CHAPTER 5 AND MODULE B
ELECTRONIC COMMERCE: Strategies For The
New Economy
&
THE WORLD WIDE WEB AND THE INTERNET
WWW AND THE INTERNET
World Wide Web
 Internet
 Web site
 Web page
 URL (uniform resource locator)
 Top-level domain

UNDERSTANDING ADDRESSES

Consider
http://nfp.cba.utulsa.edu/bajaja/mis3003/
http:// - defines the protocol default is http, others may be
mailto:// or ftp:// or telnet:// etc.
 nfp – name of the machine that is the web server. Usually www
but may be something else. Here it is nfp
 utulsa – the name of the organization usually. cba is a
subdomain within the utulsa domain.
 edu – top-level domain (organization type)
 bajaja – name of folder on the nfp server
 mis3003 – subfolder in the bajaja folder
 / at end of mis3003 means refer to the default home page which is
usually default.htm or default.html or index.html.

TOP-LEVEL DOMAINS






com – commercial or
for-profit business
coop – cooperative
edu – educational
institution
gov – U.S. government
agency
mil – U.S. military
organization
net – Internet
administrative
organization
http://data.iana.org/TLD/tlds-alpha-by-domain.txt







int – International treaties
organization
info – general information
biz – business
museum – accredited
museum
name – personal
pro – Accountant, doctor,
lawyer, etc.
Many more
WEB 2.0


. In web 2.0, data is encapsulated in tags that allow
programs to talk to each other. For example, a phone
number can be encapsulated in a <phone> tag so the dialer
on my phone will know it is a phone number and dial it.
Also, in web 2.0, focus is on on online collaboration, users as
both creators and modifiers of content, dynamic and
customized information feeds, etc. So, content is created by
the common masses of people, using social interaction.
 Wikis
 Social networking sites
 Blogs
 RSS feeds
 Podcasting
 Many others
THE INTERNET BACKBONE

Internet backbone -- major set of computer
connections on Internet



Network access point (NAP)
Network service provider (NSP)
Internet service provider (ISP)
INTERNET SERVERS: INTERNET IS NOT WWW!





Internet server
computer – provides
information and
services on the
Internet
Web server – provides
information and
services on the Web
Mail server –
provides e-mail
services
ftp (file transfer
protocol) server –
maintains files you
download
IRC (Internet Relay
Chat) server –
supports discussion
groups and chat
rooms
COMMUNICATIONS PROTOCOLS
 Information
moves on the Internet according
to communications protocols
 Communications protocol (protocol)

set of rules that every computer follows to transfer
information
 Most




widely used
TCP/IP (transport control protocol / Internet
protocol):
http (hypertext transfer protocol)
ftp (file transfer protocol)
SMTP or POP: email protocols
TELECOMMUNICATIONS HARDWARE
To access and use the Web, you also need hardware
 Mainly, some sort of modem

Telephone
 DSL
 Cable
 Satellite

OPENING CASE:
ADVERTISING $$ GO WHERE THE EYES ARE
The Internet
Adults spend 29% of their time there
Advertisers spend only 8% of $$ there
Newspaper
Adults spend only 8% of their time there
Advertisers spend 20% of $$ there
OPENING CASE:
ADVERTISING $$ GO WHERE THE EYES ARE

The Internet
Adults spend 29% of their time there
 Advertisers spend only 8% of $$ there


Newspaper
Adults spend only 8% of their time there
 Advertisers spend 20% of $$ there

ELECTRONIC COMMERCE

E-commerce is changing everything

Electronic commerce (e-commerce)

Mobile commerce (m-commerce)
TYPES OF BUSINESSES

Brick-and-Mortar or retailers

Click-and-Mortar (or Bricks-and-Clicks)

Dot-Coms (or Pure Plays) or e-tailers
E-COMMERCE BUSINESS MODELS
B2B E-COMMERCE
 Business
to Business e-commerce

Where most of the money is transacted. Why?

Basically, it’s about businesses doing business with other
businesses

Supply chain management (from Chapter 2) is a big part of
B2B e-commerce
Examples: www.flightpath.com, www.imprivata.com,
www.alibaba.com
B2C E-COMMERCE
 Business
to Consumer e-commerce

Business sells product/service to consumer

B2C is the glitzy e-commerce like iTunes, eBay, netflix, etc.
C2B E-COMMERCE
 Consumer
to Business e-commerce
 True economic inversion of the B2C model
 Fotolia is a good example (www.fotolia.com)


There you can post photos and videos and businesses will
pay you a royalty to use them (if they like what you offer)
You can also advertise businesses on your personal
Web site (called an affiliate program) and receive
monies for visitors who jump from your site to the
business’ Web sites
C2C E-COMMERCE
 Consumer
to Consumer e-commerce
You selling to another person (or the reverse)
 Usually occurs through an intermediary such as eBay or
craigslist.


Is ebay only c2c?
GOVERNMENT E-COMMERCE
 Business



to Government (B2G) e-commerce
Lockheed providing products and services to DoD
Fairly large e-commerce model in terms of revenue
Most U.S. government entities (especially at the federal level)
won’t do business with your business if you can’t do it
electronically
 Consumer



to Government (C2G)e-commerce
You selling something to the government
This market is quite small
Most times, “you” must register as a business before selling
something to the government, which would then become B2G ecommerce
GOVERNMENT E-COMMERCE
 Government



SBA providing surety guarantees, disaster assistance, etc to
small businesses
TSA holding auctions and selling off confiscated items (most
times, you must be a “business” to participate in these auctions)
U.S. Geological Survey (DOI) selling detailed survey data to
businesses
 Government


to Consumer (G2C) e-commerce
Does not fit well at all within the traditional supply-and-demand
e-commerce notion
Paying taxes, registering vehicles, etc
 Government

to Business (G2B) e-commerce
to Government (G2G) e-commerce
Mainly about information sharing, not commerce
E-COMMERCE RULES TO LIVE BY
1.
Understand your business, products, services,
and customers
2.
Find customers and establish relationships
3.
Move money easily and securely
1. UNDERSTAND YOUR BUSINESS,
PRODUCTS, SERVICES, &
CUSTOMERS

To be successful, you must answer the following:

What is my business’s added value to the
marketplace?

Who will benefit from this added value? They are my
customers! Is it other businesses, or general
consumers or the government?

What do customers see when they interact with my
company?
B2C:
Commoditylike and
Digital
B2C: CONVENIENCE
VERSUS SPECIALTY
 Convenience
Lower priced
 Purchased frequently
 Example: common food
items
 Specialty
 Higher priced
 Purchased less
frequently
 Example: Stereos,
computers

Commoditylike
 Same no matter where
you purchase it
 Examples: books, music,
movies
 Price and ease of ordering
are important
 Digital
 Purchased and delivered
over the Internet
 Best product type for B2C
e-commerce
 Examples: Music,
software

B2C: MASS CUSTOMIZATION
 Mass

customization
the ability of an organization to give its customers the
opportunity to tailor its products or services


Dell – customized computer purchases
Apple iTunes – only the music you want (not necessarily the whole
album)
B2B: MRO VERSUS DIRECT
 Maintenance,
repair, and operations (MRO)
materials (indirect materials)
materials necessary for running a company but do not
relate to the company’s primary business activities
 Similar to convenience items in B2C
 Office supplies, repair parts, lubricating oils

B2B: HORIZONTAL VERSUS VERTICAL
 B2B
e-commerce takes advantage of emarketplaces
 Electronic
marketplace (e-marketplace)
interactive business providing a central market
where multiple buyers and sellers can engage in ecommerce
 Horizontal e-marketplaces
 Vertical e-marketplaces

E-MARKETPLACES
E-COMMERCE RULES TO LIVE BY
2. FIND CUSTOMERS AND
ESTABLISH RELATIONSHIPS
You must first find customers
 Then establish relationships
 Otherwise, you can’t make a sale
 B2C and B2B techniques are very different

B2C MARKETING MIX TOOLS
Registering with search engines (SEO)
Example: http://www.seo.com/

Online ads (google adwords)
Example: http://www.google.com/adwords

Viral marketing (You-tube and games)
https://www.youtube.com/watch?v=oMS23XGrQzM


Affiliate programs: websites direct traffic to you and get
paid a percentage for each sale (conversion) or each click through
B2B MARKETING

Much more personal. Need to contact only a few
customers and establish a deep relationship with
them.

Not usually done with generic ads designed for mass
distribution. Often takes place in e-marketplaces

Once a contact is made, the relationship must be
established; this often requires face-to-face meetings

Must also integrate the IT systems to the supplier
business and customer business.
3. MOVE MONEY EASILY AND
SECURELY
 In
e-commerce, most money moves
electronically
 Security becomes very important
Example: Bitcoins
https://www.youtube.com/watch?v=ultLPNj-a8Y
Other methods:
Credit cards
Financial cybermediaries (www.paypal.com)
Electronic checks
Electronic Bill Presentment and Payment
Smart cards with a chip that stores information on how
much money you have.
B2B PAYMENT SYSTEMS

Business customers…
 Make
large purchases
 Will not pay with credit card or
financial cybermediary
 Use Financial EDI
 Pay for many purchases at once
(perhaps the end of the month)
SECURITY: THE PERVADING CONCERN
Security is very important when moving money
 Some security measures…

Encryption
 Secure Sockets Layers
 Secure Electronic Transactions
 Many, many others

E-BUSINESS TRENDS
2.
Crowdsourcing: when businesses provide enabling
technologies that allow people to create, modify, and oversee
the development of a product or service.
Virtual Goods: nonphysical object. What can be virtualized?
3.
M-commerce: web everywhere.
1.
Crowd funding: Getting a new startup funded
http://www.forbes.com/sites/chancebarnett/2013/05/08/top-10crowdfunding-sites-for-fundraising/
4.
5.
Wearable computing and augmented reality:
Being able to see data on items or services that may be for
sale.