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Chapter 11

E-Commerce

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What Is E-Commerce? E-commerce—the term used to describe performing

business transactions online.

E-commerce has been growing at a steady pace.

One estimate predicts that 18% of all purchasing will be performed over the Internet by 2006.

Brick-and-mortar, dot coms, and click-and-mortar stores.

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Benefits of E-Commerce

To businesses:

Reduced costs.

Increased customer satisfaction.

More effective management tools.

Potentially higher sales.

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Benefits of E-Commerce, Cont’d.

To customers:

Convenience.

Easier comparison shopping.

Higher degree of selection.

Potential cost savings.

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Risks of E-Commerce To businesses:

Pressure to be “always open.”

Lost business due to customer hesitation to shop online.

Risk of fraudulent credit card transactions.

Ease of entry for competitors.

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Risk of E-Commerce, Cont’d.

To customers:

Fraud and other potential security problems.

Not being able to feel or touch the goods.

Possible expense to the customer of returning merchandise.

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Types of E-Commerce Web Sites Manufacturer and e-tailer Web sites

E-tailers (electronic retailers)

Electronic storefronts

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Types of E-Commerce Web Sites, Cont’d.

Brokerage sites

Online auctions

Financial brokerages

Market and commodity exchanges

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E-Commerce Business Models Business model—describes a company’s policies,

operations and technology and how it generates revenue.

Most common e-commerce business models:

Business to consumer (B2C)

Business to business (B2B)

Consumer to consumer (C2C)

Business to government (B2G)

Intermediary hubs

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Implementing Web-Based E-Commerce

Five basic steps:

Step 1: Select appropriate business models and types of Web sites.

Step 2: Select desired e-commerce applications.

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Implementing Web-Based E-Commerce, Cont’d.

Step 3: Develop procedures for handling electronic financial transactions.

Credit and debit card processing

Electronic checks

Online payment accounts

Electronic gift certificates, gift cards, and coupons

Smart cards

Digital wallets

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Implementing Web-Based E-Commerce, Cont’d.

Special considerations for B2B financial transactions.

Using a B2B transaction processing company (payment processing, credit checking, escrow services, etc.).

Using an order-fulfillment company (order management, shipping, inventory, returns processing, marketing tools, etc.).

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Implementing Web-Based E-Commerce, Cont’d.

Step 4: Design and develop an effective Web site.

Storefront software (either packaged or Web-based)

Shopping cart software

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Implementing Web-Based E-Commerce, Cont’d.

Step 5: Implement appropriate sales and marketing strategies.

Include adequate customer service features.

Collect taxes from customers only if required by law.

Display a privacy policy and security statement.

Use an appropriate domain name and URL.

Promote your Web site sufficiently (promote URL, use meta tags, etc.).

Data warehousing and mining.

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Security Issues

Secure financial transactions.

Secure sensitive documents and files.

Authenticate online business partners.

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Summary

What is e-commerce?

Types of e-commerce Web sites

E-commerce business models

Implementing Web-based e-commerce

Security issues