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  • 1. Principles of Information Systems Eighth Edition Chapter 8 Electronic and Mobile Commerce
  • 2. Why Learn About Electronic and Mobile Commerce?
    • Most organizations have an Internet presence
      • Sales/marketing manager involved with e-commerce
      • Customer service employees help develop the Web site
      • Human resource or public relations manger may provide Web content for employees and investors
    • Must learn about e-commerce and m-commerce
    Principles of Information Systems, Eighth Edition
  • 3. An Introduction to Electronic Commerce
    • Electronic commerce: conducting business activities electronically over computer networks
    • Types of business activities that are strong candidates for conversion to e-commerce
      • Paper based
      • Time-consuming
      • Inconvenient for customers
    Principles of Information Systems, Eighth Edition
  • 4. Business-to-Business (B2B) E-Commerce
    • Subset of e-commerce
    • All the participants are organizations
    • Useful tool for connecting business partners in a virtual supply chain to cut re-supply times and reduce costs
    Principles of Information Systems, Eighth Edition
  • 5. Business-to-Consumer (B2C) E-Commerce
    • Form of e-commerce in which customers deal directly with an organization and avoid intermediaries
      • Squeezes costs and inefficiencies out of supply chain
      • Can lead to higher profits
      • Can lead to lower prices for consumers
    • E-commerce via the Internet
      • Many goods and services are cheaper online
      • The Internet allows consumers to easily compare prices, features, and value
    Principles of Information Systems, Eighth Edition
  • 6. Consumer-to-Consumer (C2C) E-Commerce
    • Subset of e-commerce that involves consumers selling directly to other consumers
    • Example: eBay
      • Customers buy and sell items directly to each other through the site
      • 181 million users buy and sell items valued at more than $44 billion
    • Other popular online auction Web sites: Craigslist, uBid, Yahoo! Auctions, Onsale, and WeBidz
    Principles of Information Systems, Eighth Edition
  • 7. eGovernment
    • Use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizen and government
    • Forms of eGovernment
      • Government-to-consumer (G2C)
      • Government-to-business (G2B)
      • Government-to-government (G2G)
    Principles of Information Systems, Eighth Edition
  • 8. Multistage Model for E-commerce Principles of Information Systems, Eighth Edition Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)
  • 9. Multistage Model for E-commerce (continued) Principles of Information Systems, Eighth Edition Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web
  • 10. E-Commerce Challenges
    • Defining an effective e-commerce model and strategy
      • Community, content, and commerce
    • Changing distribution systems and work processes to manage shipments of individual units directly to consumers
      • B2C systems must be able to handle split-case distribution
    • Integrating Web-based order processing with traditional systems
    Principles of Information Systems, Eighth Edition
  • 11. E-Commerce Challenges (continued) Principles of Information Systems, Eighth Edition Figure 8.3: Three Basic Components of a Successful E-Commerce Model Providing useful, accurate, and timely Content Buying & selling physical goods, information, and Services Features that build a loyal Community
  • 12. E-Commerce Challenges (continued) Principles of Information Systems, Eighth Edition Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional Back-End Systems
  • 13. An Introduction to Mobile Commerce
    • Mobile commerce (m-commerce ) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business
    • Handset manufacturers are working with communications carriers to develop appropriate wireless devices, related technology, and services
    • Content providers and mobile service providers are working together more closely than ever
    Principles of Information Systems, Eighth Edition
  • 14. Mobile Commerce in Perspective
    • Only 12 to 14 percent of the world’s 1.8 billion mobile phone users have ever used the Web from their phones
    • Internet Corporation for Assigned Names and Numbers (ICANN) created a .mobi domain to help attract mobile users to the Web
    • Market for m-commerce in North America is maturing much later than in Western Europe and Japan
    Principles of Information Systems, Eighth Edition
  • 15. Technology Needed for Mobile Commerce
    • Improved interface between the wireless device and its user
    • Improved network speed
    • Security
      • Encryption, digital certificates
    • Web applications that are accessible for handheld users
    Principles of Information Systems, Eighth Edition
  • 16. Technology Needed for Mobile Commerce (continued)
    • Wireless application protocol (WAP): standard set of specifications for Internet applications that run on handheld, wireless devices
      • Effectively serves as a Web browser for such devices
      • Uses the Wireless Markup Language (WML), which is designed for effectively displaying information on small devices
    Principles of Information Systems, Eighth Edition
  • 17. Electronic and Mobile Commerce Applications
    • Many B2B, B2C, C2C, and m-commerce applications are being used in:
      • Retail and wholesale
      • Manufacturing
      • Marketing
      • Investment and finance
      • Auction arenas
    Principles of Information Systems, Eighth Edition
  • 18. Retail and Wholesale
    • Electronic retailing (e-tailing): direct sale from business to consumer through electronic storefronts
      • Electronic storefronts are typically designed around an electronic catalog and shopping cart model
    • Cybermall: single Web site that offers many products and services at one Internet location
    • Manufacturing, repair, and operations (MRO) goods and services
    Principles of Information Systems, Eighth Edition
  • 19. Manufacturing
    • To raise profitability and improve customer service, many manufacturers move their supply chain operations onto the Internet
    • Electronic exchange: electronic forum where manufacturers, suppliers, and competitors buy and sell goods, trade market information, and run back-office operations
    Principles of Information Systems, Eighth Edition
  • 20. Manufacturing (continued) Principles of Information Systems, Eighth Edition Figure 8.5: Model of an Electronic Exchange
  • 21. Marketing
    • Market segmentation: identification of specific markets to target them with advertising messages
    • Technology-enabled relationship management: use of detailed information about a customer’s behavior, preferences, needs, and buying patterns to customize the entire relationship with that customer
    Principles of Information Systems, Eighth Edition
  • 22. Investment and Finance
    • Online stock trading
      • Online tools for doing research and analysis
    • Online banking
      • Customers can check account balances, transfer money among accounts, pay bills, etc.
      • Electronic bill presentment
    Principles of Information Systems, Eighth Edition
  • 23. Auctions
    • eBay
      • Has become synonymous with online auctions
      • Customer complaints: increased fees and problems with dishonest buyers
      • Constantly trying to expand and improve its services: Skype, Verisign
    • Hundreds of other online auction sites
      • Example: Priceline.com
    Principles of Information Systems, Eighth Edition
  • 24. Anywhere, Anytime Applications of Mobile Commerce
    • M-commerce devices are ideal for accessing personal information and receiving targeted messages for a particular consumer
    • Through m-commerce, companies can establish one-to-one marketing relationships with individual consumers anytime and anywhere
    • The most successful m-commerce applications suit local conditions and people’s habits and preferences
    • Examples: banking, stock trading, information services, retail, advertisements
    Principles of Information Systems, Eighth Edition
  • 25. Advantages of Electronic and Mobile Commerce
    • Global reach: helps reduce gap between rich and poor countries
    • Reduces costs: increases speed and accuracy
    • Speeds the flow of goods and information
    • Increases accuracy: eliminates human data-entry error
    • Improves customer service: information about delivery status and ability to meet customer demand
    Principles of Information Systems, Eighth Edition
  • 26. Threats to Electronic and Mobile Commerce
    • Businesses must ensure that e-commerce and m-commerce transactions are safe and consumers are protected
    • Number of threats to the continued growth of e-commerce and m-commerce
      • Security, theft of intellectual property, fraud, invasion of privacy, lack of Internet access, return on investment, legal jurisdiction, taxation
    Principles of Information Systems, Eighth Edition
  • 27. Security
    • Methods to increase security
      • Payment Card Industry security standard
      • Address Verification System
      • Card Verification Number technique
      • Visa’s Advanced Authorization process
      • Federal Financial Institutions Examination Council’s “Authentication in an Internet Banking Environment” guidelines
      • Biometric technology
    Principles of Information Systems, Eighth Edition
  • 28. Theft of Intellectual Property
    • Intellectual property: works of the mind that are distinct somehow and are owned or created by a single entity
      • For example: books, films, music, processes, and software
    • Copyright law protects authored works such as books, film, images, music, and software from unauthorized copying
    • Patents can protect software, business processes, formulae, compounds, and inventions
    Principles of Information Systems, Eighth Edition
  • 29. Theft of Intellectual Property (continued)
    • Trade secrets
    • Digital Rights Management (DRM): use of any of several technologies to enforce policies for controlling access to digital media
    Principles of Information Systems, Eighth Edition
  • 30. Fraud
    • Phishing: sending bogus messages purportedly from a legitimate institution to pry personal information from customers by convincing them to go to a “spoof” Web site
    • Click fraud: arises in a pay-per-click online advertising environment when additional clicks are generated beyond those that come from actual, legitimate users
    • Online auction fraud
    Principles of Information Systems, Eighth Edition
  • 31. Invasion of Consumer Privacy
    • Online profiling: practice of Web advertisers’ recording online behavior to produce targeted advertising
    • Clickstream data: data gathered based on the Web sites you visit and the items you click on
    Principles of Information Systems, Eighth Edition
  • 32. Lack of Internet Access
    • Digital divide: difference between people who do and people who don’t have access or capability to use high-quality, modern information and communications technology to improve their standard of living
      • Exists between:
        • More and less developed countries
        • Economic classes
        • The educated and uneducated
        • Those who live in cities and those who live in rural areas
    Principles of Information Systems, Eighth Edition
  • 33. Return on Investment
    • The investment required for a large firm to establish and operate a B2B or B2C Web site can be in the millions of dollars
    • Common problem with determining return on investment: difficult to forecast project costs and benefits
    Principles of Information Systems, Eighth Edition
  • 34. Legal Jurisdiction
    • When conducting e-commerce, sales must not violate county, state, or country legal jurisdictions
    • Examples
      • Selling stun guns and similar devices
      • Selling cigarettes or alcohol to underage customers
    Principles of Information Systems, Eighth Edition
  • 35. Taxation
    • U.S. Supreme Court ruling: Internet-based merchants must apply sales tax only when buyers live in a state where the company has physical facilities, or “nexus” ( connection or link )
    • Most businesses set up separate companies to avoid dealing with nonstandard rules of the more than 7,500 taxing districts nationwide
      • Consumers are responsible for voluntarily remitting sales taxes
    • Difficult for states to collect sales taxes on Internet purchases
    Principles of Information Systems, Eighth Edition
  • 36. Strategies for Successful E-Commerce
    • Companies must develop effective Web sites that include the following characteristics:
      • Easy to use
      • Accomplish the goals of the company
      • Safe and secure
      • Affordable to set up and maintain
    Principles of Information Systems, Eighth Edition
  • 37. Defining the Web Site Functions
    • Decide which tasks the site must accomplish
    • Create an attractive presence for the company
    • Meet the needs of its visitors
      • Examples: obtaining information about the organization and its products, buying products or services, getting advice, registering complaints
    • Redefining your site’s basic business model to capture new business opportunities
    Principles of Information Systems, Eighth Edition
  • 38. Establishing a Web Site
    • Web site hosting companies
      • Allow you to set up a Web page and conduct e-commerce within a matter of days
      • Little up-front cost
    • Storefront broker: companies that act as middlemen between your Web site and online merchants that have the products and retail expertise
    Principles of Information Systems, Eighth Edition
  • 39. Building Traffic to Your Web Site
    • Obtain and register a domain name
    • Make your site search-engine-friendly
      • Meta tag: special HTML tag that contains keywords representing your site’s content
        • Keywords are used by search engines to build indexes pointing to your Web site
    • Web site traffic data analysis software
    • Adapting Web site design for global consumers
    Principles of Information Systems, Eighth Edition
  • 40. Maintaining and Improving Your Web Site
    • Be alert to new trends and developments in e-commerce
    • Be prepared to take advantage of new opportunities
    • Personalization: tailoring Web pages to specifically target individual consumers
      • Explicit: captures user-provided information
      • Implicit: captures data from customer Web sessions
    Principles of Information Systems, Eighth Edition
  • 41. Technology Infrastructure Required To Support E-commerce and M-commerce
    • Successful implementation of e-business requires significant changes to existing business processes and substantial investment in IS technology
    • Poor Web site performance drives consumers to abandon some e-commerce sites in favor of those with better, more reliable performance
    Principles of Information Systems, Eighth Edition
  • 42. Technology Infrastructure Required To Support E-commerce and M-commerce (continued) Principles of Information Systems, Eighth Edition Figure 8.6: Key Technology Infrastructure Components
  • 43. Hardware
    • Storage capacity and computing power required of the Web server depends on:
      • Software that will run on the server
      • Volume of e-commerce transactions
    • E-commerce solutions should be designed to be highly scalable
    • Web site hosting: third-party Web service provider
    Principles of Information Systems, Eighth Edition
  • 44. Web Server Software
    • Security and identification
      • Access controls
      • Encryption
    • Retrieving and sending Web pages
    • Web site tracking
      • Web log file
    • Web site development
      • HTML/visual Web page editor, software development kits
    Principles of Information Systems, Eighth Edition
  • 45. Web Server Software (continued)
    • Web page construction
      • Web editors and extensions
      • Static Web page: contains same information
      • Dynamic Web page: responds to a specific Web user’s request
    • Examples of Web server software packages: Apache HTTP Server, Microsoft Internet Information Server
    Principles of Information Systems, Eighth Edition
  • 46. E-Commerce Software
    • E-commerce software tools
      • Catalog management: provides standard format
      • Product configuration: build product online to meet user needs
      • Shopping cart facilities
      • Transaction processing
      • Web traffic data analysis
      • Web services: software modules supporting specific business processes that users can interact with over a network as needed
    Principles of Information Systems, Eighth Edition
  • 47. E-Commerce Software (continued) Principles of Information Systems, Eighth Edition Figure 8.7: Electronic Shopping Cart
  • 48. Electronic Payment Systems
    • Digital certificate: attachment to an e-mail message or data embedded in a Web page that verifies the identity of a sender or a Web site
    • Certificate authority (CA): trusted third party that issues digital certificates
    • Secure Sockets Layer (SSL): communications protocol used to secure sensitive data
    • Electronic cash: amount of money that is computerized, stored, and used as cash for e-commerce transactions
    Principles of Information Systems, Eighth Edition
  • 49. Electronic Payment Systems (continued)
    • Credit card
    • Charge card
    • Debit card
    • Smart card: a credit card–sized device with an embedded microchip to provide electronic memory and processing capability
    Principles of Information Systems, Eighth Edition