CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE

CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE

1. EC, Electronic commerce, is the process of buying, selling, or exchanging products, services, and information, via computer networks, mostly the Internet. E-business refers to a broader definition of EC that includes servicing customers, collaborating with business partners, and conducting electronic transactions within an organization.2.The major benefits of EC are:

Organizational (sellers). EC expands the market place with minimum capital outlay. More customers can be reached and there are more suppliers to buy from. EC decreases the cost of creating, storing, retrieving, and distributing information. EC allows low inventories, customized products/services, reduced cycle time, better customer service, and lower communication cost.

Consumer. Shop from anywhere anytime. Get a large variety of products from many countries. Usually pay less. Can get customized products/services. Can search quickly for detailed information. Can get collectors items easily and cheaply and interact with other shoppers. Can work and study at home.

Societal. Less traffic, pollution, improved public services, improved quality of life. [See previous IM]

3.The major technological limitations are: security, reliability, standards and protocols (need to be improved). Insufficient bandwidth, software development tools are still evolving. Software integration problems, a need for a special server, and incompatibility with legacy systems.

Difficulty justifying (intangible benefits), security enforcement is difficult, lack of trust, resistance to change, legal issues, not enough support services, accessibility and human relations problems are the major non technological limitations

4.An intranet is an enterprise internal network which uses Internet technology (TCP/IP protocol, search engines, browsers, etc). An extranet is a secured network that uses the Internet infrastructure to connect the intranets of business partners, or to allow customers and others to access a corporate intranet.

5.The major components of EC are: Applications (B2B, B2C, intrabusiness, infrastructure, support, people, public policy, technical standards and organizations. Not shown in early printings are advertisement and marketing, and enterprise (ERP) connection. Finally management is integrating it all together.

6.A corporate portal is a network configuration in which employees, business partners, and the public can access corporate information, communicate, and collaborate.

7.EC makes direct marketing more efficient. It allows sellers to reach more customers with little capital outlay. It permits one-to-one advertisement. It allows customization and it enables the use of multimedia. Most importantly, it allows interactive, quick feedback from customers and superb customer service.

8.There are several types of virtual corporations. In one type, units from different companies form a temporary independent company. Another type is the Keiretsu, which connects business partners (permanent business alliance). Virtual corporations are frequently found in EC along the supply chain.

9.An electronic network that facilitates the exchange of information, products, services, and payments.

10.E2E Exchange-to-exchange A system that connects electronic exchanges to each other.

C2C Consumer-to-consumer A category of electronic commerce in which consumers sell directly to other consumers. Examples include online auction sites, such as ebay.

G2C Government-to-citizens A category of electronic commerce in which a government organization buys or sells goods, services, or information to businesses and citizens.

11.B2B Business-to-business A category of electronic commerce in which all of the participants are businesses or other organizations (e.g., non-profit).

B2C Business-to-consumer A category of electronic commerce in which businesses sell goods or services directly to the consumer.

12.Collaborative commerce, also called C-commerce, is a category of electronic commerce in which an interorganizational information system (IOS) is used to facilitate collaboration between business partners and organizational employees.

13.Mobile commerce, also called M-commerce, occurs when electronic commerce is conducted via wireless communications (i.e., cellular phones and personal digital assistants).

CHAPTER 2 THE DIGITAL ECONOMY1.A marketplace refers to a physical market, while a marketspace is an electronic market.

2.Digitized products are those that can be transferred to a binary code. Examples are software, music, and videos.

3.Price discovery is the process of finding either the highest price a buyer is willing to pay or the lowest price a seller is willing to accept. Online auctions sell to the highest bidder, while Priceline.com tries to find the lowest price from a seller. Search cost is the time, effort, and expense a consumer incurs to find product, price, and quality information about a good or vendor.

4.Disintermediation is the elimination of middlemen in the value chain. Reintermediation refers to brokers who manage electronic intermediation.

5.The digitization of products and services allows them to be delivered in seconds. This greatly reduces the time required to obtain them (cycle time). In addition, e-commerce facilitates greater efficiency along supply chains, leading to cycle time reduction (the time required for a product and its associated paperwork to move through the supply chain).

6.E-commerce allows manufacturers to customize all their products and services. This is in contrast to the traditional environment where consumers must choose from standardized products and services.

7.In build-to-order systems the manufacturer only begins assembly after an order has been placed.

8.Micropayments are small payments (usually less than $1) that can be made electronically. These payments can be made via mobile phone, smart card, or digital wallet.

9. Mobile commerce, or m-commerce, is e-commerce that is conducted via wireless devices (i.e., mobile phone, personal digital assistant, etc.).

CHAPTER 3 RETAILING IN ELECTRONIC COMMERCE (E-TAILING)Describe the nature of B2C e-commerce.

B2C e-commerce is concerned with businesses selling products to customers.

What sells well in B2C?

A variety of goods sell well online. These goods include: computers and electronics, sporting goods, office supplies, books and music, toys, health and beauty products, entertainment, apparel, services and cars.

What are the characteristics of high-volume products and services?

The characteristics of high-volume products and services include: high brand recognition, recognized guarantees, digitized formats, relatively inexpensive items, frequently purchased items, commodities with standard specifications and well-known, unopenable packaged items.

List the B2C revenue models.

The B2C revenue models include: product sales, subscription, transaction-fee, advertising-supported and sponsorship models.

List the B2C distribution channel models.

The B2C distribution channel models include: direct marketing, pure-play e-tailers and click-and-mortar retailers.

Describe the direct marketing model.

The direct marketing model takes place without intermediaries between manufacturers and buyers.

Describe virtual e-tailing.

These firms sell to customers over the Internet while not maintaining any type of physical sales location.

Describe the click-and-mortar approach.With this approach the firm sells to customers through the Internet and through physical sales locations.

List the benefits of online travel services to travelers and to service providers.Online travel services provide the benefits of large amounts of free information, 24/7 availability and the potential for significant reductions in price.

What role do intelligent agents have in travel services?

Intelligent agents could provide a service to travel customers by providing buyer-seller negotiations.

What are the driving forces of the electronic job market?

The electronic job market is driven by the volatile nature of the employment market itself and the constant change in available positions and applicants.

Describe the role of intelligent agents in the electronic job market.Intelligent agents can be used to search and retrieve suitable positions for candidates and suitable candidates for employer positions.

List the major online real estate applications.The major online real estate applications include: advice systems for customers who are buying and selling homes, directory and new sites, property listings, commercial property listings, residential property listings, links to realtors, maps, mortgage information, mortgage comparisons, mortgage brokers, online lenders, and sites for home sellers and buyers.

What are the advantages of online stock trading?

The major advantages of online stock trading are its ease-of-use, access to large amounts of information, convenience, and in many cases reduced costs.

Explain online bill paying.

In online bill paying, funds are taken from the user's accounts by an intermediary who then arranges payments with the user's debtor.

Explain on-demand delivery service.On-demand delivery service is express delivery that is made quickly after an online order is received.

Describe e-grocers and how they operate.

These firms will take orders online and provide deliveries to customers through a regularly scheduled delivery.

Who are the typical e-grocery shoppers? (Would you shop online for groceries?)

Typical e-grocery shoppers fall into one or more of the following groups: shopping avoiders, necessity users, new technologists, extremely busy consumers, consumers who enjoy online shopping and older individuals who enjoy shopping in any type of store.

Describe digital goods and their delivery.

Digital goods are products that can be completely digitized and delivered over the Internet.

Explain the Napster business model.

The existing Napster business model is to provide users with access to music that is not copyright protected in a peer-to-peer environment in addition to offering users the ability to purchase music online.

What are the benefits and limitations of digital delivery?

There are several advantages to the use of digital delivery including increased speed of delivery, low product cost and low distribution costs. The major disadvantage is that not all goods can be digitized.

Define shopping portals and provide two examples.

Shopping portals are gateways to storefronts and malls that may be either comprehensive or niche-oriented. Examples would include gomez.com and aol.com/shopping.

Why are escrow services useful for online purchases?

The services are useful for online purchases because they can decrease the amount of contract risk for the customer during an online purchase.

What motivates a brick-and-mortar company to offer Web services?

Traditional firms offer Web services to compete with new e-commerce entrants and to preserve market share. Additionally, traditional firms may see e-commerce as a way to expand their existing market share.

What customer services are provided by Circuit City on its Web site?

The Circuit City site provides the following customer service tools: product information, explanation of terms, product searches and flexible product comparisons.

Describe the logic of the alliance between Amazon.com and ToysRUs.com.

The alliance between these two firms allows Amazon.com to concentrate on its core competence of effective online logistics and customer relationship management, while ToysRUs.com can concentrate in their area of core competencepurchasing and marketing toys.

Why are virtual e-tailers usually not profitable?

Most of these firms are not profitable because they are unable to quickly achieve the scale to make marginal profits on each marginal sale.

Relate branding to profitability.

Good branding has historically been tied to profitability in off-line retailers. Branding is an expensive process that can create financial difficulties for new firms.

Chapter 4

Consumer Behavior, Customer Service, and AdvertisingDescribe the Web-based purchasing-decision model.

This model is used to show that each of the five stages in the generic purchasing-decision model can be supported through the Internet. It is called the Consumer Decision Support System (CDSS).

Describe one-to-one marketing.

One-to-one marketing uses special marketing techniques that treat each customer in a unique way. Internet technologies greatly facilitate the ease of one-to-one marketing.

Define loyalty and describe e-loyalty.

Customer loyalty is the degree to which a consumer will stay with a specific vendor or brand. E-loyalty is a measure of a customer's commitment to an online retailer.

Describe the issue of trust in EC and how to increase it.

Trust is very important in EC because of the lack of direct human interaction between the customer and the merchant. Merchants are able to increase the amount of trust their customers have through brand recognition, security mechanisms and business transparency.

Describe how market research is done online.

Online market research is very similar to the research that would be done off-line. Online marketing research is conducted online, and the Internet can make the process quicker and easier. Researchers go through the same steps online in determining what needs to be researched and validating results. Researchers can gain access to a large variety of secondary research available online.

Describe data mining and how it is done.

Data mining is the process of searching a large database to discover previously unknown patterns. It is a way to automate the process of finding predictive information. Data mining uses existing information stored in a database that is then searched and correlated to find new information and new patterns of information.

Define Web mining.

Web mining is the application of data mining technologies to discover meaningful patterns, profiles and trends from both the content and usage of Web sites.

Describe the limitations of online market research.

The major limitation of online market research is the sample and characteristics of Web users. These Web users may not typify the population at large, so marketers must ensure that they are aware of the demographics of those they are researching.

Define customer service and describe its importance.

Customer service is a series of activities designed to enhance customer satisfaction. Customer service is vital online because it helps businesses secure new customers and retain existing customers.

Define e-service.

E-service is customer service supplied over the Internet.

Define CRM and describe how it is practiced in EC.

CRM is customer relationship management. This is a customer service approach that focuses on building long-term and sustainable customer relationships that add value both to the customer and for the company. CRN is practiced online through a variety of different methods that use the advantages of enabling Internet technology to provide the service.

Describe help desks and call centers in EC.

Call centers and help desks are comprehensive service entities in which EC vendors address customer-service issues communicated through various content channels. Call centers and help desks that are associated with EC vendors typically use more enabling Internet technology than traditional call centers.

Define Web advertising and the major terms associated with it.

Web advertising is the use of the World Wide Web to advertise to customers. Some important terms in Internet advertising include: ad views (the number of times users call-up the page that has a banner on it), button (a small banner link to a Web site), page (an HTML document), click (a tally of each time a visitor clicks on an advertising banner), CPM (the cost per thousand impressions), hit (a request for data from a Web page or file), and visit (a series of requests during one navigation of the Web site).

Describe the reasons for growth in Web advertising.

Advertisers are looking to the Web because it is a viable advertising medium. Individuals may be moving away from other advertising mediums and to the Internet. Additionally, the demographics of individuals who use the Internet are generally more affluent then the population as a whole, making an attractive population to advertise to. Web ads also have the benefit of lower cost, increased richness of format and the ability to personalize.

List the major characteristics of Web advertising.

Web advertising can be characterized by its use of Internet technologies to advertise to groups. Web advertising can be more complex and personalized then off-line advertising.

Define banner ads and describe their benefits and limitations.

Banner ads are graphic advertisements displayed on Web pages that link to the advertisers Web site. Banner ads are limited by their cost, space for information and customer indifference.

CHAPTER 5 ADVERTISEMENT IN ELECTRONIC COMMERCE1.Internet advertisement can be done on the companys Web site and on others sites, usually via links. The idea is to bring users to see the companys home page. Internet advertising can be very media rich and can be interactive.

2.Internet advertising can be up-to-the-minute accurate. It can be seen from any place worldwide. It is usually cheaper than that of TV, newspapers, or billboards. It is media rich with possible audio and animation effects. It provides lots of additional information if so desired. You can run it for a long time at a relatively low cost. Finally, it can be interactive, so the viewers remember it for a long time.

3.A banner ad is a rectangular ad space on the computer screen, about 5 x . It may contain static or dynamic information. It can appear only once or periodically, and it usually contains a link to the advertiser when you click on it. Keyword banners appear when you click on a related word. Random banners appear at random. Static banners cost the most since they permanently stay on a page.

4.The advantages of electronic versus paper catalogs are: easy to keep up-to-date, easier and cheaper to customize, contain more information with links to details, potential use of multimedia, and easy-to-find products due to the use of search engines. Also, customers can interact with the catalogs e.g., zoom pictures, ask for more details, change colors, and even match clothes or other items. Customers can configure cars, design summer outfits, configure a computer, and much more. Also, there is easy integration with corporate ordering and back office systems. Finally, electronic catalogs can easily appear in multiple languages. The addition of audio and animation is useful in some cases.

5.Push technology collects information from several sources and delivers it to the user at designated times, or as a screen saver. It helps users, since they do not have to monitor databases and compile information constantly. Generally it is much more efficient than a search engine where information is pulled by the user with the help of the search engines. Information is pointcasted to individuals rather than broadcasted to the mass.

6.Viral marketing is word-of-mouth marketing that occurs using Internet technologies, such as e-mail, chat rooms, and virtual communities.

7.In pull technology the user provides keywords and works with the search engine. Usually, the search engine finds hundreds (thousands) of possible links that the user must look at. The ad must wait until the viewer finds it. This is in contrast to an ad that is pushed to the viewer.

8.E-mail lists are available for sale by many companies that compile them for their own use (such as CD-Max). Some companies build e-mail lists by offering rewards (e.g., CyberGold), or by running sweepstakes. Using cookies is a popular approach to collect names. Publishers of free magazines ask you to provide information on your areas of interest, then they sell it to vendors.

Chapter 6 Public B2B Exchanges

1.Define B2B exchanges.

A B2B exchange is a many-to-many e-marketplace for business-to-business transactions.

Describe the ownership and organization of exchanges.

Exchanges are generally owned by industry giants, neutral third parties, or consortia. Exchanges are generally organized around membership, services, site taxes and security.

Define B2B portals.

These are information portals for businesses.

What is a third-party exchange?

A third-party exchange is an exchange that is owned by a neutral third party.

Describe the supplier aggregation exchange.

The supplier aggregation exchange offers catalogs by a variety of suppliers that are placed in the same ordering area.

Describe a buyer aggregation exchange.

In a buyer aggregation exchange, buyers are grouped together to purchase from a single seller.

List the types of market's most suited for third-party ownership.

Third-party ownership is most appropriate in fragmented markets, seller-concentrated markets and buyer-concentrated markets.

Define CTEs.

Consortia trading exchanges are formed and operated by a group of major companies providing industry-wide transaction services.

Describe purchasing-oriented consortia and selling-oriented consortia.

Consortia that are concerned primarily with the efficient purchasing of goods are purchasing-oriented consortia. The consortia that are concerned primarily with effectively selling products are selling-oriented consortia.

Describe potential legal issues for consortia.

The consortia generally deals with issues of antitrust.

List the major critical success factors of consortia.

The major critical success factors of consortia include: the size of the industry, the ability to drive user adoption, elasticity, standardization of products, management of intensive information flow and smoothing inefficiencies in the supply chain.

Explain how matches are made in exchanges.

Matches are made by linking goods and their quantities between buyers and sellers. This is generally a fully computerized process.

Explain how private and public auctions are conducted in public exchanges.

Public auctions are conducted openly for all to view and participate in. Private auctions are conducted by invitation only in private trading rooms.

Compare fully dedicated and partially dedicated auction exchanges.

Fully dedicated auction exchanges focus purely on auctions as their business model. Partially dedicated exchanges provide auctions as a part of the overall package of services delivered.

List the steps in building a vertical exchange.

The steps in building a vertical exchange include thinking ahead, planning, systems analysis and design, building the exchange, testing-installation-operation, and system evaluation and improvement.

List the revenue sources (models) of exchanges.

The revenue models available for exchanges include: transaction fees, fees for service, membership fees and advertisement fees.

What is an intranet?

An intranet is a corporate LAN or wide area network that uses Internet technology and is secured behind a company's firewall.

What is an extranet?

An extranet is a network that uses virtual private networks to link intranets in different locations over the Internet.

List five benefits of extranets.

The benefits of extranets include: enhanced communications, productivity enhancements, business enhancements, cost reduction and information delivery.

List the problems of public exchanges.

Public exchanges have the following problems: transaction fees keep the users away, companies do not like to share information, cost savings are not as high as expected, recruiting suppliers is difficult, too many exchanges existed and supply chain improvements were not factored in.

List the problems of private exchanges.

Private exchanges are sometimes distrusted because of the private ownership. Additionally, they may face antitrust issues.

How can exchanges caused disintermediation?

Exchanges can create disintermediation by removing traditional B2B intermediaries from existing supply chains.

Chapter 7: Intrabusiness, E-Government, C2C, E-LearningList the major intrabusiness EC categories.

The major categories include business-to-employee, business unit-to-business unit, and business employee-to-business employee.

Describe EC activities among business units.

EC activities among business units usually involve strategic business units interfacing with each other.

Define intranet.

An intranet is a corporate LAN or wide area network that uses Internet technology and is secured behind a companys firewall. It is designed to serve the internal information needs of a company.

How is an intranet secured?Intranets are commonly secured behind a companys firewall, blocking access from external networks.

Describe some intranet applications.

There are many intranet applications including information sharing, conferencing software and customer service functions.

List five intranet functionalities.

Intranet functionalities include: Web-based database access, search engines/directories, interactive communication tools, document distribution, groupware and computer-based telephones.

List five intranet application areas.

Intranet application areas include: product catalogs, policies and procedures, purchase orders, document sharing, phone directories and human resource forms.

What is a corporate portal?

A corporate portal is a gateway for entering a corporate Web site, enabling communication, collaboration and access to company information.

List the benefits of corporate portals.

Corporate portals can cut costs, create a more efficient workplace and increase profits.

List five applications of portals.

Some of the possible applications of corporate portals include: knowledge bases and learning tools, business process support, collaboration and project support, data access, and security applications.

Define e-government.

E-government is the use of IT and e-commerce to provide access to government information and delivery of public services to citizens and business partners.

What are the four categories of e-government?

The four categories are: government-to-citizens, government-to-business, government-to-government and government-to-employees.

Describe G2C.

The government-to-citizens model includes all interactions between a government and its citizens. This model is meant to increase efficiencies and create greater transparency to citizens.

Describe the two main areas of G2B activities.

The two main areas of governmentto-business activities include electronic procurement where the government purchases goods from the private sector, and electronic auctions where the government electronically auctions surplus goods to businesses.

List the six stages of e-government development.

The six stages of e-government development are: information publishing/dissemination, official two-way transactions, multipurpose portals, portal personalization, clustering of common services, and full integration and enterprise transformation.

List the major C2C applications.

The major applications include classified ads, personal services and exchanges.

Define P2P networks and list their major characteristics.

Peer-to-peer networks have an architecture in which workstations have similar capabilities, the network peers share data and processing with each other directly rather than through a central server. These networks are characterized by user interfaces that load outside the Web browser and user computers that can act as both clients and servers. The overall system is easy to use and well integrated; and includes tools to support users wishing to create content or add functionality; and provides connections with other users.

Describe P2P applications in C2C.

The most common application is a file sharing utility. This application allows peers to share files using the Internet as the transmission medium.

Define online publishing and list some advantages it offers over traditional media.

Online publishing is the electronic delivery of newspapers, magazines, books, news, music, videos and other digitizable information over the Internet. Online publishing is generally more flexible than print publishing because it is easier to modify content as well as create personalization.

Describe e-books and list their advantages.

An e-book is a book in digital form that can be read on a computer screen. Some advantages of this technology include portability, convenience, frequent updates, current information and ease of searching.

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