E-Business Model

Part III. Web, Wireless, and Social Media Strategies
C hapter 6
E-Business and E-Commerce
C o u rs e
Copyright 2012 John Wiley & Sons, Inc.
Chapter 6 Outline
6.1 e-Business Challenges and Strategies
6.2 Business-to-Consumer (B2C) e-Commerce
6.3 Business-to-Business (B2B) e-Commerce and e-Procurement
6.4 e-Government
6.5 e-Commerce Support Services: Payment & Order Fulfillment
6.6 e-Business Ethics and Legal Issues
Copyright 2012 John Wiley & Sons, Inc.
Chapter 6 Learning Objectives
Describe e-business strategies and e-commerce operations.
Understand effective business-to-consumer e-commerce applications.
Understand business-to-business applications, logistics, procurement,
order fulfillment, and payment systems.
Describe e-government activities and public sector e-commerce.
Understand e-commerce support services.
Identify and describe ethics and legal issues of e-business.
Copyright 2012 John Wiley & Sons, Inc.
6.1 e-Business Challenges and Strategies
Mix of online channels & media gives consumers strong control
over where and how they interact with a business or brand.
Managers need to know how to respond to changing consumer
behavior & needs of business customers –
and how to deal with IT software vendors and consulting firms.
Companies may outsource development or hosting of e-business
systems w/ software as a service (SaaS) or cloud computing
…but developing an effective e-business model and competitive
strategy is done in-house.
 If the business model and strategy are wrong,
then implementation wouldn’t matter in the long-run.
Copyright 2012 John Wiley & Sons, Inc.
Figure 6.4. Changes in the Nasdaq during
the dot-com era, which burst (started to
decline) on March 10, 2000 and declined
until October 2002.
Dot-com Era, 1995 to 2002
Adding the prefix “e” to “business” did not eliminate
the need to focus on positive earnings and cash flow
and to earn a profit.
Copyright 2012 John Wiley & Sons, Inc.
Types of E-Business Transactions
Business-to-business (B2B). Over 85% of EC volume is B2B.
Business-to-consumers (B2C). Also called e-tailing.
Consumers-to-business (C2B). Consumers make known a particular
need for a product or service, and then suppliers compete to
provide that product or service at the requested price;
e.g., Priceline.com
Government-to-citizens (G2C) and to others. A government agency
provides services to its citizens via EC technologies.
Mobile commerce (m-commerce). Transactions and activities are
conducted via wireless networks.
Copyright 2012 John Wiley & Sons, Inc.
E-Business Web Site Requirements
and Challenges
Availability relates to the server-side of e-business. An always on
facility is needed to maintain the business critical apps.
Accuracy and Quick Response. Web software must be capable of
searching, sorting, processing promotions and payments, verifying
that the credit card number belongs to the person trying to use it,
confirming the purchase in real-time, etc. In time-sensitive B2B,
errors that delay delivery are intolerable.
Security and PCI DSS Compliance. PCI DSS (Payment Card Industry
Data Security Standard) is a set of infosec requirements to help
prevent credit card fraud.
Integrating EC systems with enterprise systems. Need better
integration across all customer points of interactions.
Web analytics. Learning from Web traffic and log data.
Copyright 2012 John Wiley & Sons, Inc.
PCI Compliance
PCI Compliance is a complex process that requires every
business that deals with payment card numbers in any way
to strictly follow a detailed list of regulations.
PCI Data Security Standard (PCI DSS): All EC and brick-andmortar merchants must be PCI DSS compliant to accept,
hold, process, or exchange credit cardholder data of major
credit cards. http://pcisecuritystandards.org
Copyright 2012 John Wiley & Sons, Inc.
E-Business Model
Figure 6.6 E-commerce model
Objective of e-business: streamline and automate processes
Copyright 2012 John Wiley & Sons, Inc.
E-business Models
Comparison shopping engines
 Affiliate marketing
 Electronic marketplaces and exchanges
 Information brokers and matching services
 Memberships
 Forward auctions
 Reverse auctions
 Name-your-own-price
 Online auctions
 Online direct marketing.
 Viral marketing
Copyright 2012 John Wiley & Sons, Inc.
6.2 B2C e-Commerce
Most well-known B2C site is Amazon.com,
whose patented IT developments
provide a competitive edge
ING Direct, largest online bank with high rates,
high-volume, low-margins, and high profits
Online job market. Most companies and
government agencies advertise job openings,
accept résumés, and take applications via the Internet.
Despite B2C ongoing growth, many e-tailers still face challenges
that interfere with the growth of its e-tailing efforts
Copyright 2012 John Wiley & Sons, Inc.
Issues in E-tailing
Resolving channel conflict between an online selling channel
and physical selling channels
Resolving conflicts within click-and-mortar organizations.
Managing order fulfillment, logistics, and reverse logistics.
Determining viability and risk of online e-tailers.
Identifying appropriate revenue (business) models.
Copyright 2012 John Wiley & Sons, Inc.
6.3 B2B e-Commerce & e-Procurement
 comprises about 85% of e-commerce dollar volume.
 covers apps that enable an enterprise to form electronic
relationships with its distributors, resellers, suppliers,
customers, and other partners.
By using B2B, organizations can restructure their supply chains
and partner relationships.
Copyright 2012 John Wiley & Sons, Inc.
B2B Business Models
• Seller can be either a manufacturer (IBM.com), a distributor
(Avnet.com), or a retailer (Walmart.com)
• Primary methods are forward auctions and online catalogs, which can
be customized for each buyer
Buy-side or e-sourcing:
• E-sourcing refers to the many procurement methods.
• Primary methods are auctions, RFQ processing, and private exchanges
Copyright 2012 John Wiley & Sons, Inc.
1. To control costs
2. To simplify processes to make them more efficient
Public and Private Exchanges
1. Vertical exchanges for direct materials—materials that are inputs to
manufacturing; e.g., PlasticsNet.com
2. Vertical exchanges for indirect materials in one industry—e.g.,
ChemConnect.com and iSteelAsia.com
3. Horizontal exchanges for indirect materials, such as office supplies, light
bulbs, and cleaning materials used by any industry; e.g., EcEurope.com
and Alibaba.com
4. Functional exchanges. Needed services such as temporary help or extra
space are traded on an as-needed basis; e.g., Employease.com
Copyright 2012 John Wiley & Sons, Inc.
6.4 E-Government
E-commerce models apply to government & the public sector
E-government is the use of Internet technology to deliver
information and public services to citizens, business partners
and suppliers of government entities
 Improves the efficiency and effectiveness of govn’t functions,
including the delivery of public services
 Increases transparency by giving access to govn’t information
 Citizens can provide feedback and more actively participate in
democratic institutions and processes
Copyright 2012 John Wiley & Sons, Inc.
E-Government in the Cloud
Budget pressures are a leading factor moving governments
into cloud computing solutions
45% of local governments are using some form of cloud
computing for applications or services
2 iPhone Apps to Curb Drunk Driving
R-U-Buzzed was released by the Colorado DOT to estimate
blood-alcohol content
Mashup program Stumble Safely gives Washington, D.C.,
pedestrians a safe route home after a night at the bar.
Copyright 2012 John Wiley & Sons, Inc.
6.5 E-Commerce Support Services:
Payment and Order Fulfillment
B2B and B2C requires support services, e.g., payment and order fulfillment
Major e-commerce support services:
 e-infrastructure: technology consultants, system developers,
integrators, hosting, security, wireless, and networks
 e-processes: payments and logistics
 e-markets: marketing and advertising
 e-communities: citizens, audiences and business partners
 e-services: CRM, PRM, and directory services
 e-content: supplied by content providers
Copyright 2012 John Wiley & Sons, Inc.
Advertising Strategies and Revenue Models
Affiliate marketing and advertising: an
organization refers consumers to other
companies’ Web sites.
Viral marketing: word-of-mouth marketing;
customers promote a product or service by
telling many others about it, often via tweets or
Customizing ads: marketing managers can
customize display ads based on users’ profiles.
Copyright 2012 John Wiley & Sons, Inc.
E-payment systems
Electronic funds transfer (EFT)
 Electronic checks
 Electronic credit cards
 Purchasing e-cards
 e-Cash—smart cards
 e-Cash—person-to-person
 Electronic bill presentment and payments
 Pay at ATMs
 Micropayments
 B2B special methods
Copyright 2012 John Wiley & Sons, Inc.
Figure 6.10 Sequence of activities in e-credit card processing
IT at Work 6.6
E-Money: The Future Currency
The growing e-money lifestyle in
Japan is making life more
convenient for consumers by
allowing transactions via mobiles.
The Mobile Suica system was
debuted by NTT DoCoMo in 2006.
Mobile Suica is a phone-based
smartcard that can be used for buying
rail tickets or accessing buildings.
Copyright 2012 John Wiley & Sons, Inc.
Figure 6.11 Contactless
Mobile Suica on mobile
phone; based on RFID
Order fulfillment activities
Figure 6.12 Order fulfillment and logistics system
Copyright 2012 John Wiley & Sons, Inc.
6.6 E-Business Ethics and Legal Issues
Privacy: Most e-payment systems know who the buyers are;
therefore, it’s necessary to protect the buyers’ identities.
Web tracking: By using tracking software and log files,
companies can track individuals’ movements on the Internet.
Job loss: EC may eliminate jobs.
Disintermediation: Technology eliminates the need for
intermediaries, such as travel and insurance agents.
Copyright 2012 John Wiley & Sons, Inc.
Chapter 6 Link Library
Amazon.com’s 1st Web site, 1995 digitalenterprise.org/images/amazon.gif
e-Business forum ebusinessforum.com
Google Merchant Center google.com/merchants
Google Product Search google.com/products
Shopzilla shopzilla.com
U.S. Federal Trade Commission ftc.gov
PCI Security Standards Council pcisecuritystandards.org/index.shtml
Internet statistics internetworldstats.com
Many Eyes (beta) data sets and visualization tools
Washington, DC Data Catalog data.octo.dc.gov/
Copyright 2012 John Wiley & Sons, Inc.

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