ecommerce cbis2210 by I0FVNFi



Information Technology for Managers         1

• What sort of benefits can arise from well chosen e-
  commerce opportunities?
• How can business managers recognize and
  capitalize upon these opportunities?

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       Why Managers Must Understand
• E-commerce
     – “The transformation of key business processes
       through the use of Internet technologies”
     – Enables organizations and individuals to:
          • Build new revenue streams
          • Create and enhance relationships with customers and
            business partners
          • Improve operating efficiencies

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       Why Managers Must Understand
          E-commerce (continued)
• Understand customers and fundamentals of the
  markets in which they operate
• Understand how the Internet differs from the
  traditional venues for business activity
• Employ business models appropriate to the
• Three models of e-commerce

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             Business-to-Business (B2B)
• Exchange of goods and services between
  businesses via computer networks
• Revenue generated via B2B transactions greatly
  exceeds B2C revenue
     – By a factor of more than 6 to 1
• Private stores
     – Web sites that function as private stores for each
       major customer
     – Accessed with customer ID and password

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             Business-to-Business (B2B)
              E-commerce (continued)
• Customer portals
     – Consolidate products and services into a single Web
          • Accessible online from anywhere in the world at any
• Private company marketplaces
     – Manage purchasing functions through a Web site
     – E-procurement software
          • Allows a company to create an electronic catalog with
            search capability

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             Business-to-Business (B2B)
              E-commerce (continued)
• Industry consortia-sponsored marketplaces
     – Gain the advantages of the private company
       marketplace for all members of the consortia

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           Business-to-Consumer (B2C)
• Exchange of goods and services between business
  organizations and individual consumers
     – Recent annual net income of $476 million on sales
       of $14.8 billion
• Majority of large brick-and-mortar retailers have at
  least experimented with some level of B2C
     – Expected to increase to about 16 percent by 2011
     – Modify in-store operations and procedures to meet
       shoppers’ new expectations that are based on online
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         Consumer-to-Consumer (C2C)
• Exchange of goods and services among
  individuals, typically facilitated by a third party
• Craigslist
     – Local classifieds and forums for 500 cities worldwide
• eBay
     – Online auction and shopping Web site
• PayPal
     – Send and receive payments via the Internet

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              E-government Applications

• Use of information technology by government
  agencies to transform relations between:
     – Government and citizens (G2C)
     – Government and businesses (G2B)
     – Various branches of the government (G2G)
• United State citizens are not completely satisfied
  with the quality of e-gov G2C Web sites

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E-government Applications (continued)

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E-government Applications (continued)

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E-government Applications (continued)

• County and local governments also have made
  attempts at implementing e-gov Web sites
• U.S. General Services Administration
     – Managing partner for several e-gov G2B initiatives
     – Directed at improving the efficiency and
       effectiveness of government operations

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                         Mobile Commerce

• Buying and selling of goods and/or services using a
  mobile device
     – Cell phone, smartphone, PDA, or other such device
• Can be used to support all forms of e-commerce
• Expected to exceed $500 million in 2008
• .Mobi
     – Top-level domain
     – Goal to deliver the Internet to mobile devices
     – Developing and publishing a set of style guides

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          Mobile Commerce (continued)

• Mobile payments
     – Payment systems based on the use of mobile
     – Mocapay
          • Allows people to pay for purchases without the use of
            cash or a credit card
          • Subscribers text four-digit pin to Mocapay
          • Present transaction number to the Mocapay merchant

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          Mobile Commerce (continued)

• Mobile ticketing
     – Tickets are sent to the mobile device
     – Users present their phones at the venue to gain
     – Also used to distribute vouchers, coupons, or loyalty
• Location-based services
     – Using GPS and appropriate software, location of a
       mobile user can be determined
     – User can request local information

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          Mobile Commerce (continued)

• Mobile banking
     – Use mobile devices to:
          • Access account information
          • Withdraw and transfer funds among various accounts
          • Purchase stocks and bonds
• Web 2.0 and e-commerce
     – Web 2.0
          • Changes in technology and Web site design
          • Enhance information sharing, collaboration, and
            functionality on the Web

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 E-commerce Critical Success Factors

• Numerous factors that contribute to making an e-
  commerce operation successful
• Identifying appropriate e-commerce opportunities
     – Consider how each potential e-commerce initiative
       fits into its overall business strategy
     – Set achievable objectives and time-based measures
• Acquiring necessary organizational capabilities
     – Make an objective assessment as to whether or not
       the organization has adequate skills, sufficient
       experience, and the corporate culture necessary to
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 E-commerce Critical Success Factors
• Directing potential customers to your site
     – Search engine optimization
          • Ensure Web site appears at or near the top of the
            search engine results
     – Organic list
          • Type of search engine result in which users are given
            a listing of potential Web sites based on their content
            and keyword relevancy
     – Paid listings
          • Search engine results that appear because of the
            payment of fees

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 E-commerce Critical Success Factors
     – Web page banner ads
          • Display a graphic
          • Banner exchange network
     – Banner advertising network
          • Acts as a broker between Web sites and advertisers
• Providing a good customer online experience
     – Company must create a Web site that will compel
       customers to return time and time again
     – Several steps must be taken to provide a good
       customer online experience

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 E-commerce Critical Success Factors

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 E-commerce Critical Success Factors
• Providing an incentive for customers to purchase
  and return in the future
     – “Eighty percent of companies believe they deliver a
       superior customer experience, but only eight percent
       of their customers agree”
• Providing timely, efficient order fulfillment
     – Adequate storage for inventory
     – Systems and processes must be capable of
       receiving fast and accurate deliveries
     – Accurate inventory counts
     – Sales forecasting
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 E-commerce Critical Success Factors
• Offering a variety of easy and secure payment
     –   Credit cards
     –   Debit and charge cards
     –   High risk of credit card fraud
     –   Most Web sites require user verification information
     –   Use encryption and authentication
          • Secure Sockets Layer (SSL)

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 E-commerce Critical Success Factors
     – Biggest risk for a consumer
          • Retailer databases on which this credit card data is
            stored may be compromised
     – Payment Card Industry (PCI) data security
          • Many retailers have not fully implemented the
     – Smart card
     – EMV standard specifications

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 E-commerce Critical Success Factors
• Handling returns smoothly and efficiently
     – Minimize returns
     – Do not upset customers with return policies
     – Consider allowing consumers to return online
       purchases to a brick-and-mortar store
     – Allow customers to return online purchases via a
       “preferred” package delivery service

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 E-commerce Critical Success Factors
• Providing effective customer service
     – Many online customers expect to be able to receive
       customer service at any time of the day or night
     – Call center customer service reps must have
       accurate and current information
          • About all in-store and Web transactions
     – Handle e-mail queries in an accurate and timely

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 A Manager Takes Charge: Jeff Bezos
  Provides a Vision for
• Bezos places emphasis on:
     –   Providing outstanding customer service
     –   Consistently enforcing secure Web transactions
     –   Ensuring timely order fulfillment and shipping
     –   Offering a diverse choice of products
     –   Emphasizing price discounts

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             Advantages of E-commerce

• Advantages that accrue to:
     – Seller
     – Buyer
     – Society as a whole

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             Advantages of E-commerce

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             Advantages of E-commerce

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   Issues Associated with E-commerce

• Customers fear that their personal data may be
  stolen or used inappropriately
     – Concerns about whether online data is secured from
       access by unauthorized users or hackers
     – Demonstrate the ability to operate in a safe and
       reliable manner that builds the trust of their

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   Issues Associated with E-commerce
• Cultural and linguistic obstacles
     – Avoid creating cultural and linguistic obstacles that
       make a Web site less attractive or effective for any
       subgroup of potential users
     – People feel more comfortable buying products and
       services in their own language

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   Issues Associated with E-commerce
• Difficulty integrating Web and non-Web sales and
  inventory data
     – Separate, non-integrated systems and databases
          • To capture and record order and inventory information
            for each sales channel
• High costs associated with the development and
  operation of an effective Web site
     – Major corporations have spent in excess of $140
       million to create their online retail Web site
          • Ongoing operating and support costs in excess of $10
            million per year
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   Issues Associated with E-commerce

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• Several forms of e-commerce
     –   Business-to-business (B2B)
     –   Business-to-consumer (B2C)
     –   Consumer-to-consumer (C2C)
     –   E-government (e-gov)
• Mobile commerce (M-commerce)
     – Buying and selling of goods and/or services using a
       mobile device
• Factors that contribute to making an e-commerce
  operation success
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                     Summary (continued)

• Advantages that result from the use of e-business
• Potential problems associated with the use of e-

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