© Paradigm Publishing, Inc. 11-1 Chapter 11 Electronic Commerce Chapter 11 Electronic Commerce

© Paradigm Publishing, Inc. 11-1

Chapter 11 Electronic Commerce

Chapter 11Electronic Commerce


Presentation Overview• An Overview of Electronic Commerce• Online Shopping and Services• Peer-to-Peer Online Transactions• Transaction Payment Methods• Establishing an E-tiler Web Site• Business-to-Business Electronic Commerce• The Supply Chain: A B2B Model• Major Types of B2B Technologies• B2B in the U.S. Economy


An Overview of Electronic Commerce

What is electronic commerce?The buying and selling of products and services over the Internet.

• Mobile commerce (M-commerce) is electronic commerce using cell phones.

• In business-to-business (B2B) electronic commerce, companies conduct business activities with other companies.

• In business-to-consumer (B2C) electronic commerce, companies use the Internet to sell products to consumers and receive payment.


An Overview of Electronic Commerce

Popular Business-to-Consumer Shopping Sites


Online Shopping and Services

What are the advantages of online shopping?– Convenience– Greater selection– More product information– Ease of comparison shopping



Online Shopping Venues– An online store is a seller’s website where

customers can view and purchase a merchant’s products and services.

The site, or online storefront, groups the products and services in categories.

– An online superstore offers an extensive array of products.

– An online shopping mall connects its stores by hyperlinks on the mall’s homepage.



When a user requests a price comparison, an online shopping agent continually scans databases for product and price information.



The Online Shopping Process



Tip Checklist for Shopping Online



• The U.S. government has enacted legislation to protect individuals who shop online.

• Milestones in federal privacy legislation:



• With data encryption, data is encoded when transmitted over the Internet and then decoded by the recipient.

• This helps to prevent unauthorized access to and usage of private data.



Online shopping sites should provide– terms of sale that are easy to find, read, and

understand– a satisfactory degree of information about the

product being offered– directions for purchasing that are simple to

follow– a high level of customer service



Online Banking and Investing– Online banking involves using a computer,

modem, and Internet to conduct routine banking.

– Investment brokerage firms also maintain Web sites where consumers can purchase and sell stocks and other securities.



Online Travel– Users can research fares and flights and

purchase tickets online.– Users can surf price and schedule combinations

to sort options by airline, arrival and departure times, price, and duration of flight.


Peer-to-Peer Online Transactions

• A peer-to-peer online transaction venue is a Web site forum on which any individual with an Internet hookup may sell, buy, trade, or share goods with other individuals.

• An online auction is a Web site consumers can visit to place an item for sale or bid on other items being offered for auction.

• Digital music distribution is the free distribution of music over the Internet.


Transaction Payment Methods

• An electronic funds transfer (EFT) is any transfer of funds over the Internet.

• Customers can use a check or credit card by phone if they do not want to supply financial data over the Internet.

An electronic check (e-check) initiates an electronic transfer of funds from the customer’s checking account to the merchant.



• A credit account represents a customer’s promise to pay for purchases upon receipt of a periodic statement from the seller.

• A credit card has a metallic strip that contains personal information and enables the user to make purchases on credit.

• A debit card withdraws funds directly from a user’s checking or savings account.



• A smart card keeps personal and financial data on a small microprocessor embedded in the card, which is read by a special reader connected to the computer.

• Digital cash allows a customer to pay for online purchases by transmitting a number from one computer to another computer.



• An electronic wallet (e-wallet) is encryption software that stores a user’s personal, credit card, and shipping information.

• A micro payment enables buyers to purchase low-cost items over the Internet.

• A person-to-person payment system allows consumers to transfer money through a credit card or a bank account.


Establishing an E-tailer Web Site

Registering the Domain Name– You must find an available domain name (or

Web address for your site).– The Internet Corporation for Name and

Numbers (ICANN) is responsible for assigning domain names.

– You can look up potential domain names on ICANN’s site to see if they are available.



Choosing Hardware and Software– You must determine the type of hardware and

software necessary to create the storefront.– Factors to consider include

• Time limitations• Funds for the enterprise• The desired complexity of the site

– A Web hosting service allows others to use its Web servers to store Web pages.



Processing Payments: Checklist– To obtain a merchant account– To provide secure order forms at the site– To use payment-processing software– An electronic order form– To use a commercial payment-processing

service



Checklist for Designing an Effective Site



Managing the Site– Customers expect e-tailer sites to

• Reflect current product descriptions and prices• Show specials, new products or services, updated

information, or new images that encourage browsing the site frequently

– If your site never changes, customers will have no reason to revisit it.



Advertising and Promoting the SiteElectronic methods to let shoppers know about your site include

• Co-advertising and co-promoting with other sites• Locating other sites like yours that will provide a

link to your site, and vice versa• Submitting your site to search engines



Analyzing the Effectiveness of the SiteSite analysis refers to an organization’s ongoing evaluation of an e-commerce Web site and its activity.

• One form involves timing a Web site’s ordering or processing activities.

• Another form provides users with a simple online questionnaire that allows feedback.



Developing a Customer Focus– The information collected on an e-commerce

site about customers and their purchases can be used to improve the company’s products and services.

– Customer relationship management (CRM) software helps companies manage the business/customer relationship.


Business-to-Business Electronic Commerce

How does the Internet support the supply chain in B2B e-commerce?

– B2B e-commerce networks companies, suppliers, agents, customers, and others in a supply chain.

– Procurement is finding products and services at the best possible prices.

– Communication in the supply chain can be done through Web sites, internets, intranets, extranets, and virtual private networks.


The Supply Chain: A B2B Model

Electronic commerce technologies allow businesses to conduct activities quickly and efficiently on a worldwide scale.



Types of Information Shared in the B2B Model



An intranet allows departments within a business to share information quickly and easily.


Major Types of B2B Technologies

Many businesses use electronic data interchange (EDI) to exchange specially formatted business documents.



Payment and Transaction Systems– Financial electronic data interchange (FEDI)

provides for the electronic transmission of payments and remittance information among a payer, payee, and banks.

– An automatic clearinghouse (ACH) is established to transfer funds electronically from one account to another.



Security Technologies– Authentication identifies an individual and

confirms that the individual is authorized to access a system.

– An electronic signature is a digital code attached to an electronically transmitted message to uniquely identify the sender.

– A trusted operating system (TOS) is a security-hardened version of a standard operating system.


B2B in the U.S. Economy

Case Study: General Electric CorporationCustomers can view high-resolution photos of engine parts they have sent in for repair.

• The site describes the defect and recommends whether and how to fix it.

• This reduces the “cycle time” for making decisions.



Case Study: WalmartWalmart uses EDI to link the company with is suppliers.

• Computers transmit purchase orders, shipping invoices, and payments.

• Electronic funds transfers allow payments to be electronically credited to suppliers’ bank accounts.



Case Study: United Parcel Service (UPS)– Employees use personal computers to enter

information from customers who request that a package be picked up or traced.

– Drivers use handheld devices to scan bar codes for product and destination information.

– Shipping label information can track packages and inform customers of package status.


On the Horizon

Based on the information presented in this chapter and your own experience, what do you think is on the horizon?

Documents

© Paradigm Publishing, Inc. 11-1 Chapter 11 Electronic Commerce Chapter 11 Electronic Commerce