Chapter 14 Electronic Commerce

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Chapter 14Electronic Commerce
Turban, Aronson, and Liang
Decision Support Systems and
Intelligent Systems, Seventh Edition
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Learning Objectives

• Describe the concepts involved in electronic
  commerce.
• Understand auctions and portal mechanisms.
• Know the applications involved in e-commerce.
• Learn about electronic market research, eCRM, and
  online advertising.
• Define collaborative commerce and B2B
  applications.
• Understand e-government activities.
• Describe mobile commerce and pervasive computing.
• Learn e-commerce infrastructure and support
  services.
• Understand the ethical and legal issues involved
  in e-commerce.

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E-commerce Provides Decision Support to Hi-Life
Corp. Vignette

• Convenience store chain needs accurate stock
  count
• Overstocking expensive
• Understocking results in customer dissatisfaction
• Losses due to shrinkage
• Manual counts used data collection sheets
• Expensive, labor intensive
• Solution based on handheld computer
• Counts entered relayed immediately to
  headquarters
• Bar code scanner employed to shorten process,
  minimize errors
• Allows for real time product totals
• Dramatic reduction in labor involved
• Lower inventory levels and quicker response time

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E-commerce

• Process of buying, selling, transferring,
  exchanging products, services, or information
  over computer networks
• Pure versus partial
• Based on degree of digitization
• Product
• Process
• Intermediary
• Pure requires all three components to be fully
  digitized
• Internet versus non-Internet
• Most are Internet based
• May be value-added networks or local area
  networks

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E-commerce Transactions

• Business-to-business (B2B)
• Business-to-consumer (B2C)
• Consumer-to-consumer (C2C)
• Consumer-to-business (C2B)
• Government-to-citizens (G2C)
• Collaborative commerce between partners
• Business to employees
• Intrabusiness/Intraorganizational commerce
• Mobile commerce (M-commerce)

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Scope of E-commerce

• Applications supported by infrastructure
• Hardware
• Software
• Messaging, multimedia, interfaces, business
  services
• Networks
• communications
• Support areas
• People
• Legal and public policy and regulations
• Marketing and advertisements
• Support services ranging from payments to order
  delivery
• Business partnerships like joint ventures,
  e-marketplaces, affiliations

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Advantages

• Advantages
• Expands marketplace globally
• Expands availability of resources
• Shortens marketing-distribution channels
• Decreases expenses
• Reduces inventory
• Aids small businesses in competing
• Enables specialized niches
• Quicker delivery of information
• Enables individuals to work from home
• Facilitates delivery of public services

• Allows for purchase of goods at lowered prices
• Enables customization, personalization
• Decreases costs to customers, while increasing
  their choices
• Allows for 24 hour shopping
• Makes electronic auctions possible
• Enables people to interact in electronic
  communities

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Limitations

• Limitations
• Lack of universal standards
• Insufficient bandwidth
• Software-development tools are still evolving
• Integration difficulties
• Need for special Web servers in addition to
  network servers
• Accessibility expensive
• Unresolved legal issues
• Lack of national and international governmental
  regulations
• Lack of mature methodologies to measure benefits
  and justify
• Customer resistance
• Security questions
• Insufficient number of buyers and sellers for
  profitable e-commerce operations

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DSS and E-commerce

• DSS supports e-commerce
• DSS allows for scheduling and transportation
  optimization
• Match buyers to sellers
• Improves market operations
• Conducts risk analysis
• Optimizes selection of transportation routes
• Assists in running B2C operations
• Data collection
• Business intelligence

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DSS and E-commerce

• E-commerce facilitates decision support
• Efficient transfer of information
• Enhances decision-support process
• Data collection and storage
• E-commerce works with DSS
• Inventory management
• Produce strategic change in call center by
  integration of simulation decision support
• Marketing database applications and distribution
  systems
• Streaming financial reports
• Comparison shopping engines
• Data transfer and storage for BI analysis

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E-commerce Mechanisms

• Electronic auctions
• Competitive market mechanisms
• Forward auctions
• Sellers place offers and buyers make sequential
  bids
• Reverse auctions
• Sellers are invited to submit bids on product or
  service buyer wants
• Bartering
• Exchange of goods or services without money
  transactions
• Portals
• Information gateways
• Single point of access through Web browser

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Portals

• Commercial
• Offer content to broad audiences
• Routine
• Little personalization
• Publishing
• Based on specific interests
• Extensive search capabilities
• Personal
• Target specific filtered information
• Narrow content
• Personalized
• Mobile
• Accessible through mobile devices

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Portals

• Voice
• Audio interfaces
• Accessible through phones
• Corporate
• Access to business information located both
  within and outside of organization
• Rich content
• Limited communities
• Organized focal point
• Suppliers
• Customers
• Employees
• Supervisors

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Business to Consumer Applications

• E-tailing
• Storefronts
• General or specialized
• May be extensions of physical stores
• E-Malls
• Collection of stores under single Internet
  address
• Manufacturers may sell direct
• Retailers may act as intermediaries

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DSS Support

• Channel conflict resolution through GDSS tools
• DSS and GDSS can be used for conflict resolution
  on pricing, resource allocation, logistics
  services
• DSS can aid in order fulfillment and logistics of
  small quantities
• DSS models can foster strategies and determine
  viability
• Identification of appropriate revenue models
• Risk analysis with DSS modeling

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Online Service Industries

• Electronic banking
• International banking
• Securities trading
• Online job market
• Travel
• Real estate

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Market Research

• E-commerce model of consumer behavior
• Independent uncontrollable variables
• Personal characteristics
• Age, gender, demographics
• Environmental characteristics
• Social, cultural, available information,
  government regulations, legal constraints
• Intervening variables
• Vendor controlled
• Market stimuli
• E-commerce systems
• Physical environment, logistics support, customer
  services

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Market Research

• Decision making process
• Influenced by independent and intervening
  variables
• Feeds into buyers decisions
• Dependent variables
• Buyers decisions

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Market Research

• Decision-making process
• Generic model
• Identification of needs, information search,
  evaluation of alternatives, purchase and
  delivery, after-purchase evaluation
• Consumer decision support system model
• Support facilities from CDSS and Internet and Web
  produce framework for Web purchasing
• Online buyer decision support model
• Customer decision-making guided by Web purchasing
  models

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Discovering Customer Desires

• Software agent search engines
• Intelligent agents
• Monitor site activity
• Searching and filtering agents for customers
• Comparison agents
• Electronic questionnaires
• Site tracking
• Cookies, Web bugs, spyware
• Collaborative filtering through inference of
  interest

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E-commerce CRM

• During life cycle of product
• Determine customer requirements
• Help customer acquire product or service
• Ongoing support
• Aid in disposal
• Tools available
• FAQs
• E-mail messaging
• Track status of order
• Personalization of Web pages and information at
  vendors site
• Chat rooms and communities
• Web-based call centers

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Online Advertising

• Media rich, dynamic, interactive
• Types
• Banners
• Pop-ups and pop-unders
• E-mail advertisements
• Electronic catalogs and brochures
• Advertisement postings in chatrooms, communities,
  and newsgroups
• Online classifieds
• Issues
• Spam
• Permission marketing
• Viral marketing
• Passive, mass market advertising
• Interactive advertising

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B2B Applications

• Sell-side marketplaces
• Private e-marketplaces operated by seller
• Electronic catalogs
• Forward auctions
• Buy-side marketplaces
• Reverse auction
• Third-party bidding marketplace or buyers Web
  site
• Procurement models
• Group purchasing
• Desktop purchasing

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B2B Applications

• Electronic exchanges
• E-marketplaces with many sellers and buyers
• Types
• Systematic sourcing by vertical distributors of
  direct materials
• Indirect materials sold on as needed basis with
  dynamic pricing
• Systematic sourcing for indirect materials at
  fixed pricing
• Spot sourcing of services on as needed basis

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Collaborative E-commerce

• Non-sales based e-commerce transactions between
  organizations
• Electronic support of communication, information
  sharing, joint decision making
• Types
• Retailers/suppliers
• Vendor-managed inventories supplied to retailers
• Product design
• Collaborative manufacturing through outsourcing
  of components and subassemblies

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Collaborative E-commerce

• Collaborative workflow management
• Planning and scheduling
• Design
• New product information
• Product-content management
• Order management
• Sourcing and procurement

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Intrabusiness E-commerce

• B2E
• Intranet-enabled business between business and
  employees
• E-commerce between business units
• Organization units sell and buy materials and
  products from each other
• E-commerce between corporate employees
• Classified ads
• Sales force automation
• Empowerment of salespersons

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E-government

• Use of Internet technologies and e-commerce to
  deliver information and services to citizens
• Gives citizens more access to information
• Allows for more feedback from citizens
• Facilitates fundamental changes in relationships
  between citizen and government
• Types
• Government-to-citizens (G2C)
• Electronic benefits transfer, payment of taxes
• Government-to-business (G2B)
• RFQs, RFBs, reverse auctions
• Government-to-government (G2G)
• Sharing of databases, information

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E-learning

• Online delivery of information for educational or
  training purposes
• Benefits
• Eliminates barriers of time, distance,
  socioeconomic status
• Saves money, reduces travel time
• Increases access to experts
• Enables large numbers to take classes
• Provides on-demand, self-paced learning
• Limitations
• Special training for instructors and students
• Requires special equipment and support services
• Lack of face-to-face interaction

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Customer to Customer E-commerce

• Buyers and sellers not businesses
• Types
• Auctions
• Classified ads
• Personal services
• Bartering

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Variants of E-Commerce

• Mobile commerce
• E-commerce through use of mobile computing
  devices on wireless networks
• Advantages
• Mobility
• People can be reached at any time
• L-commerce
• Location-based mobile commerce
• Information pushed out to recipient based on
  their current location
• Pervasive computing
• Computations become part of the environment
• Embodied in things
• Based on intelligent systems

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E-commerce Support Systems

• Electronic payments
• Electronic checks
• Electronic credit cards
• Virtual credit cards
• Purchasing cards
• Electronic cash
• Stored value money cards
• Smart cards with microprocessors
• Person-to-person payments
• Payment of bills online

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Security in Electronic Payments

• Authentication of all parties
• Protection of data from alteration or destruction
  during transmission
• Protection from buyers unjustified repudiation
• Privacy
• Customer safety
• Protection of information at sellers end

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Order Fulfillment in Electronic Commerce

• Provide customers with ordered goods
• Goods must be quickly packaged, shipped, and
  delivered
• Payment collection system must be in force
• Handle the return of unwanted or defective
  merchandise
• Customer relations

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Legal and Ethical Issues

• Fraud
• Sellers and buyers
• Buyer protection
• Seller protection
• Unwarranted repudiation
• Intellectual property rights
• Domain names
• Privacy issues
• Cookies
• Web tracking
• Sales of lists
• Monitoring e-mails and site visits
• Taxation
• Disintermediation
• Intellectual Property issues

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