IT Applications for Digital Organizations

Electronic Commerce Systems

E-Commerce

E-commerce the buying and selling of goods and services

over the Internet
Electronic commerce encompasses the entire online process of

Developing

Marketing

Selling

Delivering

Servicing

Paying for products and services

Unique features of e-commerce technology

1.

Ubiquity

2.

Global reach

3.

The technology reaches across national boundaries, around Earth

Universal standards

4.

Internet/Web technology available everywhere: work, home, etc., and

anytime

One set of technology standards: Internet standards

Richness

Supports video, audio, and text messages

Unique features of e-commerce technology

5.

Interactivity

6.

Information density

7.

Vast increases in information densitythe total amount and quality of

information available to all market participants

Personalization/Customization:

8.

The technology works through interaction with the user

Technology permits modification of messages, goods

Social technology

The technology promotes user content generation and social

networking

Electronic Commerce and the Internet

Key concepts in e-commerce

Digital markets reduce

Information asymmetry

Search costs

Transaction costs

Menu costs

Digital markets enable

Price discrimination or price differentiation

Dynamic pricing

Disintermediation

Benefits of Disintermediation to the

Consumer

Electronic Commerce and the Internet

Key concepts in e-commerce (cont.)

Digital goods

Goods that can be delivered over a digital network

E.g., Music tracks, video, software, newspapers, books

Costs of delivery over the Internet very low

Marketing costs remain the same; pricing highly variable

Industries with digital goods are undergoing revolutionary

changes (publishers, record labels, etc.)

Electronic Commerce and the Internet

Internet business models

Pure-play models

Clicks-and-mortar models

Social Network

Online meeting place

Social shopping sites

Can provide ways for corporate clients to target customers through

banner ads and pop-up ads

Online marketplace:

Provides a digital environment where buyers and sellers can meet,

search for products, display products, and establish prices for those
products

Electronic Commerce and the Internet

Content provider

Providing digital content, such as digital news, music, photos, or video,

over the Web

Online syndicators: Aggregate content from multiple sources,

package for distribution, and resell to third-party Web sites

Service provider

Provides Web 2.0 applications such as photo sharing and interactive

maps, and services such as data storage

Portal

Supersite that provides comprehensive entry point for huge array of

resources and services on the Internet

Electronic Commerce and the Internet

Virtual storefront:

Information broker:

Form of interactive media/electronic marketing that allows customers to view

and order merchandise on their computer screens. In a virtual storefront,
customers can read about the history of the product, browse through product
offerings, and place orders, all through the touch of the keyboard and mouse
on their computer

Provides product, pricing, and availability information to individuals and

businesses

Transaction broker:

Saves users money and time by processing online sales transactions and
generating a fee for each transaction

E-Commerce Models

Business-to-Business (B2B)
Business-to-Consumer (B2C)
Consumer-to-Consumer (C2C)
Consumer-to-Business (C2B), an emerging model
E-Government-to-citizens
Mobile commerce (m-commerce)

Business-to-Business (B2B)

Electronic business marketplaces, direct links between

businesses, auctions and exchanges
Electronic marketplace (e-marketplace) interactive business
communities providing a central market where multiple buyers
and sellers can engage in e-business activities

Business-to-Consumer (B2C)

Virtual storefronts, multimedia catalogs, interactive order

processing, electronic payment, online customer support
Examples: Banking, auctions (ebay.com)

Business-to-Consumer (B2C)

Common B2C e-business models include:

e-shop a version of a retail store where customers can
shop at any hour of the day without leaving their home or
office
e-mall consists of a number of e-shops; it serves as a
gateway through which a visitor can access other e-shops

Business types:
Brick-and-mortar business
Pure-play business
Click-and-mortar business

Consumer-to-Consumer (C2C)

Online auctions, posting to newspaper sites, personal

websites, e-commerce portals

Consumer-to-Consumer (C2C)

Online auctions
Electronic auction (e-auction) - Sellers and buyers solicit
consecutive bids from each other and prices are determined
dynamically
Forward auction - Sellers use as a selling channel to many
buyers and the highest bid wins
Reverse auction - Buyers use to purchase a product or
service, selecting the seller with the lowest bid

C2C communities:
Communities of interest
Communities of relations
Communities of fantasy

Emerging Model - Consumer-to-Business (C2B)

Priceline.com is an example of a C2B e-business model

The demand for C2B e-business will increase over the next
few years due to customers desire for greater convenience and
lower prices

Others

E-Government deliver information and public services to

citizens and members of the public sector
Forms of e-Government
Government-to-consumer (G2C)
Government-to-business (G2B)
Government-to-government (G2G)
M-Commerce Mobile commerce relies on the use of
wireless devices, such as personal digital assistants, cell
phones, and smart phones, to place orders and conduct
business

Electronic Commerce

Interactive marketing and personalization

Web sites are bountiful source of details about customer behavior,

preferences, buying patterns used to tailor promotions, products,
services, and pricing

Clickstream tracking tools: Collect data on customer activities at

Web sites

Used to create personalized Web pages

Collaborative filtering: Compares customer data to other customers to

make product recommendations

Electronic Commerce

Blogs

Personal web pages that contain series of chronological entries by

author and links to related Web pages

Has increasing influence in politics, news

Corporate blogs: New channels for reaching customers, introducing

new products and services

Blog analysis by marketers

Customer self-service

Web sites and e-mail to answer customer questions or to provide

customers with product information

Reduces need for human customer-support expert

Learning with an Example

Oxfam GB generates 5 million in revenue with e-commerce solution

Oxfam Great Britain is a leading international non-governmental organization

(NGO). It works with thousands of partner organizations around the world to help
overcome poverty and suffering

Over the years Oxfam Great Britain has developed a number of creative and
innovative ways to raise funds for its work. Its perhaps most famous for its High
Street chain of second-hand shops

The stores sell clothes, books, music, household goods and collectors items
such as stamps and coins

Until recently Oxfam Great Britains online shopping offering was focused largely
on the sale of virtual goods. The organization also sold a small number of goods
through eBay
To help strengthen its brand and realize new sources of income, Oxfam Great
Britain recognized that it needed to expand its online sales capacity and to offer the
type of product and range that its customers were used to buying in its High Street
stores

Learning with an Example

In 2008, Oxfam Great Britain started to lay the groundwork for a new, modern ecommerce platform

The project started with the High Street shops

Next, they built a branded High Street store

They built three product catalogues one for new, fair trade goods, another for
second-hand items sold under the High Street brand, and a third for virtual items

Benefits

Quick return on investment

Scalable platform

Greater revenue opportunity

More efficient business

E-Commerce Systems

E-Commerce Architecture

Access Control and Security

E-commerce processes must establish mutual trust and secure

access between parties

User names and passwords

Encryption key

Digital certificates and signatures

Restricted access areas

Other peoples accounts

Restricted company data

Webmaster administration areas

Profiling and Personalizing

Profiling gathers data on you and your website behavior and

choices
User registration
Cookie files and tracking software
User feedback
Profiling is used for
Personalized (one-to-one) marketing
Authenticating identity
Customer relationship management
Marketing planning
Website management

Search Management

Search processes help customers find the specific product or

service they want

E-commerce software packages often include

a website search engine

A customized search engine may be acquired from

companies

Searches are often on content or by parameters

Content and Catalog Management

Content Management Software

Catalog Management Software

Helps develop, generate, deliver, update, and archive text

and multimedia information at e-commerce websites

Helps generate and manage catalog content

Catalog and content management software works with

profiling tools to personalize content

Workflow Management

E-business and e-commerce workflow management depends

on a workflow software engine

Contains software model of business processes

Workflow models express predefined

Sets of business rules

Roles of stakeholders

Authorization requirements

Databases used

Task sequences

Event Notification

Most e-commerce applications are event driven

Responds to such things as customers first website visit

and payments

Monitors all e-commerce processes

Records all relevant events, including problem situations

Notifies all involved stakeholders

Collaboration and Trading

Processes that support vital collaboration arrangements and

trading services

Needed by customers, suppliers, and other stakeholders

Online communities of interest

E-mail, chat, discussion groups

Enhances customer service

Builds loyalty

Electronic Payment Processes

Complex processes

Electronic nature of transactions

Many security issues

Financial institutions may be part of the process

Electronic Payment Processes

Web Payment Processes

Shopping cart process

Credit card payment process

Debit and other more complex processes

Electronic Funds Transfer (EFT)

Major payment system in banking, retail
Variety of information technologies capture and process
money and credit card transfers
Most point-of-sale terminals in retail stores are networked
to bank EFT systems

Securing Electronic Payments

Network sniffers easily recognize credit card formats

Encrypt data between customer and merchant
Encrypt data between customer and financial institution
Take sensitive information off-line

E-Commerce Success Factors

Some of the success factors in e-commerce

Selection and value

Performance and service

Look and feel

Advertising and incentives

Personal attention (one-to-one marketing)

Community relationships

Security and reliability

Differences in Marketing

Web Store Requirements

E-Commerce Marketplaces

One to Many
Sell-side marketplaces
One supplier dictates product offerings and prices
Many to One
Buy-side marketplaces
Many suppliers bid for the business of a buyer
Some to Many
Distribution marketplaces
Unites suppliers who combine their product catalogs to attract a larger
audience
Eg: Works, an Internet business (B2B) purchasing service that
automates the purchasing process and gives small and midsize
companies volume purchasing power

E-Commerce Marketplaces

Many to Some
Procurement marketplaces
Unites major buyers who combine purchasing catalogs
Attracts more competition and thus lower prices
Eg: Pantellos Group Limited Partnership provides supply chain
management services to the utility and energy services industries. The
company operates an Internet-based trading platform that offers
workforce management, logistics, e-procurement, project collaboration,
logistics, virtual inventory management, transaction facilitation, supply
chain strategy, operations, and business process services support
Many to Many
Auction marketplaces
Dynamically optimizes prices
Eg: ebay

Clicks and Bricks

Success will go to those who can integrate Internet initiatives

with traditional operations

Partial e-commerce integration

Joint ventures and strategic partnerships

Complete separation

Spin-off of an independent e-commerce company

E-Commerce Integration

The business case for merging e-commerce

with traditional business operations

Move strategic capabilities in traditional operations to the

e-commerce business

Integrate e-commerce into the traditional business

Sharing of established brands

Sharing of key business information

Joint buying power and distribution efficiencies

E-Commerce Strategy Checklist

Questions to ask and answer

What audiences are we attempting to reach?
What action do we want those audiences to take?
Who owns the e-commerce channel within the
organization?
Is the e-commerce channel planned alongside other
channels?
Is there a process for generating, approving, releasing, and
withdrawing content?
Will our brand translate to the new channel?
How will we market the channel itself?