –     Determine customer requirements
       –     Help customer acquire product or service
       –     Ongoing support
       –     Aid in disposal
   • Tools available
       –     FAQs
       –     E-mail messaging
       –     Track status of order
       –     Personalization of Web pages and information at vendor’s site
       –     Chat rooms and communities
       –     Web-based call centers


12-02-2012                                                              Page 22
                       Online Advertising
   • Media rich, dynamic, interactive
   • Types
       –     Banners
       –     Pop-ups and pop-unders
       –     E-mail advertisements
       –     Electronic catalogs and brochures
       –     Advertisement postings in chatrooms, communities, and newsgroups
       –     Online classifieds
   • Issues
       – Spam
              • Permission marketing
              • Viral marketing
       – Passive, mass market advertising
              • Interactive advertising




12-02-2012                                                                Page 23
                     B2B Applications
   • Sell-side marketplaces
       – Private e-marketplaces operated by seller
             • Electronic catalogs
             • Forward auctions
   • Buy-side marketplaces
       – Reverse auction
       – Third-party bidding marketplace or buyer’s Web site
       – Procurement models
             • Group purchasing
             • Desktop purchasing



12-02-2012                                                Page 24
                  B2B Applications

   • Electronic exchanges
       – E-marketplaces with many sellers and buyers
   • Types
       – Systematic sourcing by vertical distributors of direct
         materials
       – Indirect materials sold on “as needed” basis with
         dynamic pricing
       – Systematic sourcing for indirect materials at fixed
         pricing
       – Spot sourcing of services on “as needed” basis

12-02-2012                                                   Page 25
             Collaborative E-commerce
   • Non-sales based e-commerce transactions
     between organizations
   • Electronic support of communication, information
     sharing, joint decision making
   • Types
       –     Retailers/suppliers
       –     Vendor-managed inventories supplied to retailers
       –     Product design
       –     Collaborative manufacturing through outsourcing of
             components and subassemblies


12-02-2012                                                   Page 26
             Collaborative E-commerce

   • Collaborative workflow management
       – Planning and scheduling
       – Design
       – New product information
       – Product-content management
       – Order management
       – Sourcing and procurement



12-02-2012                               Page 27
         Intrabusiness E-commerce
   • B2E
       – Intranet-enabled business between business and
         employees
   • E-commerce between business units
       – Organization units sell and buy materials and
         products from each other
   • E-commerce between corporate employees
       – Classified ads
   • Sales force automation
       – Empowerment of salespersons



12-02-2012                                                Page 28
                          E-government
   • Use of Internet technologies and e-commerce to deliver
     information and services to citizens
       – Gives citizens more access to information
       – Allows for more feedback from citizens
       – Facilitates fundamental changes in relationships between citizen
         and government
   • Types
       – Government-to-citizens (G2C)
             • Electronic benefits transfer, payment of taxes
       – Government-to-business (G2B)
             • RFQs, RFBs, reverse auctions
       – Government-to-government (G2G)
             • Sharing of databases, information


12-02-2012                                                          Page 29
                              E-learning
   • Online delivery of information for educational or training
     purposes
   • Benefits
       –     Eliminates barriers of time, distance, socioeconomic status
       –     Saves money, reduces travel time
       –     Increases access to experts
       –     Enables large numbers to take classes
       –     Provides on-demand, self-paced learning
   • Limitations
       – Special training for instructors and students
       – Requires special equipment and support services
       – Lack of face-to-face interaction


12-02-2012                                                                 Page 30
             Customer to Customer
                 E-commerce
   • Buyers and sellers not businesses
   • Types
       – Auctions
       – Classified ads
       – Personal services
       – Bartering




12-02-2012                               Page 31
             Variants of E-Commerce
   • Mobile commerce
       – E-commerce through use of mobile computing devices on
         wireless networks
             • Advantages
                 – Mobility
                 – People can be reached at any time
   • L-commerce
       – Location-based mobile commerce
             • Information pushed out to recipient based on their current location
   • Pervasive computing
       – Computations become part of the environment
             • Embodied in things
             • Based on intelligent systems


12-02-2012                                                                     Page 32
     E-commerce Support Systems

   • Electronic payments
       –     Electronic checks
       –     Electronic credit cards
       –     Virtual credit cards
       –     Purchasing cards
       –     Electronic cash
              • Stored value money cards
              • Smart cards with microprocessors
              • Person-to-person payments
       – Payment of bills online

12-02-2012                                         Page 33
12-02-2012   Page 34
             Security in Electronic Payments


   • Authentication of all parties
   • Protection of data from alteration or
     destruction during transmission
   • Protection from buyer’s unjustified
     repudiation
   • Privacy
   • Customer safety
   • Protection of information at seller’s end

12-02-2012                                       Page 35
      Order Fulfillment in Electronic Commerce


   • Provide customers with ordered goods
   • Goods must be quickly packaged,
     shipped, and delivered
   • Payment collection system must be in
     force
   • Handle the return of unwanted or defective
     merchandise
   • Customer relations

12-02-2012                                  Page 36
               Legal and Ethical Issues
   • Fraud
       – Seller’s and buyer’s
   • Buyer protection
   • Seller protection
       – Unwarranted repudiation
       – Intellectual property rights
       – Domain names
   • Privacy issues
       –     Cookies
       –     Web tracking
       –     Sales of lists
       –     Monitoring e-mails and site visits
   • Taxation
   • Disintermediation
   • Intellectual Property issues


12-02-2012                                        Page 37

				
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