608075868

b-coTnmerce

business, technology, society.

S I X T H E D I T I O N

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

Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Tbronto

Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

C o n t e n t s

PARTI introduction to E-commerce

THE REVOLUTION IS JUST BEGINNING 1-1

Learning Objectives

Facebook and MySpaee: It's All About You 1-1

1.1 E-commerce: The Revolution Is Just Beginning 1-4The First Thirty Seconds 1-7What Is E-commerce? 1-8

The Difference between E-commerce and E-business 1-8

Why Study E-commerce? 1-9/'Eight Unique Features of E-commerce Technology 1-10

Ubiquity 1-12Global Reach 1-12 ""

Universal Standards 1-12Richness 1-13Interactivity 1-14Information Density 1-14

Personalization/Customization 1-15Social Technology: User Content Generation and Social Networking 1-15

Web 2:0: Play My Version 1-16Types of E-commerce 1-18

Business-to-Consumer (B2C) E-commerce 1-18

Business-to-Business (B2B) E-commerce 1-18Consumer-to-Consumer (C2C) E-commerce 1-19Peer-to-Peer (P2P) E-commerce 1-19

Mobile Commerce (M-commerce) 1-19Growth of the Internet and the Web 1-20

XIX

xx C o n t e n t s

Origins and Growth of E-commerce 1-22

Technology and E-commerce in Perspective 1-22

Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the DeepWeb 1-24

Potential Limitations on the Growth of B2C E-commerce 1-26

1.2 E-commerce: A Brief History 1-28E-commerce 1995-2000: Innovation 1-28E-commerce 2001-2006: Consolidation 1-32

Insight on Business: The Internet Investment Roller Coaster 1-33

E-commerce 2006-Present: Reinvention 1-35Assessing E-commerce: Successes, Surprises and Failures 1-36Predictions for the Future: More Surprises 1-38

1.3 Understanding E-commerce: Organizing Themes 1-41Technology: Infrastructure 1-41Business: Basic Concepts 1-42Society: Taming the Juggernaut 1-43 -

Insight on Society: Privacy Online: Does Anybody Care 1-44

Academic Disciplines Concerned with E-commerce 1-47

Technical Approaches 1-47

Behavioral Approaches 1-48

1.4 Case Study: Internet Piracy: The Pirate Bay 1-49

1.5 Review 1-55Key Concepts 1-55Projects' 1-58Questions 1-50

Web Site Resources 1-59

E-COMMERCE BUSINESS MODELS AND CONCEPTS 2-1

Learning Objectives

Tweet Tweet: What's Your Business Model 2-1

2.1 E-commerce Business Models 2-4

Introduction 2-4

Eight Key Elements of a Business Model 2-4

Value Proposition 2-5

Revenue Model 2-5

Market Opportunity 2-7

Competitive Environment 2-8

Competitive Advantage 2-9

Market Strategy 2-11

C o n t e n t s xxi

Organizational Development 2-11

Management Team 2-12

Categorizing E-commerce Business Models: Some Difficulties 2-12

Insight on Business: Online Grocers: Finding and Executing the RightModel 2-13

2.2 Major Business-to-Consumer (B2C) Business Models 2-16

Portal 2-16

E-tailer 2-18

Insight on Technology: Can Bing Bong Google? 2-19

Content Provider 2-22

Transaction Broker 2-23

Market Creator 2-24

Service Provider 2-25

Community Provider 2-26

2.3 Major Business-to-Business (B2B) Business Models 2-27

E-distributor 2-28

E-procurement 2-29

Exchanges 2-29

Industry Consortia 2-30

Private Industrial Networks 2-30

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

Consumer-to-Consumer (C2C) Business Models 2-32

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

M-commerce Business Models 2-33

Insight on Society: Where R U 2-34

E-commerce Enablers: The Gold Rush Model 2-36

2.5 How the Internet and the Web Change Business: Strategy, Structure,and Process 2-37

Industry Structure 2-38

Industry Value Chains 2-41

Firm Value Chains 2-42

Firm Value Webs 2-43

Business Strategy 2-44

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

Projects 2-54


xxii C o n t e n t s

PART 2 'ifology Infrastructure for E-commerce

THE INTERNET AND WORLD WIDE WEB: E-COMMERCE INFRASTRUCTURE 3-1

Learning Objectives

Wikitude.me 3-1

3.1 The Internet: Technology Background 3-4

The Evolution of the Internet 1961-The Present 3-5The Internet: Key Technology Concepts 3-6

Packet Switching 3-9Transmission Control Protocol/Internet Protocol (TCP/IP) 3-11

IP Addresses 3-11

Domain Names, DNS, and URLs 3-13

Client/Server Computing 3-13

Insight on Business: P2P Dukes It Out with Streaming Video 3-16

The New Client: The Emerging Mobile Platform 3-18

Internet "Cloud Computing" Model: Software and Hardware as Service 3-19 /

Other Internet Protocols and Utility Programs 3-21Internet Protocols: HTTP, E-mail Protocols, FTP, Telnet, and SSL 3-21Utility Programs: Ping, Tracert, and Pathping 3-22

3.2 The Internet Today 3-23

The Internet Backbone 3-25Internet Exchange Points 3-26Campus Area Networks (CANs) 3-26Internet Service Providers 3-28Intranets and Extranets 3-30

Who Governs the Internet? 3-30

Insight on Society: Government Regulation and Surveillance of the Internet 3-32

3.3. Internet II: The Future Infrastructure 3-35

Limitations of the Current Internet 3-35

The Internet2® Project 3-36

The Larger Internet II Technology Environment: The First Mile and theLast Mile 3-37

Fiber Optics and the Bandwidth Explosion in the First Mile 3-38

C o n t e n t s xxiii

The Last Mile: Mobile Wireless Internet Access 3-39

Benefits of Internet II Technologies 3-46

IP Multicasting 3-46

Latency Solutions 3-48

Guaranteed Service Levels and Lower Error Rates 3-48

Declining Costs 3-48

3.4 The World Wide Web 3-49

Hypertext 3-50

Markup Languages 3-52

Standardized Generalized Markup Language (SGML) 3-52

HyperText Markup Language (HTML) 3-52

Extensible Markup Language (XML) 3-52

Web Servers and Clients 3-55

Web Browsers 3-56

3.5 The Internet and the Web: Features 3-57

E-mail 3-57

Instant Messaging 3-57

Search Engines 3-58

Intelligent Agents (Bots) 3-61'

Online Forums and Chat 3-62

Streaming Media 3-62

Cookies 3-63

Web 2.0 Features and Services 3-63

Blogs 3-63

Really Simple Syndication (RSS) 3-64

Podcasting 3-64

Wikis 3-65

New Music and Video Services 3-65

Internet Telephony 3-66

Internet Television 3-67

Telepresence and Video Conferencing 3-68

Online Software and Web Services: Web Apps, Widgets and Gadgets 3-68

M-commerce Applications: The Next Big Thing 3-69

Insight on Technology: All Mashed Up 3-70

3.6 Case Study: Akamai Technologies: The Web's Invisible Accelerator 3-72

3.7 Review 3-76

Key Concepts 3-76

Projects 3-80

Questions 3-80


XXIV C o n t e n t s

BUILDING AN E-COMMERCE WEB SITE 1 4-1

Learning Objectives

Right-Sizing a Web Site 4-1

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 4-5Systems Analysis/Planning: Identify Business Objectives, System Functionality,and Information Requirements 4-6System Design: Hardware and Software Platforms 4-8Building the System: In-House versus Outsourcing 4-8

Build Your Own versus Outsourcing 4-8Host Your Own versus Outsourcing 4-12

Insight on Business: Curly Hair and MotorMouths: Getting Started on theCheap 4-13

Testing the System 4-15Implementation and Maintenance 4-15Factors in Optimizing Web Site Performance 4-16Web Site Budgets 4-17

4.2 Choosing Software 4-1

Simple versus Multi-tiered Web Site Architecture 4-18Web Server Software 4-20

Site Management Tools 4-20Dynamic Page Generation Tools 4-21

Application Servers 4-24E-commerce Merchant Server Software Functionality 4-24

Online Catalog 4-25Shopping Carts 4-25Credit-Card Processing 2-26

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

Choosing an E-commerce Suite 4-26Building Your Own E-commerce Site: Web Services and Open SourceOptions 4-28

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

Right-Sizing Your Hardware Platform: The Demand Side 4-30Right-Sizing Your Hardware Platform: The Supply Side 4-33

4.4 Other E-commerce Site Tools 4-36

Web Site Design: Basic Business Considerations 4-37Tools for Web Site Optimization 4-38Tools for Interactivity and Active Content 4-40

C o n t e n t s xxv

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

CGI (Common Gateway Interface) 4-41

Active Server Pages (ASP) 4-41

Java, Java Server Pages (JSP), and JavaScript 4-41

ActiveX and VBScript 4-42

Insight on Technology: Pumping Up the Customer Experience Using AJAXand

Flash 4-43

ColdFusion 4-45

Personalization Tools 4-45

The Information Policy Set 4-46

Insight on Society: Designing for Accessibility with Web 2.0 4-47

4.5 Case Study: REI Climbs the Web Mountain 4-52

4.6 Review 4-55

Key Concepts 4-55

Projects 4-58

Questions 4-58


ONLINE SECURITY AND PAYMENT SYSTEMS 5-1

Learning Objectives

Cyberwar Becomes a Reality 5-1

5.1 The E-commerce Security Environment 5-3

The Scope of the Problem 5-3

The Underground Economy Marketplace: The Value of Stolen

Information 5-6

What Is Good E-commerce Security? 5-7

Dimensions of E-commerce Security 5-8

The Tension Between Security and Other Values 5-9

Ease of Use 5-10

Public Safety and the Criminal Uses of Security 5-10

5.2 Security Threats in the E-commerce Environment 5-11

Malicious Code 5-12

Unwanted Programs 5-15

Phishing and Identity Theft 5-15

Hacking and Cybervandalism 5-18

Credit Card Fraud/Theft 5-19

Spoofing (Pharming), Spam (Junk) Web Sites, and Splogs 5-21

Denial of Service (DoS) and Distributed Denial of Service (dDoS) Attacks 5-21

Sniffing 5-22

Insider Attacks 5-23

xxvi C o n t e n t s

Poorly Designed Server and Client Software 5-23

5.3 Technology Solutions 5-24 -

Protecting Internet Communications 5-24

Encryption 5-24

Symmetric Key Encryption 5-25

Public Key Encryption 5-25

Public Key Encryption Using Digital Signatures and Hash Digests 5-25

Digital Envelopes 5-30

Digital Certificates and Public Key Infrastructure (PKI) 5-30

Limitations to Encryption Solutions 5-33

Securing Channels of Communication 5-33

Secure Sockets Layer (SSL) 5-33

Insight on Society: In Pursuit of E-mail Security 5-34

Secure Hypertext Transfer Protocol (S-HTTP) 5-36

Virtual Private Networks 5-37

Protecting Networks 5-37

Firewalls 5-37

Protecting Servers and Clients 5-38

Operating System Security Enhancements 5-38

Anti-Virus Software 5-39

5.4 Management Policies, Business Procedures, and Public Laws 5-40

A Security Plan: Management Policies 5-40

The Role of Laws and Public Policy 5-42

Insight on Technology: Securing Your Information: Cleversafe Hippie Storage 5-43

Private and Private-Public Cooperation Efforts 5-46

Government Policies and Controls on Encryption Software 5-46

OECD Guidelines 5-46

5.5 Payment Systems 5-47

Types of Payment Systems 5-47

Cash 5-47

Checking Transfer 5-48

Credit Card 5-48

Stored Value 5-49

Accumulating Balance 5-49

5.6 E-commerce Payment Systems 5-51

Online Credit Card Transactions 5-52

Credit Card E-commerce Enablers 5-53

Limitations of Online Credit Card Payment Systems 5-54

Digital Wallets 5-54

Digital Cash 5-55

Online Stored Value Systems 5-55

Digital Accumulating Balance Payment Systems 5-57

C o n t e n t s xxvii

Digital Checking Payment Systems 5-57

Wireless Payment Systems 5-58

5.7 Electronic Billing Presentment and Payment 5-59

Market Size and Growth 5-59

Insight on Business: Mobile Payment's Future: WavePayMe, TextPayMe 5-60

EBPP Business Models 5-62

5.8 Case Study: PayPal Has Company 5-64

5.9 Review 5-69

Key Concepts 5-69

Projects 5-73

Questions 5-74


PART 3 iiness Concepts and Social Issues

E-COMMERCE MARKETING CONCEPTS

Learning Objectives

Netflix Develops and Defends Its Brand 6-1

6.1 Consumers Online: The Internet Audience and ConsumerBehavior 6-4

The Internet Audience 6-4

Internet Traffic Patterns: The Online Consumer Profile 6-5

Intensity and Scope of Usage 6-5

Demographics and Access 6-5

Type of Internet Connection: Broadband Impacts 6-7

Community Effects: Social Contagion 6-9

Lifestyle and Sociological Impacts 6-10

Media Choices and Multitasking : The Internet versus Other Media

Channels 6-10

Consumer Behavior Models 6-10

Profiles of Online Consumers 6-13

The Online Purchasing Decision 6-14

A Model of Online Consumer Behavior 6-15

Shoppers: Browsers and Buyers 6-16

What Consumers Shop for and Buy Online 6-20

Intentional Acts: How Shoppers Find Vendors Online 6-20

Why More People Don't Shop Online 6-21

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

Trust, Utility, and Opportunism in Online Markets 6-22

6.2 Basic Marketing Concepts 6-22

Feature Sets 6-23

Products, Brands, and the Branding Process 6-24Segmenting, Targeting, and Positioning 6-26Are Brands Rational? 6-27Do Brands Last Forever? 6-28Can Brands Survive the Internet? Brands and Price Dispersion on theInternet 6-29

6.3 Internet Marketing Technologies 6-31

The Revolution in Internet Marketing Technologies 6-32

Web Transaction Logs 6-33

Supplementing the Logs: Cookies and Web Bugs 6-36

Insight on Society: Marketing with Web Bugs 6-38

Databases, Data Warehouses, and Data Mining: Developing Profiles 6-40

Databases 6-40

Data Warehouses and Data Mining 6-41

Insight on Technology: The Long Tail: Big Hits and Big Misses 6-44

Customer Relationship Management (CRM) Systems 6-46

6.4 B2C and B2B E-commerce Marketing and Branding Strategies 6-48

Market Entry Strategies 6-48Establishing the Customer Relationship 6-50

Advertising Networks 6-51

Permission Marketing 6-53Affiliate Marketing 6-53

Viral Marketing in the Web 2.0 Milieu 6-54

Blog Marketing 6-55Social Network Marketing and Social Shopping 6-56

Insight on Business: Social Network Marketing: New Influences Among theChattering Masses 6-57

Marketing Based on the Wisdom of Crowds 6-59Leveraging Brands 6-61

Customer Retention: Strengthening the Customer Relationship 6-61

Personalization and One-to-One Marketing 6-61Customization and Customer Co-Production 6-63

Transactive Content 6-64Customer Service 6-64

Net Pricing Strategies 6-64Free and Freemium 6-68Versioning 6-69

Bundling 6-69Dynamic Pricing 6-71

C o n t e n t s xxix

Channel Strategies: Managing Channel Conflict 6-72

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

6.6 Review 6-78Key Concepts 6-78

Projects 6-81 -

Questions 6-81


E-COMMERCE MARKETING COMMUNICATIONS 7-1

Learning Objectives

Video Ads Cure Banner Blindness: String Master 7-1

7.1 Marketing Communications 7-5Online Advertising 7-5

Display Ads: Banners and Pop-Ups 7-7

Rich Media 7-8

Video Ads 7-10

Search Engine Advertising: Paid Search Engine Inclusion and Placement 7-11

Sponsorships 7-18

Referrals (Affiliate Relationship Marketing) 7-18

E-mail Marketing and the Spam Explosion 7-19

Online Catalogs 7-23

Social Marketing: Blogs, Social Networks and Games 7-25

Blog Advertising 7-25

Social Network Advertising 7-26

Game Advertising 7-26

Behavioral Targeting: Getting Personal 7-27

Insight on Society: Marketing to Children of the Web in the Age of SocialNetworks 7-28

Mixing Offline and Online Marketing Communications 7-33

7.2 Understanding the Costs and Benefits of Online MarketingCommunications 7-34

Insight on Business: Are the Very Rich Different from You and Me? 7-35

Online Marketing Metrics: Lexicon 7-38

How Well Does Online Advertising Work? 7-42

The Costs of Online Advertising 7-44

Software for Measuring Online Marketing Results 7-46

7.3 The Web Site as a Marketing Communications Tool 7-46

Domain Names 7-47

Search Engine Optimization 7-48

Insight on Technology: It's 10 P.M. Do You Know Who Is On Your WebSite? 7-49

XXX I C o n t e n t s

Web Site Functionality 7-52

7.4 Case Study: Adware, Spy ware, Ad Bombs, Ambush Marketing, andCustomer Hijacking: Invasive Marketing Techniques Growvn theWeb 7-56

7.5 Review 7-61

Key Concepts 7-61Projects 7-64Questions 7-64Web Site Resources 7-65

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

Learning Objectives

Discovering Law and Ethics in a Virtual World 8-1

8.1 Understanding Ethical, Social, and Political Issuesin E-commerce 8-4

A Model For Organizing the Issues 8-5

Basic Ethical Concepts: Responsibility, Accountability, and Liability 8-7

Analyzing Ethical Dilemmas 8-9, Candidate Ethical Principles 8-10

8.2 Privacy and Information Rights 8-11

Information Collected at E-commerce Sites 8-12Social Networks and Privacy 8-14

Profiling and Behavioral Targeting 8-15The Internet and Government Invasions of Privacy:E-commerce Surveillance 8-19Legal Protections 8-20

Informed Consent 8-22The FTC's Fair Information Practices Principles 8-23The European Directive on Data Protection 8-26

Private Industry Self-Regulation 8-26

Privacy Advocacy Groups 8-28

Technological Solutions 8-28

Insight on Business: Chief Privacy Officers 8-29

Insight on Technology: The Privacy Tug of War 8-34

8.3 Intellectual Property Rights 8-37

Types of Intellectual Property Protection 8-38

Copyright: The Problem of Perfect Copies and Encryption 8-38Look and Feel 8-39Fair Use Doctrine 8-40The Digital Millennium Copyright Act of 1998 8-41

Patents: Business Methods and Processes 8-43

C o n t e n t s xxxi

E-commerce Patents 8-44Patent Reform 8-47

Trademarks: Online Infringement and Dilution 8-47Trademarks and the Internet 8-48Cybersquatting • 8-49Cyberpiracy 5-50Metatagging 8-51Keywording 8-52Linking 8-53Framing 8-53

Challenge: Balancing the Protection of Property with Other Values 8-54

8.4 Governance 8-54

Who Governs E-commerce and the Internet? 8-56Can the Internet Be Controlled? 8-56

Public Government and Law 8-58Taxation 8-58Net Neutrality 8-60

8.5 Public Safety and Welfare 8-61Protecting Children 8-61

Cigarettes, Gambling, and Drugs: Is the Web Really Borderless? 8-63

Insight on Society: The Internet Drug Bazaar 8-64

8.6 Case Study: The Google Book Settlement: Is It Fair? 8-68

8.7 Review 8-72

Key Concepts 8-72Projects 8-76Questions 8-76


PART 4 commerce in Action

ONLINE RETAILING AND SERVICES

Learning Objectives

Blue Nile Sparkles For Your Cleopatra 9-1

9.1 The Online Retail Sector 9-5

The Retail Industry 9-6

Online Retailing 9-8E-commerce Retail: The Vision 9-8The Online Retail Sector Today 9-10

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

Multi-channel Integration 9-12

9.2 Analyzing the Viability of Online Firms 9-13-»

Strategic Analysis 9-13

Financial Analysis 9-14

9.3 E-commerce in Action: E-tailing Business Models 9-16

Virtual Merchants 9-16

E-commerce in Action: Amazon.com 9-17

Multi-channel Merchants: Brick-and-Clicks 9-25

Catalog Merchants 9-27

Manufacturer-Direct 9-28

Common Themes in Online Retailing 9-29

Insight on Technology: Using the Web to Shop 'Till You Drop 9-31

9.4 The Service Sector: Offline and Online 9-33

What Are Services? 9-34

Categorizing Service Industries 9-34

Knowledge and Information Intensity 9-34

Personalization and Customization 9-35

9.5 Online Financial Services 9-35

Financial Services Industry Trends 9-35

Online Financial Consumer Behavior 9-38

Online Banking and Brokerage 9-39

Multichannel 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 9-43

Online Real Estate Services 9-45

9.6 Online Travel Services 9-48

Why Are Online Travel Services So Popular? 9-48

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

The Online Travel Market 9-52

Insight on Business: Zipcars 9-53

Online Travel Industry Dynamics 9-56

Opportunities for Disintermediation and Re-intermediation 9-57

9.7 Online Career Services 9-58

It's Just Information: The Ideal Web Business? 9-59

Recruitment Market Segments 9-61Online Recruitment Industry Dynamics: Consolidation, Diversification,Localization, and Job Search Engines 9-62

9.8 Case Study: Open Table: Your Reservation Is Waiting 9-64

9.9 Review 9-68

Key Concepts 9-68

C o n t e n t s xxxi i i

Projects 9-75

Questions 9-76


ONLINE CONTENT AND MEDIA 10-1

Learning Objectives

Information Wants to Be Expensive 10-1

10.1 Online Content 10-5

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

Media Utilization 10-5

Internet and Traditional Media: Cannibalization Versus

Complementarity 10-7

Media Revenues 10-8

Two Models of the Digital Content Delivery: Paid and User-GeneratedContent 10-9

Free or Fee: Attitudes About Paying for Content and the Tblerance for

Advertising 10-12

Media Industry Structure 10-12

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

Technological Convergence 10-13

Content Convergence 10-13

Industry Convergence 10-15

Online Content Revenue Models and Business Processes 10-16

Making a Profit with Online Content: From Free to Fee 10-18

Key Challenges Facing Content Producers and Owners 10-19

Technology 10-19

Cost 10-20

Distribution Channels and Cannibalization 10-21

Digital Rights Management (DRM) 10-21

10.2 The Online Publishing Industry 10-22

Online Newspapers 10-22

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

Audience Size and Growth 10-27

Newspaper Business Models 10-28

Convergence 10-30

Challenges: Disruptive Technologies 10-32

Books: The Evolution of E-books 10-32

E-books 10-34

Book Audience Size and Growth 10-36

Content: Advantages and Disadvantages of E-books 10-38

E-book Industry Revenue Models 10-38

xxxiv C o n t e n t s

Convergence 10-40

Insight on Society: The Future of Books 10-43

10.3 The Online Entertainment Industry 10-45 *Online Entertainment Audience Size and Growth 10-47

Online Traditional Entertainment 10-47

User-Generated Content: Where Does It Fit? 10-47

Content 10-49

Online Entertainment Industry Revenue Models 10-50

Convergence 10-50

Insight on Technology: Hollywood Meets the Internet: Round 2 10-54

10.4 Case Study: Google and YouTube Together: Pass the Popcorn WhileThis Ad Plays 10-56

10.5 Review 10-61

Key Concepts 10-61

Projects 10-66

Questions 10-66


SOCIAL NETWORKS, AUCTIONS, AND PORTALS 11-1 |

Learning Objectives

Social Network Fever Spreads to the Professions 11-1

11.1 Social Networks and Online Communities 11-3

What Is an Online Social Network? 11-4

The Difference Between Social Networks and Portals 11-5

The Growth of Social Networks and Online Communities 11-5

Turning Social Networks Into Businesses 11-7

Types of Social Networks and Their Business Models 11-7

Social Network Features and Technologies 11-9

The Future of Social Networks 11-9

11.2 Online Auctions 11-10

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

Defining and Measuring the Growth of Auctions and Dynamic Pricing 11-13

Why Are Auctions So Popular? Benefits and Costs of Auctions 11-15

Benefits of Auctions 11-15

Risks and Costs of Auctions for Consumers and Businesses 11-17

Market-Maker Benefits: Auctions as ah E-commerce Business Model 11-18

Types and Examples of Auctions 11-18

Internet Auction Basics 11-18

Types of Auctions 11-20

When to Use Auctions (and for What) in Business 11-25 \J

C o n t e n t s xxxv

Seller and Consumer Behavior at Auctions 11-27Seller Profits: Arrival Rate, Auction Length, and Number of Units 11-27

Auction Prices: Are They the Lowest? 11-27Consumer Trust in Auctions 11-29

When Auction Markets Fail: Fraud and Abuse in Auctions 11-29

Insight on Society: Swoopo: Online Auction or Game of Chance? 11-30

11.3 E-commerce Portals 11-32The Growth and Evolution of Portals 11-34Types of Portals: General Purpose and Vertical Market 11-34

Insight on Business: The Transformation of AOL 11-35

Portal Business Models 11-40

11.4 Case Study: eBay Fine-Tunes Its Strategy 11-42

11.5 Review 11-45

Key Concepts 11-45Projects 11-50Questions 11-51Web Site Resources 11-51

B2B E-COMMERCE: SUPPLY CHAIN MANAGEMENT AND COLLABORATIVE COMMERCE 12-1

Learning Objectives

Volkswagen Builds Its B2B Net Marketplace • 12-1

12.1 BIB E-commerce and Supply Chain Management 12-4

Defining and Measuring the Growth of B2B Commerce 12-5

The Evolution of B2B Commerce 12-5The Growth of B2B E-commerce 2009-2013 12-5

Industry Forecasts 12-5Potential Benefits of B2B E-commerce 12-8The Procurement Process and the Supply Chain 12-9

Types of Procurement 12-10The Role of Existing Legacy Computer Systems 12-11

Trends in Supply Chain Management and Collaborative Commerce 12-12Supply Chain Simplification 12-13

Electronic Data Interchange (EDI) 12-13Supply Chain Management Systems 12-16

Collaborative Commerce 12-17

Insight on Technology: RFID Autoidentification: Making Your Supply

Chain Visible 12-18

Main Types of Internet-based B2B Commerce 12-21

12.2 Net Marketplaces 12-21

The Variety and Characteristics of Net Marketplaces 12-22

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

Types of Net Marketplaces 12-22

E-distributors 12-24

E-procurement 12-25

Exchanges 12-26

Industry Consortia 12-28

The Long-Term Dynamics of Net Marketplaces 12-31

12.3 Private Industrial Networks 12-32

Insight on Society: Are Net Marketplaces Anti-competitive Cartels? 12-33

What Are Private Industrial Networks? 12-34

Characteristics of Private Industrial Networks 12-36

Insight on Business: Wal-Mart Develops a Private Industrial Network 12-37

Private Industrial Networks and Collaborative Commerce 12-38Implementation Barriers 12-40Industry-Wide Private Industrial Networks 12-40The Long-Term Dynamics of Private Industrial Networks 12-42

12.4 Case Study: Elemica: Cooperation, Collaboration, and Community12-43

12.5 Review 12-48

Key Concepts 12-48

Projects 12-52

Questions 12-53


References R-l

Index I-l'

Credits C-l

Documents

608075868