Electronic Commerce BUS 311 Fall 2003 Chapter 5
Electronic Commerce - BUS 311 – Fall 2003 Chapter 5
History Began in the early 1970 s innovations such as electronic transfer of funds (EFT) were limited to large corporations and a few daring small businesses 2 - BUS 311 – Fall 2003 Electronic Data Interchange (EDI) added other kinds of transaction processing and extended the types of participating companies ANSI X. 12 standardized in 1983 EDIFACT standardized in 1986 -87 Over the last five years innovative applications, from advertisement to auctions and procurement fueled by the internet
Types of Electronic Commerce Business-to-consumer EC (B 2 C) companies sell directly to consumers over the Internet Business-to-business EC (B 2 B) two (or more) businesses make transactions electronically More than $7. 3 trillion volume by 2004 15 x volume of B 2 C Mostly done by EDI – 95% of EC is EDI! Consumer-to-consumer (C 2 C) 3 - BUS 311 – Fall 2003 E. g. E-bay, Classifieds Government-to-citizens (G 2 C) and to others Doing taxes online etc. Mobile commerce (m-commerce) Wireless commerce. E. g. Using cell phone to pay for gas
4 - BUS 311 – Fall 2003 Supply Chain Management
Value Chains in E-Commerce 5 - BUS 311 – Fall 2003 Conversion to e-commerce supply chain management provides businesses with an opportunity to: increase revenues or decrease costs by eliminating time -consuming and labor-intensive steps throughout the order and delivery process improve customer satisfaction by enabling customers to view detailed information about delivery dates and order status reduce inventory including raw materials, safety stocks, and finished goods
6 - BUS 311 – Fall 2003 Product and Information Flow for HP Printers Ordered Over the Web
E-Commerce Applications Retail and Wholesale Cybermall Electronic exchange Manufacturing Marketing Investment and Finance 7 - BUS 311 – Fall 2003 On-line Stock Trading On-line Banking
Electronic Retailing Solo storefronts Examples: walmart. com, buy. com Can use services like http: //store. yahoo. com Cybermalls 8 - BUS 311 – Fall 2003 Examples Cybermall. com, Shopnow. com Stores give up some freedom to be part of the mall Some malls are just fancy directories of stores Some solo stores expand to become malls Amazon. com, Buy. com Some malls are more like intelligent agents for comparing prices (pricegrabber. com)
Issues in E-tailing Channel conflict Lego. com: Keeping consumers and retailers happy (very small percent of revenue from online sales) Order fulfillment Shipping small quantities to many customers. How to handle returns? 9 - BUS 311 – Fall 2003 Incorrect revenue models Until 2000 (dot-com bubble), profit was old-fashioned in ecommerce You can’t have low prices and expect to make it up in advertising. Today: All is based on profit, not revenue!
B 2 B E-commerce Sell-side marketspaces One company trying to sell its goods to many companies Customized catalogs, auctions Buy-Side marketspaces / E-procurement 10 - BUS 311 – Fall 2003 One large buyer, many smaller suppliers Examples: Supermarket chains, Ford, Boeing Alternative: Group procurement (e. g. shop 2 gether. com) Electronic Exchanges Many sellers and many buyers
11 - BUS 311 – Fall 2003 An Electronic Exchange
Key Technical Components • Catalog Management • Product Configuration • Shopping Cart • E-commerce Transaction Processing • Web Site Data Analysis 12 - BUS 311 – Fall 2003 • Linux • Unix • Windows Electronic Payment Systems • Credit cards, smart cards • Digital certificate • Electronic cash • Electronic wallet • P 2 P payment (Pay. Pal) Decision: Develop or outsource? • Apache Web server • Oracle • Web construction • PC • Mainframe • Mid-range
Strategies for Successful ECommerce Developing an effective Web presence Putting up a Web site Web Site Hosting Services Storefront Brokers Building Traffic to your Web Site 13 - BUS 311 – Fall 2003 Advertising
Advertising Issues: Attracting Visitors to a Site 14 - BUS 311 – Fall 2003 Making the top list of a search engine the search engine’s spider crawls through the submitted site, following and indexing all related content and links a company can get to the top of a search engine’s list by adding, removing, or changing a few sentences or by paying for the service! Paid search is a very effective advertising method Google Adwords: www. google. com/ads Check Google Toolbar for IE (Page. Rank)
Security Most Americans are concerned about Internet security; 74% are worried about their personal info Most (64%) people don’t pay attention to privacy policies (3% read them carefully). Authentication the buyer, the seller, and the paying institutions must be assured of the identity of the party with whom they are dealing Integrity data and information transmitted in EC, must not be accidentally or maliciously altered or destroyed during transmission Non-repudiation 15 - BUS 311 – Fall 2003 merchants need protection against the customer’s unjustifiable denial of placing an order; buyer needs protection against the vendor denial of shipment, or sending wrong order Privacy many customers want their identity to be undisclosed Safety customers want to be sure that it is safe to provide a credit card number on the Internet
Advertising Online Ad Spe nding i To Hit n US $ 8 b i l (http: lion in //www 2002 2. cio. c 2002/ metric om/m etrics/ tml ) 339. h Advertisement an attempt to disseminate information in order to attract buyers 16 - BUS 311 – Fall 2003 Internet Advertisement can be updated any time at a minimal cost and therefore can always be timely can reach very large numbers of potential buyers, all over the world can be cheaper can efficiently use the convergence of text, audio, graphics, and animation can be interactive and targeted to specific interest groups and/or individuals
Advertising Methods: Banners Bann er ad s onlin e, cla remain m iming ost p all on a l i n 5 e ads (Marc 0% s opular h 7, 2. hare 002) of Jupite r Media Metri x the most commonly used form of advertising on the Internet, links to advertiser's site contains a short text or graphical message to promote a product or a vendor Keyword banners 17 - BUS 311 – Fall 2003 appear when a predetermined word is queried from the search engine effective for companies who want to narrow their target to consumers interested in particular topics Example: Google. com (text-only), Random banners appear randomly might be used to introduce new products to the widest possible audience, or to keep a well-known brand in the public memory Example: Cnet. com (few, but large banner ads) Related: Pop-up windows (pop-over and pop-under)
18 - BUS 311 – Fall 2003 Advertising Methods: Email Emerging as an Internet advertising and marketing channel that permits cost-effective implementation and a better and quicker response rate than other advertising channels Viral marketing A fine line between email marketing and spam! Typically works best where consumers sign up to receive specific information But apparently spam works, or 38% of all email wouldn’t be spam! (Business 2. 0, November 2002, p. 64)
Ethical and Legal Issues of Ecommerce Privacy most electronic payment systems know who the buyers are; therefore, it may be necessary to protect the buyers’ identity 19 - BUS 311 – Fall 2003 Web Tracking by using sophisticated software it is possible to track individual movements on the internet Domain Names several companies that have similar or same names (in different countries) compete over a domain name that is not a registered trademark Domain names have been ‘stolen’ by cybersquatters Verisign had taken control of all unassigned domain names Taxes and Other Fees particularly complex for interstate and international commerce (A tax moratorium in the US – but not in EU) Copyright intellectual property is protected by copyright laws and cannot be used freely
Transaction Processing Information Systems What is a transaction? Grocerystore purchase, airline ticket reservation, deposit money to an account. Something is exchanged (money, goods, . . . ) What data is collected? What transactions did you take part in yesterday? 20 - BUS 311 – Fall 2003 Transaction Processing major business processes provide the mission-critical activities transaction may generate additional transaction Transaction Processing System (TPS) computerized information system supports the transaction processes Critical to the well-being of the organization!!
21 - BUS 311 – Fall 2003 Characteristics of TPS Large amounts of data are processed The TPS processes information on a regular basis High level of detail in data Low complexity of calculations Systems must be very reliable Large storage (database) capacity is required Need lots of processing speed due to the high volume Input and output data are structured Need high level of accuracy, data integrity, and security Must allow for queries of data
22 - BUS 311 – Fall 2003 Transaction Processing Overview
Transaction Processing Systems Batch Processing System Transactions are accumulated over time and processed in a single group On-line Transaction Processing (OLTP) Each transaction is processed immediately 23 - BUS 311 – Fall 2003 Examples? Does anyone use a batch processing system? Know of one? Heard of one?
24 - BUS 311 – Fall 2003 Batch versus On-line Processing
25 - BUS 311 – Fall 2003 Data Processing Activities
Transaction Processing Activities Data Collection Source data automation makes it easier Data Editing Check for validity and completeness Data Correction Re-enter invalid data 26 - BUS 311 – Fall 2003 Data Manipulation Simple calculations Data Storage Update databases Document Production Business documents and Reports
27 - BUS 311 – Fall 2003 Example: Point-of-Sale System
Order Processing Systems 28 - BUS 311 – Fall 2003 Systems that process order entry, sales configuration, shipment planning, shipment execution, inventory control, invoicing, customer interaction, and routing and scheduling
29 - BUS 311 – Fall 2003 Systems that Support Order Processing
30 - BUS 311 – Fall 2003 Integration of TPSs
31 - BUS 311 – Fall 2003 TPS, MIS/DSS, and AI/ES
Enterprise Resource Planning Provide real-time monitoring of business functions Permits timely analysis of issues such as quality, availability, customer satisfaction, performance, and profitability. Combines TPS and MIS (among other things) Advantages 32 - BUS 311 – Fall 2003 Elimination of costly, inflexible legacy systems Improvement of work processes Increase in access to data for operational decision making Upgrade of technology infrastructure Disadvantages Expense and Time in Implementation Difficulty Implementing Change Difficulty Integrating with Other Systems Risks in Using One Vendor
Coming Up… Thursday Rest of Lecture Due: Lab 5 Tuesday 33 - BUS 311 – Fall 2003 Chapter 6
- Slides: 33
