meljun cortes e commerce 1
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Chapter 08:E-Commerce
MELJUN CORTES
Succeeding with Technology, Third Edition 2
Objectives• Define e-commerce and understand its role as a
transaction processing system• List the three types of e-commerce, and explain
how e-commerce supports the stages of the buying process and methods of marketing and selling
• Discuss several examples of e-commerce applications and services
Succeeding with Technology, Third Edition 3
Objectives• Define m-commerce, and describe several m-
commerce services• List the components of an e-commerce system,
and explain how they function together to provide e-commerce services
Succeeding with Technology, Third Edition
Chapter Content• The Roots of E-Commerce• Overview of Electronic Commerce• E-Commerce Applications• Mobile Commerce• E-Commerce Implementation
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Succeeding with Technology, Third Edition
Electronic Commerce• Electronic commerce (e-commerce)
– Systems that support electronically executed business transactions
– The fundamental purpose of e-commerce is to execute transactions
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Succeeding with Technology, Third Edition
Electronic Commerce• Electronic commerce (e-commerce)
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Succeeding with Technology, Third Edition
Electronic Commerce
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Succeeding with Technology, Third Edition
E-Commerce History• EDI
– Uses private communications networks (VANs) to transmit standardized transaction data between business partners and suppliers
• Automating transactions using EDI – Drastically reduced the amount of paperwork and the
need for human intervention
• Internet – Provided the ideal platform for conducting EDI
transactions
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E-Commerce History
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Succeeding with Technology, Third Edition
Transaction Processing• Transaction
– An exchange involving goods or services• Transaction processing system (TPS)
– Information system used to support and record transactions such as paying for products or paying an employee (e.g. payroll system that calculates an employee’s pay and cuts a check)
– transaction processing systems share a common set of activities called the transaction processing cycle
• Batch processing– Transactions are collected over time and processed together in batches– useful in situations where transactions take place away from the computer
system• Online transaction processing
– Takes place at the point of sale– critical to time-sensitive transactions such as selling concert tickets and making flight
reservations
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Succeeding with Technology, Third Edition
The Transaction Processing Cycle• Data collection
– The process of capturing transaction related data
• Data editing– Checking the validity of data entered
• Data correction– Implemented if an error is found in the entered data
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Succeeding with Technology, Third Edition
The Transaction Processing Cycle• Data manipulation
– Processing transaction data
• Data storage– Altering databases to reflect the transaction
• Data output– Receipts, picking lists, and other documents
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The Transaction Processing Cycle
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Different Transaction Processing for Different Needs• Order processing system
– Supports the sales of goods or services to customers– Arranges for shipment of products
• Purchasing system– Supports the purchase of goods and raw materials
from suppliers
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Succeeding with Technology, Third Edition
Different Transaction Processing for Different Needs
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Succeeding with Technology, Third Edition
Types of E-Commerce• Business-to-consumer e-commerce (B2C)
– Connects individual consumers with sellers , cutting out the middleman
– E.g. Amazon.com • Business-to-business e-commerce (B2B)
– Supports business transactions on across private networks, the Internet, and the Web
• Consumer-to-consumer e-commerce (C2C)– Connects individual sellers with people shopping for used
items– E.g. ebay.com
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Succeeding with Technology, Third Edition
Types of E-Commerce
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Succeeding with Technology, Third Edition
E-Commerce from the Buyer’s Perspective
• Process of buying or acquiring goods or services
– Realizing a need
– Researching a product
– Selecting a vendor
– Providing payment
– Accepting delivery
– Using product support
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E-Commerce from the Buyer’s Perspective
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Succeeding with Technology, Third Edition
E-Commerce from the Seller’s Perspective
• Sellers business practices– Market research to identify customer needs– Manufacturing products or supplying services that
meet customer needs– Marketing and advertising to make customers aware
of available products and services
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Succeeding with Technology, Third Edition
E-Commerce from the Seller’s Perspective
• Sellers business practices– Providing a method for acquiring payments– Making arrangements for delivery of the product– Providing after-sales support
• Supply chain management– From the seller’s perspective, the process of
producing and selling goods – Involves three areas of focus: demand planning,
supply planning, and demand fulfillment• Demand fulfillment: process of getting the product or service to the
customer
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Succeeding with Technology, Third Edition
E-Commerce from the Seller’s Perspective
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Benefits and Challenges of E-Commerce
• Buyers enjoy the convenience of shopping from their desktop
• B2C e-commerce
– Levels the playing field between large and small businesses
• Challenges– Established businesses must alter systems and business
practices – Security, privacy, reliability: E-commerce can survive only
if all involved can trust the system – Social concerns
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Benefits and Challenges of E-Commerce
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Succeeding with Technology, Third Edition
E-Commerce Applications• E-Commerce
– Playing an increasingly important role in our personal and professional lives
– Allows us to discover new and interesting products – Allows us to find better deals– Used to monitor bank accounts and transfer
electronic funds
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Succeeding with Technology, Third Edition
Retail E-Commerce: Shopping Online
• E-tailing provides customers with – Product information – The ability to comparison shop
• E-tailing options– Set up an electronic storefront– Lease space in a cybermall
• Web site that allows users to browse through a wide variety of products offered by several different retailers
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Retail E-Commerce: Shopping Online
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Online Clearing Houses, Web Auctions,and Marketplaces
• Provide a platform for businesses and individuals to sell their products and belongings– www.ubid.com
• Provides a method for manufacturers to liquidate stock and consumers to find a good deal
– eBay.com • Most popular auction/marketplace
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Succeeding with Technology, Third Edition
B2B Global Supply Managementand Electronic Exchanges• Global supply management (GSM)
– Businesses can find the best deals for raw materials and supplies needed to manufacture their products on the global market
• Electronic exchange – an industry-specific Web resource created to provide a
convenient centralized platform for B2B e-commerce among manufacturers, suppliers, and customers
– Promotes cooperation between competing companies
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Marketing• Web is used for
– Unsolicited advertising• Banner: A rectangular area embedded in the Web page content
for advertising, often across the top of the page– Access to product information through business Web
sites• Get better deals and make informed decisions
– Market research• Traditionally done by interviewing customers• Market segmentation divides customer opinions based on
various criteria• E-commerce allows market segmentation to take place on an
individual level
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Marketing
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Succeeding with Technology, Third Edition
Banking, Finance, and Investment• Online banking provides
– Convenient access to bank balance information– Ability to transfer funds, pay bills, and obtain account
histories
• Electronic funds transfer – Popular for paying bills and receiving paychecks
• Online brokerages – Able to execute trades fast, within seconds
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Mobile Commerce (M- Commerce)• A form of e-commerce • Takes place over wireless mobile devices such as
– Handheld computers and cell phones– takes place in emerging technologies such as dashtop
computers embedded in automobile dashboards
• Presents unique opportunities and challenges
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Succeeding with Technology, Third Edition
Mobile Commerce
Succeeding with Technology, Third Edition
M-Commerce Technology• Technologies and standards
– Wireless Application Protocol (WAP)• a communication standard used by developers to create m-
commerce applications
– Wireless Markup Language (WML)– Infrared or Bluetooth wireless networking technology
• Near Field Communications (NFC)
• Open Mobile Alliance (OMA)– Hundreds of mobile operators, device and network
suppliers and companies have joined together to create standards and interoperability between mobile devices
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Succeeding with Technology, Third Edition
Types of M-Commerce Applications
• Methods for delivering m-commerce services– Directly from cell phone service providers– Via mobile Internet or Web applications
• Location-based m-commerce applications
– Using Short Message Service (SMS) text messaging or Multimedia Messaging Service (MMS)
– Using short-range wireless technology, such as infrared
• Proximity payment system
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Types of M-Commerce Applications
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E-Commerce Implementation• Implementing e-commerce
– Requires large investment and expertise
• E-Commerce host – A company that takes on some or all of the
responsibility of setting up and maintaining an e-commerce system for a business or organization
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Infrastructure• E-Commerce requires significant infrastructure
changes• Businesses must have employees who are
technically savvy• B2C e-commerce
– Often connects manufacturers directly with consumers, cutting out the middleman
– Requires shipping individual products directly to consumers
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Infrastructure
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Hardware and Networking• Underestimating the amount of Web traffic
– Leads to network stalls and long wait times
• Typical e-commerce Web site– Employs one or more server computers and a high-
speed Internet connection
• Outsourcing to a Web hosting company– Can operate 24 hours a day, 7 days a week– Load-balancing
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Succeeding with Technology, Third Edition
Software• Web Server Software
– Responds to requests for Web pages
• Web Server Utility Programs– Provide statistical information about server usage
and Web site traffic patterns
• E-Commerce Software– Supports e-commerce activities– Includes catalog management, electronic shopping
cart, and payment software
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Software• Web Site Design Tools
– What-you-see-is-what-you-get (WYSIWYG) applications or wizards
• Graphics Applications– Design and create graphic elements of Web sites
• Web Site Development Tools– Application programming interfaces (API’s)
• Allow software engineers to develop Web-driven programs
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Software• Web services
– Programs that automate tasks by communicating with each other over the Web
– Systems developers can provide tools for automating trivial or repetitive tasks
– Important in transaction processing
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Succeeding with Technology, Third Edition
Building Traffic• The 3Cs Approach
– Content, community, and commerce
• Keywords and Search Engines– Choose name and product names that best describe
business purpose and features– Select descriptive domain names– Business-related keywords can be listed in the HTML
meta tag• Read by search engines and servers, but not displayed on
the page
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Succeeding with Technology, Third Edition
Building Traffic• Marketing
– Online advertising methods include banner ads, pop-up ads, and e-mail
– market segmentation: customer opinions are divided into demographic variables such as race, gender, income, education, and age to determine which segment a product appeals to most
– Offline advertising methods include magazines, newspapers, radio, and television
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Building Traffic
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Succeeding with Technology, Third Edition
Electronic Payment System• proximity payment system
– allows customers to transfer funds wirelessly between their mobile device and a point-of-sale terminal
• Electronic cash (e-cash or digital cash) – Provides a private and secure method of transferring funds from a
bank account or credit card to online vendors or individuals – PayPal
• Best-known e-cash provider • E-cash benefits
– Privacy - hides account information from vendors– Convenient if seller cannot process a credit card
• Smartcards– Credit cards with embedded microchips that can store and process
data and can be used as electronic wallets
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Electronic Payment System
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Succeeding with Technology, Third Edition
Electronic Payment System
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Succeeding with Technology, Third Edition
International Markets• Internet users of all nationalities will have access to your
products • First consideration of a global e-commerce strategy
– Visitors of all nationalities and cultures should feel comfortable while viewing your Web content
• Costly approach– Create multiple versions of your Web site, each in a different
language
• Once the international market is won over, e-tailer faces other challenges– Foreign Currency, shipping, national taxes
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E-Commerce Security Issues• There are significant privacy and security
concerns– Public network– No buyer or seller identity verification– Hacker attacks
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Succeeding with Technology, Third Edition
E-Commerce Security Issues• Digital certificate
– A type of electronic business card
– Attached to Internet transaction data
– Verifies the sender of the data
– Provided by certification authorities
– Encryption • Uses high-level mathematical functions and computer
algorithms to transform data so that it is unintelligible to all but the intended recipient
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Succeeding with Technology, Third Edition
E-Commerce Security Issues• Securing data in transit
– Secure Sockets Layer (SSL)• Digital certificates combined allows for encrypted
communications to occur between Web browser and Web server
– Transport Layer Security (TLS)• A URL associated with this begins with https• Allow for encrypted communication to occur between
browsers and servers• Secures usernames, passwords, credit card information
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E-Commerce Security Issues
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Succeeding with Technology, Third Edition
Business Resumption Planning• Great pains are taken to ensure that transaction
processing systems remain in working order• Business resumption planning (BRP)
– Takes into account every possible disaster and provides courses of action to minimize negative effects
– The goal is to protect data and keep key systems operating until order is resumed
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Succeeding with Technology, Third Edition
Summary• E-Commerce
– Systems that support electronically executed transactions
• Transaction processing system (TPS)– Supports and records transactions
• Three main types of e-commerce – Business-to-consumer (B2C)– Business-to-business (B2B)– Consumer-to-consumer (C2C)
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Succeeding with Technology, Third Edition
Summary• Retail Web sites
– Allow consumers to comparison shop
• Mobile commerce– A form of e-commerce that takes place over wireless
mobile devices
• E-Commerce – Requires investment in networking, hardware, and a
wide variety of software
– Requires changes in infrastructure
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