Chapter 11 Electronic
Commerce
Chapter 11
Electronic Commerce
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Presentation Overview
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An Overview of Electronic Commerce
Online Shopping and Services
Peer-to-Peer Online Transactions
Transaction Payment Methods
Establishing an E-tiler Web Site
Business-to-Business Electronic Commerce
The Supply Chain: A B2B Model
Major Types of B2B Technologies
B2B in the U.S. Economy
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An Overview of
Electronic Commerce
What is electronic commerce?
The buying and selling of products and services
over the Internet.
• Mobile commerce (M-commerce) is electronic
commerce using cell phones.
• In business-to-business (B2B) electronic
commerce, companies conduct business activities
with other companies.
• In business-to-consumer (B2C) electronic
commerce, companies use the Internet to sell
products to consumers and receive payment.
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An Overview of
Electronic Commerce
Popular Business-to-Consumer Shopping Sites
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Online Shopping and Services
What are the advantages of online shopping?
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Convenience
Greater selection
More product information
Ease of comparison shopping
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Online Shopping and Services
Online Shopping Venues
– An online store is a seller’s website where
customers can view and purchase a merchant’s
products and services.
The site, or online storefront, groups the products
and services in categories.
– An online superstore offers an extensive array
of products.
– An online shopping mall connects its stores by
hyperlinks on the mall’s homepage.
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Online Shopping and Services
When a user requests a price comparison, an online
shopping agent continually scans databases for
product and price information.
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Online Shopping and Services
The Online Shopping Process
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Online Shopping and Services
Tip Checklist for Shopping Online
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Online Shopping and Services
• The U.S. government has enacted legislation to
protect individuals who shop online.
• Milestones in federal privacy legislation:
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Online Shopping and Services
• With data encryption, data is encoded when
transmitted over the Internet and then decoded by
the recipient.
• This helps to prevent unauthorized access to and
usage of private data.
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Online Shopping and Services
Online shopping sites should provide
– terms of sale that are easy to find, read, and
understand
– a satisfactory degree of information about the
product being offered
– directions for purchasing that are simple to
follow
– a high level of customer service
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Online Shopping and Services
Online Banking and Investing
– Online banking involves using a computer,
modem, and Internet to conduct routine
banking.
– Investment brokerage firms also maintain Web
sites where consumers can purchase and sell
stocks and other securities.
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Online Shopping and Services
Online Travel
– Users can research fares and flights and
purchase tickets online.
– Users can surf price and schedule combinations
to sort options by airline, arrival and departure
times, price, and duration of flight.
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Peer-to-Peer
Online Transactions
• A peer-to-peer online transaction venue is a
Web site forum on which any individual
with an Internet hookup may sell, buy,
trade, or share goods with other individuals.
• An online auction is a Web site consumers
can visit to place an item for sale or bid on
other items being offered for auction.
• Digital music distribution is the free
distribution of music over the Internet.
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Transaction Payment Methods
• An electronic funds transfer (EFT) is any
transfer of funds over the Internet.
• Customers can use a check or credit card by
phone if they do not want to supply financial
data over the Internet.
An electronic check (e-check) initiates an
electronic transfer of funds from the customer’s
checking account to the merchant.
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Transaction Payment Methods
• A credit account represents a customer’s
promise to pay for purchases upon receipt
of a periodic statement from the seller.
• A credit card has a metallic strip that
contains personal information and enables
the user to make purchases on credit.
• A debit card withdraws funds directly from
a user’s checking or savings account.
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Transaction Payment Methods
• A smart card keeps personal and financial
data on a small microprocessor embedded
in the card, which is read by a special
reader connected to the computer.
• Digital cash allows a customer to pay for
online purchases by transmitting a number
from one computer to another computer.
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Transaction Payment Methods
• An electronic wallet (e-wallet) is encryption
software that stores a user’s personal, credit
card, and shipping information.
• A micro payment enables buyers to
purchase low-cost items over the Internet.
• A person-to-person payment system allows
consumers to transfer money through a
credit card or a bank account.
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Establishing an E-tailer
Web Site
Registering the Domain Name
– You must find an available domain name (or
Web address for your site).
– The Internet Corporation for Name and
Numbers (ICANN) is responsible for assigning
domain names.
– You can look up potential domain names on
ICANN’s site to see if they are available.
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Establishing an E-tailer
Web Site
Choosing Hardware and Software
– You must determine the type of hardware and
software necessary to create the storefront.
– Factors to consider include
• Time limitations
• Funds for the enterprise
• The desired complexity of the site
– A Web hosting service allows others to use its
Web servers to store Web pages.
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Establishing an E-tailer
Web Site
Processing Payments: Checklist
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To obtain a merchant account
To provide secure order forms at the site
To use payment-processing software
An electronic order form
To use a commercial payment-processing
service
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Establishing an E-tailer
Web Site
Checklist for Designing an Effective Site
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Establishing an E-tailer
Web Site
Managing the Site
– Customers expect e-tailer sites to
• Reflect current product descriptions and prices
• Show specials, new products or services, updated
information, or new images that encourage
browsing the site frequently
– If your site never changes, customers will have
no reason to revisit it.
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Establishing an E-tailer
Web Site
Advertising and Promoting the Site
Electronic methods to let shoppers know about
your site include
• Co-advertising and co-promoting with other sites
• Locating other sites like yours that will provide a
link to your site, and vice versa
• Submitting your site to search engines
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Establishing an E-tailer
Web Site
Analyzing the Effectiveness of the Site
Site analysis refers to an organization’s ongoing
evaluation of an e-commerce Web site and its
activity.
• One form involves timing a Web site’s ordering or
processing activities.
• Another form provides users with a simple online
questionnaire that allows feedback.
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Establishing an E-tailer
Web Site
Developing a Customer Focus
– The information collected on an e-commerce
site about customers and their purchases can be
used to improve the company’s products and
services.
– Customer relationship management (CRM)
software helps companies manage the
business/customer relationship.
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Business-to-Business Electronic
Commerce
How does the Internet support the supply
chain in B2B e-commerce?
– B2B e-commerce networks companies,
suppliers, agents, customers, and others in a
supply chain.
– Procurement is finding products and services
at the best possible prices.
– Communication in the supply chain can be
done through Web sites, internets, intranets,
extranets, and virtual private networks.
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The Supply Chain: A B2B
Model
Electronic commerce
technologies allow
businesses to conduct
activities quickly and
efficiently on a
worldwide scale.
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The Supply Chain: A B2B
Model
Types of Information Shared in the B2B Model
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The Supply Chain: A B2B
Model
An intranet allows departments within a business to
share information quickly and easily.
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Major Types of B2B
Technologies
Many businesses use electronic data interchange
(EDI) to exchange specially formatted business
documents.
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Major Types of B2B
Technologies
Payment and Transaction Systems
– Financial electronic data interchange (FEDI)
provides for the electronic transmission of
payments and remittance information among a
payer, payee, and banks.
– An automatic clearinghouse (ACH) is
established to transfer funds electronically from
one account to another.
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Major Types of B2B
Technologies
Security Technologies
– Authentication identifies an individual and
confirms that the individual is authorized to
access a system.
– An electronic signature is a digital code
attached to an electronically transmitted
message to uniquely identify the sender.
– A trusted operating system (TOS) is a
security-hardened version of a standard
operating
system.
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B2B in the U.S. Economy
Case Study: General Electric Corporation
Customers can view high-resolution photos of
engine parts they have sent in for repair.
• The site describes the defect and recommends
whether and how to fix it.
• This reduces the “cycle time” for making decisions.
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B2B in the U.S. Economy
Case Study: Walmart
Walmart uses EDI to link the company with is
suppliers.
• Computers transmit purchase orders, shipping
invoices, and payments.
• Electronic funds transfers allow payments to be
electronically credited to suppliers’ bank accounts.
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B2B in the U.S. Economy
Case Study: United Parcel Service (UPS)
– Employees use personal computers to enter
information from customers who request that a
package be picked up or traced.
– Drivers use handheld devices to scan bar codes
for product and destination information.
– Shipping label information can track packages
and inform customers of package status.
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On the Horizon
Based on the information presented in this
chapter and your own experience, what do
you think is on the horizon?
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