Introduction to Information Technology
2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
Electronic Commerce
Prepared by:
Roberta M. Roth, Ph.D.
University of Northern Iowa
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-1
Chapter Preview
 In this chapter, we will study:
Forms and uses of business-to-consumer
electronic commerce
Forms and uses of business-to-business
electronic commerce
New forms of EC
Technical and non-technical requirements
needed to make EC work
Legal and ethical issues associated with EC
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-2
E-Commerce / E-Business
 Electronic Commerce: buying and selling of
products, services and information via computer
networks, primarily the Internet
 Electronic Business: a broader definition that
includes




buying and selling, plus
servicing customers
collaborating with business partners
conducting electronic transactions within an
organization
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-3
Types of E-Commerce








Business-to-business EC (B2B)
Collaborative commerce (c-commerce)
Business-to-consumer EC (B2C)
Consumer-to-businesses (C2B)
Consumer-to-consumer (C2C)
Intrabusiness (intraorganizational) commerce
Government-to-citizens (G2C) and others
Mobile commerce (m-commerce)
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-4
E-Commerce History and Scope
 History



Began in the early 1970s (long before the Internet was open to
commercial use)
Limited to large businesses initially
Electronic Fund Transfer (EFT) and Electronic Data Interchange
(EDI)
 Scope Today Includes








advertising
home banking
shopping in electronic stores and malls
buying stocks
finding a job
conducting an auction
collaborating electronically with business partners around the
globe
providing customer service
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-5
E-Commerce Framework
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-6
EC Benefits to Organizations

Increased customer base:



Reduced cost:







Reach a large number of customers at little cost
Procure material and services from other companies at less cost
Allow lower inventories by facilitating “pull”-type supply chain management
Shorten marketing distribution channels and reduce marketing costs
Decrease the cost of creating, processing, distributing, storing, and
retrieving paper-based information
Lower telecommunications costs because the Internet is much cheaper than
value-added networks (VANs)
Reduced cycle time:



Broaden markets
Find niche markets (e.g. www.dogtoys.com)
Procure material and services from other companies rapidly
Reduce the time between the outlay of capital and the receipt of products and
services
Helps small businesses compete against large companies
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-7
EC Benefits to Customers

Choice




Consumers can select from many vendors and many more products than they
could locate otherwise
Consumers can get customized products, from PCs to cars, at competitive or
bargain prices
Consumers can find unique products and collectors’ items through virtual
auctions that might otherwise require them to travel long distances to a
particular auction place at a specific time
Convenience




Consumers can conduct online quick comparisons to find less expensive
products and services
Customers can shop or make other transactions 24 hours a day, year round,
from almost any location
Product information immediately available 24 hours a day, year round,
from almost any location
Consumers can interact with other consumers in electronic communities and can
exchange ideas as well as compare experiences
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-8
EC Benefits to Society
 Convenience

Enables more individuals to work at home and to do less
traveling
 Access



Allows some merchandise to be sold at lower prices - less
affluent people can buy more and increase their standard of
living
Enables people in less developed countries and rural areas to
enjoy products and services that otherwise are not
available to them
Facilitates delivery of public services, such as government
entitlements, reducing the cost of distribution and fraud, and
increasing the quality of the social services, police work, health
care and education
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-9
Technical Limitations of EC

A few technical challenges remain for organizations
wishing to conduct EC:







Lack of universally accepted standards for quality, security, and
reliability
Insufficient telecommunications bandwidth
Still-evolving software development tools
Difficulties in integrating the Internet and EC software with some
existing (especially legacy) applications and databases
Need for special Web servers in addition to the network servers
(added cost)
Expensive and/or inconvenient Internet accessibility for many
people
All of these will diminish over time
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-10
Non-Technical Limitations of EC

Legal and economic concerns:





Many legal issues are yet unresolved
Lack of national and international regulations and standards
Difficulty in measuring benefits of EC and justifying EC
Insufficient number (critical mass) of sellers and buyers exists for
profitable EC operations
Cultural resistance:



Distrust of the new: Many sellers and buyers are waiting for EC to
stabilize before they take part
Customer resistance to the change from a physical to virtual
stores
Perception that electronic commerce is expensive and unsecured,
so many do not want even to try it
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-11
Business-to-Consumer EC
 Electronic Storefronts and Malls
 Electronic retailing can be conducted via solo
storefront or as a part of cybermall
 Issues of e-tailing
 May be channel conflict and conflict with
existing stores
 Difficult to fulfill large quantity of very small
orders
 Incorrect business model (advertising revenue
versus profitable sales)
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-12
Business-to-Consumer EC (continued)
 Services Online
 Banking (www.sfnb.com)
 Securities trading (Schwab Online)
 Job markets (Monster Board)
 Travel (Expedia.com)
 Real estate (Realtor.com)
 Auctions (eBay.com)
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-13
Business-to-Consumer EC (continued)
 Personalization – ability to customize product,
service, advertisement, or customer service
 B2C EC enables personalization at low cost
 Internet enables marketing research
 Questionnaires
•
Usually involve some inducement
 Direct behavior observation
•
Cookies or site tracking services
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-14
Business-to-Consumer EC (continued)
 Use of intelligent agents
 Help customers determine what to buy
 Search for and compare vendor prices
 Collect information and develop customer profiles
 Online advertising
 Banners
• Keyword banners
• Random banners
 Direct email
 Pop-up windows
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-15
Business-to-Consumer EC (continued)
 Advertising Approaches and Issues





Permission marketing – offer incentives to consumers to receive
advertising
Viral (advocacy) marketing – online word of mouth advertising
(send this ad to a friend and get…)
Customizing ads – base ads on consumers’ profile
Interactive marketing – tailor ads based on stored customer
data
Attracting visitors to a site
•
•
Making the top list of a search engine
Online events, promotions, and attractions
 Electronic catalogs / customized catalogs
 Coupons online
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-16
Business-to-Consumer EC (continued)
 Providing Customer Service
 Help customer determine needs
 Help customer acquire product or service
 Support customer during ownership of
product or service
 Help customer dispose of product or service
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-17
Business-to-Business EC




Composes the majority of EC volume
Enables organizations to form electronic relationships
Covers all activities along the supply chain
Business Models:
 Sell-Side Marketplace
•
Organizations sell products to other organizations
electronically.
 Buy-Side Marketplace
•
Buyers post needs; sellers submit bids
 Electronic Exchanges
•
Electronic marketplaces link many buyers and many sellers
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-18
Business-to-Business EC (continued)
 Collaborative Commerce – non-
buying/selling activities between businesses






Planning and scheduling
Design
New product information
Product content management
Order management
Sourcing and procurement
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-19