What Is E-Commerce?

Chapter 10 ObjectivesUnderstand how e-commercehas changed today’sbusiness practicesIdentify various e-commercerevenue streamsDiscuss the positive impact ofe-commerce on global societyKnow how e-retailing worksIdentify e-commercemarket sectorsDifferentiate between thevarious e-commercebusiness usiness-to-business, andbusiness-to-employeeChapter 10E-Commerce:A Revolution in theWay We Do BusinessDiscuss issues associatedwith building an electronicstorefront, acceptingpayment, managing productdelivery, designing a site,managing the site, andpromoting the siteNextp.10.2What Is E-Commerce?What Is E-Commerce?What is electronic commerce(e-commerce)?How are e-commerce transactions conducted? Primarily through desktopcomputers Wirelessly using handheldWeb-enabled devices Financial businesstransaction that occurs overan electronic network Sometimes callede-businessM-commerceNextE-commerce thattakes place usingmobile devicesNextp.10.2 Fig. 10-1p.10.3What Is E-Commerce?What is a bricks-and-mortar business? Company with aphysical location, suchas Wal-Mart or KmartWhat Is E-Commerce?What is a clicks-and-mortar business? Company with a bricks-and-mortar locationas well as an online presence Some companieshave onlinepresencewithout physicallocations– E*Trade andAmazon.comNextp.10.3 Fig. 10-2Nextp.10.3 Fig. 10-31

E-Commerce BusinessModelsWhat Is E-Commerce?What is business-to-consumer(B-to-C or B2C) e-commerce?How has e-commerce grown? Estimates are that by 2005 worldwide e-commercewill exceed 5 trillionNext Sale ofproducts orservices from abusiness to thegeneral publicNextp.10.4 Fig. 10-4p.10.5E-Commerce BusinessModelsE-Commerce BusinessModelsHow might a B2C e-commerce businessoperate?1: Customersbuy productsand servicesonlineWhat is disintermediation? Sell products toconsumers withoutusing traditional retailchannels Enables companies tomaximize benefits byeliminating middlemanINTERNETINTERNET2: Networkcontains Webhosting, security,and backuppersonalize offerings tocustomer's profileNextp.10.5 Fig. 10-5p.10.5E-Commerce BusinessModelsWhat is consumer-to-consumer (Cto-C or C2C) e-commerce? Individualsusing Internetto sell productsto otherindividuals– Online auction,such as eBayNextp.10.6 Fig. 10-6Access to variety ofproducts and serviceswithout constraints oftime or distancebusiness benefitsof B2C3: Warehousereceives andfulfills orderNextconsumer benefitsof B2CE-Commerce BusinessModelsWhat is peer-to-peer (P2P) e-commerce? Users connect toeach other’s harddisks and exchangefiles directly Consumercan pay anotherconsumer to copyfileNextp.10.62

E-Commerce BusinessModelsE-Commerce BusinessModelsWhat is business-to-business(B-to-B or B2B) e-commerce? Sale and exchange of products and servicebetween businesses Many businesses engage in both B2B and B2C Supply chain creates and distributes productsWhat are four basic types of B2B e-commerce sites?brokering B2Bvendor B2BActs as middleman bynegotiating contract ofpurchase and saleProduct supplier allows purchasingagents to use network to shop,submit request for quotes (RFQs),and purchase itemsinfomediary B2BProvides specializedinformation aboutsuppliers and otherbusinessesservice B2BNextNextp.10.7 Fig. 10-7p.10.7Uses network to provideone or more services tobusinessE-Commerce BusinessModelsWhat is vertical B2B e-commerce? E-commercesitespecializing ina particularindustryE-Commerce BusinessModelsWhat is business-to-employee (Bto-E or B2E) e-commerce? Use of intranet technology tohandle activities that takeplace within a business Increases profits by reducingexpenses withina companyNextNextp.10.8p.10.8E-Commerce BusinessModelsE-Commerce RevenueStreamsWhat are some advantages of e-commerce? p.10.8 Fig. 10-8NextAlso calledintrabusinessGlobal market 24/7Businesses have access to 459 million people with Internet accessCustomers can conduct price comparisons easilyFeedback can be immediateChanging information can be available quicklyFAQ (frequently asked questions) pages can provide easy accessto customer supportAbility to gather customer information, analyze it, and reactNew and traditional approaches to generating revenueManufacturers can buy and sell directly, avoiding the cost of themiddlemanDistribution costs for information reduced or eliminatedOptions to create a paperless environmentWhat is a revenue stream? Method abusiness uses togenerate income Single Web sitemay use morethan one methodof generatingrevenuedirect sales ofa product talsadvertisingWeb net accessp.10.83

E-Commerce RevenueStreamsE-Commerce RevenueStreamsWhat is electronic software distribution (ESD)?How is revenue generated with softwarerental? Sale of digitalproducts suchas software,music, movies,books, andphotographs Purchaseentitles you todownload onecopy of item ASP charges a rental fee before you canaccess and use Web application software Microsoft’s Webapplications arecalled .NETWeb applicationSoftware applicationthat exists ona Web siteNextNextp.10.8 Fig. 10-10p.10.9E-Commerce RevenueStreamsE-Commerce RevenueStreamsHow is revenue generated with an informational onWhat is advertisement revenue? Sites earncommissionsfromadvertisingsponsor whenvisitors makepurchases as aresult ofclickingadvertisementon Web pageadvertisementadvertisementNext Visitors arerequired tosubscribe toservice Provides someinformation atno cost, butrequires asubscription toaccess contentof entire sitep.10.10 Fig. 10-12E-Commerce RevenueStreamsE-Commerce RevenueStreamsHow is revenue generated with Internetaccess?What is a Web hosting service? Assists people andcompanies in hosting theirWeb site Provides hardware,software, andcommunications requiredfor a Web server Some provide servicesthat include managingpayments and tatnonopubliccostcostNextp.10.10 Fig. toinformationinformationWeb serverComputer thatdelivers Web pagesto users Some sites,such as MSNand AOL,provide Internetaccess Many havebecome portalsoffering otherservicesNextp.10.11 Fig. 10-144

The E-Retailing MarketSectorWhat is an electronic storefront?Next Web sitewherecustomerenterspersonal andfinancial data Transactionand financialdataautomaticallyare verified ata bankingWeb siteusual methodof paymentNextp.10.12 Fig. 10-16aOther E-CommerceMarket Sectors on theWhat is online banking? Web Pay bills fromyour computer Transfer moneyelectronicallyfrom youraccount to apayee’saccountNextp.10.13 Fig. 10-16cWhat is online trading?Other E-CommerceMarket Sectors on theWeb Invest online instocks, options,bonds,treasuries, CDs,money markets,annuities, andmutual fundswithout using abroker Transaction feesare lessexpensiveNextp.10.14 Fig. 10-17aOther E-CommerceMarket Sectors on theWebWhat travel services are available on theWeb? Drivingdirectionsand maps Airline, hotel,and carreservationsNextWhat is a secure checkout?add to cart Web site wheree-retailerdisplays itsproducts Shopping cartallows customerto collectpurchases Also calledonline catalogp.10.15The E-Retailing MarketSectorcredit cardp.10.14 Fig. 10-17bOther E-CommerceMarket Sectors on theWebWhat is a shopping bot? Web site thatsearches forthe best priceon a specificproduct Also called ashopbotNextp.10.15 Fig. 10-185

Other E-Commerce MarketSectors on the WebWhat health services are available on the Web?Other E-Commerce MarketSectors on the WebWhat are other Web-based business services? Provide up-todate medical,fitness,nutrition, orexerciseinformation Pharmaciesallowcustomers torefillprescriptionsand calsupportcreditsalesmarketresearchNextNextp.10.16 Fig. 10-19direct mailp.10.17Creating an OnlineStoreCreating an OnlineStoreWhat decisions should be made to create an onlinestore?What options are available for building astorefront? Develop in-housestorefront Outsource storefrontNextNextp.10.18 Fig. 10-20p.10.18Creating an OnlineStoreCreating an OnlineStoreWhat is e-commerce software?What is a secure server? Allows merchant to setup a storefront Includes security Some include statisticaltracking features andcapability of integratingwith other systemsNextp.10.18 Fig. 10-21 Prevents access to system by unauthorized users Used for transactions involving credit card ofhttp://http://insteadNextp.10.206

Creating an OnlineStoreCreating an OnlineStoreWhat is a Web site development service? Assists inprocess ofcreating astorefront Allows smallbusinesses andindividuals toparticipate in ecommercearenaWhat factors lead to customer loyalty? Best storefronts areefficient and easy touse Customers who mustwait more than eightseconds for a page todownload usually willclick to another siteanyone can create a storefront and sellgoods through the Yahoo! portalNextNextp.10.20 Fig. 10-23p.10.22 Fig. 10-25Creating an OnlineStoreWhat is electronic Customer RelationshipManagement (eCRM)? Service after a sale Combinespersonalized touchand customizedservice tocustomers Automatic e-mail toconfirm orders,display FAQ, andsend surveysNextCreating an OnlineStoreWhat is e-mail publishing? Process of sending newsletters via e-mail to largegroup of people with similar interestsNextp.10.23 Fig. 10-26p.10.24Creating an OnlineStoreCreating an OnlineStoreSelecting a domain nameWhat is a submission service? Name shouldcorrespond tobusiness name orfunction Domain name isregistered withvarious searchengines Web-basedbusiness inwhich youtypically paya fee toregister withhundreds ofsearchenginesNextp.10.24 Fig. 10-27Nextp.10.25 Fig. 10-287

Summary of ECommerce:A Revolution in the WayWe Do BusinessCreating an OnlineStoreWhat is spam? Unsolicited e-mailmessages or newsgrouppostings Internet junk mail Usually generatesantagonism instead of salesNextAlternatives to spamPromote goodwill byprovidinginformation orservices for groupsand individuals What is e-commerce?E-commerce business modelsE-commerce revenue streamsThe e-retailing market sectorOther e-commerce market sectors on theWeb Creating an online storeChapter 10 Completep.10.258

E-Commerce: A Revolution in the Way We Do Business Understand how e-commerce has changed today’s business practices Discuss the positive impact of e-commerce on global society Differentiate between the various e-commerce business models: business-to-consumer, consumer-to