Week 3: Electronic Commerce

1. 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.

2. “There is no physical analog for what Amazon.com is becoming.” Jeff Bezos Cofounder and long-time CEO of Amazon.com

3. 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

4. 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

5. Electronic Commerce % of Total Retail Sales Globalization 3.0 For Seasonal Variation

6. 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)

7. Key Web Capabilities Leveraged by E-Commerce 1) Information Dissemination 2) Integration 3) Mass Customization 4) Interactive Communication 5) Collaboration 6) Transaction Support

8. 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 5-8

9. Key Web Capability:2) Integration Integration of information via Web sites and other mechanisms Integration of processes among multiple companies Real-time access to personalized information “Efficient Markets”

10. 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

11. Key Web Capability: 3) Mass Customization Tailoring ______for meeting particular customers’ needs on a _____ scale Timbuk2.com Custom Messenger Bag Builder

12. Key Web Capability:4) 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

13. Key Web Capability:5) 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

14. Key Web Capability:6) Transaction Support Internet and the Web: Reduced transaction costs Enhanced operational efficiency Dell – automated transaction support Cost savings per sale What is Disintermediation?

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

16. E-Commerce Business Strategies Differentiated based on levels of physical/virtual presence

17. 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

18. Question What is the difference between… 1) The Internet 2) An Extranet 3) An Intranet

19. 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

20. 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

21. 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.

22. Question What is EDI and what do companies do with it?

23. Electronic Data Interchange (EDI) • Used for B2B applications prior to the introduction of Web Services • Still used today

24. Extranet System Architecture

25. 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

26. 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

27. Intranet System Architecture

28. Intranet Applications: Training Boeing 200,000 employees get trained Quality eTraining program Business improvements What benefits can be realized using intranet applications for training?

29. Intranet Application: Collaboration Boeing Information shared between employees across the world What benefits can be realized using intranets for collaboration in project management?

30. 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

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

32. 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

33. 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 doesn’t pay Nonshipment – Seller doesn’t ship

34. 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

35. 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

36. Printing-On-Demand • Customized printing • Small batches • What kinds of customers are attracts to this service? • Lulu, BookSurge, Blurb

37. Blogging Weblogging Online text diary Chronological entries Power of bloggers Vlogging Video blogging

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

39. 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

40. Slingbox Acts as a personal media server “Placeshifts” television content to any Internet-enabled device

41. 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

42. 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

43. 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?

44. Internet Taxation • Solutions: • Use tax • - Consumers required to pay their state’s 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?

45. Arguments For and Against Internet Taxation

46. 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

47. 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

48. Cases

49. eBay Under Attack Phishing eBay feedback scores eBay buyer insurance

50. 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)