Chapter 8

E-Commerce Systems

McGraw-Hill/Irwin

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

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
Accepting payments
Delivering

Selling

Marketing

E-commerce encompasses the online process of

Developing

Servicing

Internet and other information technologies support every step of the process
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Scope of e-Commerce

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E-Commerce Technologies

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Categories of e-Commerce
Business-toConsumer (B2C)
Virtual storefront Multimedia catalogs Interactive order processing Electronic payments Online customer support
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Consumer-toConsumer (C2C)

Business-toBusiness (B2B)

Online auctions
Posting to newspaper sites Personal websites E-commerce portals

Electronic business marketplaces

Direct links between businesses, auctions, and exchanges

Essential e-Commerce Architecture

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Access Control and Security

E-commerce processes must establish mutual trust, secure access between parties User names and passwords Encryption key Digital certificates and signatures

Restricted access areas

Other peoples accounts Restricted company data Webmaster administration 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 customers 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

Encrypt data between customer and financial institution

Encrypt data between customer and merchant

Take sensitive information off-line

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E-Commerce Application Trends

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Case 3: Driving the Buzz on the Web

Old Thinking

Social networks contain influentials Influentials drive proactive behavior in others Influentials cant be influenced in a way that accelerates a word-of-mouth campaign Find embryo trends, then help influentials discover them
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New Thinking

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

Selection & value

Performance and service

Look and feel

Advertising and incentives Community relationships

Personal attention Great consumer communications

Security and reliability

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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 Relies on multiple electronic information technologies

Businesses buy, sell, or trade with other businesses Electronic funds transfers Data interchange Trading systems Catalog systems

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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 Nobles experience with spin-off

Gained venture capital, entrepreneurial culture, flexibility Attracted quality management Accelerated decision making Failed to gain market share 8-36

E-Commerce Channel Choices

An e-commerce channel is the marketing or sales channel created by a company for its e-commerce activities There is no universal strategy or e-commerce channel choice Both e-commerce integration and separation have major business pros and cons Most businesses are implementing some measure 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

Second-movers can use the same approach as first movers, but with better products and services, at much lower cost

Another strategy is to use combinations of 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
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