Ch08-Electronic and Mobile Commerce

8/10/2019 Ch08-Electronic and Mobile Commerce

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Principles of InformationSystems

Eighth Edition

Chapter 8Electronic and Mobile Commerce


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2Principles of Information Systems, Eighth Edition

Principles and Learning Objectives

Electronic commerce and mobile commerce areevolving, providing new ways of conductingbusiness that present both opportunities for

improvement and potential problems Describe the current status of various forms of e-

commerce, including B2B, B2C, and C2C

Outline a multistage purchasing model that

describes how e-commerce works Define m-commerce and identify some of its unique

challenges


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Principles and Learning Objectives(continued)

E-commerce and m-commerce can be used inmany innovative ways to improve the operations ofan organization

Identify several e-commerce and m-commerceapplications

Identify several advantages associated with the useof e-commerce and m-commerce


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Although e-commerce and m-commerce offer manyadvantages, users must be aware of and protectthemselves from many threats associated with this

technology Identify the major issues that represent significant

threats to the continued growth of e-commerce andm-commerce

Organizations must define and execute a strategyto be successful in e-commerce

Outline the key components of a successful e-commerce strategy


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E-commerce and m-commerce require the carefulplanning and integration of a number of technologyinfrastructure components

Identify the key components of technologyinfrastructure that must be in place for e-commerceand m-commerce to work

Discuss the key features of the electronic payment

systems needed to support e-commerce


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Why Learn About Electronic and MobileCommerce?

Most organizations have an Internet presence

Sales/marketing manager involved with e-commerce

Customer service employees help develop the Web

site Human resource or public relations manger may

provide Web content for employees and investors

Must learn about e-commerce and m-commerce


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An Introduction to ElectronicCommerce

Electronic commerce: conducting businessactivities electronically over computer networks

Types of business activities that are strong

candidates for conversion to e-commerce Paper based

Time-consuming

Inconvenient for customers


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Business-to-Business (B2B)E-Commerce

Subset of e-commerce

All the participants are organizations

Useful tool for connecting business partners in a

virtual supply chain to cut resupply times andreduce costs


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Business-to-Consumer (B2C)E-Commerce

Form of e-commerce in which customers dealdirectly with an organization and avoidintermediaries

Squeezes costs and inefficiencies out of supplychain

Can lead to higher profits

Can lead to lower prices for consumers

E-commerce via the Internet Many goods and services are cheaper online

The Internet allows consumers to easily compareprices, features, and value


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Consumer-to-Consumer (C2C)E-Commerce

Subset of e-commerce that involves consumersselling directly to other consumers

Example: eBay

Customers buy and sell items directly to each otherthrough the site

181 million users buy and sell items valued at morethan $44 billion

Other popular online auction Web sites: Craigslist,uBid, Yahoo! Auctions, Onsale, and WeBidz


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eGovernment

Use of information and communications technologyto simplify the sharing of information, speedformerly paper-based processes, and improve the

relationship between citizen and government Forms of eGovernment

Government-to-consumer (G2C)

Government-to-business (G2B)

Government-to-government (G2G)


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Multistage Model for E-commerce

Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)


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Multistage Model for E-commerce(continued)

Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web


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E-Commerce Challenges

Defining an effective e-commerce model andstrategy

Community, content, and commerce

Changing distribution systems and work processesto manage shipments of individual units directly toconsumers

B2C systems must be able to handle split-case

distribution Integrating Web-based order processing with

traditional systems


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E-Commerce Challenges (continued)

Figure 8.3: Three Basic Components of a Successful E-Commerce Model


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E-Commerce Challenges (continued)

Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional

Back-End Systems


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An Introduction to Mobile Commerce

Mobile commerce (m-commerce) relies on the useof wireless devices, such as personal digitalassistants, cell phones, and smart phones, to place

orders and conduct business Handset manufacturers are working with

communications carriers to develop appropriatewireless devices, related technology, and services

Content providers and mobile service providers areworking together more closely than ever


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Mobile Commerce in Perspective

Only 12 to 14 percent of the worlds 1.8 billion

mobile phone users have ever used the Web fromtheir phones

Internet Corporation for Assigned Names andNumbers (ICANN) created a .mobi domain to helpattract mobile users to the Web

Market for m-commerce in North America is

maturing much later than in Western Europe andJapan


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Technology Needed for MobileCommerce

Improved interface between the wireless deviceand its user

Improved network speed

Security Encryption, digital certificates

Web applications that are accessible for handheldusers


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Technology Needed for MobileCommerce (continued)

Wireless application protocol (WAP):standardset of specifications for Internet applications thatrun on handheld, wireless devices

Effectively serves as a Web browser for suchdevices

Uses the Wireless Markup Language (WML), whichis designed for effectively displaying information on

small devices


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Electronic and Mobile CommerceApplications

Many B2B, B2C, C2C, and m-commerceapplications are being used in:

Retail and wholesale

Manufacturing Marketing

Investment and finance

Auction arenas


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Retail and Wholesale

Electronic retailing (e-tailing):direct sale frombusiness to consumer through electronicstorefronts

Electronic storefronts are typically designed aroundan electronic catalog and shopping cart model

Cybermall:single Web site that offers manyproducts and services at one Internet location

Manufacturing, repair, and operations (MRO)goods and services


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Manufacturing

To raise profitability and improve customer service,many manufacturers move their supply chainoperations onto the Internet

Electronic exchange:electronic forum wheremanufacturers, suppliers, and competitors buy andsell goods, trade market information, and run back-office operations


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Manufacturing (continued)

Figure 8.5: Model of an Electronic Exchange


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Marketing

Market segmentation:identification of specificmarkets to target them with advertising messages

Technology-enabled relationship management:

use of detailed information about a customersbehavior, preferences, needs, and buying patternsto customize the entire relationship with thatcustomer


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Investment and Finance

Online stock trading

Online tools for doing research and analysis

Online banking

Customers can check account balances, transfermoney among accounts, pay bills, etc.

Electronic bill presentment


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Auctions

eBay

Has become synonymous with online auctions

Customer complaints: increased fees and problems

with unscrupulous buyers Constantly trying to expand and improve its services:

Skype, Verisign

Hundreds of other online auction sites

Example: Priceline.com


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Anywhere, Anytime Applications ofMobile Commerce

M-commerce devices are ideal for accessingpersonal information and receiving targetedmessages for a particular consumer

Through m-commerce, companies can establishone-to-one marketing relationships with individualconsumers anytime and anywhere

The most successful m-commerce applications suitlocal conditions and peoples habits and

preferences Examples: banking, stock trading, information

services, retail, advertisements


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Advantages of Electronic and MobileCommerce

Global reach: helps reduce gap between rich andpoor countries

Reduces costs: increases speed and accuracy

Speeds the flow of goods and information Increases accuracy: eliminates human data-entry

error

Improves customer service: information aboutdelivery status and ability to meet customerdemand


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Threats to Electronic and MobileCommerce

Businesses must ensure that e-commerce and m-commerce transactions are safe and consumersare protected

Number of threats to the continued growth of e-commerce and m-commerce

Security, theft of intellectual property, fraud, invasionof privacy, lack of Internet access, return on

investment, legal jurisdiction, taxation


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Security

Methods to increase security

Payment Card Industry security standard

Address Verification System

Card Verification Number technique Visas Advanced Authorization process

Federal Financial Institutions Examination Councils

Authentication in an Internet Banking Environment

guidelines Biometric technology


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Theft of Intellectual Property

Intellectual property: works of the mind that aredistinct somehow and are owned or created by asingle entity

For example: books, films, music, processes, andsoftware

Copyright law protects authored works such asbooks, film, images, music, and software from

unauthorized copying Patents can protect software, business processes,

formulae, compounds, and inventions


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Fraud

Phishing:sending bogus messages purportedlyfrom a legitimate institution to pry personalinformation from customers by convincing them to

go to a spoof Web site Click fraud: arises in a pay-per-click online

advertising environment when additional clicks aregenerated beyond those that come from actual,

legitimate users Online auction fraud


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Invasion of Consumer Privacy

Online profiling:practice of Web advertisersrecording online behavior to produce targetedadvertising

Clickstream data:data gathered based on theWeb sites you visit and the items you click on


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Lack of Internet Access

Digital divide:difference between people who doand people who dont have access or capability to

use high-quality, modern information and

communications technology to improve theirstandard of living

Exists between:

More and less developed countries

Economic classes The educated and uneducated

Those who live in cities and those who live in ruralareas


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Return on Investment

The investment required for a large firm toestablish and operate a B2B or B2C Web site canbe in the millions of dollars

Common problem with determining return oninvestment: difficult to forecast project costs andbenefits


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Legal Jurisdiction

When conducting e-commerce, sales must notviolate county, state, or country legal jurisdictions

Examples

Selling stun guns and similar devices Selling cigarettes or alcohol to underage customers


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Taxation

U.S. Supreme Court ruling: Internet-basedmerchants must apply sales tax only when buyerslive in a state where the company has physical

facilities, or nexus Most businesses set up separate companies to

avoid dealing with nonstandard rules of the morethan 7,500 taxing districts nationwide

Consumers are responsible for voluntarily remittingsales taxes

Difficult for states to collect sales taxes on Internetpurchases


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Strategies for SuccessfulE-Commerce

Companies must develop effective Web sites thatinclude the following characteristics:

Easy to use

Accomplish the goals of the company Safe and secure

Affordable to set up and maintain


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Defining the Web Site Functions

Decide which tasks the site must accomplish

Create an attractive presence for the company

Meet the needs of its visitors

Examples: obtaining information about theorganization and its products, buying products orservices, getting advice, registering complaints

Redefining your sites basic business model to

capture new business opportunities


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Establishing a Web Site

Web site hosting companies

Allow you to set up a Web page and conduct e-commerce within a matter of days

Little up-front cost

Storefront broker:companies that act asmiddlemen between your Web site and onlinemerchants that have the products and retail

expertise


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Building Traffic to Your Web Site

Obtain and register a domain name

Make your site search-engine-friendly

Meta tag:special HTML tag that contains keywords

representing your sites content Keywords are used by search engines to build

indexes pointing to your Web site

Web site traffic data analysis software

Adapting Web site design for global consumers


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Maintaining and Improving Your WebSite

Be alert to new trends and developments in e-commerce

Be prepared to take advantage of new

opportunities Personalization:tailoring Web pages to

specifically target individual consumers

Explicit: captures user-provided information

Implicit: captures data from customer Web sessions

Technology Infrastructure Required To


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Technology Infrastructure Required ToSupport E-commerce and

M-commerce Successful implementation of e-business requires

significant changes to existing business processesand substantial investment in IS technology

Poor Web site performance drives consumers toabandon some e-commerce sites in favor of thosewith better, more reliable performance


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Hardware

Storage capacity and computing power required ofthe Web server depends on:

Software that will run on the server

Volume of e-commerce transactions E-commerce solutions should be designed to be

highly scalable

Web site hosting: third-party Web service provider


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Web Server Software

Security and identification

Access controls

Encryption

Retrieving and sending Web pages Web site tracking

Web log file

Web site development HTML/visual Web page editor, softwaredevelopment kits


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Web Server Software (continued)

Web page construction

Web editors and extensions

Static Web page: contains same information

Dynamic Web page: responds to a specific Webusers request

Examples of Web server software packages:Apache HTTP Server, Microsoft Internet

Information Server


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E-Commerce Software

E-commerce software tools

Catalog management: provides standard format

Product configuration: build product online to meet

user needs Shopping cart facilities

Transaction processing

Web traffic data analysis

Web services: software modules supporting specificbusiness processes that users can interact with overa network as needed


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E-Commerce Software (continued)

Figure 8.7: Electronic Shopping Cart


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Electronic Payment Systems

Digital certificate:attachment to an e-mailmessage or data embedded in a Web page thatverifies the identity of a sender or a Web site

Certificate authority (CA):trusted third party thatissues digital certificates

Secure Sockets Layer (SSL):communicationsprotocol used to secure sensitive data

Electronic cash:amount of money that iscomputerized, stored, and used as cash for e-commerce transactions

El t i P t S t


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Electronic Payment Systems(continued)

Credit card Charge card

Debit card

Smart card:a credit cardsized device with anembedded microchip to provide electronic memoryand processing capability


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Summary

Electronic commerce (or e-commerce): conductingbusiness activities electronically over computernetworks

Types of e-commerce: business-to-consumer(B2C), business-to-business (B2B), and consumer-to-consumer (C2C)

eGovernment: use of information and

communications technology to simplify the sharingof information, speed formerly paper-basedprocesses, and improve the relationship betweencitizen and government


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Summary (continued)

Issues affecting growth of e- and m-commerce:security, theft of intellectual property, fraud,invasion of consumer privacy, lack of Internetaccess, return on investment, legal jurisdiction, andtaxation

An effective Web site should be easy to use,accomplish the goals of the company, be safe and

secure, and be affordable to set up and maintain Successful implementation of e-business requires

significant changes to existing business processesand substantial investment in IS technology

Ch08-Electronic and Mobile Commerce

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