CHAPTER 7

CHAPTER 7

Electronic Commerce: Applications and Issues

n  CHAPTER OUTLINE

7.1  Overview of E-Business & E-Commerce

7.2  Business-to-Consumer (B2C) Electronic Commerce

7.3  Business-to-Business (B2B) Electronic Commerce

7.4  Electronic Payments

7.5  Ethical and Legal Issues in E-Business

Overview of E-Business and  E-Commerce

Definitions and Concepts

n  Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet.

n  E-business is a broader definition of EC, including buying and selling of goods and services,

n  Brick-and-mortar organizations are purely physical organizations.

n  Virtual organizations are companies that are engaged only in EC. (Also called pure play)

n  Click-and-mortar organizations are those that conduct some e-commerce activities

Types of E-Commerce

n  Business-to-consumer (B2C): the sellers are organizations and the buyers are individuals.

n  Business-to-business (B2B): both the sellers and buyers are business organizations.  B2B represents the vast majority of e-commerce.

n  Consumer-to-consumer (C2C): an individual sells products or services to other individuals.

n  Business-to-employee (B2E): An organization uses e-commerce internally to provide information and services to its employees. Companies allow employees to manage their benefits, take training classes electronically; buy discounted insurance, travel packages, and event tickets.

n  E-Government: the use of Internet Technology in general and e-commerce in particular to deliver information about public services to citizens (called Government-to-citizen [G2C EC]), business partners and suppliers (called government-to-business [G2B EC]),

n  Mobile Commerce (m-commerce) refers to e-commerce that is conducted in a wireless environment.

See video about  

Major Types of E commerce

E-Commerce and Search

Major E-Commerce Mechanisms

n  An auction is a competitive process in which either a seller solicits consecutive bids from buyers or a buyer solicits consecutive bids from sellers.

n  forward auction as a channel to many potential buyers.  Note that

     Sotheby’s uses forward auctions.

n  In reverse auctions, one buyer, usually an organization, wants to buy a product or a service. 

E-Commerce Business Models
Online direct marketing	Viral marketing
Electronic tendering system	Group purchasing
Name-your-own-price	Online auctions
Find-the-best-price	Bartering Online
Affiliate marketing	Product customization

Benefits of E-Commerce
organizations	Makes national and international markets more accessible
customers	Access a vast number of products and services around the clock
Society	Ability to easily and conveniently deliver information, services and products to people

Limitations of E-Commerce
Technological	Lack of universally accepted security standards
Non-technological	Perception that EC is unsecure

Online Service Industries

n  Cyberbanking         

n   Online securities trading

n  Online job market

n  Travel services

n  Online advertising

Disintermediation

Online Advertising

§  Advertising is an attempt to disseminate information in order to influence a buyer-seller transaction.

§  Banners are simply electronic billboards.

§  Pop-up ad appears in front of the current browser window.

§  Pop-under ad appears underneath the active window.

§  Permission marketing asks consumers to give their permission to voluntarily accept online advertising and e-mail.

§  Viral marketing refers to online “word-of-mouth” marketing.

Issues in E-Tailing

§  Order fulfillment involves finding the product to be shipped; packaging the product; arrange for speedy delivery to the customer

§  Channel conflict occurs when manufacturers disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives

§  Communitainment is the blending of community, communication, and entertainment into a new form of online activity driven by consumers. 

Declining usage of traditional media

See video about 

New Media VS Traditional Media

Eight Types of Web sites for Advertising

§  Portals: most popular; best for reach but not targeting

§  Search: second largest reach; high advertising value

§  Commerce: high reach; not conducive to advertising

§  Entertainment: large reach; strong targetability

§  Community: emphasize being a part of something; good for specific advertising

§  Communications: not good for branding; low targetability

§  News/weather/sports: poor targetability

§  Games: good for very specific types of advertising

Electronic Exchanges

v Vertical Exchanges

v Horizontal Exchanges

v Functional Exchanges

v Electronic Payments

Electronic checks (e-checks)

v Electronic credit cards

v Purchasing cards

v Electronic cash

Ethical Issues

v Privacy

v Job Loss

Legal Issues Specific to E-Commerce

§  Fraud on the Internet i.e. stocks, investments, business opportunities, auctions.

§  Domain Names problems with competition.

§  Cybersquatting refers to the practice of registering domain names solely for the purpose of selling them later at a higher price.

§  Domain Tasting is a practice of registrants using the five-day "grace period" at the beginning of a domain registration to profit from pay-per-click advertising.

§  Taxes and other Fees when and where (and in some cases whether) electronic sellers should pay business license taxes, franchise fees, gross-receipts taxes, excise taxes, …etc.

§  Copyright protecting intellectual property in e-commerce and enforcing copyright laws is extremely difficult.