12. Electronic Commerce Rev: Feb, 2013 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of...

12. Electronic CommerceRev: Feb, 2013

Euiho (David) Suh, Ph.D.

POSTECH Strategic Management of Information and Technology Laboratory(POSMIT: http://posmit.postech.ac.kr)

Dept. of Industrial & Management EngineeringPOSTECH

Contents1 Introduction of E-Commerce

2 Classification of E-Commerce

3 Technology & Architecture of E-Commerce

4 Marketplaces of E-Commerce

5 Strategies of E-Commerce

6 Successful Case of E-Commerce

7 Problem & Future of E-Commerce

8 Case Study

3

Definition and Characteristics of E-Commerce

■ Definition– Every commercial transaction and its supporting action (buying and selling of products

or services) over electronic systems such as the Internet and other computer networks

■ Traditional Commerce vs. E-Commerce

1. Introduction of E-Commerce

Traditional commerce E-Commerce

• Capable of having a guarantee of trust• Adjust the price of goods on the spot• Instant payment for purchase

• Secure: more secure than a check • Fast: the transactions take not more

than a few seconds• Always on: the purchases can be made

24/7 • Convenient: ease of purchasing • Reduced cost price: Reduction of

Marketing and Advertising Costs

4

Scope of E-Commerce (1/2)

Internet and other information technologiessupport every step of the process

Selling

Marketing

Developing Servicing

Delivering

Acceptingpayments

E-commerce en-compasses

the online process of…

E-commerce en-compasses

the online process of…


5

Scope of E-Commerce (2/2) 1. Introduction of E-Commerce

6

Background of E-Commerce

■ Market Situation– America: Private organization centered EC• Government: Law, Policy, Fund, etc.• Private: Economic/technical aspect

– Japan: Government centered EC• Government: Standardization, Technical development• Private: Inducting private participation

– Korea: Private organization centered EC with government’s political support• Government: Industrial informationalization project• Private: Developing application and standard of technology

Growth of InternetIncrease of

E-Commerce Market Size

Importance ofE-Commerce


7

Elements of E-Commerce

Institution

Network

Process

EC

Government, Pro-ducer, Retailer, Cus-

tomer,Supplier…

Order Processing, Marketing, Sales, Customer Ser-vice…

Intranet, Extranet, Inter-net…


8

Classification of E-Commerce (1/2)

■ Transaction Type

C2C B2C

B2BB2C

B2G

C2G

Business-to-Consumer (B2C)

Business-to-Business (B2B)

Consumer-to-Consumer (C2C)

Virtual storefrontMultimedia catalogs Interactive order processingElectronic paymentsOnline customer support

Electronic businessmarketplaces

Direct links between busi-nesses, auctions, and ex-changes

Online auctionsPosting to newspaper sitesPersonal websitesE-commerce portals

2. Classification of E-Commerce

9

Classification of E-Commerce (2/2)

■ Site Connecting Method

M-Commerce

Cable ECNetwork

WirelessStationary

2. Classification of E-Commerce

10

B2C E-Commerce

■ Definition– A transaction conducted over the Internet between a business and a consumer• Business which sell products to a customer, ship it to him/her, and receive payment, all without

ever meeting the customer.

■ B2C E-Commerce Success Factors– Security and reliability– Performance and service– Great consumer communications– Advertising and incentives

■ Differences in Marketing

2. Classification of E-Commerce1) B2C

11

Web Store Requirements2. Classification of E-Commerce

1) B2C

12

B2B E-Commerce

■ Definition– The wholesale and supply side of the commercial process• Business which buy, sell, or trade with other businesses

■ Reliance on Multiple Electronic Information Technologies– Electronic funds transfers– Data interchange– Trading systems– Catalog systems

2. Classification of E-Commerce2) B2B

13

B2B E-Commerce Web Portal2. Classification of E-Commerce

2) B2B

14

Application Trends2. Classification of E-Commerce

3) E-Commerce Application Trends of B2C & B2B

15

E-Commerce Technologies 3. Technology & Architecture of E-Commerce

16

Essential E-Commerce Architecture

Access Controland Security

Access Control

Authentication

Security Measures

Profiling and Per-sonalizing

Profile Management

Personalization

Behavior Tracking

Search Manage-ment

Content-Based Search

Parametric-Based Search

Role- and Rule- Based Search

Content Man-agement

Dynamic Content Generation

Data Repository

CatalogManagement

Pricing Calculation

Product Configura-tion

Catalog Generation

Payment

Shopping Cart

Payment Method Support

Payment Verifica-tion

Workflow Man-agement

Buying Process Automation

Document Man-agement

Rule- and Role-Based Content Routing

Event Notifica-tion

Event-Driven Transaction Mes-saging

Message to e-MailMessage to BoardsNewsgroups

Collaborationand Trading

Mediation Negoti-ation

Bidding/Auctioning Collaborative Buy-ing

Online Community

3. Technology & Architecture of E-Commerce

17



Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart







Event Notifica-tion






Online Community


Access Control

Authentication

Security Measures

EC processes must establish mutual trust, secure access between parties

User names and pass words Encryption key Digital certificates and signatures

Restricted access areas Other people’s accounts Restricted company data Webmaster administration areas


18



Access Control

Authentication

Security Measures

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart







Event Notifica-tion






Online CommunityProfiling and Per-sonalizing

Profile Management

Personalization

Behavior Tracking

Profiling gathers data on you and your website behavior and choices

User registration Cookie files and tracking software User feedback

Profiling is used for Personalized (one-to-one) marketing Authenticating identity Customer relationship management Marketing planning Website management


19



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart







Event Notifica-tion






Online Community

Search Manage-ment




Search processes help customers find the specific product or service they want

EC software packages often include a website search engine

Customized search engine may be acquired from companies like Google or Requisite Technology

Searches are often on content or by parameters


20



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart







Event Notifica-tion






Online Community

Content Man-agement


Data Repository

Helps develop, generate, deliver, update, and archive text and multimedia informa-tion at e-commerce websites

Product configuration and mass customiza-tion


21



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

Payment

Shopping Cart







Event Notifica-tion






Online CommunityCatalogManagement

Pricing Calculation


Catalog Generation

Helps generate and manage catalog con-tent

Product configuration and mass customiza-tion


22



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart



Event Notifica-tion






Online Community





E-business & e-commerce manage-ment depends on a workflow soft-ware engine

Software model of business pro-cesses

Workflow models express predefined Sets of business rules Roles of stakeholders Authorization requirements Routing alternatives Databases used Task sequences


23



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart










Online Community

Event Notifica-tion



Most e-commerce applicants are event driven

Responds to customer’s first website visit, payments, and so on

Monitors all e-commerce processes Records all relevant events, including

problem situations Notifies all involved stakeholders Works in tandem with user-profiling

software


24



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation

Payment

Shopping Cart







Event Notifica-tion






Online Community

Processes support vital collaboration arrangements and trading services

Needed by customers, suppliers, and other stakeholders to accomplish e-commerce transactions

Online communities of interest E-mail, chat, discussion groups Enhances customer service Builds loyalty


25



Access Control

Authentication

Security Measures


Profile Management

Personalization

Behavior Tracking

Search Manage-ment




Content Man-agement


Data Repository

CatalogManagement

Pricing Calculation


Catalog Generation





Event Notifica-tion






Online Community

Payment

Shopping Cart



Electronic Payment Example

Securing Electronic Payments

Network sniffers easily recognize credit card for-mats

Encrypt data between customer and mer-chant

Encrypt data between customer and financial institution

Take sensitive information off-line


26

E-Commerce Marketplaces

One to Many Many to One Some to Many Many to Some Many to Many

Sell-side mar-ketplaces

One supplier dictates product offerings and prices

Buy-side mar-ketplaces

Many suppliers bid for the busi-ness of a buyer

Distribution marketplaces

Unites suppliers who combine their product catalogs to at-tract a larger audience

Procurement marketplaces

Unites major buyers who combine pur-chasing cata-logs

Attracts more competition, which lowers prices

Auction marketplaces

Dynamically optimizes prices

4. Marketplaces of E-Commerce

27

Clicks and Bricks5. Strategies of E-Commerce

1) Click and Bricks

SuccessInternetInitiatives

TraditionalOperations

Merging operations has trade-offs

28

Integrated vs. Separate e-Business5. Strategies of E-Commerce

1) Click and Bricks

29

Other Clicks and Bricks Strategies

■ Partial e-commerce integration– Joint ventures and strategic partnerships

■ Complete separation– Spin-off of an independent e-commerce company

■ Barnes and Noble’s experience with spin-off– Gained venture capital, entrepreneurial culture, flexibility– Attracted quality management– Accelerated decision making– Failed to gain market share

5. Strategies of E-Commerce1) Click and Bricks

30

E-Commerce Channel Choices5. Strategies of E-Commerce

2) Channel Choices

The marketing or sales channel created by a com-pany

for its e-commerce activities

E-CommerceChannel

No universal strategy or e-commerce channel choice

Major business pros and cons in both e-commerce integration and sep-aration

Most businesses’ implementing some measure of clicks-and-bricks in-tegration

31

E-Commerce Strategy Checklist

■ Questions to ask and answer

– What audiences are we attempting to reach?

– What action do we want audiences to take?

– Who owns the e-commerce channel within the organization?

– Is the e-commerce channel planned alongside other channels?

– Is there a process for generating, approving, releasing, and withdrawing content?

– Will our brand translate to the new channel?

– How will we market the channel itself?

5. Strategies of E-Commerce3) Checklist

32

eBay

■ Concept of Cyber Auction

Buyer A

Buyer B

Buyer C

Cyber auction site(www.ebay.com)

Seller

② Bidding

② Bidding

② Bidding

④ Notifying the Bidder

⑤ Remittance

⑥ Delivery

③ Decide a bidder

④ Notifyingthe bidder

① Enroll products

6. Successful Case of E-Commerce

33

eBay

■ C2C

■ Regulation & Security System

personal key public key

<Digital Signature>


34

eBay

■ CRM (Community)– News– Chat– Information– Personal data management


35

Problem of E-Commerce

Using agent andmore efficientsearch engine

Improved encodingtechnology

Security Problem

Application of one-to-one marketing

Traditional Marketing Strategy

Flood of Information

Problem

7. Problem & Future of E-Commerce

36

Future of E-Commerce

Rapid expansionof internet network

ImprovedInfrastructure

Combination of Various contents

Positive

7. Problem & Future of E-Commerce

37

Reference

■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 9

■ Euiho Suh, “E-Commerce (PPT Slide)”

■ THE FREE DICTIONARY BY FARLEX, “B2C E-Commerce financial definition”

http://mis.postech.ac.kr/class/IMEN381_MIS/Textbook%20IIS%2016th/Chap009.ppt









http://mis.postech.ac.kr/class/IMEN381_MIS/mis_ppt/E-Commerce.ppt






http://financial-dictionary.thefreedictionary.com/B2C+E-Commerce





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