MIS_Lecture 8-1_EB and EC

7/31/2019 MIS_Lecture 8-1_EB and EC

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MIS

E-Business / E-Commerce

J. S. Chou

Assistant Professor


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What is Electronic Commerce?

Use of electronic networked computer-based

technology to:

Bring new products, services, or ideas to market Support and enhance business operations (including

sales of products/services over the Web)

Most e-commerce transactions take place among

businesses

Now recognized as a prime revenue source


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The Road to Electronic Commerce

Key to e-commerce is using computer networks,

especially the Internet, to automate and streamline

business transactions

1960s: banks created private telephone network to doelectronic funds transfers

1970s: banks created services to provide after hours

services to their customers

Late 1970s and early 1980s: Electronic Data Interchange(EDI) emerged

Communications protocol that enabled companies to exchange

business documents over private phone networks


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The Road to Electronic Commerce (2)

Early 1980s and through the 1990s: personal computer

facilitated rapid expansion of the Internet and ultimately

provided the spark that led to the explosive use of the

World Wide Web Late 1990s and early 2000s: networking technologies

blossomed and expanded the reach, speed, and in some

cases, security of Internet-based communications and

transactions


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Electronic Business

Electronic commerce can take several forms depending on the

degree of digitization (the transformation from physical to digital).

The degree of digitization relates to: the product(service) sold

the process

the delivery agent(or intermediary).

E-commerce describes the process of buying, selling, transferring, orexchanging products, services, and/or information via computernetworks, including the Internet. E-business refers to a broaderdefinition of e-commerce, not just the buying and selling of goods and

services, but also servicing customers, collaborating with businesspartners, conducting e-learning, and processing electronic transactions.


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E-Business EC Organizations

Brick-and-mortar (or old-economy) refer to purephysical organizations (corporations).

Virtual (or pure-play) organizations are companiesthat are engaged only in EC .

Click-and-mortar (or click-and-brick) organizationsare those that conduct some e-commerce activities, yettheir primary business is done in the physical world.

E-commerce describes the process of buying, selling,transferring, or exchanging products, services, and/or informationvia computer networks, including the Internet. E-business refersto a broader definition of e-commerce, not just the buying andselling of goods and services, but also servicing customers,

collaborating with business partners, conducting e-learning, andprocessing electronic transactions.


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E-Commerce Benefits

Easy comparison shopping

Reduced costs and increased competition

Convenience

24 7 365 operation

Global access

Lower entry barriers

Increased market (customer) knowledge


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E-Commerce Disadvantages

Hidden costs

Vulnerability to technical failure

Cost of staying in business

Lack of security

Invasion of privacy

Low service levels

Legal issues


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E-Commerce Styles


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E-Business Transaction Types

E-commerce transactions can be done between various parties.

Business-to-business (B2B): Both the sellers and thebuyers are business organizations.

Collaborative commerce (c-commerce): In c-commerce,business partners collaborate electronically.

Business-to-consumers (B2C):The sellers areorganizations, and the buyers are individuals.

Consumers-to-businesses (C2B):Consumers makeknown a particular need for a product or service, and

suppliers compete to provide it.


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E-Business Transaction Types (Continued)

E-commerce transactions can be done between various parties.

Consumer-to-consumer (C2C): Individuals sellproducts or services to other individuals.

Intrabusiness (intraorganizational) commerce:Anorganization uses EC internally to improve its

operations. A special case is known as B2E (business

to its employees)

Government-to-citizens (G2C):A governmentprovides services to its citizens via EC technologies.

Mobile commerce (m-commerce): When e-commerce is done in a wireless environment.


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Components of E-Business


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Components of EC(Continued)

To execute these applications, companies need the right information,infrastructure, and support services. As shown:

People:Sellers, buyers, intermediaries, information systems specialists andother employees, and any other participants.

Public policy: Legal and other policy and regulating issues, such asprivacy protection and taxation.

Marketing and advertising: Like any other business, EC usuallyrequires the support of marketing and advertising.

Support services: Many services are needed to support EC. Theyrange from payments to order delivery and content creation.

Business partnerships: Joint ventures, e-marketplaces, andpartnerships are some of frequently occurring relationships in e-

business


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E-Commerce Architecture


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A Sample E-Commerce Transaction


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More examples


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Business-To-Consumer B2C

Electronic retailing (e-tailing) is the direct sale of products throughelectronic storefronts or electronic malls, usually designed aroundan electronic catalog format and/or auctions. Electronic Storefronts. Hundreds of thousands of solo storefronts can

be found on the Internet, each with its own Internet name and EC

portal, such as Home Depot, The Sharper Image, or Wal-Mart. Electronic mall, also known as a cybermall or e-mall, is a collection of

individual shops under one Internet address. The basic idea of anelectronic mall is the same as that of a regular shopping malltoprovide a one-stop shopping place that offers many products andservices.

For generations home shopping from catalogs has flourished, andtelevision shopping channels have attracted millions of shoppers.However, these methods have drawbacks: Both methods can beexpensive; paper catalogs are sometimes not up-to-date; andtelevision shopping is limited to what is shown on the screen at

any given time.

Electronic Retailing: Storefronts and Malls


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Service Industries B2C

Electronic banking, also known as cyberbanking includes various bankingactivities conducted from home or a business instead of at a physical bank

International and Multiple-Currency Banking. International banking and theability to handle trading in multiple currencies, transfers of electronic fundsand electronic letters of credit are critical for international trade.

Online Securities Trading can be placed from anywhere, any time. Investorscan find a considerable amount of information regarding a specific companyor in a mutual fund.

Online Job Market. The Internet offers a perfect environment for job seekers

and for companies searching for employees. Travel Services. The Internet is an ideal place to plan, explore, and arrange

almost any trip.

Real Estate. Real estate transactions are an ideal area for e-commerce. Thecustomer can view many properties, sort and organize properties according topreferences and can preview the exterior and interior designs of theproperties, shortening the search process.

Delivery ofservices (buying an airline ticket or stocks) can bedone 100 percent electronically, with considerable cost reductionpotential. Therefore, online services is growing very rapidly.


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Customer Service B2C

Phase 1: Requirements Phase 2: Acquisition

Phase 3: Ownership

Phase 4: Retirement

Phases In Customer Service Life Cycle.


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Issues in E-TailingMarket Research B2C

To successfully conduct electronic commerce, especially B2C, it isimportant to find out who are the actual and potential customersand what motivates them to buy. Finding out what specific groups

of consumers want is done via segmentation, dividing customersinto specific segments, like age or gender.

Market researchers have tried to understand consumer behavior,and develop models to help vendors understand how a consumer

makes a purchasing decision. If the process is understood, avendor may be able to influence the buyers decision, throughadvertising or special promotions.


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Consumer Behavior Model


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Issues in E-tailing

Several models have been developed in an effort to describe thedetails of the decision-making process that leads up to andculminates in a purchase.

Generic Purchasing-Decision Model1. Need identification

2. information search

3. evaluation of alternatives

4. purchase and delivery

5. after-purchase evaluation.


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Market Research The Process

There are basically two ways to find out what customers want. Thefirst is to ask them, and the second is to infer what they want byobserving what they do.

Asking Customers What They Want: The Internetprovides easy, fast, and relatively inexpensive ways for vendors to

find out what customers want by interacting directly with them. Thesimplest way is to ask potential customers to fill in electronicquestionnaires.

Observing Customer Behavior on the Web:The Webis a rich source of business intelligence captured from a company sWeb sites. By analyzing the user behavior patterns contained in the

clickstream data inference about behavior can be made. Brand- and Vendor-Finding Agents and Price Comparisons

Search Agents

Collaborative Filtering Agents

Other Agents


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Business-To-Business B2B

Sell-Side Marketplaces: organizations attempt to sell their products orservices to other organizations electronically, from their own private e-

marketplace. This model is similar to the B2C model in which the buyer

is expected to come to the sellers site and place an order.

Buy-Side Marketplaces: organizations attempt to buy needed

products or services from other organizations electronically, usuallyfrom their own private e-marketplace. One buy-side model is a reverse

auction. Here, a company that wants to buy items places a request forquotation (RFQ) on its Web site, or in a third-party bidding marketplace.

In B2B applications, the buyers, sellers, and transactions involveonly organizations. It covers a broad spectrum of applications thatenable an enterprise to form electronic relationships with itsdistributors, resellers, suppliers, customers, and other partners.


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Business-To-Business B2B (Continued)

E-procurement. Purchasing by using electronic support is referred to

as e-procurement. In addition to reverse auctions e-procurement

uses other mechanism. Two popular ones are group purchasing and

desktop purchasing.

Group purchasing the requirements of many buyers are aggregated sothat they total a large volume, and thus merit more seller attention. Oncebuyersorders are aggregated, they can be placed on a reverse auction,and a volume discount can be negotiated.

Desktop purchasing. In this variation of e-procurement, supplierscatalogs are aggregated into an internal master catalog on the buyers

server, so that the companys purchasing agents can shop moreconveniently. Desktop purchasing is most suitable for maintenance,replacement, and operations (MRO) indirect items, such as office

supplies.


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Business-To-Business B2B (Continued)

Electronic Exchanges areE-marketplaces in which there aremany sellers and many buyers. Vertical distributors for direct materials: These are B2B marketplaces where

direct materials(materials that are inputs to manufacturing) are traded in anenvironment of long-term relationship, known as systematic sourcing.

Vertical exchanges for indirect materials: Here indirect materials in one industryare purchased on anas-neededbasis (called spot sourcing). Buyers and sellersmay not know each other. In such vertical exchanges, prices are continually

changing, based on the matching of supply and demand.

Horizontal distributors: These aremany-to-manye-marketplaces for indirect(MRO) materials, such as office supplies, used by any industry. Prices are fixed or

negotiated in this systematic sourcing-type exchange.

Functional exchanges: Here, needed services such as temporary help or extraspace are traded on anas-neededbasis (spot sourcing). Prices are dynamic,and they vary depending on supply and demand.


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E-Government

It can be divided into three major categories:

government-to-citizens (G2C)

government-to-business (G2B)

government-to-government (G2G)

E-government is the use of Internet technology in general and e-commerce in particular to deliver information and public services tocitizens, business partners and suppliers, and those working in thepublic sector.


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Consumer-To-Consumer C2C

C2C Auctions.

Classified Ads.

Personal Services.

Support Services to C2C.

Customer-to-customer(C2C) e-commerce refers to e-commerce in which both the buyer and the seller are individuals(not businesses). C2C is conducted in several ways on theInternet, where the best-known C2C activities are auctions.

Database Design for


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Database Design for

E-commerce Applications

Define scope of database

Establish some basic business rules and their

effect(s) on the design

Define tables required to support the e-commerce

activities

Identify basic attributes for each table


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Extensible Markup Language (XML)

Meta-language used to represent and

manipulate data elements

Designed to facilitate the exchange of structureddocuments such as orders or invoices over the

Internet

World Wide Web Consortium published the firstXML 1.0 standard definition in 1998


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ProductList.xml Document


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ProductList.dtd Document


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DTD and XML Documents

for Order Data


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XML Data Binding in HTML

MIS_Lecture 8-1_EB and EC

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