electronic commerce - gbv
TRANSCRIPT
Electronic Commerce2010
A Managerial PerspectiveGlobal Edition
Efraim Turban' ' University of Hawaii
David KingJDA Software Group, Inc.
Jae LeeKorea Advanced Institute of Science and Technology
Ting-Peng LiangCity University of Hong Kong and National Sun Yat-Sen University (Taiwan)
Deborrah C. Turban
Turban Company Inc.
with contributions by
Judy LangLang Associates
Christy CheungHong Kong Baptist University
Linda LaiMacau Polytechnic Institute of China
Carol PollardAppalachian State University
Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto
Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Contents
T Part 1 Tntroriurtinn to E-Commerre and E-Marketplaces 43
CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE 43Beijing 2008: A Digital Olympics 44
1.1 ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS 46Defining Electronic Commerce 46Defining E-Business 47Other EC Concepts 47Electronic Markets and Interorganizational
and Intraorganizational Information Systems 48
1.2 THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION, CONTENT,AND HISTORY 49
An EC Framework 49Classification of EC by the Nature, Direction of the Transactions,
and Interactions 50
Case 1.1 EC Appl ica t ion: Want to Buy Chocolate Online?Try Godiva.com 52
A Brief History of EC 53The Future of EC 54
1.3 E-COMMERCE 2.0: FROM WEB 2.0 TO ENTERPRISE SOCIALNETWORKING AND VIRTUAL WORLDS 55
Social Computing 55Web 2.0 55Social Networks and Social Network Services 56
Case 1.2 EC Appl icat ion: MySpace: The World's Most PopularSocial Networking Web Site 58
Enterprise Social Networks 59Virtual Worlds and Second Life 60
1.4 THE DIGITAL WORLD: ECONOMY, ENTERPRISES,
AND SOCIETY 62The Digital Economy 62The Digital Enterprise 62The Digital Society 64
1.5 ELECTRONIC COMMERCE DRIVERS AND THE CHANGINGBUSINESS ENVIRONMENT 68
The Drivers of EC and Its Growth 68Performance, Business Pressures, and Organizational Responses 69
1.6 ELECTRONIC COMMERCE BUSINESS MODELS 72The Structure and Properties of Business Models 72Typical EC Business Models 75
1.7 THE BENEFITS, LIMITATIONS, AND IMPACTS OFELECTRONIC COMMERCE 76
The Benefits and Impacts of EC 76The Limitations and Barriers of EC 76Why Study E-Commerce? 77
1.8 OVERVIEW OF THIS BOOK 78
Contents
I
Case 1.3 EC Application: How College Students BecomeEntrepreneurs 79
Part 1: Introduction to E-Commerce and E-Marketplaces 80Part 2: Internet Consumer Retailing 80Part 3: Business-to-Business E-Commerce 80Part 4: Other EC Models and Applications 81Part 5: EC Support Services 81Part 6: EC Strategy and Implementation 81Online Part 7: Auctions and Application Development 81Online Tutorials 81Online Appendix 81Online Supplements 81
MANAGERIAL ISSUES 81
SUMMARY 82
KEY TERMS 83
QUESTIONS FOR DISCUSSION 83
INTERNET EXERCISES 84
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 84
CLOSING CASE: MARY KAY'S EC SYSTEMS 85
ONLINE RESOURCES 86
REFERENCES 87
CHAPTER 2 E-MARKETPLACES: MECHANISMS, TOOLS, AND IMPACTSOF E-COMMERCE 89Web 2.0 Tools at Eastern Mountain Sports 90
2.1 ELECTRONIC COMMERCE MECHANISMS: AN OVERVIEW 92EC Activities and Mechanisms 92Sellers, Buyers, and Transactions 93
2.2 E-MARKETPLACES 94Electronic Markets 95E-Marketplace Components and Participants 95Types of E-Marketplaces 96
2.3 CUSTOMER INTERACTION MECHANISMS: STOREFRONTS, MALLS,
AND PORTALS 97Electronic Storefronts 97Electronic Malls 98Types of Stores and Malls 98Web (Information) Portals 99The Roles and Value of Intermediaries in E-Marketplaces 100
Case 2.1 EC Application: TradeEgypt.com 101
2.4 ELECTRONIC CATALOGS, SEARCH ENGINES, AND
SHOPPING CARTS 102Electronic Catalogs 102EC Search Act iv i t ies, Types, and Engines 104Shopping Carts 105
2.5 AUCTIONS, BARTERING, AND NEGOTIATINGONLINE 106
Definition and Characteristics 106Traditional Auctions Versus E-Auctions 106Dynamic Pricing and Types of Auctions 108Benefits, Limitations, and Impacts of E-Auctions 109
Contents
Online Bartering 110
Online Negotiating 111
2.6 WEB 2.0 TOOLS AND SERVICES: FROM BLOGS TO WIKIS I l l
Blogging (Weblogging) 112
Mechanism Aids for Web 2.0 Tools: Tags, Folksonomy,
and Social Bookmarks 116
Wikis 117
2.7 VIRTUAL WORLDS AS AN ELECTRONIC COMMERCE
MECHANISM 117
Business Activities and Value in Virtual Worlds 118
2.8 COMPETITION IN THE DIGITAL ECONOMY AND ITS IMPACT
ON INDUSTRIES 119
Competition in the Internet Ecosystem 119
Case 2.2 EC A p p l i c a t i o n : How Blue Nile, Inc., Is Changingt the Jewelry Industry 120
Impact on Competition 122
EC Impact on Whole Industries 123
Case 2.3 EC A p p l i c a t i o n : Craigslist: The UltimateOnline Classified Site 124
2.9 IMPACTS OF ELECTRONIC COMMERCE ON BUSINESS PROCESSES
AND ORGANIZATIONS 125
Improving Marketing and Sales 125
Transforming Organizations 126
Redefining Organizations 128
MANAGERIAL ISSUES 130
SUMMARY 131
KEY TERMS 132
QUESTIONS FOR DISCUSSION 132
INTERNET EXERCISES 133
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 133
CLOSING CASE: SECOND LIFE 134
ONLINE RESOURCES 135
REFERENCES 136
2A BUILD-TO-ORDER PRODUCTION 138
Part 2 Internet Consumer Retailing 14Q_
CHAPTER 3 RETAILING IN ELECTRONIC COMMERCE: PRODUCTSAND SERVICES 140Amazon.com: E-Tailing Grows Despite the Slumping Economy . . . . 141
3.1 INTERNET MARKETING AND ELECTRONIC RETAILING 143
Overview of Electronic Retailing 143
Size and Growth of the B2C Market 143
What Sells Well on the Internet 144
Characteristics and Advantages of Successful E-Tailing 144
3.2 E-TAILING BUSINESS MODELS 147
Classification by Distribution Channel 147
Insights and Additions 3.1 Selling Cars Online:Build-to-Order
Other B2C Models and Special Retailing 150
B2C in Social Networks 150
Contents
3.3 TRAVEL AND TOURISM (HOSPITALITY) SERVICES ONLINE 151Services Provided 152Special Services Online 152Benefits and Limitations of Online Travel Services 153
Case 3.1 EC Application: WAYN: A Social Networkfor Travelers 154
Corporate Travel 154Impact of EC on the Travel Industry 154
3.4 EMPLOYMENT PLACEMENT AND THE JOB MARKET ONLINE 155The Internet Job Market 156Benefits and Limitations of the Electronic Job Market 158
3.5 REAL ESTATE, INSURANCE, AND STOCK TRADING ONLINE 159Real Estate Online 159Insurance Online 160Online Stock Trading 160
3.6 BANKING AND PERSONAL FINANCE ONLINE 162Home Banking Capabilities 162Virtual Banks 162International and Multiple-Currency Banking 163Online Financial Transaction Implementation Issues 164
Case 3.2 EC Application: Security for Online Bank Transactions . . . . 164Personal Finance Online 165
3.7 ON-DEMAND DELIVERY OF PRODUCTS, DIGITAL ITEMS,ENTERTAINMENT, AND GAMING 166
On-Demand Delivery of Products 166Fresh Direct 167Online Delivery of Digital Products, Entertainment, and Media 167Online Entertainment 168
3.8 ONLINE PURCHASE-DECISION AIDS 169Shopping Portals 170Shopbots Software Agents 170"Spy" Services 170Business Ratings Sites 171Trust Verification Sites 171Other Shopping Tools 171
3.9 PROBLEMS WITH E-TAILING AND LESSONS LEARNED 172
3.10 ISSUES IN E-TAILING 173Disintermediation and Reintermediation 173Channel Conflict 174Determining the Right Price 175Product and Service Customization and Personalization 175Fraud and Other Illegal Activities 175How to Make Customers Happy 175
MANAGERIAL ISSUES 176
SUMMARY 176
KEY TERMS 177
QUESTIONS FOR DISCUSSION 178
INTERNET EXERCISES 178
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 179
CLOSING CASE: WAL-MART POWERS ONLINE 179
ONLINE RESOURCES 181
REFERENCES 181
10 Contents
CHAPTER 4 CONSUMER BEHAVIOR, INTERNET MARKETING,AND ADVERTISING 184Netflix Increases Sales Using DVD Recommendations
and Advertisements 185
4.1 LEARNING ABOUT CONSUMER BEHAVIOR ONLINE 186A Model of Consumer Behavior Online 186
4.2 THE CONSUMER PURCHASING DECISION-MAKING PROCESS 189A Generic Purchasing-Decision Model 189Customer Decision Support in Web Purchasing 190Players in the Consumer Decision Process 191
4.3 MASS MARKETING, MARKET SEGMENTATION,AND ONE-TO-ONE MARKETING 191
From Mass Marketing to One-to-One Marketing 191How One-to-One Relationships Are Practiced 192
4.4 PERSONALIZATION AND BEHAVIORAL MARKETING 194Personalization in E-Commerce 194
Behavioral Marketing and Collaborative Filtering 195
4.5 LOYALTY, SATISFACTION, AND TRUST IN EC 196Customer Loyalty 196Satisfaction in EC 197Trust in EC 198
4.6 MARKET RESEARCH FOR EC 200Objectives and Concepts of Market Research Online 200
Case 4.1 EC Application: Internet Market Research ExpeditesTime-to-Market at Procter & Gamble 201
Representative Market Research Approaches 201
Insights and Additions 4.2: Market Researchby Comscore, Inc
Limitations of Online Market Research and Howto Overcome Them
Biometric Marketing
4.7 WEB ADVERTISINGOverview of Web AdvertisingSome Internet Advertising TerminologyWhy Internet Advertising?Advertising Networks
4.8 ONLINE ADVERTISING METHODSBannersPop-Up and Similar AdsE-Mail AdvertisingNewspaper-Like and Classified AdsSearch Engine AdvertisementGoogle—The Online Advertising KingAdvertising in Chat Rooms
Insights and Additions 4.3: Google's MajorAdvertisement Methods
Other Forms of Advertising
4.9 ADVERTISING STRATEGIES AND PROMOTIONS . . .Social Network AdvertisingVideo Ads on the Web and in SociaL NetworkingViral Marketing
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Contents 11
Other Advertising Strategies 219
Online Events, Promotions, and Attractions 220
Mobile Marketing and Advertising 221
4.10 SPECIAL ADVERTISING AND IMPLEMENTATION TOPICS 222
Permission Advertising 222
Some Implementation Issues 223
Ad Management 224
Localization 224
Ad Content 225
Intel l igent Agents Applications 226
MANAGERIAL ISSUES 227
SUMMARY 228
KEY TERMS 229
QUESTIONS FOR DISCUSSION 229
INTERNET EXERCISES 230
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 230
CLOSING CASE: TOYOTA SCION GOES SOCIAL FOR ADVERTISING AND
MARKET RESEARCH 231
ONLINE RESOURCES 233
REFERENCES 233
Part 3 BiKiness-to-Business E-Commerce 235__
CHAPTER 5 B2B E-COMMERCE 235
Auction for Supplies Helps Portsmouth Hospitals 236
5.1 CONCEPTS, CHARACTERISTICS, AND MODELSOF B2B E-COMMERCE 237
Basic B2B Concepts 237Market Size and Content of B2B 237The Basic Types of B2B Transactions and Activities 237The Basic Types of B2B E-Marketplaces and Services 238B2B Characteristics 239Supply Chain Relationships in B2B 240
Insights and Additions 5.1: Summary of B2BCharacteristics
Service Industries Online in B2B 241The Benefits and Limitations of B2B 242The Content of the B2B Field 242
5.2 ONE-TO-MANY: SELL-SIDE E-MARKETPLACES 243Sell-Side Models 243Sales from Catalogs 245
Case 5.1 EC Application: Gregg's Cycles Goes Online 246Online Direct Sales: The Example of Cisco Systems 246
Case 5.2 EC Application: Whirlpool B2B Trading Portal 247
5.3 SELLING VIA DISTRIBUTORS AND OTHER INTERMEDIARIES 247
Case 5.3 EC Application: W. W. Grainger and Goodrich Corporation . . 248
5.4 SELLING VIA E-AUCTIONS 249Using Auctions on the Sell Side 249Auctioning from the Company's Own Site 249Using Intermediaries in Auctions 249Examples of B2B Forward Auctions 250
12 Contents
Case 5.4 EC Application: How the U.S. State of Pennsylvania Sells SurplusEquipment 250
5.5 ONE-FROM-MANY: BUY-SIDE E-MARKETPLACES ANDE-PROCUREMENT 251
Procurement Methods 251Inefficiencies in Traditional Procurement Management 252The Goals and Benefits of E-Procurement 253
5.6 BUY-SIDE E-MARKETPLACES: REVERSE AUCTIONS 255Conducting Reverse Auctions 255Group Reverse Auctions 256
5.7 OTHER E-PROCUREMENT METHODS 257An Internal Purchasing Marketplace: Aggregating Suppliers'
Catalogs and Desktop Purchasing 257Buying at Sellers' E-Auctions 258Group Purchasing 258Buying at Sellers' Sites and Collaborative Commerce 259Purchasing Direct Goods 259Electronic Bartering 259
5.8 B2B ELECTRONIC EXCHANGES: DEFINITIONS
AND CONCEPTS 260
Case 5.5 EC Applicat ion: ChemConnect: The World CommodityChemical Exchange 261
Functions of Exchanges 262Dynamic Pricing in B2B Exchanges 262Advantages, Limitations, and the Revenue Model
of Exchanges 263
5.9 B2B PORTALS, DIRECTORIES, AND OWNERSHIP OF
B2B MARKETPLACES 265B2B Portals 265
Case 5.6 EC Applicat ion: Alibaba.com 266Ownership of B2B Marketplaces 268
Case 5.7 EC Applicat ion: Agentrics: A Giant Retail Exchange 269Comparing the Many-to-Many B2B Models 270
5.10 PARTNER AND SUPPLIER RELATIONSHIP MANAGEMENT 271Partner and Supplier Relationship Management 271E-Communities and PRM 271
5.11 B2B IN THE WEB 2.0 ENVIRONMENT AND SOCIAL
NETWORKING 272The Opportunities 272The Use of Web 2.0 Tools in B2B 272Social Networks in the B2B Marketplace 272Examples of Other Activities of B2B Social Networks 273Strategy for B2B Social Networking 273
5.12 INTERNET MARKETING IN B2B EC 274Organizational Buyer Behavior 274The Marketing and Advertising Processes in B2B 274Methods for B2B Online Marketing 275Affiliate Programs, Infomediaries,
and Data Mining 276
MANAGERIAL ISSUES 277
SUMMARY 277
KEY TERMS 279
Contents 13
QUESTIONS FOR DISCUSSION 279
INTERNET EXERCISES 279
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 280
CLOSING CASE: IMARKETKOREA 281
ONLINE RESOURCES 282
REFERENCES 283
CHAPTER 6 E-SUPPLY CHAINS, COLLABORATIVE COMMERCE,AND CORPORATE PORTALS 285Boeing's Global Supply Chain for the Dreamliner 787 286
6.1 E-SUPPLY CHAINS 287Definitions and Concepts 287Supply Chain Parts 288Managing Supply Chains 289
6.2 SUPPLY CHAIN PROBLEMS AND SOLUTIONS 292Typical Problems Along the Supply Chain 292EC Solutions Along the Supply Chain 293
6.3 RFID AS A KEY ENABLER IN SUPPLYCHAIN MANAGEMENT 295
The RFID Revolution 295RFID Applications in the Supply Chain 296Limitations and Concerns of RFID 298
Case 6.1 EC Application: Airbus Improves Productivitywith RFID 299
RuBee: An Alternative to RFID? 300
6.4 COLLABORATIVE COMMERCE 301Essentials of Collaborative Commerce 301Collaboration Hubs 301Collaborative Networks 301Representative Examples of E-Collaboration 302Barriers to C-Commerce 306
6.5 COLLABORATIVE PLANNING, CPFR, APS, AND PLM 306Collaborative Planning, Forecasting, and Replenishment 307Advanced Planning and Scheduling 307
Case 6.2 EC Application: West Marine: A CPFR Success Story 308Product Lifecycle Management 308Supporting Joint Design 309
6.6 SUPPLY CHAIN INTEGRATION 309How Information Systems Are Integrated 309Integration Along the Extended Supply Chain 310
6.7 CORPORATE (ENTERPRISE) PORTALS 310Corporate Portals: An Overview 310Types of Corporate Portals 312Corporate Portal Applications and Issues 313
6.8 COLLABORATION-ENABLING ENVIRONMENTSAND TOOLS 314
Workflow Technologies and Applications 314Collaboration and Groupware: Some Basic Concepts 315Electronic Meeting Systems: Face-to-Face Support
and Virtual Meetings 317Real-Time Collaboration Tools for Virtual Meetings 318
14 Contents
Electronic Teleconferencing 319Unified Communication: Integration and
Groupware Suites 320Collaboration 2.0 ' 323Implementation Issues for Online Collaboration 325
Case 6.3 EC A p p l i c a t i o n : Wikis, Blogs, and Chats Support Collaboration
at DrKW 326
MANAGERIAL ISSUES 327
SUMMARY 328
KEY TERMS 328
QUESTIONS FOR DISCUSSION 329
INTERNET EXERCISES 329
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 330
CLOSING CASE: HOW WAL-MART USES EC IN ITS SUPPLY CHAIN 331
ONLINE RESOURCES 333
REFERENCES 333
Part 4 Other EC Models and Applications ai6_
CHAPTER 7 INNOVATIVE EC SYSTEMS: FROM E-GOVERNMENTAND E-LEARNING TO CONSUMER-TO-CONSUMERE-COMMERCE 336Caterpillar Inc. Champions E-Learning 337
7.1 E-GOVERNMENT: AN OVERVIEW 338Definition and Scope 338Government-to-Citizens 338Government-to-Business 342Government-to-Govemment 343Government-to-Employees and Internal Efficiency
and Effectiveness 343
7.2 IMPLEMENTING E-GOVERNMENT 344The Transformation to E-Government 344E-Government and Social Networking 346Implementation Issues of E-Government 346M-Government 347
7.3 E-LEARNING 347The Basics of E-Learning: Definitions and Concepts 347
Case 7.1 EC Application: E-Learning at Cisco Systems 349Benefits and Drawbacks of E-Learning 350Preventing E-Learning Failures 352Distance Learning and Online Universities 352Online Corporate Training 353Implementing E-Learning and E-Training 354Edutainment 354Social Networks and E-Learning 354Learning in Virtual Worlds and Second Life 355Visual Interactive Simulation 357E-Learning Tools and Management 357
7.4 ONLINE PUBLISHING AND E-BOOKS 359Content Providers, Publishers, and Distributors 359Electronic Books 360Print-on-Demand 363
Contents 15
7.5 KNOWLEDGE MANAGEMENT, LEARNING, ANDELECTRONIC COMMERCE 363
An Overview of Knowledge Management 363KM Types and Activities - 364
Case 7.2 Appl icat ion Case : Knowledge Management atInfosys Technologies 365
How Is Knowledge Management Related to E-Commerce? 366Knowledge Portals 367Online Advice and Consulting 367Employee Knowledge Networks and Expert Location Systems 368
Case 7.3 EC Appl icat ion: How the U.S. Department of Commerce Usesan Expert Location System 370
7.6 CONSUMER-TO-CONSUMER ELECTRONIC COMMERCE 371E-Commerce: C2C Applications 371C2C Activities in Social Networks 372Support Services for C2C 373
MANAGERIAL ISSUES 374
SUMMARY 374
KEY TERMS 375
QUESTIONS FOR DISCUSSION 375
INTERNET EXERCISES 376
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 376
CLOSING CASE: A WORLD-CLASS E-GOVERNMENT:
SINGAPORE 377
ONLINE RESOURCES 379
REFERENCES 379
CHAPTER 8 MOBILE COMPUTING AND COMMERCE, AND PERVASIVECOMPUTING 381The Blooming of Food Lion 382
8.1 MOBILE COMMERCE: ATTRIBUTES, BENEFITS,AND DRIVERS 383
Attributes of M-Commerce 383Drivers of M-Commerce 384
8.2 COMPONENTS, TECHNICAL INFRASTRUCTURE, AND SERVICESOF MOBILE COMPUTING 385
Mobile Devices 386Mobile Computing Software and Services 387Wireless Telecommunications Networks 388
8.3 MOBILE FINANCIAL APPLICATIONS 391Mobile Banking 391Mobile Payments 391
Case 8.1 EC Appl icat ion: Closing the Digital Divide withMobile Microfinance 393
8.4 MOBILE MARKETING AND ADVERTISING 394Mobile Marketing Campaigns 394Mobile Marketing Guidelines 395
8.5 MOBILE WORKFORCE SOLUTIONS 396Needs of the Mobile Workforce 396
8.6 MOBILE ENTERTAINMENT 399Growth of the Mobile Entertainment Market 399
Contents
Mobile Music and Video 400Mobile Games 400Mobile Gambling 401
8.7 LOCATION-BASED MOBILE COMMERCE 402L-Commerce Infrastructure 403Location-Based Services and Applications 404Barriers to Location-Based M-Commerce 405
8.8 SECURITY AND OTHER IMPLEMENTATION ISSUESIN MOBILE COMMERCE 406
M-Commerce Security Issues 406Technological Barriers to M-Commerce 407Ethical, Legal, and Health Issues in M-Commerce 408
I 8.9 PERVASIVE COMPUTING 409I Overview of Pervasive Computing 409I Radio Frequency Identification (RFID) 410I Sensor Networks and Smart Items 413| Case 8.2 EC Application: Wi-Fi Sensor Net Aids Winemakers 415| Privacy and Pervasive Computing 416
j MANAGERIAL ISSUES 417
| SUMMARY 418
1 KEY TERMS 419
| QUESTIONS FOR DISCUSSION 420
j INTERNET EXERCISES 420
| TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 421
| CLOSING CASE: WAL-MART TURNS TO MOBILE FOR WEATHER ALERTS . . . 421
I . ONLINE RESOURCES 422
I REFERENCES 423
1 CHAPTER 9 THE WEB 2.0 ENVIRONMENT ANDj SOCIAL NETWORKS 4251 Wikipedia and Its Problems of Content, Quality,| and Privacy Protection 426
! 9.1 THE WEB 2.0 REVOLUTION, SOCIAL MEDIA, AND| INDUSTRY DISRUPTORS 427I What Is Web 2.0? 427| Representative Characteristics of Web 2.0 427j Web 2.0 Companies and New Business Models 4281 Social Media 429| Industry and Market Disruptors 429
I 9.2 VIRTUAL COMMUNITIES 431| Characteristics of Traditional Online Communities| and Their Classification 431
I 9.3 ONLINE SOCIAL NETWORKING: BASICSj AND EXAMPLES 434I A Definition and Basic Information 434| Representative Social Networks Sites and Services 436I Mobile Social Networking 437
I 9.4 MAJOR SOCIAL NETWORK SERVICES: FROM FACEBOOK| TO FLICKR 438| Facebook: The Network Effect 438| Bebo 439
Contents 17
Orkut: Exploring the Very Nature of Social Networking Sites 440Flickr Ticks Off Some of Its Users . 441
9.5 BUSINESS AND ENTERPRISE SOCIAL NETWORKS 441Definitions, Concepts, Types, and Examples 441Business Social Networking: Concepts and Benefits 442Enterprise Social Networks 443Other Social Networking Structures 445Social Marketplaces 446
9.6 COMMERCIAL ASPECTS OF WEB 2.0 AND SOCIAL NETWORKINGAPPLICATIONS 447
Why Is There an Interest? 447Case 9.2 EC Appl icat ion: Revenue Sources at YouTube 447
Advertising Using Social Networks, Blogs, and Wikis 448Shopping in Social Networks 450Feedback from Customers: Conversational Marketing 450Commercial Activities in Business and Enterprise
Social Networks 451Revenue-Generation Strategies in Social Networks 453Risks and Limitations When Interfacing with Social Networks 454Justifying Social Media and Networking 454
9.7 ENTERTAINMENT WEB 2.0 STYLE: FROM SOCIAL NETWORKS TOMARKETPLACES 455
Entertainment and Social Networks 455Advertising Movies and Events in Communities 456Online Marketplace for Movies 456Mobile Web 2.0 Devices for Entertainment and Work 457Yahoo! Go 457
9.8 THE FUTURE: WEB 3.0 AND WEB 4.0 459
Web 3.0: What's Next? 459
MANAGERIAL ISSUES 461
SUMMARY 462
KEY TERMS 462
QUESTIONS FOR DISCUSSION 463
INTERNET EXERCISES 463
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 464
CLOSING CASE: LINKEDIN: THE BUSINESS-ORIENTED
SOCIAL NETWORK 465
ONLINE RESOURCES 466
REFERENCES 467
Part 5 Ff Support Servires 46Q
CHAPTER 10 E-COMMERCE FRAUD AND SECURITY 469How Seattle's Hospital Survived a Bot Attack 470
10.1 THE INFORMATION SECURITY PROBLEM 471What Is EC Security? 471The Drivers of EC Security Problems 473Why Is E-Commerce Security Strategy Needed? 475
10.2 BASIC E-COMMERCE SECURITY ISSUES AND LANDSCAPE 476The Security Basic Terminology 476
Contents
The EC Security Battleground 476Security Scenarios and Requirements in E-Commerce 478The Defense: Defenders and Their Strategy 479
10.3 TECHNICAL ATTACK METHODS 480Technical and Nontechnical Attacks: An Overview 480The Major Technical Attack Methods 481Malicious Code: Viruses, Worms, and Trojan Horses 481
10.4 PHISHING, FINANCIAL FRAUD, AND SPAM 484Phishing 485Fraud on the Internet 485
Case 10.1 EC Application: Internet Stock Fraud Aidedby Spam 489
Social Networking Makes Social Engineering Easy 489
10.5 THE INFORMATION ASSURANCE MODELAND DEFENSE STRATEGY 491
Confidentiality, Integrity, and Availability 491Authentication, Authorization, and Nonrepudiation 491E-Commerce Security Strategy 492The Defense Strategy 492
10.6 THE DEFENSE I : ACCESS CONTROL, ENCRYPTION,AND PKI 493
Access Control 493Encryption and the One-Key (Symmetric) System 495Public Key Infrastructure (PKI) 496
10.7 THE DEFENSE I I : SECURING E-COMMERCE
NETWORKS 499Firewalls 499Demilitarized Zone 499VPNs 500Intrusion Detection Systems (IDSs) 500Honeynets and Honeypots 501
10.8 THE DEFENSE I I I : GENERAL CONTROLS AND OTHER
DEFENSE MECHANISMS 501General Controls 502Application Controls 503Internal Control and Compliance Management 504Protecting Against Spam . 504Protecting Against Pop-Up Ads 505Protecting Against Spyware 506
10.9 BUSINESS CONTINUITY, SECURITY AUDITING,
AND RISK MANAGEMENT 506Business Continuity and Disaster Recovery Planning 506Auditing Information Systems 507
Case 10.2 EC Application: Business Continuity andDisaster Recovery 508
Risk-Management and Cost-Benefit Analysis 508
10.10IMPLEMENTING ENTERPRISEWIDEE-COMMERCE SECURITY 509
Senior Management Commitment and Support 509EC Security Policies and Training 510EC Security Procedures and Enforcement 510Industry Standards for Credit Card Protection (PCI DSS) 511Security Tools: Hardware and Software 511Why Is I t Difficult to Stop Internet Crime? 511
Contents 19
MANAGERIAL ISSUES 513
SUMMARY 514
KEY TERMS 516
QUESTIONS FOR DISCUSSION 516
INTERNET EXERCISES 517
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 518
CLOSING CASE: UBS PAINEWEBBER'S BUSINESS OPERATIONS
DEBILITATED BY MALICIOUS CODE 518
ONLINE RESOURCES 519
REFERENCES 520
CHAPTER 11 ELECTRONIC COMMERCE PAYMENT SYSTEMS 522Pay-Per-View Pages: The Next iTunes 523
11.1 THE PAYMENT REVOLUTION 524
11.2 USING PAYMENT CARDS ONLINE 526
Processing Cards Online 526
Fraudulent Card Transactions 527
11.3 SMART CARDS 529
Types of Smart Cards 530
Applications of Smart Cards 530
Case 11.1 EC A p p l i c a t i o n : TaiwanMoney Card 533
11.4 STORED-VALUE CARDS 533
11.5 E-MICROPAYMENTS 534
11.6 E-CHECKING 536
Case 11.2 EC A p p l i c a t i o n : To POP or BOC: Digital Checksin the Offline World 537
11.7 B2B ELECTRONIC PAYMENTS 539
Current B2B Payment Practices 539
Enterprise Invoice Presentment and Payment 540
MANAGERIAL ISSUES 542
SUMMARY 543
KEY TERMS 545
QUESTIONS FOR DISCUSSION 545
INTERNET EXERCISES 545
TEAM ASSIGNMENTS, PROJECTS, AND CLASS
DISCUSSIONS 546
CLOSING CASE: THE CHECK IS IN THE NETWORK 546
ONLINE RESOURCES 547
REFERENCES 548
CHAPTER 12 FULFILLING E-COMMERCE ORDERSAND OTHER EC SUPPORT SERVICES 550How Amazon.com Fulfills Orders 551
12.1 ORDER FULFILLMENT AND LOGISTICS—AN
OVERVIEW 552
Acquiring Goods and Services 553
Basic Concepts of Order Fulfillment and Logistics 553
20 Contents
Overview of LogisticsThe EC Order Fulfillment Process
Insights and Additions 12.1: What ServicesDo Customers Need?
553553
12.2 PROBLEMS IN ORDER FULFILLMENT 557Typical Supply Chain Problems 557Why Supply Chain Problems Exist 557
12.3 SOLUTIONS TO ORDER FULFILLMENT
PROBLEMS ' 558Improvements in the Order-Taking Activity 558Warehousing and Inventory Management Improvements 558
Case 12.1 EC Application: How WMS Helps Schurman ImproveIts Internal and External Order Fulfillment System 559
Speeding Deliveries 560Partnering Efforts and Outsourcing Logistics 561Integrated Global Logistics Systems 561
Insights and Additions 12.2: UPS ProvidesBroad EC Services
Order Fulfillment in Mass Customization 562Handling Returns (Reverse Logistics) 563Order Fulfillment in B2B 564
Case 12.2 EC Application: How Daisy Brand FulfillsB2B Orders 565
Innovative E-Fulfillment Strategies 566
Case 12.3 EC Application: How Sundowner Motor Inns FulfillsIts Online Reservations 566
12.4 INTEGRATION AND ENTERPRISE RESOURCE
PLANNING 567Enterprise Resource Planning: An Overview 568Advantages and Benefits of ERP Systems 568
12.5 INTELLIGENT AGENTS AND THEIR ROLEIN E-COMMERCE 570
Definitions and Basic Concepts 570Multiagent Systems 572Applications of Software and Intelligent Agents in
E-Commerce 573
12.6 OTHER E-COMMERCE SUPPORT SERVICES 574Consulting Services 574Directory Services, Newsletters, and Search Engines 574More EC Support Services - 576Outsourcing EC Support Services 576
MANAGERIAL ISSUES 579
SUMMARY 580
KEY TERMS 580
QUESTIONS FOR DISCUSSION 580
INTERNET EXERCISES 581
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 582
CLOSING CASE: HOW MASS CUSTOMIZATION EC ORDERSARE FULFILLED—MULTIBRAS OF BRAZIL 582
ONLINE RESOURCES 583
REFERENCES 584
Contents
Part 6 EC Strategy and Implementation 585
CHAPTER 13 E-COMMERCE STRATEGY AND GLOBAL EC 585The Success of Travelocity's E-Strategy 586
13.1 ORGANIZATIONAL STRATEGY: CONCEPTS
AND OVERVIEW 587Strategy and the Web Environment 587The Strategic Planning Process 590Strategic Planning Tools 593
Case 13.1 EC Application: Strategic Planning at InternetNZ 593
13.2 BUSINESS PLANNING IN E-COMMERCE 594Business Plan Fundamentals 594Business Case 595
13.3 E-COMMERCE STRATEGY: CONCEPTS AND OVERVIEW 596
13.4 E-STRATEGY INITIATION 598Representative Issues in E-Strategy Initiation 598
Case 13.2 EC Application: Measuring Profit on the Web 600Strategy in the Web 2.0 Environment and in Social Networking 601
13.5 E-STRATEGY FORMULATION 603Selecting EC Opportunities 603Determining an Appropriate EC Application Portfolio Mix 603Risk Analysis and Management 604Issues in Strategy Formulation 605
13.6 E-STRATEGY IMPLEMENTATION 607E-Strategy Implementation Process 607Strategy Implementation Issues 608
13.7 E-STRATEGY AND PROJECT ASSESSMENT 611The Objectives of Assessment 611Measuring Results and Using Metrics 611
13.8 GLOBAL E-COMMERCE 614Benefits and Extent of Operations 614Barriers to Global EC 615Breaking Down the Barriers to Global EC ' 616
13.9 E-COMMERCE IN SMALL AND MEDIUM-SIZED
ENTERPRISES 617Supporting SMEs 618
Case 13.3 EC A p p l i c a t i o n : Networx Events Uses E-Commerce 619
MANAGERIAL ISSUES 620
SUMMARY 621
KEY TERMS 622
QUESTIONS FOR DISCUSSION 622
INTERNET EXERCISES 622
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 623
CLOSING CASE: PIERRE LANG EXPANDS INTO
EASTERN EUROPE 623
ONLINE RESOURCES 624
REFERENCES : 625
22 Contents
CHAPTER 14 ECONOMICS AND JUSTIFICATION OF ELECTRONICCOMMERCE 627Justifying Investment in IT and EC at California
State Automobile Association 628
14.1 WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEYBE JUSTIFIED? 629
Increased Pressure for Financial Justification 629Other Reasons Why EC Justification Is Needed 630EC Investment Categories and Benefits 630How Is an EC Investment Justified? 630What Needs to Be Justified? When Should Justification
Take Place? 631Using Metrics in EC Justification 631
14.2 DIFFICULTIES IN MEASURING AND JUSTIFYINGE-COMMERCE INVESTMENTS 633
The EC Justification Process 633Difficulties in Measuring Productivity and Performance Gains 634Relating IT Expenditures to Organizational Performance 634Intangible Costs and Benefits 635The Process of Justifying EC and IT Projects 636
14.3 METHODS AND TOOLS FOR EVALUATING AND JUSTIFYINGE-COMMERCE INVESTMENTS 637
Opportunities and Revenue Generated by EC Investment 637Methodological Aspects of Justifying EC Investments 637Traditional Methods for Evaluating EC Investments 638Implementing Traditional Methods 640ROI Calculators 640Advanced Methods for Evaluating IT and EC Investments 640
14.4 EXAMPLES OF E-COMMERCE PROJECT JUSTIFICATION 642Justifying E-Procurement 642
Insights and Additions 14.1: E-Procurement MetricsCustomer Service and e-CRM 643Justifying a Portal 644Justifying E-Training Projects 645Justifying an Investment in Mobile Computing and in RFID 646
Case 14.1 EC Application: Paesano Restaurant JustifiesWireless E-Commerce 646
Justifying Security Projects 648Justifying Social Networking and the Use of Web 2.0 Tools 648
14.5 THE ECONOMICS OF E-COMMERCE 648Reducing Production Costs 648Increased Revenues 651Reducing Transaction Friction or Risk 652Facilitating Product Differentiation 652EC Increases Agility 652Valuation of EC Companies 652
14.6 OPPORTUNITIES FOR SUCCESS IN E-COMMERCE AND
AVOIDING FAILURE 653Factors That Determine E-Commerce Success 654E-Commerce Failures 655E-Commerce Successes 656Opportunities for Success: Creating Digital Options 658Cultural Differences in EC Successes and Failures 658Can EC Succeed in Developing Economies? 658
Contents
MANAGERIAL ISSUES 659
SUMMARY 660
KEY TERMS 661
QUESTIONS FOR DISCUSSION 661
INTERNET EXERCISES 662
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 662
CLOSING CASE: JUSTIFYING EC AND IT INVESTMENT IN THE U.S. STATE
OF IOWA 663
ONLINE RESOURCES 664
REFERENCES 664
CHAPTER 15 LAUNCHING A SUCCESSFUL ONLINE BUSINESSAND EC PROJECTS 666OBO Sets Its Goals for Success 667
15.1 GETTING INTO E-COMMERCE AND STARTING A NEWONLINE BUSINESS 668
Getting into E-Commerce 668Starting a New Online Business 668An E-Start-up Is a Start-up 668Creating a New Company or Adding an Online Project 669
Case 15.1 EC Application: Innovation and Creativityat Amazon.com 669
Planning Online Businesses 672Funding a New Online Business 672
15.2 ADDING E-COMMERCE INITIATIVES OR TRANSFORMING
TO AN E-BUSINESS 674Adding EC Initiatives to an Existing Business 674Transformation to an E-Business 675
15.3 BUILDING OR ACQUIRING A WEB SITE 677Classification of Web Sites 678Building a Web Site 678
15.4 WEB SITE HOSTING AND OBTAINING A DOMAINNAME 679
Web Hosting Options 679
Case 15.2 EC Application: How Small Companies Use aStorebuilder 680
Registering a Domain Name 681
15.5 CONTENT CREATION, DELIVERY, AND MANAGEMENT 682Categories and Types of Content 683Creation or Acquisition of Content 684Content Management and Maintenance 685Catalog Content and Its Management 686
Case 15.3 EC Application: Anglesea Online Uses Content ManagementSoftware for Success 687
Content Maximization and Streaming Services 687Case 15.4 EC Application: Akamai Technologies 688
15.6 WEB SITE DESIGN 690Information Architecture 690Site Navigation 691Performance (Speed) 692Colors and Graphics 693Web Site Usability 693
24 Contents
15.7 PROVIDING E-COMMERCE SUPPORT SERVICES 694Who Builds the Web Site? 694Payments: Accepting Credit Cards 694Web Site Promotion 695Customer Relationship Management 696
15.8 OPENING A WEB STOREFRONT 697Options for Acquiring Storefronts 697Yahoo! Small Business 699
MANAGERIAL ISSUES 699
SUMMARY 700
KEY TERMS 701
QUESTIONS FOR DISCUSSION 701
INTERNET EXERCISES 702
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 702
CLOSING CASE: HOW TELECOM NEW ZEALAND (TNZ) EXCELS
WITH CONTENT MANAGEMENT 703
ONLINE RESOURCES 704
REFERENCES 704
CHAPTER 16 REGULATORY, ETHICAL, AND COMPLIANCEISSUES IN EC 707Why Is Disney Funding Chinese Pirates? 708
16.1 THE COMPLEXITY OF LEGAL AND REGULATORY ISSUES 709Laws Are Subject to Interpretation 709
Case 16.1 EC Application: Is eBay a Store or a Bulletin Board? 710The Law: A System for Social Control and Protection 710Personal and Property Rights 710Regulatory Compliance in EC 711
16.2 CIVIL LAW, INTELLECTUAL PROPERTY LAW, COMMON LAW,
AND EC LEGAL ISSUES 712Criminal Law and Civil Law 712Intellectual Property Law 713Common Law in E-Commerce 715Fan and Hate Sites 716Other E-Commerce Legal Issues 717
16.3 ETHICAL CHALLENGES AND GUIDELINES 718Ethical Principles and Guidelines 718Business Ethics 719EC Ethical Issues 720
16.4 PRIVACY RIGHTS, PROTECTION AND FREE SPEECH 721Privacy Rights and Protection 721Free Speech Online Versus Privacy Protection 722The Price of Protecting an Individual's Privacy 722How Information About Individuals Is Collected 723Privacy Protection by Information Technologies 725Privacy Issues in Web 2.0 Tools and Social Networks 725Privacy Protection by Ethical Principles 725
Case 16.2 EC Application: Property Rights Extended to DomainNames and Digital Property 726
The USA PATRIOT Act 727Privacy Protection in Countries Other Than the United States 728
Contents 25
16.5 CONSUMER AND SELLER PROTECTION FOR ONLINE FRAUD 729
Consumer (Buyer) Protection 729
Seller Protection 731
Protecting Buyers and Sellers: Electronic and
Digital Signatures 732
16.6 SOCIETAL ISSUES AND GREEN EC 733
The Digital Divide 733
Electronic Discovery 733
Operating Greener Businesses and Eco-Friendly Data Centers 733
How to Operate Greener Businesses, Data Centers,
and Supply Chains 734
Global Green Regulations 734
Other Societal Issues 735
MANAGERIAL ISSUES 737
SUMMARY 738
KEY TERMS 739
QUESTIONS FOR DISCUSSION 739
INTERNET EXERCISES 740
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS 740
CLOSING CASE: NET NEUTRALITY: GOOD FOR E-BUSINESS? 741
ONLINE RESOURCES 742
REFERENCES 742
GLOSSARY 746
INDEX 763