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