Chapter 11 Understanding Computers, 11th Edition

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11th Edition
TODAY AND TOMORROW

• 11

E-Commerce
CHAPTER
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Learning Objectives

• Explain what e-commerce is and describe some of
  the benefits and risks involved with implementing
  e-commerce.
• Discuss the types of Web sites that can be used
  to implement e-commerce.
• Identify a variety of e-commerce business models
  and discuss their similarities and differences.

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Learning Objectives, Contd

• List several strategies for implementing
  e-commerce using the Web, including some of the
  decisions that need to be made, the options
  available for accepting payments, and the process
  of designing and developing an effective Web
  site.
• Outline some sales and marketing strategies that
  can be used in conjunction with an e-commerce Web
  site.
• Discuss some security issues related to
  e-commerce transactions

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Overview

• This chapter covers
• Potential advantages and disadvantages of
  e-commerce
• Types of e-commerce Web sites and e-commerce
  business models
• Steps for implementing Web-based e-commerce
• Sales and marketing strategies for e-commerce Web
  sites
• E-commerce security issues

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What Is E-Commerce?

• E-commerce act of doing business transactions
  over the Internet or similar technology
• E-commerce in the U.S. has continued to grow at a
  steady pace
• M-commerce (mobile commerce) is growing
• U-commerce (universal commerce) trend being
  strongly supported by Visa is on the rise

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Advantages of E-Commerce

• To businesses
• Reduced costs
• Dot-coms are less expensive than brick-and-mortar
  store because there is no physical storefront to
  maintain
• Increased customer satisfaction
• If shopping experience is convenient (open all
  the time, no driving, etc.
• More effective sales and marketing tools
  (personalized e-mails, customer relationship
  management tools, etc.)
• Potentially higher sales

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Advantages of E-Commerce, Contd

• To customers
• Convenience
• Easier comparison shopping
• Higher number of merchants to choose from
• Geographical location is not an issue
• Shopping bots and other comparison shopping tools
  are available
• Higher degree of selection
• Potential cost savings

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Disadvantages 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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Disadvantages of E-Commerce, Contd

• To customers
• Fraud and other potential security problems
• Not being able to see 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 sites sell products
  and services directly to the end user

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Types of E-Commerce Web Sites, Contd

• Brokerage sites sites that bring buyers and
  sellers together
• Online auction sites sites where individuals
  auction products to other individuals
• Buyers bid and highest bidder at the time the
  auction closes buys the item
• Seller pays a listing fee and a selling fee based
  on the final price
• Sellers set the starting bid and can specify a
  minimum sales price
• Many sites bid automatically for each bidder up
  to his or her maximum stated price

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Types of E-Commerce Web Sites, Contd

• Brokerage sites, contd
• Financial brokerage sites (allow individuals to
  sell stocks, bonds, etc.
• Market and commodity exchange sites (match up
  buyers and sellers of commodities, such as
  equipment, energy, cattle, etc.

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E-Commerce Business Models

• Business model description of how a company does
  business
• E-commerce business model description of the
  types of buyers and sellers in an e-commerce
  company, such B2B, B2G, and so forth
• Business-to-consumer (B2C) model
• Business-to-business (B2B) model
• Consumer-to-consumer (C2C) model
• Business-to-government (B2G) model
• Intermediary hub model
• Vertical hub
• Horizontal hub

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Implementing Web-Based E-Commerce

• Step 1 Select appropriate business models and
  types of Web sites
• More than one model and type of Web site can be
  selected
• Some businesses at additional types later on
• Step 2 Select the desired e-commerce
  applications
• Determine electronic customer relationship
  management (eCRM) activities to be included
• Determine which other business systems the Web
  site will be linked to

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Implementing Web-Based E-Commerce, Contd

• Step 3 Develop procedures for handling
  electronic financial transactions
• Need to determine which types will be accepted
• Most sites accept credit cards

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Implementing Web-Based E-Commerce, Contd

• Other digital cash options include
• Electronic checks funds come out of customers
  checking account
• Online payment accounts (such as PalPal) funds
  can be transferred to others from the customers
  account
• Can transfer funds ahead of time or have money
  transferred from a credit card or bank account as
  needed

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Implementing Web-Based E-Commerce, Contd

• Other digital cash options, contd
• Electronic gift certificates, gift cards, and
  coupons
• Appropriate codes are entered into the Web site
  at time of purchase
• Smart cards holds a cash value
• Typically read by readers attached to a PC
• Smart card readers may becomecommon on vending
  machines, in taxis, and other public locations

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Implementing Web-Based E-Commerce, Contd

• Other digital cash options, contd
• Digital wallets electronic file that holds
  information to speed online transactions
• Can hold credit card numbers, passwords, address,
  etc. to be automatically or manually transferred
  to an online order form as needed
• Site-specific digital wallets store this
  information for each customer on a business Web
  server for use with purchases on that site only

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Implementing Web-Based E-Commerce, Contd

• Special considerations for B2B financial
  transactions because of the volume of
  transactions businesses may consider using
• B2B transaction processing
• Can take care of transaction processing for a
  business, including processing payments,
  electronic billing, etc.
• Order-fulfillment companies
• Take care of physically filling orders for a
  business including order management,
  distribution, CRM services, etc.

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Implementing Web-Based E-Commerce, Contd

• Step 4 Design and develop an effective Web site
• Sites should be carefully designed
• Can consider using
• Storefront software facilitates the creation of
  an online store (either packaged or Web-based)
• Shopping cart software designed to add only
  ordering capabilities to an existing Web site

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Implementing Web-Based E-Commerce, Contd

• Step 5 Implement appropriate sales and marketing
  strategies
• Include adequate customer service features
• Collect taxes from customers if required by law
• Display a privacy policy and security statement
• Use an appropriate domain name and URL
• URL should be easy to remember and type
• Visitors should not have to type a page name
  (such as index.html) to view the home page of the
  site

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Implementing Web-Based E-Commerce, Contd

• Step 5 Implement appropriate sales and marketing
  strategies, contd
• Promote your Web site sufficiently
• Use appropriate meta tags
• Submit your site to search sites
• Consider paying for sponsored listings on search
  sites
• Consider using banner ads on other sites
• Update your site regularly and consider adding
  incentives for return visits (contests, coupons,
  etc.)

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Implementing Web-Based E-Commerce, Contd

• Step 5 Implement appropriate sales and marketing
  strategies, contd
• Data warehousing and mining
• Data warehouse a collection of data about a
  company and its customers
• Data mining the use of intelligent software to
  analyze a data warehouse to find patterns and
  relationships that would not otherwise be obvious

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Security Issues

• Security is essential for e-commerce Web sites
• Some guidelines for e-commerce sites
• Secure financial transactions (use a secure Web
  server)
• Secure sensitive documents and files (use
  encryption)
• Authenticate online business partners (use
  digital certificates and digital signatures)

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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