Download E-Commerce

Understanding Computers
Chapter 11:
E-Commerce
Learning Objectives
• Explain what e-commerce is and describe some of the
benefits and risks involved with implementing ecommerce.
• 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
• 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 communications technology
– Has existed for years via private networks
(electronic funds transfers, etc.)
– Now typically performed via the Internet
• 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 is also on
the rise
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Advantages of E-Commerce
• For businesses:
– Reduced costs
• Dot-coms are less expensive than brick-andmortar stores because there is no physical
storefront to maintain
– Increased customer satisfaction
• If shopping experience is convenient (open all
the time, no driving, etc.)
– Broader customer base (less geographical
restrictions)
– 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
• For 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
– Customized products
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Advantages of E-Commerce
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Disadvantages of E-Commerce
• For businesses:
– Pressure to be always open, site always working
– Lost business due to some customer hesitation to
shop online
– Risk of fraudulent credit card transactions
– Ease of entry for competitors
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Disadvantages of E-Commerce
• For customers:
– Fraud and other potential security problems
• Buyer protection programs and using
credit cards can help
– Not being able to see or touch the goods
• 3D online stores
may help
– Possible expense
of returning
merchandise
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Types of E-Commerce Web Sites
• Manufacturer and e-tailer Web sites: Sell products
and services directly to the end user
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Types of E-Commerce Web Sites
• Brokerage sites: Bring buyers and sellers together and
earn revenue by charging commissions on sales
made via the site
– Online auction sites: Allow individuals to 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
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Types of E-Commerce Web Sites
– 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: The policies, operations, and
technologies used by a business in order to generate
revenue
E-commerce business model: Description of the
types of buyers and sellers in an e-commerce
company, such as 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
(consumer-to-government - C2G)
• 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 can be selected
– Some businesses add
additional types later on
– Some business models
are patented
• 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
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Implementing Web-Based
E-Commerce
• Step 3: Develop procedures for handling electronic
financial transactions
– Need to determine which types will be accepted
– Most sites accept credit cards; debit cards too
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Implementing Web-Based
E-Commerce
– Customers can use virtual account numbers,
and prepaid credit cards to limit risk and liability
– Digital cash options include:
• Electronic checks: Funds come out of
customer’s checking account
• Online payment accounts (such as PayPal):
Funds can be transferred to others from the
customer’s account
– Can transfer funds ahead of time or have
money transferred from a credit card or bank
account as needed
– Some transactions require a fee
– Can add or remove funds as needed
• Electronic gift certificates, gift cards, and
coupons: Appropriate codes are entered into the
Web site at time of purchase
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Implementing Web-Based
E-Commerce
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Implementing Web-Based
E-Commerce
– Smart cards: Can hold a cash value
• For Web purchases, typically read by readers
attached to a PC
• Many credit cards and campus IDs are smart
cards
– Many can be used with NFC technology
• Smart card readers
may become common
on vending machines,
in taxis, and other
public
locations
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Implementing Web-Based ECommerce
– Digital wallet: Electronic file that holds information
to speed online transactions
• Can hold credit card numbers, passwords,
address, etc. to be used in e-commerce
transactions
• Third-party digital wallets: Standalone programs
that automatically or manually transfer
necessary information 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
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Implementing Web-Based
E-Commerce
• Special B2B considerations because of the volume of
B2B transactions
– B2B transaction processing
• Allows merchants to customize their payment
processing plans to fit their needs
– Credit card, debit card, check, and digital
cash settlement
– Credit checking
– Expense tracking
– Electronic billing
– Payment settlement compatible with other
widely used systems
– Consolidation and reconciliation services
– Escrow services
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Implementing Web-Based
E-Commerce
– Order-fulfillment companies
• Take care of physically filling orders for a
business including:
– Order management
– Distribution
– CRM services
– Marketing tools
– E-fulfillment strategic planning
– Integration with existing systems
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Implementing Web-Based
E-Commerce
• Step 4: Design and develop an effective Web site
– Sites should be carefully designed, developed, and
tested
– Sites should use adequate security measures
– Should be attractive, fast loading, and easy to use
– Make checkout process easy to use to reduce
shopping cart abandonment
– Consider adding statements to encourage trust
– E-commerce features can be created 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
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Implementing Web-Based
E-Commerce
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Implementing Web-Based
E-Commerce
• Step 5: Implement appropriate sales and marketing
strategies
– Include adequate customer service features
– Collect taxes from customers only 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
• Promote your Web site sufficiently
– Use appropriate meta tags (description, keywords)
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Implementing Web-Based
E-Commerce
– Submit your site to search sites
– Consider paying for sponsored listings on search
sites
– Consider using banner ads
• Use of rich media ads is growing
• Can display sponsor banner ads on site
• Can place banner ads on other sites
• Use of behavioral (targeted) ads is growing
– Update your site regularly and consider adding
incentives for return visits (contests, coupons, etc.)
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Implementing Web-Based
E-Commerce
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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
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