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MIS 6453 – Spring 2006
Electronic Commerce
Selling on the Web
Instructor: John Seydel, Ph.D.
Student Objectives
Compare an contrast LANs/WANs, the Internet,
intranets, and extranets
Discuss ecommerce connectivity options
Summarize the basic ecommerce revenue
models
Discuss why business models evolve
Understand revenue strategy issues facing
ecommerce businesses
Address what it takes to create an effective Web
presence
Summarize web design principles
Some Connectivity Issues
Types of networks
Connection options
Internet2
Intranets and Extranets
Intranet (not just a LAN): Interconnected
network that does not extend beyond the
organization that created it; uses TCP/IP
Extranet (not just a WAN):
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Intranet extended to include entities outside the
boundaries of an organization
Connects companies with suppliers, business
partners, or other authorized users
Public and Private Networks
Public network: Any computer network
or telecommunications network
available to the public
Private network: A private, leased-line
connection between two companies
that physically connects their intranets
Leased line: Permanent telephone
connection between two points
Virtual Private Network (VPN)
Extranet that uses public networks and their
protocols
IP tunneling is uses; effectively creates a
private passageway through the public
Internet
Encapsulation is involved; process used by
VPN software
VPN software: must be installed on the
computers at both ends of the transmission;
special encryption involved
VPN Architecture Example
Internet Connection Concepts
Bandwidth: the primary criterion
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Amount of data that can travel through a communication line per
unit of time
Net bandwidth is what counts (actual speed that information
travels)
Symmetric connections
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Provide the same bandwidth in both directions (upload/download)
Asymmetric connections provide different bandwidths for each
direction
Options:
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Voice-grade
Broadband (data-quality)
Leased lines
Wireless
Voice-Grade Telephone
Connections
POTS, or plain old telephone service
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Uses existing telephone lines and an analog
MoDem
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Provides bandwidth between 28 and 56 Kbps
Digital Subscriber Line (DSL);
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Connection methods do not use a modem
Instead use Integrated Services Digital Network
(ISDN) switching
Bandwidths between 128 Kbps and 256 Kbps
Broadband Connections
Higher quality; developed for transmitting data
Operate at speeds of greater than 200 Kbps
Asymmetric digital subscriber (ADSL)
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100 to 640 Kbps upstream
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1.5 to 9 Mbps downstream
Cable modems: transmission speeds between
300 Kbps and 1 Mbps
DSL: private line with no competing traffic
Leased-Line Connections
Non-shared connections between organizations
and ISPs
Include:
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DS0 (carries only one digital signal); typically 56
Kbps telephone line
T1 line (also called a DS1); carries 24 DS0 lines and
operates at 1.544 Mbps
Fractional T1; provides service speeds of 128 Kbps
and upward in 128-Kbps increments
T3 service (also called DS3); offers 44.736 Mbps
Wireless Connections
Satellite
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For rural areas
May work in conjunction with MoDem for uploads
Bluetooth
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Designed for personal use over short distances (< 9 meters)
Low power / low-bandwidth, with speeds of up to 722 Kbps
Networks are called personal area networks (PANs) or piconets
Devices can discover one another and exchange info automatically
WiFi (wireless ethernet using 802.11 protocols)
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Most common wireless connection technology for use on LANs
Wireless access point (WAP): device required to transmit network packets
between WiFi-equipped computers and other devices
Bandwidths vary (11 and 45 Mbps and up); range of about 300 ft
Devices are capable of roaming
Fixed point; use repeaters from ISP to customers
Cellular networks: here’s the big potential for growth
Some Comparisons (Kbps)
POTS – phone modem (56)
Cable modem – sharing channel (300/10,000)
T1 – leased line (1,544)
DSL – private line (640/9,000)
T3 – leased line (44,700)
T3 with ATM – asynchronous transfer (622,000)
Internet2 – testbed for tech (up to 10,000,000)
LAN/WAN connections (e.g., ASU)
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Wired (1,000,000)
Wireless
 802.11b (11,000)
 802.11g (45,000)
Satellite – mostly for rural access (150/500)
Note: we must consider the digital divide
Yet to Come . . .
Business models for the Web
Web presence concepts
Website critiques
eCommerce Revenue Models
Web catalog
Digital content
Advertising supported
Advertising/subsubcription mix
Fee-for-transaction
Fee-for-service
The Web Catalog Model
Evolved from the mail-order model
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B2C
B2B (often as extranets)
Extensively used for:
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Consumer electronics
Entertainment (books, music, videos)
Luxury goods (high value:weight ratio)
Clothing retail and discount
Gifts and flowers
General discount
Most typically supplement traditional businesses
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Consider Walmart.com
Think also about websites chosen for critique
The Digital Content Model
Ideal means of exchange for digitized
content:
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Movies and recordings
Photographs
Published documents (online library)
Newspapers, magazines, . . .
Other . . . ?
Limited, of course, to customers with
broadband
Again, often used to supplement conventional
business models
The Advertising Supported Model
Examples include
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Portals (MSN, AccessPoint.AState, Yahoo, . . . )
Newspapers
Classified ads (targeted)
Originally thought to be “goldmines”!
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The source of many .com failures
Most survivors have evolved
Challenges
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How to measure the value of a visitor
What to consider an exposure (click-through?)
Critical mass of visitors
The Advertising/Subscription Mixed
Model
Based upon the newspaper/TV model
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Primary costs paid by advertising
Supporting revenues from subscribers
Allow nonsubscribers access to limited content
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Abstracts
Headlines
Crossword puzzles
Other . . . ?
Weighting of revenues varies
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WSJ: more subscription
Arkansas Democrat-Gazette: more advertising
The Fee-for-Transaction Model
Used extensively by
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Travel agents
Auto sales services
Stockbrokers
Insurance agents
Event booking
Mortgage loan brokers
Online banking
Represent distintermediation
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Removing the “middleman”
Actually, a common phenomenon as organizations move
online
Not a bad thing, necessarily, but can lead to cannibalization
Fee-for-Service
Essentially a “pay-per-view” concept
Some examples
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Gaming
 Video games (a major growth industry)
 Gambling
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Entertainment (concerts, films, etc.)
Consulting services
 Medical
 Legal
 Investment
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And guess what else . . . ?
 Extremely effective
 Considered a social malignancy, however
 Probably not a good idea to study further
eCommerce Revenue Models are
Evolving
Remember the ecommerce is in its infancy; much
change continues to take place in how business is
done on the Web
Some common transitions we’re seeing
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Subscription sites toward ad-supported
Ad-supported toward ad/subscription mixed
Ad-supported toward fee-for-service
Ad-supported toward subscription
(Note the general trend away from advertising!)
The process has in numerous cases involved series of
multiple transitions (e.g., Britannica)
Some Revenue Strategy Issues
Channel conflict / cannibalization
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Recall the 4th “P” in the marketing mix
Only so much demand exists, so using multiple channels can
be inefficient and lead to loss of customer goodwill
Consider ASU’s means of distribution:
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F2F
Online
CVN
Correspondence
Strategic alliances (look at the Amazon site)
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More important than ever
The Web is just too big for someone to have much chance of
making it alone
So many opportunities exist to augment
capacity/offerings/etc. with online and conventional affiliates
Creating an Effective Online
Presence
Identify goals and make them consistent with firm’s
brand image
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Attracting visitors to the website
Making the site interesting enough that visitors stay and explore
Convincing visitors to follow the site’s links to obtain information
Creating an impression consistent with the organization’s
desired image
Building a trusting relationship with visitors
Reinforcing positive images that the visitor might already have
about the organization
Encouraging visitors to return to the site
Varies according to organization type
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Profit-driven
Not-for-profit
Profit-Driven Organizations
Should provide links to
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Detailed information about each product model
A store locator page if applicable
Information about the company and services such
as financing offered
Should offer a strong sense of corporate
presence
Needs to make it easy for customers to
communicate with the organization
Should be attractive, yet professional
Not-for-Profit Organizations
Key goal for the websites is typically
information dissemination
Must also provide and facilitate two-way
communications
Web Site Usability: Consider Site
Visitor Motivations
Learning about products or services that the company
offers
Buying products or services that the company offers
Obtaining information about warranty, service, or repair
policies for products they purchased
Obtaining general information about the company or
organization
Obtaining financial information for making an investment
or credit granting decision
Identifying the people who manage the company or
organization
Obtaining contact information for a person or department
in the organization
Web Site Usability: Accessibility
One of the best ways to accommodate a broad range of
visitor needs is to build flexibility into the Web site’s
interface
Good site design lets visitors choose among information
attributes
Web sites can offer visitors multiple information formats
by including links to files in those formats
Goals that should be met when constructing Web sites
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Offer easily accessible facts about the organization
Allow visitors to experience the site in different ways and at
different levels
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Sustain visitor attention and encourage return visits
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Offer easily accessible information
Trust and Loyalty
True with any business:
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A 5 percent increase in customer loyalty can yield profit
increases between 25% and 80%
Repetition of satisfactory service can build customer loyalty
Especially important in ecommerce
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Customer service is a problem for many ecommerce sites
It’s much harder to build trust when you can’t see the
person with whom you’re doing business
This is aided by making websites customer-centric
Let’s Look at Some of the Sites
General thoughts
We’ll try to identify some criteria for
judging sites
Customer-Centric Website Design
Puts the customer at the center of all site designs
Guidelines
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Design the site around how visitors will navigate the links
Allow visitors to access information quickly
Avoid using inflated marketing statements
Avoid using business jargon and terms that visitors might
not understand
Be consistent in use of design features and colors
Make sure navigation controls are clearly labeled
Test text visibility on smaller monitors
Conduct usability tests
Involves connecting with customers
Connecting With Customers
Personal contact model:
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Firm’s employees individually search for, qualify, and communicate
with potential customers
Prospecting – personal contact approach to identifying and
reaching customers
Mass media approach: firms prepare advertising and
promotional materials about the firm and its products
Addressable media:
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Advertising efforts directed to a known addressee
Also called mass media
One-to-many communication model: communication flows from
one advertiser to many potential buyers
One-to-one communication model: both buyer and seller
participate in information exchange
Design Guidelines (Specifics)
Realize comparisons to print media
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Similarities
Differences
Layout, content, & navigation
Fonts & colors
Image considerations
Print versus Web Delivery
Similarity: good layout is good layout
Differences:
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Hyperlink ===> nonlinear capability (easy to get
lost in maze)
Can’t see whole page at once
Readers scan first; take longer to read
Content appearance is a function of
monitor/browser settings
Use sans-serif for body and serif for headings
Animation (two-edged sword!)
Layout, Content, & Navigation
Short paragraphs
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10 lines or less
Use bullets (customized! ), tables, & headings
Margins
Pages <= 3 screens
Don’t underline!
Navigation system (each page)
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Navigation bar
Top, bottom, next, . . .
Use frames (or don’t use frames!)
Fonts & Colors
Color info: the-light.com/colclick.html
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Hexadecimal codes
“Browser-safe” colors
Fundamental issue: contrast
Setting: best if defined within <style>
tags
Safe fonts: Arial & Times
Don’t get carried away with fonts (<=3)
Images
Use sparingly
Arrange to achieve balance with text and
white space
Keep small (page should take no more than
10 seconds to load at 28kbs)
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Reduce size
Use thumbnails
Add warnings
Maintain contrasts when using background
images
Summary of Objectives
Compare an contrast LANs/WANs, the Internet,
intranets, and extranets
Discuss ecommerce connectivity options
Summarize the basic ecommerce revenue
models
Discuss why business models evolve
Understand revenue strategy issues facing
ecommerce businesses
Address what it takes to create an effective Web
presence
Summarize web design principles