MIS 111: Computers and the
Inter-networked Society
Class 4: E-Commerce
July 14th, 2011
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Today’s Learning Objectives
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List one or two current events in technology news
Define e-commerce
List at least 4 different ways e-commerce can make money
Explain the difference between Business-to-Customer and
Business-to-Business e-commerce
List the components of an online store
Discuss how the “long tail” is implemented in e-commerce and
why it makes e-commerce successful
Discuss a few ways you can make money online
Survey
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When was the last time you used a physical store to buy…
Music
Book
Software
DVD
E-Commerce: An Example
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E-Commerce: A Definition
“The process of buying, selling,
transferring, or exchanging
products, services, or information
via computer networks, including
the Internet.”
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Pure vs. Partial E-Commerce
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Bricks and mortar (not e-commerce)
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Virtual (pure e-commerce)
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Clicks and mortar (partial e-commerce)
A Word on Nomenclature
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Business and technology people are fairly
simple people.
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Hence, the names they choose mean exactly
what they say (for example, management
information systems? The world wide web?)
Types of E-Commerce
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Business-to-Consumer
Business-to-Business
Consumer-to-Consumer
Business-to-Employee
E-Government
Mobile Commerce
Business-to-Consumer
and
Business-to-Business
More details
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Business-to-Consumer EC (B2C)
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Means of Access (E-Tailing)
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Direct sale through Electronic Storefronts
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Direct sale through Electronic Malls
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May include thousands of vendors
Benefits of E-Tailing:
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Like www.officedepot.com
Can buy from home 24/7
Wider variety of products at lower prices (text
books?)
Business-to-Consumer Services
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Online Service Industries (in addition to goods)
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Cyberbanking (paying bills, applying for loans)
Online Securities Trading (E*Trade)
Online Job Market (www.monster.com)
Travel Services (www.hotels.com)
Business-to-Consumer Ads
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Online Advertising Methods
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Banners (electronic billboards)
Pop-ups/Pop-unders (annoying!!)
Spamming vs. Permission Marketing
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Viral Marketing
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(Will you please sign up for our newsletter?)
“Word of Mouth” marketing
Addwords (not as good as search engine
optimization)
Business-to-Business (B2B)
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Sell-Side Marketplaces
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Buy-Side Marketplaces
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Organizations buy products from others
Electronic Exchanges
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Organizations sell products to others
One buyer, many sellers
Some E-Commerce Business
Models
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Online direct marketing
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Deep discounters
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Small buyers aggregate demand to get low price
Online auctions
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Receivers send info about product to friends
Group purchasing
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Appeals to customers who consider only price
Viral marketing
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Manufacturers/Retailers sell directly to customers
Like regular auction, but online
How do they make money?
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Amazon.com
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Pandora.com
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Ebay.com
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iTunes
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http://www.barnesandnoble.com/
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Google
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Facebook
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CNN
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ESPN
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NCN.com
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go.disney.com
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www.arizona.edu
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Woot.com
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Where to start?
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Q1. how are you going to make money
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Adverting
Selling a product
Selling a service
Selling digital media
Affiliate program
Selling sort of you own program
Subscriptions
Hybrid
DO YOUR RESEARCH!
Example, I’m going to be selling a
digital product
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Tomorrow, we will do an affiliate program so
today we are going to be selling videos and
music
Q2. how much work am I willing to put into
Web development?
Option 1
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Online solutions
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http://shopping-cart-review.toptenreviews.com/
https://www.bigcommerce.com/ecommercesolution-features.php
Online Stores:
Components & Processes
a
Customer
Catalogue
b
Shopping
Cart
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Catalogue
• List of Products
• Descriptions
• Prices
• Options, size, etc.
• Pictures
Shopping Cart
• A temporary list of
item to be
purchased
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Payment
Collection
e-commerce - Michael McDonnell
Checkout
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Checkout
• Billing Info
• Shipping Address
• Shipping Cost
• Record Order
• Process Payment
Electronic Payments
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Electronic Checks
Electronic Credit Cards
Purchasing Cards
Do you know what that little lock means in
the upper right hand corner of the browser?
Electronic Payments (cont’d)
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Electronic Cash
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Stored-Value Money Cards (calling cards)
Smart Cards (like the CatCard)
Person-to-Person Payments (PayPal)
Digital Wallets (stores financial info of buyer so no
reentry is needed)
Option 2
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Content Management System
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Plugins
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Blog
Google sites
Word press
Joomla
Drupal
http://extensions.joomla.org/
Option 3
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Completely program it
Why?
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Complete flexibility
Your platform doesn’t support content
management systems
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http://govollow.appspot.com/
Free and lots of traffic (great for facebook, iphone
integration)
You’re a geek 
With option 2 and 3
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You usually need to find you own place to
host the Web site (they are just software)
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Install software
Create a database
The Long Tail
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“The Long Tail”
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What happened to Touching the Void?
What does it mean that we have a “market of
hits?” (anyone listen to the Top 40 station?)
Why aren’t obscure products in the market?
What is the 20/80 principle and why doesn’t it
apply to the market for music and videos?
The Long Tail: Power Law Distribution
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The Rules of The Long Tail
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Rule 1: Make Everything Available
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Rule 2: Cut the Price in Half; Now Lower it.
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Is any price too low?
Rule 3: Help Me Find it.
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Why can sellers sell everything online?
How do recommendations work?
You: A Money Maker
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Affiliate Programs (http://www.amazon.com/)
Advertising (www.google.com/adsense/)
Create Products (http://www.spreadshirt.com/)
I want to sell my own product …
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Don’t want to handle order fulfillment
http://www.amazonservices.com/content/fulfillmentby-amazon.htm?id=hm2
Tomorrow
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No reading
Meet in McClelland Hall 214
We’re going to make a business!!!
Quiz
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