Principles of Information Systems
Chapter 8
Electronic and Mobile Commerce
2
Principles and Learning Objectives
• Electronic commerce and mobile commerce are
evolving, providing new ways of conduct...
3
Principles and Learning Objectives
(continued)
• E-commerce and m-commerce can be used in
many innovative ways to improv...
4
Why Learn About Electronic and Mobile
Commerce?
• Most organizations have an Internet presence
– Sales/marketing manager...
5
An Introduction to Electronic
Commerce
• Electronic commerce: conducting business
activities electronically over compute...
6
Business-to-Business (B2B)
E-Commerce
• Subset of e-commerce
• All the participants are organizations
• Useful tool for ...
7
Business-to-Consumer (B2C)
E-Commerce
• Form of e-commerce in which customers deal
directly with an organization and avo...
8
Consumer-to-Consumer (C2C)
E-Commerce
• Subset of e-commerce that involves consumers
selling directly to other consumers...
9
E-Government
• Use of information and communications technology
to simplify the sharing of information, speed
formerly p...
10
Multistage Model for E-commerce
Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)
11
Multistage Model for E-commerce
(continued)
Figure 8.2: Product and Information Flow for HP Printers Ordered over the W...
12
E-Commerce Challenges
• Defining an effective e-commerce model and
strategy
– Community, content, and commerce
• Changi...
13
E-Commerce Challenges (continued)
Figure 8.3: Three Basic Components of a Successful E-Commerce Model
14
E-Commerce Challenges (continued)
Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional
Back-End Systems
15
An Introduction to Mobile Commerce
• Mobile commerce (m-commerce) relies on the use
of wireless devices, such as person...
16
Mobile Commerce in Perspective
• Only 12 to 14 percent of the world’s 1.8 billion
mobile phone users have ever used the...
17
Technology Needed for Mobile
Commerce
• Improved interface between the wireless device
and its user
• Improved network ...
18
Technology Needed for Mobile Commerce
(continued)
• Wireless application protocol (WAP): standard
set of specifications...
19
Electronic and Mobile Commerce
Applications
• Many B2B, B2C, C2C, and m-commerce
applications are being used in:
– Reta...
20
Retail and Wholesale
• Electronic retailing (e-tailing): direct sale from
business to consumer through electronic
store...
21
Manufacturing (continued)
Figure 8.5: Model of an Electronic Exchange
22
Investment and Finance
• Online stock trading
– Online tools for doing research and analysis
• Online banking
– Custome...
23
Auctions
• eBay
– Has become synonymous with online auctions
– Customer complaints: increased fees and problems
with un...
24
Anywhere, Anytime Applications of
Mobile Commerce
• M-commerce devices are ideal for accessing
personal information and...
25
Advantages of Electronic and Mobile
Commerce
• Global reach: helps reduce gap between rich and
poor countries
• Reduces...
26
Threats to Electronic and Mobile
Commerce
• Businesses must ensure that e-commerce and m-
commerce transactions are saf...
27
Security
• Methods to increase security
– Payment Card Industry security standard
– Address Verification System
– Card ...
28
Theft of Intellectual Property
• Intellectual property: works of the mind that are
distinct somehow and are owned or cr...
29
Lack of Internet Access
• Digital divide: difference between people who do
and people who don’t have access or capabili...
30
Legal Jurisdiction
• When conducting e-commerce, sales must not
violate county, state, or country legal jurisdictions
•...
31
Strategies for Successful
E-Commerce
• Companies must develop effective Web sites that
include the following characteri...
32
Establishing a Web Site
• Web site hosting companies
– Allow you to set up a Web page and conduct e-
commerce within a ...
33
Building Traffic to Your Web Site
• Obtain and register a domain name
• Make your site search-engine-friendly
– Meta ta...
34
Technology Infrastructure Required To
Support E-commerce and
M-commerce
• Successful implementation of e-business requi...
35
Technology Infrastructure Required To
Support E-commerce and
M-commerce (continued)
Figure 8.6: Key Technology Infrastr...
36
Hardware
• Storage capacity and computing power required of
the Web server depends on:
– Software that will run on the ...
37
E-Commerce Software
• E-commerce software tools
– Catalog management: provides standard format
– Product configuration:...
38
E-Commerce Software (continued)
Figure 8.7: Electronic Shopping Cart
39
Electronic Payment Systems
• Digital certificate: attachment to an e-mail
message or data embedded in a Web page that
v...
40
Electronic Payment Systems
(continued)
• Credit card
• Charge card
• Debit card – (bank card or check card)
• Smart car...
41
Summary 
• Electronic commerce (or e-commerce): conducting
business activities electronically over computer
networks
•...
42
Summary (continued) 
• Multistage model for e-commerce: includes search
and identification, selection and negotiation,...
43
Summary (continued)
• Issues affecting growth of e- and m-commerce:
security, theft of intellectual property, fraud,
in...
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Week 5 ch08 c

  1. 1. Principles of Information Systems Chapter 8 Electronic and Mobile Commerce
  2. 2. 2 Principles and Learning Objectives • Electronic commerce and mobile commerce are evolving, providing new ways of conducting business that present both opportunities for improvement and potential problems – Describe the current status of various forms of e- commerce, including B2B, B2C, and C2C – Outline a multistage purchasing model that describes how e-commerce works – Define m-commerce and identify some of its unique challenges
  3. 3. 3 Principles and Learning Objectives (continued) • E-commerce and m-commerce can be used in many innovative ways to improve the operations of an organization – Identify several e-commerce and m-commerce applications – Identify several advantages associated with the use of e-commerce and m-commerce
  4. 4. 4 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 manager may provide Web content for employees and investors • Must learn about e-commerce and m-commerce
  5. 5. 5 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
  6. 6. 6 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 resupply times and reduce costs
  7. 7. 7 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
  8. 8. 8 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
  9. 9. 9 E-Government • 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)
  10. 10. 10 Multistage Model for E-commerce Figure 8.1: Multistage Model for E-Commerce (B2B and B2C)
  11. 11. 11 Multistage Model for E-commerce (continued) Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web
  12. 12. 12 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
  13. 13. 13 E-Commerce Challenges (continued) Figure 8.3: Three Basic Components of a Successful E-Commerce Model
  14. 14. 14 E-Commerce Challenges (continued) Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional Back-End Systems
  15. 15. 15 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
  16. 16. 16 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
  17. 17. 17 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
  18. 18. 18 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
  19. 19. 19 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
  20. 20. 20 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
  21. 21. 21 Manufacturing (continued) Figure 8.5: Model of an Electronic Exchange
  22. 22. 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
  23. 23. 23 Auctions • eBay – Has become synonymous with online auctions – Customer complaints: increased fees and problems with unscrupulous buyers – Constantly trying to expand and improve its services: Skype, Verisign • Hundreds of other online auction sites – Example: Priceline.com
  24. 24. 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
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. 29 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
  30. 30. 30 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
  31. 31. 31 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
  32. 32. 32 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
  33. 33. 33 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
  34. 34. 34 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
  35. 35. 35 Technology Infrastructure Required To Support E-commerce and M-commerce (continued) Figure 8.6: Key Technology Infrastructure Components
  36. 36. 36 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
  37. 37. 37 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
  38. 38. 38 E-Commerce Software (continued) Figure 8.7: Electronic Shopping Cart
  39. 39. 39 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
  40. 40. 40 Electronic Payment Systems (continued) • Credit card • Charge card • Debit card – (bank card or check card) • Smart card: a credit card–sized device with an embedded microchip to provide electronic memory and processing capability Debit Card Charge Card Credit Card
  41. 41. 41 Summary  • Electronic commerce (or e-commerce): conducting business activities electronically over computer networks • Types of e-commerce: business-to-consumer (B2C), business-to-business (B2B), and consumer- to-consumer (C2C) • E-Government: 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
  42. 42. 42 Summary (continued)  • Multistage model for e-commerce: includes search and identification, selection and negotiation, electronic purchasing, delivery, and after-sales service • Mobile commerce (m-commerce): uses wireless devices to place orders and conduct business • B2B, B2C, C2C, and m-commerce applications are being used in retail and wholesale, manufacturing, marketing, investment and finance, and auction arenas
  43. 43. 43 Summary (continued) • Issues affecting growth of e- and m-commerce: security, theft of intellectual property, fraud, invasion of consumer privacy, lack of Internet access, return on investment, legal jurisdiction, and taxation • An effective Web site should be easy to use, accomplish the goals of the company, be safe and secure, and be affordable to set up and maintain • Successful implementation of e-business requires significant changes to existing business processes and substantial investment in IS technology

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