E-Commerce Laudon

^-commerce

business, technology, society.

F I F T H E D I T I O N

Kenneth C. Laudon Carol Guercio TraverNew York University Azimuth Interactive, Inc.

PEARSON

PrenticeHall

Prentice Hall, Upper Saddle River, New Jersey 07458

C o n t e n t s

PARTI Introduction to E-commerce

THE REVOLUTION IS JUST BEGINNING 1-1

Learning Objectives 1-1

MySpace and Facebook: It's All About You 1-2

1.1 E-commerce: The Revolution Is Just Beginning 1-5The First Thirty Seconds 1-9What Is E-commerce? 1-9The Difference between E-commerce and E-business 1-10

Why Study E-commerce? 1-11

Eight Unique Features of E-commerce Technology 1-11Ubiquity 1-13

Global Reach 1-13Universal Standards 1-13Richness 1-14Interactivity 1-14Information Density 1-15

Personalization/Customization 1-16

Social Technology: User Content Generation and Social Networking 1-16Web 2:0: Play My Version 1-17Types of E-commerce 1-19

Business-to-Consumer (B2C) E-commerce 1-19Business-to-Business (B2B) E-commerce 1-19

Consumer-to-Consumer (C2C) E-commerce 1-20Peer-to-Peer (P2P) E-commerce 1-20

Mobile Commerce (M-commerce) 1-21Growth of the Internet and the Web 1-21Origins and Growth of E-commerce 1-23

Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the Deep

x v i i i C o n t e n t s

Web 1-25

Technology and E-commerce in Perspective 1-27

Potential Limitations on the Growth of B2C E-commerce 1-28

1.2 E-commerce: A Brief History 1-29

E-commerce 1995-2000: Innovation 1-29

Insight on Business: Dot-com De'ja vu 1-34

E-commerce 2001-2006: Consolidation 1-36

E-commerce 2006-Present: Reinvention 1-36

Assessing E-commerce: Successes, Surprises and Failures 1-36

Predictions for the Future: More Surprises 1-39

1.3 Understanding E-commerce: Organizing Themes 1-42

Technology: Infrastructure 1-42 ^

Business: Basic Concepts 1-44

Society: Taming the Juggernaut 1-44

Insight on Society: Holding On To Your Privacy Online 1-45

Academic Disciplines Concerned with E-commerce 1-48

Technical Approaches 1-48

Behavioral Approaches 1-49

1.4 Case Study: P2P Networks Rock, Music Industry Rolls 1-50

1.5 Review 1-54

Key Concepts 1-54

Projects , 1-58

Questions 1-59

Web Site Resources 1-59

E-COMMERCE BUSINESS MODELS AND CONCEPTS 2-1


Online Groceries: Up from the Embers 2-2

2.1 E-commerce Business Models 2-5 '

Introduction 2-5

Eight Key Elements of a Business Model 2-5

Value Proposition 2-6

Revenue Model 2-7

Market Opportunity 2-9

Competitive Environment 2-10

Competitive Advantage 2-11

Market Strategy 2-12

Organizational Development 2-12

Management Team 2-13

Categorizing E-commerce Business Models: Some Difficulties 2-13

C o n t e n t s xix

2.2 Major Business-to-Consumer (B2C) Business Models 2-14

Portal 2-14

E-tailer 2-16

Insight on Technology: Search, Ads and Apps: The Future for Google(and Microsoft) 2-17

Content Provider 2-20Transaction Broker 2-21Market Creator 2-22Service Provider 2-23Community Provider 2-24

2.3 Major Business-to-Business (B2B) Business Models 2-25

E-distributor 2-25

E-procurement 2-26

Exchanges 2-27

Insight on Business: Onvia Evolves 2-28

Industry Consortia 2-29Private Industrial Networks 2-30

2.4 Business Models in Emerging E-commerce Areas 2-31

Consumer-to-Consumer (C2C) Business Models 2-31

Peer-to-Peer (P2P) Business Models 2-32

M-commerce Business Models 2-32

E-commerce Enablers: The Gold Rush Model 2-34

Insight on Society: Is Privacy Possible in'a Wireless World? 2-35

2.5 How the Internet and the Web Change Business: Strategy, Structure,and Process 2-37Industry Structure 2-37Industry Value Chains 2-40Firm Value Chains 2-41Firm Value Webs 2-42Business Strategy 2-43

2.6 Case Study: Priceline.com and the Search for a Business Model thatWorks 2-47

2.7 Review 2-51

Key Concepts 2-51 ^

Projects 2-53

Questions 2-53


xx C o n t e n t s

PART 2 Technology Infrastructure for E-commerce

THE INTERNET AND WORLD WIDE WEB: E-COMMERCE INFRASTRUCTURE 3

Learning Objectives 3-.1

All Mashed Up 3-2

3.1 The Internet: Technology Background 3-5

The Evolution of the Internet 1961—The Present 3-6The Internet: Key Technology Concepts 3-7

Packet Switching 3-10Transmission Control Protocol/Internet Protocol (TCP/IP) 3-12IP Addresses 3-12Domain Names, DNS, and URLs 3-14Client/Server Computing 3-14

Insight on Business: Peer-to-Peer Networks Rescue Hollywood c

and TV Studios 3-17

Other Internet Protocols and Utility Programs 3-20Internet Protocols: HTTP, E-mail Protocols, FTP, Telnet, and SSL 3-20Utility Programs: Ping, Tracert, and Pathping 3-21

3.2 The Internet Today 3-22

The Internet Backbone 3-24Internet Exchange Points 3-25Campus Area Networks (CANs) 3-25Internet Service Providers 3-27Intranets and Extranets 3-28

Who Governs the Internet? 3-29

Insight on Society: Government Regulation of the Internet 3-313.3. Internet II: The Future Infrastructure 3-33

Limitations of the Current Internet 3-33The Internet2® Project 3-34The Larger Internet II Technology Environment: The First Mile and theLast Mile 3-35

Fiber Optics and the Bandwidth Explosion in the First Mile 3-36The Last Mile: Mobile Wireless Internet Access 3-37

Benefits of Internet II Technologies 3-45IP Multicasting 3-45

C o n t e n t s | xx i

Latency Solutions 3-45Guaranteed Service Levels and Lower Error Rates 3-47Declining Costs 3-47

3.4 The World Wide Web 3-47

Hypertext 3-48

Markup Languages 3-49Standardized Generalized Markup Language (SGML) 3-49

HyperText Markup Language (HTML) 3-49

Extensible Markup Language (XML) 3-51Web Servers and Clients 3-53Web Browsers 3-54

3.5 The Internet and the Web: Features 3-55

E-mail 3-55Instant Messaging 3-55Search Engines 3-56Intelligent Agents (Bots) 3-59Online Forums and Chat 3-60

Insight on Technology: Chatterbots Meet Avatars 3-61

Streaming Media 3-62Cookies 3-63Web 2.0 Features and Services 3-63

Blogs 3-63 •'

Really Simple Syndication (RSS) ; 3-64

Podcasting 3-65Wikis 3-66New Music and Video Services 3-66Internet Telephony 3-66

Internet Television 3-68Video Conferencing 3-69Online Software and Web Services: Web Apps, Widgets and Gadgets 3-69M-commerce Applications: The Next Big Thing 3-70

3.6 Case Study: Akamai Technologies: The Web's Jukebox 3-71

3.7 Review 3-75

Key Concepts 3-75Projects 3-78Questions 3-79


xxii C o n t e n t s

BUILDING AN E-COMMERCE WEB SITE 4-1


Right-Sizing a Web Site 4-2

4.1 Building an E-commerce Web Site: A Systematic Approach 4-4Pieces of the Site-Building Puzzle 4-4

Planning: The Systems Development Life Cycle - 4-5

Systems Analysis/Planning: Identify Business Objectives, System Functionality,

and Information Requirements 4-6

System Design: Hardware and Software Platforms 4-8

Building the System: In-House versus Outsourcing 4-8

Build Your Own versus Outsourcing 4-8

Host Your Own versus Outsourcing 4-12

Insight on Business: Curly Hair and Tattoos: Getting Started on the Cheap 4-13

Testing the System 4-15

Implementation and Maintenance 4-15

Factors in Optimizing Web Site Performance 4-16

. Web Site Budgets 4-17 ,

4.2 Choosing Software 4-18

Simple versus Multi-tiered Web Site Architecture 4-18

Web Server Software 4-20

Site Management Tools 4-21

. Dynamic Page Generation Tools 4-22

Application Servers 4-24

E-commerce Merchant Server Software Functionality 4-25

Online Catalog 4-26

Shopping Carts 4-26

Credit-Card Processing 4-26

Merchant Server Software Packages (E-commerce Suites) 4-26

Choosing an E-commerce Suite 4-27% Building Your Own E-commerce Site: Web Services and Open Source

Options 4-28

4.3 Choosing the Hardware for an E-commerce Site 4-29

Right-Sizing Your Hardware Platform: The Demand Side 4-30

Right-Sizing Your Hardware Platform: The Supply Side 4-33

4.4 Other E-commerce Site Tools 4-37

Web Site Design: Business Considerations 4-37

Tools for Web Site Optimization 4-39

Tools for Interactivity and Active Content 4-40

Bling for Your Blog: Web 2.0 Design Elements 4-40

C o n t e n t s xxiii

CGI (Common Gateway Interface) 4-41Active Server Pages (ASP) 4-41Java, Java Server Pages (JSP), and JavaScript 4-41

Insight on Technology: Pumping Up the Customer Experience Using AJAXandFlash 4-43

ActiveX and VBScript 4-44

ColdFusion 4-44

Personalization Tools 4-45

The Information Policy Set 4-45

Insight on Society: Designing for Accessibility with Web 2.0 4-46

4.5 Case Study: REI Climbs the Web Mountain 4-49

4.6 Review 4-54Key Concepts 4-54Projects 4-57 ,Questions 4-58


ONLINE SECURITY AND PAYMENT SYSTEMS 5-l_

Learning Objectives 5-1 ' /

Cyberwar Becomes a Reality 5-2

5.1 The E-commerce Security Environment 5-4The Scope of the Problem 5-4 /

The Underground Economy Marketplace: The Value of StolenInformation 5-8

What Is Good E-commerce Security? 5-9Dimensions of E-commerce Security 5-10The Tension Between Security and Other Values 5-12

Ease of Use 5-12Public Safety and the Criminal Uses of Security 5-12

5.2 Security Threats in the E-commerce Environment 5-14Malicious Code 5-15Unwanted Programs 5-17Phishing and Identity Theft ^ 5-19Hacking and Cybervandalism 5-21Credit Card Fraud/Theft 5-22Spoofing (Pharming) and Spam (Junk) Web Sites 5-23Denial of Service (DoS) and Distributed Denial of Service (dDoS) Attacks 5-24

Sniffing 5-24Insider Attacks 5-25

Poorly Designed Server and Client Software 5-25

x x i v C o n t e n t s

5.3 Technology Solutions 5-26

Protecting Internet Communications 5-26

Encryption 5-26

Symmetric Key Encryption 5-28

Public Key Encryption 5-29

Public Key Encryption Using Digital Signatures and Hash Digests 5-29

Digital Envelopes 5-32

Digital Certificates and Public Key Infrastructure (PKI) 5-32

Limitations to Encryption Solutions 5-35

Securing Channels of Communication 5-35 . ,

Secure Sockets Layer (SSL) 5-35

Insight on Society: In Pursuit of E-mail Security 5-36

Secure Hypertext Transfer Protocol (S-HTTP) 5-38

Virtual Private Networks (VPN) 5-39

Protecting Networks 5-39

Firewalls 5-39

Protecting Servers and Clients 5-40

Operating System Security Enhancements 5-40

Anti-Virus Software 5-41 ' .

5.4 Management Policies, Business Procedures, and PublicLaws 5-42

A Security Plan: Management Policies 5-42 /

Insight on Technology: Securing Your Information: Cieversafe Hippie Storage5-45 j

The Role .of Laws and Public Policy 5-46/

Private and Private-Public Cooperation Efforts 5-48

Government Policies and Controls on Encryption Software 5-48

OECD Guidelines 5-48

5.5 Payment Systems 5-49

Types of Payment Systems 5-49

Cash 5-49

Checking Transfer 5-50

Credit Card 5-50

Stored Value 5-51

Accumulating Balance 5-51

5.6 - E-commerce Payment Systems 5-53

Online Credit Card Transactions 5-54

Credit Card E-commerce Enablers 5-55

Limitations of Online Credit Card Payment Systems 5-56

Digital Wallets 5-56

Digital Cash 5-57

Online Stored Value Systems 5-57

Digital Accumulating Balance Payment Systems 5-59

Digital Checking Payment Systems 5-59

C o n t e n t s xxv

Wireless Payment Systems 5-60

5.7 Electronic Billing Presentment and Payment 318

Market Size and Growth 5-61

Insight on Business: Mobile Payment's Future: WavePayMe, TextPayMe 5-62

EBPP Business Models 5-64

5.8 Case Study: PayPal Has Company 5-675.9 Review 5-71

Key Concepts 5-71

Projects 5-76

Questions 5-77


PART 3 ;iness Concepts and Social Issues

E-COMMERCE MARKETING CONCEPTS 6-1


Netflix Develops and Defends Its Brand 6-2

6.1 Consumers Online: The Internet Audience and ConsumerBehavior 6-5 /The Internet Audience 6-5

Internet Traffic Patterns: The Online Consumer Profile 6-6

Intensity and Scope of Usage 6-6

Demographics and Access 6-6

Type of Internet Connection: Broadband Impacts 6-10

Community Effects: Social Contagion 6-11

Lifestyle and Sociological Impacts 6-12

Media Choices and Multitasking : The Internet versus Other Media

Channels 6-12

Consumer Behavior Models 6-12

Profiles of Online Consumers 6-15

The Online Purchasing Decision 6-16

A Model of Online Consumer Behavior 6-17

Shoppers: Browsers and Buyers 6-20

What Consumers Shop for and Buy Online 6-22

Intentional Acts: How Shoppers Find Vendors Online 6-22

Why More People Don't Shop Online 6-23

Trust, Utility, and Opportunism in Online Markets 6-24

x x v i C o n t e n t s

6.2 Basic Marketing Concepts 6-24Feature Sets - 6-25Products, Brands, and the Branding Process 6-26Segmenting, Targeting, and Positioning 6-28Are Brands Rational? 6-29Do Brands Last Forever? 6-30Can Brands Survive the Internet? Brands and Price Dispersion on theInternet 6-31

6.3 Internet Marketing Technologies 6-33

The Revolution in Internet Marketing Technologies 6-33Web Transaction Logs 6-35 " /

Supplementing the Logs: Cookies and Web Bugs 6-37Databases, Data Warehouses, and Data Mining: Developing Profiles 6-39

Insight on Society: Marketing with Web Bugs 6-40 •

Databases 6-42

Data Warehouses and Data Mining 6-43 J

Insight on Technology: The Long Tail: Big Hits and Big Misses 6-46'

Customer Relationship Management (CRM) Systems 6-48

6.4 B2C and B2B E-commerce Marketing and Branding Strategies 6-50

Market Entry Strategies 6-50Establishing the Customer Relationship 6-52

Advertising Networks 6-52 •

Permission Marketing 6-54Affiliate Marketing 6-55

Viral Marketing in the Web 2.0 Milieu 6-56 .Blog Marketing 6-57 .Social Network Marketing and Social Shopping 6-58

Leveraging Brands 6-58 *

Insight on Business: Social Network Marketing: New Influences Among the

Chattering Masses 6-59

Customer Retention: Strengthening the Customer Relationship 6-61

Personalization and One-to-One Marketing 6-61

Customization and Customer Co-Production 6-63Transactive Content 6-64 j

' j

Customer Service 399Net Pricing Strategies 6-66

It's Free! 6-68Versioning 6-68Bundling 6-69Dynamic Pricing 6-70

Channel Strategies: Managing Channel Conflict 6-71

C o n t e n t s j xxvii

6.5 Case Study: Liquidation.com: B2B Marketing Success Story 6-73

6.6 Review 6-77Key Concepts 6-77Projects 6-80Questions 6-81Web Site Resources 6-82

E-COMMERCE MARKETING COMMUNICATIONS 7-l_

Learning Objectives 7-1 -

Video Ads Cure Banner Blindness: String Master 7-2

7.1 Marketing Communications 7-5Online Advertising 7-5

Display Ads: Banners and Pop-Ups 7-7Rich Media/Video Ads 7-10Search Engine Advertising: Paid Search Engine Inclusion and Placement 7-12

Sponsorships 7-19Referrals (Affiliate Relationship Marketing) 7-19

E-mail Marketing and the Spam Explosion 7-20Online Catalogs 7-24Social Marketing: Blogs, Social Networks and Games 7-26

Blog Advertising 7-26

Social Network Advertising 7-27Game Advertising 7-27

Behavioral Targeting: Getting Personal 7-28

Insight on Society: Marketing to Children of the Web in the Age of SocialNetworks 7-29

Mixing Offline and Online Marketing Communications 7-33 '

7.2 Understanding the Costs and Benefits of Online MarketingCommunications 7-34Online Marketing Metrics: Lexicon 7-34

Insight on Business: The Very Rich Are Different from You and Me: Nieman Marcus,Tiffany ft Co., and Armani 7-35

How Well Does Online Advertising Work? 7-40The Costs of Online Advertising 7-43Software for Measuring Online Marketing Results 7-45

7.3 The Web Site as a Marketing Communications Tool 7-45Domain Names 7-46Search Engine Optimization 7-47

Insight on Technology: It's 10 P.M. Do You Know Who Is On Your Web Site? 7-48

Web Site Functionality 7.-50

x x v i i i C o n t e n t s

7.4 Case Study: Adware, Spy ware, Ad Bombs, Ambush Marketing, andCustomer Hijacking: Invasive Marketing Techniques Grow on theWeb 7-53

7.5 Review 7-59

Key Concepts 7-59

Projects 7-62 . . •:Questions 7-62Web Site Resources 7-63 '.

ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE 8-1 t

. 1 j.

Learning Objectives 8-1 {

Second Life Gets a Life: Discovering Law and Ethics in Virtual Worlds 8-2 \

8.1 Understanding Ethical, Social, and Political Issuesin E-commerce 8-4 jA Model For Organizing the Issues 8-5 . , IBasic Ethical Concepts: Responsibility, Accountability, and Liability 8-7 ;Analyzing Ethical Dilemmas 8-9 " |Candidate Ethical Principles 8-9 I

8.2 Privacy and Information Rights 8-11 1Information Collected at E-commerce Sites 8-12 IProfiling and Behavioral Targeting 8-13The Internet and Government Invasions of Privacy:E-commerce Surveillance 8-17Legal Protections 8-19

Informed Consent 8-19The FTC's Fair Information Practices Principles 8-22The European Directive on Data Protection 8-24 ',

Private Industry Self-Regulation 8-25Privacy Advocacy Groups 8-26

Technological Solutions 8-26

Insight on Business: Chief Privacy Officers 8-28

Insight on Technology: The Privacy Tug of War 8-32

8.3 Intellectual Property Rights 8-32

Types,of Intellectual Property Protection 8-34Copyright: The Problem of Perfect Copies and Encryption 8-35

Look and Feel 8-36Fair Use Doctrine 8-36 l

The Digital Millennium Copyright Act of 1998 8-37Patents: Business Methods and Processes ,8-39

E-commerce Patents 8-41Patent Reform 8-41

C o n t e n t s xxix

Trademarks: Online Infringement and Dilution 8-44

Trademarks and the Internet 8-44

Cybersquatting 8-45

Cyberpiracy 8-45

Metatagging 8-47

Keywording 8-48

Linking 8-49

Framing 8-49

Challenge: Balancing the Protection of Property with Other Values 8-50

8.4 Governance 8-51

Who Governs E-commerce and the Internet? 8-51

Can the Internet Be Controlled? 8-53

Public Government and Law 8-54

Taxation 8-54

Net Neutrality 8-56

8.5 Public Safety and Welfare 8-57

Protecting Children ° 8-57

Cigarettes, Gambling, and Drugs: Is the Web Really Borderless? 8-58

Insight on Society: The Internet Drug Bazaar 8-61

8.6 Case Study: Print the Library [Online]: Is Google Playing Fair, or JustOut to Make a Buck? 8-63

8.7 Review 8-66Key Concepts, 8-66 j

Projects 8-70 ''

Questions 8-71


PART 4 hrnmerce in Action

ONLINE RETAILING AND SERVICES 9-1


Blue Nile Sparkles For Your Cleopatra 9-2

9.1 The Online Retail Sector 9-6

The Retail Industry 9-7

Online Retailing 9-9

E-commerce Retail: The Vision 9-9

The Online Retail Sector Today 9-11

Multi-channel Integration 9-13

xxx C o n t e n t s

9.2 Analyzing the Viability of Online Firms 9-14

Strategic Analysis 9-14

Financial Analysis 9-15

9.3 E-commerce in Action: E-tailing Business Models 9-17

Virtual Merchants 9-17

E-commerce in Action: Amazon.com 9-18

Multi-channel Merchants: Brick-and-Clicks 9-26

Catalog Merchants 9-28

Manufacturer-Direct 9-29

Common Themes in Online Retailing 9-31

9.4 The Service Sector: Offline and Online 9-32

Insight on Technology: Using the Web to Shop 'Till You Drop 9-33

What Are Services? 9-35

Categorizing Service Industries 9-35

Knowledge and Information Intensity 9-35

Personalization and Customization 9-36

9.5 Online Financial Services 9-36

Financial Services Industry Trends 9-36

Online Financial Consumer Behavior 9-38

Online Banking and Brokerage 9-39

Multi-channel vs. Pure Online Financial Services Firms 9-40

Financial Portals and Account Aggregators 9-41

Online Mortgage and Lending Services 9-42

Online Insurance Services 9-44

Online Real Estate Services 9-45

9.6 Online Travel Services 9-48

Insight on Society: Turf Wars-Antitrust and the Online Real Estate Market 9-49

Why Are Online Travel Services So Popular? 9-51 '

The Online Travel Market 9-52

Online Travel Industry Dynamics 9-54

Insight on Business: Zipcars 9-55

Opportunities for Disintermediation and Re-intermediation 9-57

E-commerce in Action: Expedia.com 9-58

9.7 Online Career Services 9-64

It's Just Information: The Ideal Web Business? 9-64

Recruitment Market Segments 9-67

Online Recruitment Industry Dynamics: Consolidation, Diversification,Localization, and Job Search Engines 9-67

9.8 Case Study: IAC/InterActiveCorp: Online Services Spin-off ^9-69

9.9 Review 9-74

Key Concepts 9-74

C o n t e n t s XXXI

Projects 9-81Questions 9-82Web Site Resources 9-83

ONLINE CONTENT AND MEDIA 10-1


The Wall Street Journal Online Discovers Web 2.0 10-2

10.1 Online Content 10-5Content Audience and Market: Where Are the Eyeballs and the Money? 10-5

Media Utilization 10-6Internet and Traditional Media: Cannibalization VersusComplementarity 10-7Media Revenues 10-8Two Models of the Digital Content Delivery: Paid and User-GeneratedContent 10-9Free or Fee: Attitudes About Paying for Content and the Tolerance forAdvertising 10-11

Media Industry Structure 10-12Media Convergence: Technology, Content, and Industry Structure 10-13

Technological Convergence 10-13Content Convergence 10-13Industry Convergence 10-15 '

Online Content Revenue Models and Business Processes 10-16Making a Profit with Online Content: From Free to Fee 10-18

Key Challenges Facing Content Producers and Owners 10-19Technology 10-19Cost 10-20 ,Distribution Channels and Cannibalization 10-21Digital Rights Management (DRM) 10-21

10.2 The Online Publishing Industry 10-22Online Newspapers 10-22

Insight on Business: DRM: Who Owns Your Files? 10-23

Audience Size and Growth 10-25

Online Newspaper Revenue Models and Results 10-27Convergence 10-28Challenges: Disruptive Technologies 10-29

Books: The Evolution of E-books 10-30E-books 10-31

Book Audience Size and Growth 10-33Content: Advantages and Disadvantages of E-books 10-34E-book Industry Revenue Models 10-35

xxxi i C o n t e n t s

Convergence 10-37

Insight on Society: The Future of Books 10-40

E-commerce in Action: CNET Networks, Inc. 10-42

10.3 The Online Entertainment Industry 10-47

Online Entertainment Audience Size and Growth 10-48

Online Traditional Entertainment 10-49 ,

User-Generated Content: Where Does It Fit? 10-49'

Content 10-50

Online Entertainment Industry Revenue Models 10-51

Convergence 10-51

Insight on Technology: Hollywood Needs a New Script: Pass_the Cash Cow Please 10-55

10.4 Case Study: Google and YouTube Together: Can Google MonetizeYouTube? 10-58

10.5 Review 10-61Key Concepts 10-61

Projects 10-67

Questions 10-67


SOCIAL NETWORKS, AUCTIONS, AND PORTALS d_ 11-1

Learning Objectives 11-1i

Social Network Fever Spreads to the Professions 11-2

11.1 Social Networks and Online* Communities 11-4What Is an Online Social Network? 11-5

The Difference Between Social Networks and Portals 11-5

The Growth of Social Networks and Online Communities 1̂ -6

Turning Social Networks Into Businesses 11-7

Types of Social Networks and Their Business Models 11-8

Social Network Features and Technologies 11-10

The Future of Social Networks 11-10

11.2 Online Auctions 11-11

Defining and Measuring the Growth of Auctions and Dynamic Pricing 11-11

Insight on Technology: Social Operating Systems: Facebook vs. Google 11-12

Insight on Society: Dynamic Pricing: Is This Price Right? 11-15

Why Are Auctions So Popular? Benefits and Costs of Auctions 11-18

Benefits of Auctions 11-18

Risks and Costs of Auctions for Consumers and Businesses 11-19

Market-Maker Benefits: Auctions as an E-commerce Business Model 11-21

Types and Examples of Auctions 11-21

Internet Auction Basics 11-21

C o n t e n t s xxxiii

Types of Auctions 11-23When to Use Auctions (and for What) in Business 11-28Seller and Consumer Behavior at Auctions 11-30

Seller Profits: Arrival Rate, Auction Length, and Number of Units 11-30Auction Prices: Are They the Lowest? 11-31Consumer Trust in Auctions 11-32

When Auction Markets Fail: Fraud and Abuse in Auctions 11-33

11.3 E-commerce Portals 11-33

The Growth and Evolution of Portals 11-35

Types of Portals: General Purpose and Vertical Market 11-36

Insight on Business: Battle of the Portals 11-37

Portal Business Models 11-41

E-commerce in Action: Yahoo! Inc. 11-42

11.4 Case Study: iVillage Discovers the Path to Success, But Has It SinceLost Its Way? 11-50

11.5 Review 11-52Key Concepts 11-52Projects 11-57Questions 11-58Web Site Resources 11-58

B2B E-COMMERCE: SUPPLY CHAIN MANAGEMENT AND COLLABORATIVE COMMERCE 766_

i

Learning Objectives 12-1 ''

Volkswagen Builds Its B2B, Net Marketplace 12-2

12.1 B2B E-commerce and Supply Chain Management 12-5Defining and Measuring the Growth of B2B Commerce 12-5The Evolution of B2B Commerce 12-6The Growth of B2B E-commerce 2001 -2012 12-8

Industry Forecasts 12-8Potential Benefits of B2B E-commerce 12-10The Procurement Process and the Supply Chain 12-10

Types of Procurement 12-11The Role of Existing Legacy Computer Systems 12-13

Trends in Supply Chain Management and Collaborative Commerce 12-14Supply Chain Simplification 12-14 -Electronic Data Interchange (EDI) 12-14

Supply Chain Management Systems 12-17Collaborative Commerce 12-18

Insight on Technology: RFID Autoidentification: Making Your SupplyChain Visible 12-19

x x x i v C o n t e n t s

Main Types of Internet-based B2B Commerce 12-22

12.2 Net Marketplaces ' 12-23 ?

The Variety and Characteristics of Net Marketplaces 12-23Types of Net Marketplaces 12-23

E-distributors 12-25

E-procurement 12-26E-commerce in Action: Ariba 12-28

Exchanges 12-35Industry Consortia 12-37

The Long-Term Dynamics of Net Marketplaces 12-40

12.3 Private Industrial Networks 12-41

What Are Private Industrial Networks? 12-41

Insight on Society: Are Net Marketplaces Anti-competitive Cartels? 12-42

Characteristics of Private Industrial Networks r 12-44

Private Industrial Networks and Collaborative Commerce 12-45

Insight on Business: Wal-Mart Develops a Private Industrial Network 12-47

Implementation Barriers 12-48

Industry-Wide Private Industrial Networks 12-49

The Long-Term Dynamics of Private Industrial Networks • 12-49

12.4 Case Study: Siemens Clicks with Click2procure 12-52

12.5 Review 12-55

Key Concepts 12-55 „Projects 12-59

Questions 12-60

Web Site Resources 12-60References R-l

Index 1-1

Credits C-l , ,

E-Commerce Laudon

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Transcript of E-Commerce Laudon