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Chapter 6
E-Business and E-Commerce
Information Technology for ManagementImproving Performance in the Digital Economy
7th editionJohn Wiley & Sons, Inc.
Slides contributed by Dr. Sandra ReidChair, Graduate School of Business & Professor, Technology
Dallas Baptist University
6-1Copyright 2010 John Wiley & Sons, Inc.
Chapter Outline
6.1 Overview of E-Business and E-Commerce6.2 Major EC Mechanisms6.3 Business-to-Consumer Applications6.4 Business-to-Business Applications6.5 Major Models of E-Business: From E-
Government to C2C
6-2Copyright 2010 John Wiley & Sons, Inc.
Chapter Outline (cont’d)
6.6 E-Commerce Support Services: Payment and Order Fulfillment
6.7 Ethical and Legal Issues in E-Business6.8 Managerial Issues
Copyright 2010 John Wiley & Sons, Inc. 6-3
Learning Objectives
1. Describe electronic commerce, its scope, benefits, limitations, and types.
2. Explain how online auctions and bartering work.3. Understand the major applications of business-to-consumer
commerce, including service industries and the major issues faced by e-tailers.
4. Describer business-to-business applications.5. Explain why intrabusiness and B2E are considered e-
commerce.
6-4Copyright 2010 John Wiley & Sons, Inc.
Learning Objectives cont’d
6. Describe e-government activities and consumer-to-consumer e-commerce.
7. Identify the e-commerce support services, specifically payments and logistics.
8. Understand the importance and activities of online advertising.
9. Identify and describe ethical and legal issues relating to e-commerce.
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• Problem – Leader & target for Compaq.Losses exceed $100 million.
• Solution – Rapid expansion with selling via online.
• Result – Leading systems provider in US; second worldwide. Fortune’s top 5 “Most Admired” companies since 1999.By-product – sell refurbished Dell computers.
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Dell’s Vast Customer Base
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Business-to-Business
Dell becomes British Airways' preferred partner
Intel invests $23 million in three Indian firms
Dell’s Vast Customer Base – cont’d
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How Dell Does IT: Order Management
Online self-learning about Dell products along with IT & management topicsTraining services
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6.1 Overview of E-Business and E-Commerce
E-Business / E-Commerce
E-commerce describes the process of buying, selling, transferring, or exchanging products, services, and/or information via computer networks, including the Internet.
E-business refers to a broader definition of e-commerce, not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners, conducting e-learning, and processing electronic transactions.
e-commerceor
e-business
E-Business: degree of digitization
• 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).
• Partial vs. pure Electronic Commerce– Buying books from Amazon
Click-&-mortar vs Brick-&-mortar organizations
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More shoppers proceed to checkout online…………
E-commerce in our company
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(Source: Drawn by E. Turban)
Online Advertisers, Marketers & Students
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Powerstudents.com
E-Business – Transaction Types
E-commerce transactions can be done between various parties.
• Business-to-business (B2B): Both the sellers and the buyers are business organizations
• Collaborative commerce (c-commerce): In c-commerce, business partners collaborate electronically
• Business-to-consumers (B2C): The sellers are organizations, and the buyers are individuals (e-tailing)
• Consumers-to-businesses (C2B): Consumers make known a particular need for a product or service, and suppliers compete to provide it
E-Business – Transaction Types (Continued)
• Consumer-to-consumer (C2C): Individuals sell products or services to other individuals
• Intrabusiness (intraorganizational) commerce: An organization uses EC internally to improve its operations. A special case is known as B2E (business to its employees)
• Government-to-citizens (G2C): A government provides services to its citizens via EC technologies, or to other government units (G2G) or to businesses (G2B)
• Mobile commerce (m-commerce): When e-commerce is done in a wireless environment
E-commerce business models• Affiliate marketing• Bartering online and e-classifieds (e.g. craigslist.com) • Deep Discounters• Electronic marketplaces and exchanges• Electronic tendering systems
– Use the mechanism of reverse auctions• Find-the-best-price / Name-your-own price• Online auctions• Group purchasing (e-co-ops)• Information brokers• Membership• Online direct marketing
– Direct selling to customers; most efficient for digital products • Product customizations (build-to-order)• Supply-chain providers / improvers• Value chain integrators / service providers• Social commerce (e.g. Google APIs )
A framework for E-commerce
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(Source: Drawn by E. Turban)
EC: benefits and limitations• Benefits to Organizations:
– Expands marketplace– Efficient procurement– Eliminates marketing costs– Decrease the cost of digital products
and services– Reduces inventory costs (pull system)– Enables niche markets
• Benefits to Consumers:– Less expensive products– More choices– Shop from anywhere, anytime– Customized products– Work and study from home– Interact and exchange ideas
• Technological limitations:– Lack of universally accepted
standards for quality and security
– Telecommunication bandwidth– Integration (legacy applications)– Accessibility
• Other limitations:– Legal and regulatory issues– Measurement inability– Lack of trust to faceless
transactions– Lack of critical mass
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6.2 IS Major EC Mechanisms
EC mechanisms
•Electronic market (e-marketplace)•Electronic catalogs
•Consist of a product database, a directory, search capabilities, presentation function. An electronic catalog can be static or dynamic, standard or customized.
•Electronic auctions (e-Auctions)•Forward auctions: Items are placed at sites for auction and buyers bid continuously for the items (e.g. eBay.com).•Reverse auctions: Suppliers are invited to submit bids. •Auctions are used in B2C, B2B, C2B, e-government, and C2C commerce
•Bartering online•Electronically supported exchange of goods without monetary transactions
Electronic Catalogs
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All of Your Suppliers’ Products in One Online Catalog
E-Auctions
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E-Classifieds
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stores
business
eBay case study
Bartering & Negotiations
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The New Age of Bartering
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6.3 Business-to-Consumer Applications
Business-To-Consumer – B2C • Electronic retailing (e-tailing) is the direct sale of products through
electronic storefronts or electronic malls, usually designed around
an 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 an electronic mall is the same as that of a regular shopping mall—to provide a one-stop shopping place that offers many products and services.
Customer Service Life Cycle
• Phase 1: Requirements – Assist customer determine needs
• Phase 2: Acquisition – Help customer acquire product or service
• Phase 3: Ownership– Support customer (e.g. newsletters, online subscription
renewal)• Phase 4: Retirement
– Help client dispose of product
Electronic Storefronts
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Electronic Malls
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shopping
Amazon – King of E-Tailing
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Jeff Bezos: The Wizard Of Web Retailing
Last Founder Standing
The Future of Reading
America's Best Leaders: Jeff Bezos, Amazon.com CEOThe founder of the massive online retailer is a true Internet pioneer
Online Job Market
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Travel Services
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Real Estate Online
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E-tailing Issues – B2C
• Resolving channel conflict: A firm’s distribution channels compete with each other and with the firm.
• Resolving conflicts within click-and-mortar organizations. When an established company decides to sell direct online, it may create a conflict within its existing operations in areas such as pricing, services, allocation of resources and logistical support.
• Organizing order fulfillment and logistics. E-tailers face a difficult problem of how to ship small quantities to a large number of buyers.
• Determining viability and risk of online e-tailers. How long does a company operate while losing money and how will it finance the losses.
• Identifying appropriate revenue models. It is necessary to identify appropriate revenue/business models.
The concept of retailing and e-tailing implies the sale of goods and/or services to individual customers. The following are the major issues faced by e-tailers that may be handled and supported by IT tools:
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6.4 B2B Applications
Business-To-Business
• B2B business models– Sell-Side Marketplaces: organizations attempt to sell their
products or services to other organizations electronically, from their own private e-marketplace.
– Buy-Side Marketplaces: organizations attempt to buy needed products or services from other organizations electronically, usually from their own private e-marketplace. One buy-side model is a reverse auction. Here, a company that wants to buy items places a request for quotation (RFQ) on its Web site, or in a third-party bidding marketplace.
Business-To-Business
• Electronic Exchanges are E-marketplaces in which there are many 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 an environment of long-term relationship, known as systematic sourcing.
– Vertical exchanges for indirect materials: Here indirect materials in one industry are purchased on an “as-needed” basis (called spot sourcing). Buyers and sellers may not know each other. In such vertical exchanges, prices are continually changing, based on the matching of supply and demand.
– Horizontal distributors: These are “many-to-many” e-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 extra space are traded on an “as-needed” basis (spot sourcing). Prices are dynamic, and they vary depending on supply and demand.
ChemConnect Case Study
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ChemConnect
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6.5 Major Models of E-Business: From E-Government to C2C
E-Government to C2C
• B2E – organizations disseminate information to employees over company intranet.
• E2E – employees communicate with each other. I.e.: goods & services bought & sold among fellow employees.
• SBU/SBU – company owned dealerships buy goods & services from main company. Improves internal supply chain operations.
• E-Collaborative – digital technologies that enable collaboration.
• E-Government – delivers information & services to citizens, business partners & suppliers. I.e.: G2C, G2B, G2G.
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6.6 E-Commerce Support Services: Payment, & Order Fulfillment
E-commerce support services
Copyright 2010 John Wiley & Sons, Inc. 6-43(Source: Drawn by E. Turban.Based on S.Y. Choi et al., 1997, p. 18.)
Market Research Online
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Electronic payment
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How e-credit cards work
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(The numbers 1-9 indicate the sequence of activities.) (Source: Drawn by E. Turban.)
The use of a mobile phone as an e-wallet
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(Source: Koichi Kamoshida/Getty Images.)
Order fulfillment and the logistics system
Copyright 2010 John Wiley & Sons, Inc. 6-48(Source: Turban et al., Electronic Commerce: A Managerial Perspective 2008, Exhibit 13.2, p. 591).
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6.7 Ethical & Legal Issues in E-Business
Ethical and Legal Issues in E-Business
• Privacy• Web tracking (cookies)• Disintermediation and reintermediation
– Infomediaries• Internet fraud • Domain names
– Cybersquatting• Taxes and other fees• Intellectual property protection
Ethical and Legal Issues in E-Business
• Privacy• Web tracking (cookies)• Loss of jobs• Disintermediation and reintermediation
– (a) matching and information providing; (b) value-added services e.g. consulting (Infomediaries)
• Internet fraud • Domain names
– Cybersquatting• Taxes and other fees• Intellectual property protection
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6.8 Managerial Issues
Managerial Issues
• E-Commerce failures – common. Solid business analyses a must.
• Failed initiatives within an organization.• Success stories & lessons learned should be shared.• Managing resistance to change.• Integration into business overall.• Lack of qualified personnel & outsourcing.• Managing impact on organization.• Alliances can be very helpful & productive.• Choosing appropriate strategy.
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Copyright 2010 John Wiley & Sons, Inc.
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Copyright 2010 John Wiley & Sons, Inc. 6-54