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Concepts, Technology, and Applications of Mobile Commerce

Robert Nickerson

Professor and Chair Department of Information Systems

Director, Center for Electronic BusinessCollege of Business

San Francisco State UniversitySan Francisco, California USA

RNick@sfsu.eduhttp://online.sfsu.edu/~rnick

© Robert C. Nickerson, 2009

Agenda

E-commerce1. E-commerce systems: Characteristics and functions2. E-commerce systems: Case study3. E-commerce systems: European analysisM-commerce4. M-commerce systems: Characteristics and functions5. M-commerce technology 6. M-commerce applications7. M-commerce application development8. M-commerce trust, security, and payment9. M-commerce issuesBeyond m-commerce:10. U-commerce: The next step after m-commerce?

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Lecture 1Electronic Commerce:

Characteristics and Functions

Objectives:• To review basic electronic commerce concepts• To describe electronic commerce systems as

information systems• To position electronic commerce systems among the

various types of information systems• To describe the main functions of electronic commerce

systems

Electronic commerce:Definition

Narrow (Mueller-Veerse): Electronic commerce (e-commerce) is the process of conducting business transactions

through communications networks, especially the Internet.

• Business transaction: – Buy, sell, exchange products

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Electronic commerce:Definition

Broad (Tarasewich, Nickerson, Warkentin):

Electronic commerce (e-commerce) is the process of conducting business activities

related to (potential) business transactions through communications networks, especially

the Internet.• Business activity related to business transaction:

– Business relationship management – Product search and comparison – Product information presentation and promotion– Purchase transaction management – Product delivery– Post-purchase customer support– Other

E-business

• Term coined by IBM in 1997 to refer to all business activities conducted using web-based technologies

• Sometimes used interchangeably with e-commerce• Includes e-commerce but also other business activities• Has come to mean all electronically-based business

activities• Wikipedia: “Electronic Business, commonly referred

to as "eBusiness" or "e-Business", may be defined as the utilization of information and communication technologies (ICT) in support of all the activities of business.”

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E-business

E-business

E-commerce

This course: focuses on e-commerce although many topics apply to e-business and the distinction will blur.

Commerce:Dimensions

Model of commerce dimensions (Choi, et al.)

• Process dimension: process of conducting commerce– Physical– Digital (virtual, electronic)

• Product dimension: form of goods or services– Physical– Digital (virtual, electronic)

• Delivery dimension: method of delivery of product– Physical– Digital (virtual, electronic)

• 2x2x2 matrix

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Commerce:Dimensions

E-commerce:Dimensions

• Traditional commerce (geographic or g-commerce): physical process, physical product, physical delivery

• Electronic commerce: digital process, physical or digital product, physical or digital delivery

• Pure e-commerce: digital process, digital product, digital delivery

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E-commerce:Dimensions

A business can conduct:• Only traditional commerce (brick-and-mortar business)

– Example: many small businesses

• Only electronic commerce (pure-play e-commercebusiness)– Example: eBay

• Both traditional and electronic commerce (partial e-commerce business; click-and-mortar business)– Example: FNAC

Bricks with mortar between them

Internet vs. non-internet e-commerce

• Most e-commerce today uses the internet (public network)

• E-commerce also uses intranets and extranets (private networks that use internet technology)– Intranet: internet based network within company firewall– Extranet: internet based network connecting two businesses

intranets

• Before the internet e-commerce was conducted using private networks (e.g., value-added networks, VAN)– Example: Electronic data interchange (EDI) systems using

value-added networks

• Today some e-commerce is conducted using systems other than the internet– Example: Private EDI systems are still common– Example: Pay parking system using mobile phones (Finland)

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E-commerce:Business models

E-commerce business models (Rappa):

• Merchant: wholesaler or retailer (e-tailer) of goods and services (Amazon, Lands' End)

• Brokerage: brings buyers and sellers together and facilitates transactions– Forward auction (eBay): one seller, many buyers, highest

bidder wins– Reverse auction/bidding/tendering: one buyer, many sellers –

lowest bidder wins– Exchange/double auction (eTrade): many sellers, many buyers

• Manufacturer: manufacturer or producer of goods that sells directly to customers (Dell Computers)

E-commerce:Business models

• Advertising: provides (free) content (e.g., news) and (free) services (e.g., e-mail) mixed with advertising messages (Yahoo!, Monster.com)

• Infomediary/information brocker: collects and sells information to other businesses (DoubleClick, Nielson//Netratings)

• Affiliate: provides click-through purchase opportunities at sites where people may be surfing (Commission Junction)

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E-commerce:Business models

• Online direct marketing • Online auctions• Electronic tendering• Online exchange• Advertiser• Information brokers

(informediaries) • Direct sale by

manufacturers• Affiliate marketing• Name your own price • Find the best price • Group purchasing

• Product and service customization

• Bartering• Negotiation• Deep discounting• Membership• Value-chain integrators• Value-chain service

providers• Supply chain improvers• Social networks,

communities, and blogging(Turban 2008)

E-commerce: Revenue models

• Sales: Revenue from sales of goods and services• Transaction fee: Commission based on size of

transaction• Subscription fee: Fixed fee per month (or other time

period) for a service• Advertising: Fees for displaying advertisements

(banner ads) on a web site• Affiliate fees: Commission for referring customers to

other web sites

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E-commerce: Revenue models

Banner ads

(Turban 2008)

E-commerce:Types

Types of e-commerce classified by the nature of the transaction:

• Business-to-consumer (B2C)– Business sells to individual consumer– Online retailing or e-tailing– Amazon

• Business-to-business (B2B) – Business sells to another business– Cisco

• Consumer-to-consumer (C2C)– Individual consumer sells to anther consumer through an

intermediary (often using auction)– eBay

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E-commerce:Types

• Consumer-to-business (C2B)– Individual consumer offers to purchase from business– Priceline

• Business-to-employee (B2E) – Business provides online services to employees– Company intranet

• Government-to-citizen (G2C) and Government-to-business (G2B) – Government agency provides goods and services to citizens or

businesses– E-government– Postal Service

• Government-to-business (G2B)– Government agency provides goods and services to another

government agency

E-commerce in the US wine industry

Growers

Winery

Wholesalers/ distributors

Retailers

Consumers

Land owners

Suppliers

Service firms

Negotiants

Bulk wine

Land

Grapes

Bottled wine

Bot-tled wine

Bottled wine

Bottled wine

Supplies

Supplies

Public authorities

Services Regula-tions

Services Regula-tions

Bulk wine

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Benefits of e-commerce

• Anytime commerce: available 24/7/365• Many place commerce: can take place from many more

places than traditional commerce• Global commerce: not limited to one country• Reduced transaction costs: efficiency in ordering,

billing, etc.• Product customization: products can be built to order

(e.g., Dell)• Instant delivery: for digital products

E-commerce systems

Question: How are electronic commerce capabilities provided by an organization?

Answer: By an electronic commerce system

Definition

An electronic commerce (e-commerce) system is an information system that processes data and provides information to support the operations, management,

and competitive position of an organization’s electronic commerce activities.

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E-commerce systems

Support:• E-commerce operations: advertising, selling, order

entry, inventory control, order fulfillment, billing, customer support, etc.

• E-commerce management: customer targeting, advertisement management, sales analysis, credit management, etc.

• E-commerce competitive position: web presence, lower cost order processing

E-commerce system components

• Hardware– Client devices: personal computers– Servers: web servers, application servers, database servers– Networks: communications channels, communications

processors

• Software– Operating systems: client, server, network– Communications software (protocols)– E-commerce application software– Database software– Browsers

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E-commerce system components

• Personnel– Users: customers, in-house users – System operators

• Procedures– Customer procedures (user interface through browser)– In-house user procedures– System operator procedures

• Data– Product data– Customer data– Sales data– Other data

E-commerce systems and information system typologies

Where do e-commerce systems fit in the information system typologies?

• Organizational or interorganizational systems– Organizational: B2C– Interorganizational: B2B

• Domestic or global systems– Domestic: support e-commerce in a single country – Global: support e-commerce in multiple countries

• Transaction processing systems – Support e-commerce transactions (buy, sell, pay)

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E-commerce systems and information system typologies

• Management information system capabilities– Management reporting on e-commerce activities

• Decision support system capabilities– Analysis of data gathered from e-commerce activities

• Business intelligence capabilities– Warehousing and mining of data gathered from customer use of

e-commerce system

• Non-strategic or strategic information systems– Non-strategic: click-and-mortar business– Strategic: pure-play e-commerce business

E-commerce system functions

• What capabilities or functions must an e-commerce system provide?

• Answer depends on type of system• Consider B2C merchant e-commerce system in detail• Other e-commerce systems may have similar or

different functionality

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Merchant e-commerce system functions

Product presentation

Order entry

Electronic payment

Order fulfillment

Electronic catalog

Electronic shopping

cart

Customer service

Data acquisition

Product support

Data warehouse

Data analysis Management

Customer

Merchant e-commerce system functions

• Functions are within e-commerce system• Other functionality is needed outside e-commerce

system– Inventory database management– Customer database management– Financial accounting– Warehousing and delivery

• These capabilities are needed even if the company does not engage in e-commerce

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Merchant e-commerce system functions:Product presentation

• Presents product to customer before purchase through the user interface (browser)

• Information presented:– Product advertisements– Product information/specifications/features– Product views

• 2D or 3D• Single or multiple views• Figure modeling (apparel)• Sample presentation (music, software, books)

• Features:– Language selection– Search tool– Customization for user preferences

• Electronic catalog: database of information about products; linked to inventory system for product data integrity

Merchant e-commerce system functions:Order entry

• Allows customer to place order for selected products • Information about each product ordered is added to

electronic shopping cart for customer• Electronic shopping cart: database of information on

products ordered by customer• Function is linked to inventory system for product

availability information• Function requires access to customer database to

update and use customer data

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Merchant e-commerce system functions:Electronic payment

• Provides ability for customer to pay for order• Payment options:

– Online payment (credit or debit card)– COD (collect on delivery)– Check (before delivery)– Invoice (after delivery)– Gift certificate (prepaid)

• Security important in electronic payment– Should have secure Web site for payment (e.g., SSL)

• In B2B, electronic funds transfer (EFT) can be used for payment

• Function is linked to external payment authorization system

• Function is linked to accounts receivable system, financial accounting system

Merchant e-commerce system functions:Order fulfillment

• Delivers product to customer• Delivery can be digital for some products

– Music– Software– Information

• Delivery must be physical for other products– Apparel– Manufacturing components

• Function is linked to warehouse and shipping systems for physical delivery

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Merchant e-commerce system functions:Customer service

• Provides assistance to customer related to purchase process– Before purchase: questions about product– During purchase: questions about use of e-commerce system– After purchase: order tracking; exchange or return of product

• Options:– Customer service FAQs– Customer service (toll-free) telephone number– Customer service e-mail – Customer service chat

Merchant e-commerce system functions:Product support

• Provides assistance to customer related to use of product after receipt of product– Initial set-up, installation, operation– On-going maintenance – Warranty or non-warranty repair or replacement

• Options:– Product support FAQs– Product support (toll-free) telephone number– Product support e-mail– Product support chat

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Merchant e-commerce system functions:Data acquisition

• Captures data during the customer interaction with the system

• Data stored in data warehouse• Customer preference data acquired from product

presentation function as customer searches for products

• Customer order data acquired from order entry function when customer orders products

• Privacy of customer should be guaranteed when data is acquired (privacy statement)

• Data used for marketing research purposes

Merchant e-commerce system functions:Data analysis

• Analyzes data in data warehouse • Uses statistical techniques (data mining)

– Identify trends– Identify relationships

• Results presented to management for decision-making purposes

• Results may also be used to customize product presentation to customer

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E-commerce system functions:Service businesses

• Basic model is designed for businesses that sell goods (B2C or B2B)

• Does the model apply in service businesses?• Service businesses:

– Banks– Travel companies (hotels, airlines)– Security brokers– Educational institutions– Other

E-commerce system functions:Service businesses

• E-commerce systems of service businesses require similar functions

• System must have these capabilities: – Service presentation/description: customer identifies desired

service – Service order: customer places order for service – Electronic payment: customer pays for service– Service fulfillment: service is provided to customer; can be

electronic – Customer service: service related to customer order– Service support: support for customer after receiving service – Data acquisition – Data analysis

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E-commerce functions:Other types of businesses

• Functionality varies for other types of businesses– B2B requires additional functionality specific to B2B depending

on whether system is sell side or buy side (e-procurement)– Auctions require specialized functionality that depends on

whether auction is forward, reverse, or double (exchange)

E-commerce system cases

• How well do actual merchant e-commerce systems fit this model?

• Are there functions of e-commerce systems that are not found in this model?