Principles of Information Systems Eighth Edition

1. Principles of Information SystemsEighth Edition Chapter 8 Electronic and Mobile Commerce

2. An Introduction to Electronic Commerce • Electronic commerce: conducting business activities electronically over computer networks • Types of business activities that are strong candidates for conversion to e-commerce • Paper based • Time-consuming • Inconvenient for customers Principles of Information Systems, Eighth Edition

3. Business-to-Business (B2B) E-Commerce • Subset of e-commerce • All the participants are organizations • Useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs Principles of Information Systems, Eighth Edition

4. Business-to-Consumer (B2C) E-Commerce • Form of e-commerce in which customers deal directly with an organization and avoid intermediaries • Squeezes costs and inefficiencies out of supply chain • Can lead to higher profits • Can lead to lower prices for consumers • E-commerce via the Internet • Many goods and services are cheaper online • The Internet allows consumers to easily compare prices, features, and value Principles of Information Systems, Eighth Edition

5. Consumer-to-Consumer (C2C) E-Commerce • Subset of e-commerce that involves consumers selling directly to other consumers • Example: eBay • Customers buy and sell items directly to each other through the site • 181 million users buy and sell items valued at more than $44 billion • Other popular online auction Web sites: Craigslist, uBid, Yahoo! Auctions, Onsale, and WeBidz Principles of Information Systems, Eighth Edition

6. eGovernment • Use of information and communications technology to simplify the sharing of information, speed formerly paper-based processes, and improve the relationship between citizen and government • Forms of eGovernment • Government-to-consumer (G2C) • Government-to-business (G2B) • Government-to-government (G2G) Principles of Information Systems, Eighth Edition

7. Multistage Model for E-commerce Figure 8.1: Multistage Model for E-Commerce (B2B and B2C) Principles of Information Systems, Eighth Edition

8. Multistage Model for E-commerce (continued) Figure 8.2: Product and Information Flow for HP Printers Ordered over the Web Principles of Information Systems, Eighth Edition

9. E-Commerce Challenges • Defining an effective e-commerce model and strategy • Community, content, and commerce • Changing distribution systems and work processes to manage shipments of individual units directly to consumers • B2C systems must be able to handle split-case distribution • Integrating Web-based order processing with traditional systems Principles of Information Systems, Eighth Edition

10. E-Commerce Challenges (continued) Figure 8.3: Three Basic Components of a Successful E-Commerce Model Principles of Information Systems, Eighth Edition

11. E-Commerce Challenges (continued) Figure 8.4: Web-Based Order Processing Must Be Linked to Traditional Back-End Systems Principles of Information Systems, Eighth Edition

12. An Introduction to Mobile Commerce • Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, cell phones, and smart phones, to place orders and conduct business • Handset manufacturers are working with communications carriers to develop appropriate wireless devices, related technology, and services • Content providers and mobile service providers are working together more closely than ever Principles of Information Systems, Eighth Edition

13. Technology Needed for Mobile Commerce • Improved interface between the wireless device and its user • Improved network speed • Security • Encryption, digital certificates • Web applications that are accessible for handheld users Principles of Information Systems, Eighth Edition

14. Technology Needed for Mobile Commerce (continued) • Wireless application protocol (WAP): standard set of specifications for Internet applications that run on handheld, wireless devices • Effectively serves as a Web browser for such devices • Uses the Wireless Markup Language (WML), which is designed for effectively displaying information on small devices Principles of Information Systems, Eighth Edition

15. Retail and Wholesale • Electronic retailing (e-tailing): direct sale from business to consumer through electronic storefronts • Electronic storefronts are typically designed around an electronic catalog and shopping cart model • Cybermall: single Web site that offers many products and services at one Internet location • Manufacturing, repair, and operations (MRO) goods and services Principles of Information Systems, Eighth Edition

16. Investment and Finance • Online stock trading • Online tools for doing research and analysis • Online banking • Customers can check account balances, transfer money among accounts, pay bills, etc. • Electronic bill presentment Principles of Information Systems, Eighth Edition

17. Anywhere, Anytime Applications of Mobile Commerce • M-commerce devices are ideal for accessing personal information and receiving targeted messages for a particular consumer • Through m-commerce, companies can establish one-to-one marketing relationships with individual consumers anytime and anywhere • The most successful m-commerce applications suit local conditions and people’s habits and preferences • Examples: banking, stock trading, information services, retail, advertisements Principles of Information Systems, Eighth Edition

18. Advantages of Electronic and Mobile Commerce • Global reach: helps reduce gap between rich and poor countries • Reduces costs: increases speed and accuracy • Speeds the flow of goods and information • Increases accuracy: eliminates human data-entry error • Improves customer service: information about delivery status and ability to meet customer demand Principles of Information Systems, Eighth Edition

19. Security • Methods to increase security • Payment Card Industry security standard • Address Verification System • Card Verification Number technique • Visa’s Advanced Authorization process • Federal Financial Institutions Examination Council’s “Authentication in an Internet Banking Environment” guidelines • Biometric technology Principles of Information Systems, Eighth Edition

20. Fraud • Phishing: sending bogus messages purportedly from a legitimate institution to pry personal information from customers by convincing them to go to a “spoof” Web site • Click fraud: arises in a pay-per-click online advertising environment when additional clicks are generated beyond those that come from actual, legitimate users • Online auction fraud Principles of Information Systems, Eighth Edition

21. Lack of Internet Access • Digital divide:difference between people who do and people who don’t have access or capability to use high-quality, modern information and communications technology to improve their standard of living • Exists between: • More and less developed countries • Economic classes • The educated and uneducated • Those who live in cities and those who live in rural areas Principles of Information Systems, Eighth Edition

22. Return on Investment • The investment required for a large firm to establish and operate a B2B or B2C Web site can be in the millions of dollars • Common problem with determining return on investment: difficult to forecast project costs and benefits Principles of Information Systems, Eighth Edition

23. Taxation • U.S. Supreme Court ruling: Internet-based merchants must apply sales tax only when buyers live in a state where the company has physical facilities, or “nexus” • Difficult for states to collect sales taxes on Internet purchases Principles of Information Systems, Eighth Edition

24. Strategies for Successful E-Commerce • Companies must develop effective Web sites that include the following characteristics: • Easy to use • Accomplish the goals of the company • Safe and secure • Affordable to set up and maintain Principles of Information Systems, Eighth Edition

25. Building Traffic to Your Web Site • Obtain and register a domain name • Make your site search-engine-friendly • Meta tag: special HTML tag that contains keywords representing your site’s content • Keywords are used by search engines to build indexes pointing to your Web site • Web site traffic data analysis software • Adapting Web site design for global consumers Principles of Information Systems, Eighth Edition

26. Electronic Payment Systems • Digital certificate: attachment to an e-mail message or data embedded in a Web page that verifies the identity of a sender or a Web site • Certificate authority (CA): trusted third party that issues digital certificates • Secure Sockets Layer (SSL): communications protocol used to secure sensitive data • Electronic cash: amount of money that is computerized, stored, and used as cash for e-commerce transactions Principles of Information Systems, Eighth Edition

27. Electronic Payment Systems (continued) • Credit card • Charge card • Debit card • Smart card: a credit card–sized device with an embedded microchip to provide electronic memory and processing capability Principles of Information Systems, Eighth Edition