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10.1 © 2007 by Prentice Hall

1010ChapterChapter

E-Commerce: Digital E-Commerce: Digital Markets, Digital GoodsMarkets, Digital GoodsE-Commerce: Digital E-Commerce: Digital

Markets, Digital GoodsMarkets, Digital Goods


LEARNING OBJECTIVES

Management Information SystemsManagement Information SystemsChapter 10 E-Commerce: Digital Markets, Digital GoodsChapter 10 E-Commerce: Digital Markets, Digital Goods

• Describe the unique features of e-commerce, digital markets, and digital goods.

• Analyze how Internet technology has changed value propositions and business models.

• Describe the various types of e-commerce and how e-commerce has changed consumer retailing and business-to-business transactions.


LEARNING OBJECTIVES (cont’d)


• Evaluate the role of m-commerce in business and describe the most important m-commerce applications.

• Compare the principal payment systems for electronic commerce.


Major League Baseball Hits a Home Run with Information Systems

• Problem: Declining revenue from traditional sales channels, declining customer base, increasing costs.

• Solutions: MLB Web sites and cell phone ticketing enable electronic ticketing and delivery of online information and games, which increase sales.

• SAS customer analysis software and Web site tracking tools help identify good sales prospects.

• Demonstrates IT’s role in reducing cost, opening new sales channels, and building community with customers.

• Illustrates the emerging digital firm landscape where businesses can use tools to analyze critical data and leverage expertise in emerging technologies to offer services to other businesses.




• E-commerce: the use of the Internet and the web to transact business.

Unique Features of E-commerce:• Ubiquity: Internet is available everywhere, anytime.• Global reach: the technology reaches across national boundaries.• Universal standards: one set of technology standards.• Richness: video, audio and text messages are possible.• Interactivity: the technology works through interaction with the

user.• Information density: the technology reduces information costs

and raises quality.• Personalization/customization: the technology allows

personalized messages to be delivered to individuals as well as groups.


Key concepts in E-commerce:• Disintermediation: The elimination of

organizations or business process layers responsible for certain intermediary steps in a value chain, reducing costs to the consumer

ELECTRONIC COMMERCE



The Benefits of Disintermediation to the Consumer

Figure 10-2

ELECTRONIC COMMERCE



Business Model:

• Defines an enterprise

• Describes how the enterprise delivers a product or service

• Shows how the enterprise creates wealth

Internet Business Models



• Virtual storefront: Sells goods or services online (Amazon.com)

• Online marketplace: Provides a trading platform for individuals and firms (eBay.com)

Internet Business Models



• Content provider: Creates revenue by providing content (WSJ.com, TheStreet.com)

• Online service provider: Provides online services for individuals and businesses (Xdrive.com)

• Virtual community: Provides an online community to focused groups (Friendster.com, iVillage.com)

• Portal: Provides initial point of entry to Web, specialized content, services (Yahoo.com, MSN.com)


Internet Business Models (Continued)


Electronic Commerce

Types of Electronic Commerce

• Business-to-customer (B2C): Retailing of products and services directly to individual customers (Wal-Mart.com)

• Business-to-business (B2B): Sales of goods and services to other businesses (Grainger.com, Ariba.com)

• Consumer-to-consumer (C2C): Individuals using the Web for private sales or exchange (eBay.com )



Clickstream tracking tools:

• Collect data on customer activities at Web sites and store them in a log

Interactive Marketing and Personalization

Management Information SystemsManagement Information Systems

Chapter 10 E-Commerce: Digital Markets, Digital GoodsChapter 10 E-Commerce: Digital Markets, Digital Goods


Web Site Visitor Tracking

Figure 10-3

ELECTRONIC COMMERCE



• Create unique personalized Web pages for each customer

• Increased closeness to customer increases value to the customer, while reducing costs of interacting with the customer

ELECTRONIC COMMERCE

Web Personalization



Web Site Personalization

Figure 10-4

ELECTRONIC COMMERCE

Management Information SystemsManagement Information SystemsChapter 10 E-Commerce: Digital Markets, Digital Goods Chapter 10 E-Commerce: Digital Markets, Digital Goods cece


• Blogs: Personal Web page that contains a series of chronological entries by its author, and links to related Web pages.

• Business-to-business (B2B) electronic commerce: New efficiencies and relationships• EDI• Procurement• Private industrial networks (private exchanges)• Net marketplaces• Exchanges



• Electronic Data Interchange (EDI): Enables the computer-to-computer exchange between two organizations of standard transactions. Currently 80% of B2B e-commerce uses this system.

• EDI is being replaced by more powerful Web-based alternatives.

Business-to-Business Electronic Commerce: New Efficiencies and Relationships



Electronic Data Interchange (EDI)Electronic Data Interchange (EDI)

Figure 10-5

Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment. Suppliers can automatically send data about shipments to purchasing firms. The purchasing firms can use EDI to provide production and inventory requirements and payment data to suppliers.

Electronic Commerce



ELECTRONIC COMMERCE

Private Industrial Networks

• The largest Web-based form of B2B commerce

• Private B2B extranets that focus on continuous

business process coordination between a small group

of companies for collaboration and supply chain

management. Wal-Mart uses its own private network

to coordinate more than 15,000 suppliers to its stores.



ELECTRONIC COMMERCE

A Private Industrial Network

Figure 10-6



• Net marketplaces (e-hubs) provide a single marketplace for many different buyers and sellers.


ELECTRONIC COMMERCE


A Net Marketplace

Figure 10-7



• M-commerce: The use of the Internet for purchasing goods and services and also for transmitting messages using wireless mobile devices



M-Commerce Services and Applications

• Information-based services: Instant messaging, e-mail, searching for a movie or restaurant using a cell phone or handheld PDA

• Transaction-based services: Purchasing stocks, concert tickets, music, or games; searching for the best price for an item using a cell phone and buying it in a physical store or on the Web



• Personalized services: Services that anticipate

what a customer wants based on that person’s

location or data profile, such as updated airline

flight information or beaming coupons for nearby

restaurants


M-Commerce Services and Applications (Continued)


M-Commerce Challenges

• Slow data transfer speeds on second-generation

cellular networks, resulting in higher costs to

customer

• Limited memory and power supplies



• More Web sites need to be designed specifically

for small wireless devices.

• Keyboards and screens on cell phones are still

tiny and awkward to use.


M-Commerce Challenges (Continued)


ELECTRONIC COMMERCE

Electronic Commerce Payment Systems

Digital wallets Electronic storage of I.D. and digital cash.

Accumulated balance Used for micro payments. Similar to monthly telephone bills.

Stored value Used for micro payments. Pre-payment of funds, debited on use.

Smart Cards I.D. and credit information stored on a chip attached to a card. Used in Europe.

Digital cash Electronic currency that can be transferred over the Web.

Peer-to-Peer payment Interpersonal transfer of funds such as PayPal.

Digital checking Electronic checks with digital signatures, used most often in B2B commerce.

Electronic billing presentmentand payment

Used by consumers to pay bills online, provided by many banks.

Credit cards The most common form of payment.

Management Information SystemsManagement Information SystemsChapter 4 Chapter 4

The Digital Firm: Electronic Business and Electronic CommerceThe Digital Firm: Electronic Business and Electronic Commerce

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