Chapter 10 - E-Commerce

What is E-Commerce

What is electronic commerce (e-commerce)?

°    A financial business transaction that occurs over an electronic network

°    Sometimes called e-business

°    Anyone with access to a computer, an Internet connection, and a
means to pay for
purchased goods or
services can
participate in
e-commerce

How are e-commerce transactions conducted?

°    Primarily through desktop computers

°    Wirelessly using handheld Web-enabled devices

What is a bricks-and-mortar business?

°    A company  that has a physical location

°    Also called a brick-and-mortar business

What is a clicks-and-mortar business?

°    A company that has a bricks-and-mortar location as well as an online presence

°    Some companies
only have an
online presence
without physical
locations

How has e-commerce grown?

°    Forrester Research, a leading independent research firm, estimates that by 2004 worldwide e-commerce will exceed $6.7 trillion

What were early stages in the development of e-commerce?

 

E-Commerce Business Models

What is business-to-consumer (B-to-C or B2C) e-commerce?

°    Consists of the sale of products or services from a business to the general public or end user

°    The seller is the business

°    The buyer is the consumer (public)

°    Products can be physical objects or intangible items such as software or services

How might a B2C e-commerce business operate?

What is disintermediation?

°    Businesses sell products directly to consumers without using traditional retail channels

°    Enables companies to maximize benefits by eliminating the middleman

What is consumer-to-consumer (C-to-C or C2C) e-commerce?

°     Consists of individuals using the Internet to sell products and services directly to other individuals

°     An online auction is similar to negotiating, in which one consumer auctions goods to other consumers

°     eBay is a popular online auction

What is peer-to-peer (P2P) e-commerce?

°    A form of e-commerce that enables users with the same networking software to connect to each other’s hard disks and exchange  files directly

°    A consumer
can pay another
consumer to copy
a file

 

Company on the Cutting Edge

°    World’s largest online trading community

°    More than 60 million objects offered for sale since the company’s inception

°    Founded by Pierre Omidyar on Labor Day, 1995

 

E-Commerce Business Models

What is business-to-business (B-to-B or B2B) e-commerce?

°    The sale and exchange of products and service between businesses

°    The major type of e-commerce interaction

°    Many businesses engage in both B2B and B2C

What is a supply chain?

°    The interrelated network of facilities and distribution methods that

•    obtains materials

•    transforms materials into finished products

•    delivers the finished products to customers

What are four basic types of B2B e-commerce sites?

What is vertical B2B e-commerce?

°    An
e-commerce site that specializes in a particular industry

 

What is business-to-employee (B-to-E or B2E) e-commerce?

°    The use of intranet technology to handle activities that  take place within a business

°    Also called intrabusiness
e-commerce

°    Increases profits by reducing expenses within a company

What are some advantages of e-commerce?

•      Global market 24 hours per day

•      Businesses have access to 360 million people with Internet access

•      Customers can conduct price comparisons easily

•      Feedback can be immediate

•      Changing information can be available quickly

•      FAQ (frequently asked questions) pages can provide easy access to customer support

•      Ability to gather customer information, analyze it, and react

•      New and traditional approaches to generating revenue

•      Manufacturers can buy and sell directly, avoiding the cost of the middleman

•      Distribution costs for information reduced or eliminated

•      Options to create a paperless environment

 

E-Commerce Revenue Streams

What is a revenue stream?

°    The method a business uses to generate income

°    A single Web site may use more than one method of generating revenue

How is revenue generated with direct sales?

°    You purchase a product or service

°    The business arranges delivery

°    Sales are made to both consumers and businesses

What is electronic software distribution (ESD)?

°    Sale of digital products such as software, music, movies, books, and photographs

°    A purchase entitles you to download one copy of an item

How is revenue generated with software rental?

°   Application service providers (ASPs) charge a rental fee before you can access and use Web application software

°   Rental fee arrangements
vary by vendor
and application

°   Microsoft’s Web
applications are
called .NET

What is advertisement revenue?

°     Some Web sites contain advertisements

°     Sites earn commissions from the advertising sponsors when visitors make purchases as a result of clicking the advertisement

 

Technology Trailblazer

Michael Dell

°    Began building and selling computers at 18 while in college

°    In first year of
business,
sales reached $6
million

°    In 1992, Dell became
the youngest CEO
of a company named
to the Fortune 500 list

°    Successful in creating a company that bypassed the middleman to sell custom-built personal computers directly to consumers

 

E-Commerce Revenue Streams

How is revenue generated with an informational Web site?

°    Visitors are required to subscribe to a service

°    Usually provide some information at no cost, but require a subscription to access the content of the entire site

What is a Web hosting service?

°    Assists people and companies in hosting their Web site

°    Provides the hardware, software, and communications required for a Web server

°    Some provide services that include managing payments and tracking inventory

What is an online storage service?

°    Provides data storage to computer users

°    Often used to store backup copies of data and information

How is revenue generated with Internet access?

°    Some sites provide Internet access

°    Many have become portals offering many other services

 

The E-Retailing Market Sector

What is E-retail?

°    Occurs when retailers use the Web to sell their products and services

°    Also called e-tail

 

Company on the Cutting Edge

°    Founded by Jeff Bezos in 1995

°    Originally a book store

°    Now expanded to sell a variety  of products

°    Has become the Internet's top retailer with more than $600 million in annual sales

 

The E-Retailing Market Sector

What is an electronic storefront?

°    The Web site where an e-retailer displays its products

°    Also called an online catalog

°    Contains descriptions, graphics, and sometimes product reviews

What is a shopping cart?

°    A software component on the Web that allows the customer to collect purchases

°    Items can be added, deleted, or saved for a future visit

What is a secure checkout?

°    Web site where the customer enters personal and financial data

°    The transaction and financial data automatically are verified at a banking Web site

 

Technology Trailblazers

Dieter Seitzer and Heinz Gerhäuser

°    Researchers at the Applied Electronics division at the Fraunhoufer Institute in Germany

°    Began developing the MP3 format in 1987

°    A method to compress audio
files into a digitized
format so they
transfer quickly
from a Web page
to a computer

 

Other E-Commerce Market Sectors on the Web

What are other e-commerce market sectors on the Web?

°    Many market sectors have taken advantage of business opportunities on the Web

What is online banking?

°    Allows you to pay bills from your computer

°    Transfer money electronically from your account to a payee’s account

°    Download monthly banking transactions

What is online trading?

°     You can invest in stocks, options, bonds, treasuries, CDs, money markets, annuities, and mutual funds without using a broker

°     Transaction fee usually less than when trading through a broker

What entertainment and media are available on the Web?

°    Music, videos, news, sporting events, and 3-D multiplayer games

°    News and live radio broadcasting

°    Streaming audio

What travel services are available on the Web?

°    Driving directions and maps

°    Airline, hotel, and car reservations

What is a shopping bot?

°    A Web site that searches the Internet for the best price on a product or service in which you are interested

°    Also called a shopbot

What health services are available on the Web?

°     Provide up-to-date medical, fitness, nutrition, or exercise information

°     Some maintain databases of doctors and dentists

°     Pharmacies allow customers to refill prescriptions and ask questions

What are other business services?

 

Creating an Online Store

What decisions should be made to create an online store?

°     Building a storefront

°     Managing payment

°     Managing
product delivery

°     Designing a site
that attracts customers and keeps them returning

°     Managing the site

°     Promoting the site

What are the options available for building a storefront?

°    E-retailers must select software and hardware to build a storefront

°    Can develop and maintain the site in house

°    Can outsource all or part of the system

°    Often e-retailers hire an expert in Web design and development to assist in implementing a site

What is e-commerce software?

°    Allows a merchant to set up a storefront with a product database, combined with a shopping cart

°    Should provide a secure environment to process order transactions

°    Some include statistical tracking features and capability of integrating with a business' other systems

What is a Web host?

°     An outside company that provides the hardware, software, and communications required for a  Web server

°     Charges a monthly fee or a percentage of the sales income

°     Web server also called an e-commerce server or commerce server

What is a secure server?

°    Prevents access to the system by unauthorized users

°    Often used for transaction services where credit card information is entered

What is a Web site development service?

°    Assists in the process of creating a storefront

°    Allows small businesses and individuals to participate in the e-commerce arena with a minimum investment

How can customers pay for products?

What are steps in accepting customer payments using a credit card?

°    Obtain a merchant account

•    Establishes a relationship between the e-retailer and a bank

•    Allows the e-retailer to accept credit card payments

°    Provide a secure order form

•    Used to collect orders and
credit card information from
the customer

°    Use a payment-processing service

•    Provides software to manage
the transaction between the
e-retailer and the bank

What is fulfillment?

°     Managing and storing inventory

°     Packaging and shipping products

°     Maintaining records of all transactions

°     Fulfillment companies

•     outsourcing services that provide warehousing and inventory management, product assembly, order processing, packing, shipping, return processing,and online reporting

•     also called logistics companies

What are the implications of e-retail for delivery services?

°    Traditional delivery services such as Federal Express and UPS will have increased business due to e-retail sales

What factors lead to customer loyalty?

°     Successful sites attract customers and keep them returning to the site

°     Te best storefronts plan for convenience, are efficient, and easy to use

°     Customers who must wait more than eight seconds for a page to download usually will click to another site

What is electronic Customer Relationship Management (eCRM)?

°     Used to provide service after a sale

°     Combines a personalized touch and customized service to customers

°     Uses automatic e-mail to confirm orders, display a list of frequently asked questions (FAQ), and send surveys for feedback

What is e-mail publishing?

°    The process of sending newsletters via e-mail messages to a large group of people with similar interests

°    Can be used as
follow up after
a sale to
generate return
business and
recommendations

What is site management?

°    Monitoring Web site use

°    Collecting data and using it to improve the Web site

What is a domain name?

°    A unique registered name that identifies and locates a Web site

°    Customer types a domain name into a Web browser to display a Web page

°    Should correspond to the
business name or the
function of the business

°    Domain name is registered
with various search engines

•    Ensures the site will appear
in the hit lists for searches
on related keywords

What is a submission service?

°    A Web-based business in which you typically pay a fee to register with hundreds of search engines

What is online advertising?

°    Often called banner ads

°    Advertisements are linked to the advertiser's Web site

°    Advertiser usually pays based on the number of click-throughs

•    Occurs when a visitor clicks an advertisement to move to the advertiser’s Web page

What is spam?

°    Unsolicited e-mail messages or newsgroup postings

°    Internet junk mail

°    Usually generates antagonism instead of sales

 

Summary of E-Commerce:
A Revolution in the Way We Do Business

°   What is e-commerce?

°   E-commerce business models

°   E-commerce revenue streams

°   The e-retailing market sector

°   Other e-commerce market sectors on the Web

°   Creating an online store

Chapter 10 Complete