Part III.

Web, Wireless, and Social Media

Strategies

C hapter 6
E-Business and E-Commerce

Course

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Chapter 6 Outline
6.1 e-Business Challenges and Strategies
6.2 Business-to-Consumer (B2C) e-Commerce
6.3 Business-to-Business (B2B) e-Commerce
and e-Procurement
6.4 e-Government
6.5 e-Commerce Support Services: Payment &
Order Fulfillment
6.6 e-Business Ethics and Legal Issues
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Chapter 6 Learning Objectives

Describe e-business strategies and e-commerce

operations.

Understand effective business-to-consumer ecommerce applications.

Understand business-to-business applications,

logistics, procurement, order fulfillment, and
payment systems.

Describe e-government activities and public sector ecommerce.

Understand e-commerce support services.

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6.1 e-Business Challenges and

Strategies
Mix of online channels & media gives consumers strong control

over where and how they interact with a business or brand.

Managers need to know how to respond to changing
consumer behavior & needs of business customers
and how to deal with IT software vendors and consulting
firms.
Companies may outsource development or hosting of ebusiness systems w/ software as a service (SaaS) or cloud
computing
but developing an effective e-business model and
competitive strategy is done in-house.
If the business model and strategy are wrong,
then implementation wouldnt matter in the longrun.

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Figure 6.4. Changes in the

Nasdaq during the dot-com era,
which burst (started to decline)
on March 10, 2000 and declined
until October 2002.

Dot-com Era, 1995 to

2002
Adding the prefix e to business did
not eliminate the need to focus on
positive earnings and cash flow and to
earn a profit.

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Types of E-Business Transactions

Business-to-business (B2B). Over 85% of EC
volume is B2B.
Business-to-consumers (B2C). Also called e-tailing.
Consumers-to-business (C2B). Consumers make
known a particular need for a product or service, and
then suppliers compete to provide that product or
service at the requested price;
e.g., Priceline.com
Government-to-citizens (G2C) and to others. A
government agency provides services to its citizens
via EC technologies.
Mobile commerce (m-commerce). Transactions and
activities
are& conducted
via wireless networks.
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E-Business Web Site

Requirements and Challenges

Availability relates to the server-side of e-business. An always

on facility is needed to maintain the business critical apps.
Accuracy and Quick Response. Web software must be
capable of searching, sorting, processing promotions and
payments, verifying that the credit card number belongs to the
person trying to use it, confirming the purchase in real-time,
etc. In time-sensitive B2B, errors that delay delivery are
intolerable.
Security and PCI DSS Compliance. PCI DSS (Payment Card
Industry Data Security Standard) is a set of infosec
requirements to help prevent credit card fraud.
Integrating EC systems with enterprise systems. Need
better integration across all customer points of interactions.
Web analytics. Learning from Web traffic and log data.

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PCI Compliance

http://www.pcisecuritystandards.org/popups/pcirocks.php

PCI Compliance is a complex process that

requires every business that deals with payment
card numbers in any way to strictly follow a
detailed list of regulations.
PCI Data Security Standard (PCI DSS): All
EC and brick-and-mortar merchants must be PCI
DSS compliant to accept, hold, process, or
exchange credit cardholder data of major credit
cards.
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E-Business Model

Figure 6.6 E-commerce model

Objective of e-business: streamline and automate processes

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E-business Models

Comparison shopping engines

Affiliate marketing
Electronic marketplaces and exchanges
Information brokers and matching services
Memberships
Forward auctions
Reverse auctions
Name-your-own-price
Online auctions
Online direct marketing.
Viral marketing

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6.2 B2C e-Commerce

Most well-known B2C site is Amazon.com,

whose patented IT developments
provide a competitive edge

ING Direct, largest online bank with high rates,

high-volume, low-margins, and high profits

Online job market. Most companies and

government agencies advertise job openings,
accept rsums, and take applications via the Internet.

Despite B2C ongoing growth, many e-tailers still face

challenges that interfere with the growth of its e-tailing
efforts

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Issues in E-tailing
1. Resolving

channel conflict between an online

selling channel and physical selling channels

2. Resolving

conflicts within click-and-mortar

organizations.

3. Managing

order fulfillment, logistics, and reverse

logistics.
4.

Determining viability and risk of online e-tailers.

5. Identifying

appropriate revenue (business)

models.
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6.3 B2B e-Commerce & eProcurement

B2B
comprises about 85% of e-commerce dollar
volume.
covers apps that enable an enterprise to form
electronic relationships with its distributors,
resellers, suppliers, customers, and other
partners.

By using B2B, organizations can restructure their

supply chains and partner relationships.

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B2B Business Models

Sell-side:
Seller can be either a manufacturer (IBM.com), a
distributor (Avnet.com), or a retailer (Walmart.com)
Primary methods are forward auctions and online
catalogs, which can be customized for each buyer

Buy-side or e-sourcing:
E-sourcing refers to the many procurement methods.
Primary methods are auctions, RFQ processing, and
private exchanges

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B2B
E-procurement
1. To control costs
2. To simplify processes to make them more efficient

Public and Private Exchanges

3. Vertical exchanges for direct materialsmaterials that are inputs
to manufacturing; e.g., PlasticsNet.com
4. Vertical exchanges for indirect materials in one industrye.g.,
ChemConnect.com and iSteelAsia.com
5. Horizontal exchanges for indirect materials, such as office
supplies, light bulbs, and cleaning materials used by any industry;
e.g., EcEurope.com and Alibaba.com
6. Functional exchanges. Needed services such as temporary help
or extra space are traded on an as-needed basis; e.g.,
Employease.com
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6.4 E-Government
E-commerce models apply to government & the public
sector

E-government is the use of Internet technology to

deliver information and public services to citizens,
business partners and suppliers of government
entities
Benefits
Improves the efficiency and effectiveness of
govnt functions, including the delivery of public
services
Increases transparency by giving access to govnt
information
Citizens can provide feedback and more actively
participate in democratic institutions and
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E-Government in the Cloud

Budget pressures are a leading factor moving

governments into cloud computing solutions
45% of local governments are using some form of
cloud computing for applications or services

2 iPhone Apps to Curb Drunk Driving

R-U-Buzzed was released by the Colorado DOT to

estimate blood-alcohol content
Mashup program Stumble Safely gives
Washington, D.C., pedestrians a safe route home
after a night at the bar.

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6.5 E-Commerce Support Services:

Payment and Order
Fulfillment

B2B and B2C requires support services, e.g., payment and

order fulfillment

Major e-commerce support services:

e-infrastructure: technology consultants,
system developers, integrators, hosting, security,
wireless, and networks
e-processes: payments and logistics
e-markets: marketing and advertising
e-communities: citizens, audiences and
business partners
e-services: CRM, PRM, and directory services
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Advertising Strategies and

Revenue Models

Affiliate marketing and

advertising: an organization refers
consumers to other companies Web
sites.

Viral marketing: word-of-mouth

marketing; customers promote a
product or service by telling many
others about it, often via tweets or
texts.

Customizing ads: marketing

managers can customize display ads
based on users profiles.
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E-payment systems

Electronic funds transfer (EFT)

Electronic checks
Electronic credit cards
Purchasing e-cards
e-Cashsmart cards
e-Cashperson-to-person
Electronic bill presentment and payments
Pay at ATMs
Micropayments
B2B special methods

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Figure 6.10 Sequence of activities in e-credit card

processing
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IT at Work 6.6

E-Money: The Future Currency

The growing e-money
lifestyle in Japan is making
life more convenient for
consumers by allowing
transactions via mobiles.
The Mobile Suica system
was debuted by NTT
DoCoMo in 2006.
Mobile Suica is a phone-based
smartcard that can be used for
buying
tickets
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buildings.

Figure 6.11
Contactless Mobile
Suica on mobile
phone; based on RFID

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Order fulfillment activities

Figure 6.12 Order fulfillment and logistics

system
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Copyright 2012 John Wiley & Sons,

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6.6 E-Business Ethics and Legal

Issues

Privacy: Most e-payment systems know who the

buyers are; therefore, its necessary to protect
the buyers identities.

Web tracking: By using tracking software and

log files, companies can track individuals
movements on the Internet.

Job loss: EC may eliminate jobs.

Disintermediation: Technology eliminates the

need for intermediaries, such as travel and
insurance agents.

Copyright 2012 John Wiley & Sons,

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Chapter 6 Link Library

Amazon.coms 1st Web site, 1995

digitalenterprise.org/images/amazon.gif

e-Business forum ebusinessforum.com

Google Merchant Center google.com/merchants

Google Product Search google.com/products

Shopzilla shopzilla.com

U.S. Federal Trade Commission ftc.gov

PCI Security Standards Council

pcisecuritystandards.org/index.shtml

Internet statistics internetworldstats.com

Many Eyes (beta) data sets and visualization tools

manyeyes.alphaworks.ibm.com/manyeyes/

Washington, DC Data Catalog data.octo.dc.gov/

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