Week 3: Electronic Commerce

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Week 3 Electronic Commerce
MIS 2101 Management Information Systems Douglas
M. Schutz
Based on material from Information Systems Today
Managing in the Digital World, Leonard Jessup
and Joseph Valacich, Pearson Prentice Hall, 2007
Also includes material by David Schuff, Paul
Weinberg, Cindy Joy Marselis, Munir Mandviwalla,
and Mart Doyle.
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There is no physical analog for what Amazon.com
is becoming. Jeff Bezos Cofounder and long-time
CEO of Amazon.com
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Learning Objectives

• Define electronic commerce. Discuss how it has
  evolved, and the strategies that companies use to
  compete in cyberspace
• Explain the differences between
• The Internet
• Extranets
• Intranets
• Describe emerging trends in electronic commerce
• Discuss regulatory issues

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What is Electronic Commerce? (also referred to
as e-commerce or EC)

• The online exchange of
• 1) ____________
• 2)____________
• 3)____________
• between
• 1) firms
• 2) firms and customers
• 3) customers

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Electronic Commerce
of Total Retail Sales
Globalization 3.0
For Seasonal Variation
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Most Common Types of E-CommerceWhat are
examples of the types of E-Commerce Below?

• Business-to-consumer (B2C)
• Business-to-business (B2B)
• Business-to-employee (B2E)
• Consumer-to-consumer (C2C)

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Key Web Capabilities Leveraged by E-Commerce

• 1) Information Dissemination
• 2) Integration
• 3) Mass Customization
• 4) Interactive Communication
• 5) Collaboration
• 6) Transaction Support

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Key Web Capability 1) Information Dissemination

• Firms have access to customers independent of
  location
• Increased geographical reach through virtual
  storefronts
• Economical medium for marketing products and
  services

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Key Web Capability2) Integration

• Integration of information via Web sites and
  other mechanisms
• Integration of processes among multiple companies
  
• Real-time access to personalized information
• Efficient Markets

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Examples of Integration

• Airline reservations
• Make reservations through any airline, travel
  agency, or online
• The reservation can involve multiple airlines
• Use a cell phone, voice, or browser
• Change reservations through any airline, travel
  agency, or online
• Amazon
• purchase products from other companies through
  Amazon
• ATMs

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Key Web Capability 3) Mass Customization

• Tailoring ______for meeting particular customers
  needs on a _____ scale
• Timbuk2.com
• Custom Messenger Bag Builder

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Key Web Capability4) Interactive Communication

• Immediate feedback between company and customers
• What types of features are used in Interactive
  communication?
• Best Buy
• Geek Squad
• 24-hour computer support

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Key Web Capability5) Collaboration

• Virgin Entertainment Group
• Microsoft SharePoint
• Managers now have more time selling products and
  training employees
• Head office now has more time for strategic
  planning

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Key Web Capability6) Transaction Support

• Internet and the Web
• Reduced transaction costs
• Enhanced operational efficiency
• Dell automated transaction support
• Cost savings per sale
• What is Disintermediation?

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Question

• What do we mean when we say an organization is
• Brick and Mortar
• Click and Mortar
• Click only
• Examples?

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E-Commerce Business Strategies

• Differentiated based on levels of
  physical/virtual presence

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Learning Objectives
Define electronic commerce. Discuss how it has
evolved, and the strategies that companies use to
compete in cyberspace Explain the differences
between The Internet Extranets Intranets Describ
e emerging trends in electronic commerce Discuss
regulatory issues
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Question

• What is the difference between
• 1) The Internet
• 2) An Extranet
• 3) An Intranet

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1) The Internet . . . A network of networks

• Computers and other devices capable of
  communicating
• The infrastructure that connects them (fiber
  optics, copper, modems, routers, microwave, etc.)
  
• The software tools and standard protocols that
  make communication possible
• It is more than the World Wide Web

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As a result of the standards

• You can retrieve material using a browser from
  any Web Server regardless of technology or
  location
• You can send email to any email account
  regardless of technology or location
• Dissimilar computers at multiple locations can
  function together to complete a process

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2) Extranet

• Extranet uses Internet technology to conduct
  business between firms for Business-to-Business
  (B2B) electronic commerce.
• Nearly all Fortune 1,000 companies deploy some
  type of B2B applications.
• Boeing 1,000 authorized business partners
• Electronic Data Interchange (EDI) and Web
  Services are two technologies used for Extranets.

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Question

• What is EDI and what do companies do with it?

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Electronic Data Interchange (EDI)

• Used for B2B applications prior to the
  introduction of Web Services
• Still used today

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Extranet System Architecture
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Web Services Example
The Gap
Stock DB
In stock confirmation
BigStore.com
ProductLookup Application
Credit card confirmation
AccountDB
Client
Shopping Application
GiantBank
Credit verification application
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3) Intranet

• Intranet uses an internal, private network using
  Internet based Web technologies for the secured
  transmission of information within an
  organization.
• Business-to-employee (B2E) electronic commerce
• Boeing
• More than 1 million pages
• 200,000 employees

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Intranet System Architecture
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Intranet Applications Training

• Boeing
• 200,000 employees get trained
• Quality eTraining program
• Business improvements
• What benefits can be realized using intranet
  applications for training?

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Intranet Application Collaboration

• Boeing
• Information shared between employees across the
  world
• What benefits can be realized using intranets for
  collaboration in project management?

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Learning Objectives
Define electronic commerce. Discuss how it has
evolved, and the strategies that companies use to
compete in cyberspace Explain the differences
between The Internet Extranets Intranets Describ
e emerging trends in electronic commerce Discuss
regulatory issues
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Questions

• For each of the following emerging trends
• What does this mean to you personally?
• As a business professional, are there any
  interesting opportunities?

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Types of Consumer to Consumer (C2C) E-Commerce

• Forward auction
• Sellers post goods or services for sale
• Buyers bid on these items
• Reverse auction
• Buyers post a request for quote (RFQ)
• Seller proposes a bid

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E-Auction Fraud

• E-auctions marred with more fraud than any other
  Internet activity
• 42 of all Internet-fraud related complaints
• Average loss 1,155 per complaint
• Types of e-Auction fraud
• Bid luring Luring bidders from a legitimate
  auction to buy the same item at a lower price
• Reproductions Not an original as advertised
• Bid shielding Bidding on your own items to
  inflate the price
• Shipping fraud Jacking up shipping/handling
  fees
• Payment failure Buyer doesnt pay
• Nonshipment Seller doesnt ship

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Social Online Communities

• MySpace.com
• 4.5 of all Internet site visits in mid 2006
• Over 100 million users
• About 230,000 new users a day
• Original purpose social network based on music
  interests
• 2005 purchased by NewsCorp for 580 million
• Income from targeted ads

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Self-Publishing

• Consumers can voice their opinions with no
  editorial review
• Original material by the author
• Traditional B2B becoming What?
• Publishing from home
• Print-On-Demand
• Blogging

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Printing-On-Demand

• Customized printing
• Small batches
• What kinds of customers are attracts to this
  service?
• Lulu, BookSurge, Blurb

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Blogging

• Weblogging
• Online text diary
• Chronological entries
• Power of bloggers
• Vlogging
• Video blogging

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M-Commerce

• Electronic transactions using wireless mobile
  devices
• Mobile networks
• Smart phones
• What are some types of M-Commerce applications?

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Online Entertainment Industry

• Digital rights management (DRM)
• Technological solution for control of digital
  media
• Restrictions
• Devices which will play it
• How many times it can play
• Prevention of illegal copying and distribution
• Watermark illegal copy can be traced to
  original purchaser

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Slingbox

• Acts as a personal media server
• Placeshifts television content to any
  Internet-enabled device

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Learning Objectives
Define electronic commerce. Discuss how it has
evolved, and the strategies that companies use to
compete in cyberspace Explain the differences
between The Internet Extranets Intranets Describ
e emerging trends in electronic commerce Discuss
regulatory issues
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Threats to E-Commerce

• The USA PATRIOT Act
• Introduced after 9/11 terrorist attacks in 2001
• More power given to governmental agencies to
  protect Americans
• Critics Civil Liberties Union

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Internet Taxation

• The Internet Tax Freedom Act 1998
• Created as an incentive for EC businesses
• Internet sales treated as mail-order sales
• - No sales taxes paid in states where the company
  has no presence
• What problems resulted?

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Internet Taxation

• Solutions
• Use tax
• - Consumers required to pay their states sales
  tax
• - Part of some income tax returns
• Streamlined Sales Tax Project
• - Simplification of tax codes
• Collection of taxes by out-of-state sellers
• What do you think?

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Arguments For and Against Internet Taxation
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Net Neutrality

• Data sent over the Internet is handled in a
  neutral manner
• All traffic treated the same way
• ISPs (Internet Service Providers) and telephone
  companies argue for prioritization

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Censorship

• Governmental attempts to control Internet
  traffic
• Limiting citizens from viewing content
• For example China, North Korea
• Strict guidelines on what can be viewed
• Key words and topics blocked
• United States
• Child Online Protection Act (COPA)
• Age verification for certain content

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Cases
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eBay Under Attack

• Phishing
• eBay feedback scores
• eBay buyer insurance

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Monitoring Productive Employees

• You have zero privacy, get over it (Scott
  McNeely)
• Use of company provided Internet connection can
  be legally monitored
• American Management Association survey (2005)