INF101 – Business

Information Systems

Week 7 - Electronic and Mobile

Commerce (Chapter 7)

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Objectives
After completing this chapter, you will be able to:
Describe the current status of various forms of e-commerce,
including B2B, C2C, and e-government
Outline a multistage purchasing model that describes how e-
commerce works
Define m-commerce and identify some of its unique challenges
Identify several e-commerce and m-commerce applications

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Objectives
After completing this chapter, you will be able to (cont’d):
Identify the many benefits and challenges associated with the
continued growth of e-commerce and m-commerce
Outline the key components of a successful e-commerce and m-
commerce strategy
Identify the key components of technology infrastructure that
must be in place for e-commerce and m-commerce to work
Discuss the key features of the electronic payment systems
needed to support e-/m-commerce

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 An Introduction to Electronic Computers

• Electronic commerce: conducting business activities electronically over

computer networks
• Business activities that are strong candidates for conversion to e-commerce are:
• Paper based
• Time-consuming
• Inconvenient for customers

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 Business-to-Business E-Commerce

• B2B e-commerce is a subset of e-commerce

• All the participants are organizations
• Useful tool for connecting business partners in a virtual supply chain to cut
resupply times and reduce costs
• Many organizations use both:
• Buy-side e-commerce to purchase goods and services from suppliers
• Sell-side e-commerce to sell products to their customers

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 Business-to-Consumer E-Commerce

• B2C e-commerce
• Customers deal directly with an organization and avoid intermediaries; this is called
disintermediation
• Reasons for steady growth
• Cheaper goods and services via the Web
• Online shoppers can design a personalized product
• The use of social media networks to promote products and reach customers

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Business-to-Consumer E-Commerce

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 Consumer-to-Consumer E-Commerce

• C2C e-commerce
• Involves electronic transactions between consumers are facilitated by a third party
• Popular sites include:
• eBay, Bidz.com, Craigslist, eBid, Etsy, Fiverr, Ibidfree, Kijiji, Ubid, and Taobao
• Companies and individuals involved in C2C must be careful
• Sales must not violate the rules of various county, state, and country legal jurisdictions

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Consumer-to-Consumer E-Commerce

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 E-Government

• E-government is the use of information and communications technology to:

• Simplify the sharing of information
• Speed formerly paper-based processes
• Improve the relationship between citizens and government
• Forms of e-Government:
• Government-to-consumer (G2C)
• Government-to-business (G2B)
• Government-to-government (G2G)

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 Introduction to Mobile Commerce

• Mobile commerce (m-commerce) relies on the use of wireless devices

• The Internet Corporation for Assigned Names and Numbers (ICANN):
• Created a .mobi domain to help attract mobile users to the Web

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 Mobile Commerce in Perspective

• The market for m-commerce in North America

• Maturing much later than in Western Europe and Japan
• Worldwide, m-commerce accounted for 35 percent of all retail e-commerce
sales in the fourth quarter of 2015
• The number of mobile Web sites worldwide is growing rapidly
• Because of advances in wireless broadband technologies

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M-Commerce Web Sites

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 Advantages of Electronic and Mobile Commerce

• Reach new customers

• Reduce the cost of doing business
• Speed the flow of goods and information
• Increase the accuracy of order-processing
• Improve the level of customer service

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 E-Commerce Challenges

• Dealing with Consumer Privacy Concerns

• About one-third of all adult Internet users will not buy online due to privacy concerns
• Overcoming Consumers’ Lack of Trust
• In online sellers
• Overcoming Global Issues
• Cultural, language, time and distance, infrastructure, currency, and legal challenges

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 Electronic and Mobile Commerce Applications

• Areas in which applications are used

• Retail and wholesale – Manufacturing
• Marketing – Advertising
• Bartering – Retargeting
• Price comparison – Couponing
• Investment and finance – Banking

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 Wholesale e-Commerce

• A key sector of wholesale e-commerce

• Spending on manufacturing, repair, and operations (MRO) goods and services
• MRO purchases often approach 40 percent of a manufacturing company’s total
revenues
• E-commerce software for plant operations provides powerful comparative
searching capabilities to enable managers to identify functionality equivalent
items

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 Manufacturing

• Electronic exchange: an electronic forum where manufacturers, suppliers, and

competitors buy and sell goods, trade market information, and run back-office
operations
• Private exchanges are owned and operated by a single company
• Consortium-operated exchanges are run by a group of traditionally competing
companies with common procurement needs
• Independent exchanges are open to any set of buyers and sellers within a given
market

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Manufacturing

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 Marketing

• Market segmentation: the identification of specific markets to target them with

advertising messages
• Divides the pool of potential customers into subgroups usually defined in terms of
demographic characteristics
• eXelate (a subsidiary of Nielson)
• Provides data as a service solution that customers can use to access a database of
more than 250 million business records

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 Advertising

• Methods of buying mobile ad impressions

• Cost per thousand (CPM)
• Cost per click (CPC)
• Cost per action (CPA)
• Three main measures of success
• Number of users reached
• Click through rate (CTR)
• Number of actions users take

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Advertising

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 Bartering

• With economic downturn, many people and businesses have turned to

bartering to gain goods and services
• A number of Web sites have been created to support bartering

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 Bartering

• Retargeting
• An average of 74 percent of all online shopping carts are abandoned
• Retargeting is used by advertisers to recapture those shoppers by using targeted and
personalized ads to direct shoppers back to a retailer’s site
• Price comparison
• Mobile phone apps enable shoppers to compare prices and products online
• In some cases, shopper can simply scan an item’s barcode or snap a photo of the item

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 Bartering

• Couponing
• In 2015, over $515 billion in consumer incentives were distributed in North America
• Less than one percent were redeemed
• Shoppers can subscribe to mobile coupon aggregators
• Mobile coupon redemption rate is expected to increase due to coupon integration in
social networks

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Bartering

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 Investment and Finance

• The Internet has revolutionized the world of investment and finance

• The brokerage business adapted to the Internet faster than any other arm of
finance

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 Banking

• Online banking customers can:

• Check balances of their savings, checking, and loan accounts
• Transfer money among accounts
• Pay their bills
• Many banks enable customers to perform online banking activities via mobile
phone

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 Online Personalized Shopping

• An increasing number of Web sites offer personalized consultations for

shoppers
• Key to the success of Web sites such as MyTheresa and Net-a-Porter
• A philosophy of high customer service and strong, personal client relationships

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 Strategies for Successful E-Commerce and M-Commerce

• Companies must develop effective Web sites that include the following
characteristics:
• Easy to use
• Accomplish the goals of the company
• Safe and secure
• Affordable to set up and maintain

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 Defining an Effective E-Commerce Model and Strategy

• First major challenge for a successful

e-commerce site is to decide on the effective e-commerce model it wants to
use
• Three components of a successful model
• Community
• Content
• Commerce

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Defining an Effective E-Commerce Model and Strategy

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 Defining the Functions of a Web Site

• Decide which tasks the site must accomplish

• Create an attractive presence for the company
• Meet the needs of its visitors
• Example: obtaining information about the organization and its products
• Redefine the site’s basic business model as needed to capture new
opportunities

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 Establishing a Web Site

• Web site hosting companies:

• Allow you to set up a Web page and conduct e-commerce within a matter of days
• Have little up-front cost
• Storefront broker: a company that acts as an intermediary between your Web
site and online merchants who have the products and retail expertise

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 Building Traffic to Your Web Site

• Measures to attract customers

• Obtain and register a domain name
• Make your site search-engine friendly
• Include a meta tag in your site’s home page
• Use Web site traffic data analysis software
• Provide quality, keyword-rich content
• Add new content to the Web site on a regular basis
• Acquire links to your site from other Web sites

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 Maintaining and Improving Your Web Site

• Personalization: the process of tailoring Web pages to specifically target

individual consumers
• Two types of personalization techniques to capture data and build customer
profiles:
• Implicit personalization captures data from customer Web sessions
• Explicit personalization captures user-provided information

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 Technology Infrastructure Required to Support E-
Commerce and M-Commerce

• Poor Web site performance drives consumers to abandon some e-commerce

sites in favor of those with better, more reliable performance

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 Hardware

• The Web server’s required storage capacity and computing power depend on:
• The software that must run on the server
• Volume of e-commerce transactions that must be processed
• Successful e-commerce solutions are designed to be highly scalable
• Can be upgraded to meet unexpected user traffic

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 Hardware

• Key Web site performance measures

• Response time
• Transaction success rate
• System availability
• Key decision for a new e-commerce company
• Choosing whether to host its own Web site or to enlist a third-party Web service
provider

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Hardware

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 Web Server Software

• Fundamental services needed in Web server software

• Security and identification
• Retrieving and sending Web pages
• Web site tracking
• Web site development
• Web page development

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 E-Commerce Software

• Five core tasks that must be supported by e-commerce software

• Catalog management
• Product configuration
• Shopping cart facilities
• E-commerce transaction processing
• Web traffic data analysis

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 Mobile Commerce Hardware and Software

• Limitations of handheld devices that complicate their use:

• Screens are small
• Input capabilities are limited to a few buttons
• Less processing power and less bandwidth than desktop or laptop computers
• Operate on limited-life batteries
• For these reasons
• Web developers must often rewrite Web applications so users with mobile devices
can access them

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 Electric Payment Systems

• Authentication technologies are used by many organizations to confirm the

identity of a user requesting access to information or assets
• Digital certificate: an attachment to an e-mail message or data embedded in a
Web site that verifies the identity of a sender or Web site
• Certificate authority (CA): a trusted third-party organization or company that
issues digital certificates

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 Electric Payment Systems

• Various measures are being implemented to increase the security associated

with the use of credit cards
• Address Verification System is a check built into the payment authorization request
- Compares the address on file with the address provided by the cardholder
• Card Verification Number
- A check of the additional digits typically printed on the back of the card

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 Electric Payment Systems

• Transport Layer Security (TLS) is a communications protocol used to secure

sensitive data during e-commerce
• Electronic cash: an amount of money that is computerized, stored, and used as
cash for e-commerce transactions
• Credit, charge, debit, and smart cards are payment systems used for e-
commerce

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Electric Payment Systems

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 Electric Payment Systems

• A p-card (procurement card or purchasing card) is a credit card used to

streamline the traditional purchase order and invoice payment processes
• Typically issued to selected employees who must follow company rules and guidelines
• Spending activity is reviewed periodically by someone independent of the cardholder

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 Summary

• Electronic and mobile commerce are evolving, providing new ways of

conducting business that present both potential benefits and problems
• E-commerce and m-commerce can be used in many innovative ways to improve
the operations of an organization
• E-commerce and m-commerce offer many advantages yet raise many
challenges
• Organizations must define and execute an effective strategy to be successful in
e-commerce and m-commerce
• E-commerce and m-commerce require the careful planning and integration of a
number of technology infrastructure components

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