E-Commerce Systems

Chapter 8

Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Learning Objectives

Identify the major categories and trends of e-commerce applications

Identify the essential processes of an e-commerce system, and give examples of how they are implemented in e-commerce applications

Identify and give examples of key factors and Web store requirements needed to succeed in e-commerce

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Learning Objectives

Identify and explain the business value of several types of e-commerce marketplaces

Discuss the benefits and trade-offs of several e-commerce clicks and bricks alternatives

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Case 1: KitchenAid & Royal Bank of Canada

Companies doing business online must police unauthorized use of brand names, logos, and trademarks to protect their investments

Companies such as BrandProtect, MarkMonitor, and NameProtect help companies fight for control of their brands and reputations

Brand protection challenges have grown exponentially

– Using logos without permission is easy; go to a web site, grab a logo, and put it somewhere else

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Case Questions

Consider your online shopping patterns

– How much weight do you place on the presence of a name, logo, or other trademark on a Web site when purchasing goods or services?

– Do you stop to consider whether you may have been misled?

– How could you tell the difference?

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Case Questions

Brian Maynard of KitchenAid notes that development of the Internet changed the problem of brand policing

– What are some of these changes?

– What challenges can you think of that did not exist in the pre-online world?

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Case Questions

The companies mentioned in the case (Kitchen-Aid, RBC, Disney, Coke) were well established and enjoyed strong brand recognition well before the advent of the Internet

– Do you think online-only companies face the same problems as they do?

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Introduction to e-Commerce

Internet and other information technologiessupport every step of the process

Selling

Marketing

Developing Servicing

Delivering

Acceptingpayments

E-commerce encompasses

the online process of…

E-commerce encompasses

the online process of…

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Scope of e-Commerce

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E-Commerce Technologies

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Categories of e-Commerce

Business-to-Consumer

(B2C)

Virtual storefront

Multimedia catalogs

Interactive order processing

Electronic payments

Online customer support

Consumer-to-Consumer

(C2C)

Online auctions

Posting to newspaper sites

Personal websites

E-commerce portals

Business-to-Business (B2B)

Electronic business

marketplaces

Direct links between

businesses, auctions, and

exchanges

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Essential e-Commerce Architecture

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Access Control and Security

Encryption key

Digital certificates and signatures

User names and passwords

E-commerce processes must establish mutual trust, secure access between parties

Restricted company data

Webmaster administration areas

Other people’s accounts

Restricted access areas

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Profiling and Personalizing

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

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Search Management

Search processes help customers find the specific

product or service they want

E-commerce 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

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Content and Catalog Management

Content Management Software– Helps develop, generate, deliver, update,

and archive text and multimedia information at e-commerce websites

Catalog Management Software– Helps generate and manage catalog content

Catalog and content management software works with profiling tool to personalize content– Product configuration and mass customization

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Workflow Management

E-business & e-commerce management depends on a workflow software engine– Software model of business processes

Workflow models express predefined

– Sets of business rules– Roles of stakeholders– Authorization requirements– Routing alternatives– Databases used– Task sequences

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Example of Workflow Management

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Event Notification

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

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Collaboration and Trading

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

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Electronic Payment Example

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Securing Electronic Payments

Network sniffers easily recognize credit card formats

Take sensitive information

off-line

Encrypt data between

customer and merchant

Encrypt data between

customer and financial

institution

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E-Commerce Application Trends

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Case 3: Driving the “Buzz” on the Web

Find embryo trends, then help influentials discover them

Find embryo trends, then help influentials discover them

Old Thinking

Old Thinking

New Thinking

New Thinking

Influentials drive proactive behavior in others

Influentials drive proactive behavior in others

Social networks contain “influentials”

Social networks contain “influentials”

Influentials can’t be influenced in a way that accelerates a word-of-mouth campaign

Influentials can’t be influenced in a way that accelerates a word-of-mouth campaign

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Case Study Questions

How can companies benefit from the “cultural assessments” regularly performed by Mattel?– How could the information obtained be used

to create business value for those organizations?

In spite of disconfirming evidence as to the effectiveness of targeting online opinion leaders, companies are increasing their efforts to identify and contact them– Why do you think this is the case?

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Case Study Questions

One of the participants in the case states that “you want to ride the wave, rather than trying to start one of your own”

– What does she mean by that?

– If companies are not starting these “waves,” where are they coming from?

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B2C E-Commerce Success Factors

Community relationships

Community relationships

Advertising and incentives

Advertising and incentives

Selection & valueSelection & value

Security and reliability

Security and reliability

Performance and service

Performance and service

Great consumer communicationsGreat consumer communications

Personal attentionPersonal attention

Look and feelLook and feel

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Differences in Marketing

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Web Store Requirements

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B2B E-Commerce

B2B is the wholesale and

supply side of the commercial

process

Businesses buy, sell, or trade with other businesses

Relies on multiple electronic

information technologies Catalog systems

Trading systems

Data interchange

Electronic funds transfers

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E-Commerce Marketplaces

One to Many

Sell-side marketplaces

One supplier dictates product offerings and prices

Many to One

Buy-side marketplaces

Many suppliers bid for the business of a buyer

Some to Many

Distribution marketplaces

Unites suppliers who combine their product catalogs to attract a larger audience

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E-Commerce Marketplaces

Many to Some

Procurement marketplaces

Unites major buyers who combine purchasing catalogs

Attracts more competition, which lowers prices

Many to Many

Auction marketplaces

Dynamically optimizes prices

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B2B E-Commerce Web Portal

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Clicks and Bricks

Success will go to those who can integrate Internet initiatives with traditional operations– Merging operations has trade-offs

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Integrated vs. Separate e-Business

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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

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E-Commerce Channel Choices

An e-commerce channel is the marketingor sales channel created by a company

for its e-commerce activities

There is no universal strategy ore-commerce channel choice

Both e-commerce integration and separationhave major business pros and cons

Most businesses are implementing somemeasure of clicks-and-bricks integration

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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?

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Case 2: Entellium, Digg, Peerflix, Zappos, Jigsaw

For many Internet companies, the second-mover advantage is substantial

For many Internet companies, the second-mover advantage is substantial

Second-movers can use the same

approach as first movers, but with

better products and services, at much

lower cost

Another strategyis to use combinationsof successful business

models

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Case Study Questions

Is the second-mover advantage always a good business strategy?

– Defend your answer with examples of the companies in this case

What can a front-runner business do to foil the assaults of second movers?

– Defend your answer using examples of the front-runner companies in the case

Do second movers always have the advantage

in Web based business success? – Evaluate the five strategies in the case, and the

companies that used them, to defend your answer