E-Commerce

Information Technology for Managers 1

 Objectives
• What sort of benefits can arise from well chosen e-
commerce opportunities?
• How can business managers recognize and
capitalize upon these opportunities?

Information Technology for Managers 2

 Why Managers Must Understand
E-commerce
• E-commerce
– “The transformation of key business processes
through the use of Internet technologies”
– Enables organizations and individuals to:
• Build new revenue streams
• Create and enhance relationships with customers and
business partners
• Improve operating efficiencies

Information Technology for Managers 3

 Why Managers Must Understand
E-commerce (continued)
• Understand customers and fundamentals of the
markets in which they operate
• Understand how the Internet differs from the
traditional venues for business activity
• Employ business models appropriate to the
Internet
• Three models of e-commerce

Information Technology for Managers 4

 Business-to-Business (B2B)
E-commerce
• Exchange of goods and services between
businesses via computer networks
• Revenue generated via B2B transactions greatly
exceeds B2C revenue
– By a factor of more than 6 to 1
• Private stores
– Web sites that function as private stores for each
major customer
– Accessed with customer ID and password

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Information Technology for Managers 6
 Business-to-Business (B2B)
E-commerce (continued)
• Customer portals
– Consolidate products and services into a single Web
site
• Accessible online from anywhere in the world at any
time
• Private company marketplaces
– Manage purchasing functions through a Web site
– E-procurement software
• Allows a company to create an electronic catalog with
search capability

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Information Technology for Managers 8
 Business-to-Business (B2B)
E-commerce (continued)
• Industry consortia-sponsored marketplaces
– Gain the advantages of the private company
marketplace for all members of the consortia

Information Technology for Managers 9

 Business-to-Consumer (B2C)
E-commerce
• Exchange of goods and services between business
organizations and individual consumers
• Amazon.com
– Recent annual net income of $476 million on sales of
$14.8 billion
• Majority of large brick-and-mortar retailers have at
least experimented with some level of B2C
– Expected to increase to about 16 percent by 2011
– Modify in-store operations and procedures to meet
shoppers’ new expectations that are based on online
shopping
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 Consumer-to-Consumer (C2C)
E-commerce
• Exchange of goods and services among
individuals, typically facilitated by a third party
• Craigslist
– Local classifieds and forums for 500 cities worldwide
• eBay
– Online auction and shopping Web site
• PayPal
– Send and receive payments via the Internet

Information Technology for Managers 11

 E-government Applications
• Use of information technology by government
agencies to transform relations between:
– Government and citizens (G2C)
– Government and businesses (G2B)
– Various branches of the government (G2G)
• United State citizens are not completely satisfied
with the quality of e-gov G2C Web sites

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E-government Applications (continued)

Information Technology for Managers 13

E-government Applications (continued)

Information Technology for Managers 14

E-government Applications (continued)
• County and local governments also have made
attempts at implementing e-gov Web sites
• U.S. General Services Administration
– Managing partner for several e-gov G2B initiatives
– Directed at improving the efficiency and
effectiveness of government operations

Information Technology for Managers 15

 Mobile Commerce
• Buying and selling of goods and/or services using a
mobile device
– Cell phone, smartphone, PDA, or other such device
• Can be used to support all forms of e-commerce
• Expected to exceed $500 million in 2008
• .Mobi
– Top-level domain
– Goal to deliver the Internet to mobile devices
– Developing and publishing a set of style guides

Information Technology for Managers 16

 Mobile Commerce (continued)
• Mobile payments
– Payment systems based on the use of mobile
devices
– Mocapay
• Allows people to pay for purchases without the use of
cash or a credit card
• Subscribers text four-digit pin to Mocapay
• Present transaction number to the Mocapay merchant

Information Technology for Managers 17

 Mobile Commerce (continued)
• Mobile ticketing
– Tickets are sent to the mobile device
– Users present their phones at the venue to gain
entrance
– Also used to distribute vouchers, coupons, or loyalty
cards
• Location-based services
– Using GPS and appropriate software, location of a
mobile user can be determined
– User can request local information

Information Technology for Managers 18

 Mobile Commerce (continued)
• Mobile banking
– Use mobile devices to:
• Access account information
• Withdraw and transfer funds among various accounts
• Purchase stocks and bonds
• Web 2.0 and e-commerce
– Web 2.0
• Changes in technology and Web site design
• Enhance information sharing, collaboration, and
functionality on the Web

Information Technology for Managers 19

 E-commerce Critical Success Factors
• Numerous factors that contribute to making an e-
commerce operation successful
• Identifying appropriate e-commerce opportunities
– Consider how each potential e-commerce initiative fits
into its overall business strategy
– Set achievable objectives and time-based measures
• Acquiring necessary organizational capabilities
– Make an objective assessment as to whether or not
the organization has adequate skills, sufficient
experience, and the corporate culture necessary to
succeed
Information Technology for Managers 20
 E-commerce Critical Success Factors
(continued)
• Directing potential customers to your site
– Search engine optimization
• Ensure Web site appears at or near the top of the
search engine results
– Organic list
• Type of search engine result in which users are given
a listing of potential Web sites based on their content
and keyword relevancy
– Paid listings
• Search engine results that appear because of the
payment of fees

Information Technology for Managers 21

 E-commerce Critical Success Factors
(continued)
– Web page banner ads
• Display a graphic
• Banner exchange network
– Banner advertising network
• Acts as a broker between Web sites and advertisers
• Providing a good customer online experience
– Company must create a Web site that will compel
customers to return time and time again
– Several steps must be taken to provide a good
customer online experience

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 E-commerce Critical Success Factors
(continued)

Information Technology for Managers 23

 E-commerce Critical Success Factors
(continued)
• Providing an incentive for customers to purchase and
return in the future
– “Eighty percent of companies believe they deliver a
superior customer experience, but only eight percent
of their customers agree”
• Providing timely, efficient order fulfillment
– Adequate storage for inventory
– Systems and processes must be capable of receiving
fast and accurate deliveries
– Accurate inventory counts
– Sales forecasting
Information Technology for Managers 24
 E-commerce Critical Success Factors
(continued)
• Offering a variety of easy and secure payment
methods
– Credit cards
– Debit and charge cards
– High risk of credit card fraud
– Most Web sites require user verification information
– Use encryption and authentication
• Secure Sockets Layer (SSL)

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 E-commerce Critical Success Factors
(continued)
– Biggest risk for a consumer
• Retailer databases on which this credit card data is
stored may be compromised
– Payment Card Industry (PCI) data security
standard
• Many retailers have not fully implemented the
standard
– Smart card
– EMV standard specifications

Information Technology for Managers 26

 E-commerce Critical Success Factors
(continued)
• Handling returns smoothly and efficiently
– Minimize returns
– Do not upset customers with return policies
– Consider allowing consumers to return online
purchases to a brick-and-mortar store
– Allow customers to return online purchases via a
“preferred” package delivery service

Information Technology for Managers 27

 E-commerce Critical Success Factors
(continued)
• Providing effective customer service
– Many online customers expect to be able to receive
customer service at any time of the day or night
– Call center customer service reps must have
accurate and current information
• About all in-store and Web transactions
– Handle e-mail queries in an accurate and timely
manner

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 A Manager Takes Charge: Jeff Bezos
Provides a Vision for Amazon.com
• Bezos places emphasis on:
– Providing outstanding customer service
– Consistently enforcing secure Web transactions
– Ensuring timely order fulfillment and shipping
– Offering a diverse choice of products
– Emphasizing price discounts

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 Advantages of E-commerce
• Advantages that accrue to:
– Seller
– Buyer
– Society as a whole

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Information Technology for Managers 31
 Advantages of E-commerce
(continued)

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 Advantages of E-commerce
(continued)

Information Technology for Managers 33

 Issues Associated with E-commerce
• Customers fear that their personal data may be
stolen or used inappropriately
– Concerns about whether online data is secured from
access by unauthorized users or hackers
– Demonstrate the ability to operate in a safe and
reliable manner that builds the trust of their
customers

Information Technology for Managers 34

 Issues Associated with E-commerce
(continued)
• Cultural and linguistic obstacles
– Avoid creating cultural and linguistic obstacles that
make a Web site less attractive or effective for any
subgroup of potential users
– People feel more comfortable buying products and
services in their own language

Information Technology for Managers 35

 Issues Associated with E-commerce
(continued)
• Difficulty integrating Web and non-Web sales and
inventory data
– Separate, non-integrated systems and databases
• To capture and record order and inventory information
for each sales channel
• High costs associated with the development and
operation of an effective Web site
– Major corporations have spent in excess of $140
million to create their online retail Web site
• Ongoing operating and support costs in excess of $10
million per year
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 Issues Associated with E-commerce
(continued)

Information Technology for Managers 37

 Summary
• Several forms of e-commerce
– Business-to-business (B2B)
– Business-to-consumer (B2C)
– Consumer-to-consumer (C2C)
– E-government (e-gov)
• Mobile commerce (M-commerce)
– Buying and selling of goods and/or services using a
mobile device
• Factors that contribute to making an e-commerce
operation success
Information Technology for Managers 38
 Summary (continued)
• Advantages that result from the use of e-business
• Potential problems associated with the use of e-
commerce

Information Technology for Managers 39