Enabling Commerce Using the Internet: Part 2

1. Enabling Commerce Using the Internet: Part 2 “…We can hardly keep up with the Fortune 500 companies who are contacting us.” Sibley Verbeck, CEO and founder of the Electric Sheep Company

2. Review Questions • What is e-commerce? • What are the main types of e-commerce? • Describe an extranet. • Describe an intranet. • List the e-commerce business strategies.

3. Learning Objectives • What is e-commerce and how has the Internet enabled it to grow? • What are the different types of e-commerce? • What are the e-commerce business strategies? • Understanding extranets and B2B e-commerce • Understanding intranets and B2E e-commerce • Understanding the Internet and B2C e-commerce • C2C e-commerce and the Web • New trends in e-commerce

4. Business-to-consumer e-commerce The Internet

5. Use of Internet Technologies • Characteristics of the Internet, intranet, and extranet • B2B and B2E rely on extranet and intranet. • Internet provides an opportunity for B2C commerce.

6. Stages of B2C E-Commerce • Web sites range from passive to active.

7. E-Tailing • Selling goods and services online • Click-and-mortar • Walmart.com • Click only • Amazon.com • Virtual company • Priceline.com • Reverse pricing vs. menu-driven pricing

8. E-Tailing: Selling Goods and Services in the Digital World • Companies utilizing E-Tailing have unique benefits • Product Benefits: With no store size and shelf space restrictions, companies can sell a far wider variety of goods. • Place Benefits: Internet storefronts are available on almost every computer connected to the Internet. • Price Benefits: The efficiency of online retailers, with high volumes and low overhead allow for very competitive pricing.

9. The Long Tail • Traditional stores • Focus on mainstream needs • Target the average customer • Example: Blockbuster • E-Tailers • Can focus on niche markets • Example: Netflix

10. EC Web Sites: Attracting and Retaining Online Customers – 4 Key Recommendations • The Web site should offer something unique • The Web site must motivate people to visit, to stay, and to return • You must advertise your presence on the Web • You should learn from your Web site

11. EC Web Sites: Attracting and Retaining Online Customers

12. E-Tailing Drawbacks • Product delivery drawbacks • Delay between product order and delivery • Except for products that can be downloaded • Direct product experience drawbacks • Lack of sensory information • Smell, taste, feel • Lack of the social element • Cannot replace going to the mall with friends

13. E-Banking • Financial institutions offer: • Online banking • Management of credit card, checking, and savings accounts • Electronic bill pay • Bill payment online • Online investing • Growing in popularity • Extensive use of Internet for obtaining financial information

14. Consumer-to-consumer e-commerce The Web and Consumers

15. Types of C2C E-Commerce • C2C commerce has always been present • 17% of American adults have sold online • C2C relationships characterized by • Number of buyers • Number of sellers

16. E-Auctions • Forward auction • Sellers post goods or services for sale. • Buyers bid on these items. • Highest bid wins. • Reverse auction • Buyers post a request for quote (RFQ). • Seller proposes a bid. • Lowest seller bid wins. • This is frequently in B2B e-commerce.

17. C2C E-Commerce

18. E-Auction Fraud • E-auctions marred with more fraud than any other Internet activity. • E-auctions represent 45 percent of all Internet fraud-related complaints. • Average loss: $724 • Types of e-Auction fraud: • Bid luring: luring bidders to another auction set at a lower price • Reproductions: selling something that is said to be original but is not • Bid shielding: using two different accounts to bid. One very high and one very low, you drop the high one at the last second and win with the small bid • Shipping fraud • Payment failure • Nonshipment

19. Internet Marketing Methods

20. Search Marketing • Strategies to enhance visibility in search engines’ results • Paid inclusion • Fee paid to the search engine to appear in the results • Cannot influence order, thus companies may use: • Search engine advertising • Search engine optimization

21. Internet Marketing • If you build it, they won’t come unless you market it • Search Engine Optimization (SEO) can be critical to your Web site’s success

22. Search Advertising • Search advertising • Also called sponsored search • Pay to ensure a spot on top of search results page • Example: Google AdWords • Bid for being listed in sponsored search results • Placement depends on relevance • Pay-per-click • Can get costly

23. Search Engine Optimization • Position within search results based on complex formula • Tips: • Have other pages link to one’s site • Keep updating content • Include key words

24. Pricing Model • Impression-based • This is based on the number of times the page containing an ad is viewed. • Performance-based • This is more direct, such as pay-per-click. • Metrics— • click-through rate • conversion rate • Click fraud—manually or automatically inflating the click-through rate.

25. Consumer-to-business e-commerce and m-commerce New Trends

26. C2B EC • Relatively new phenomenon • Consumers sell to businesses • Stock photo sites such as www.shutterstock.com • Crowdsourcing • Blurry line between C2B and B2B

27. M-Commerce • Electronic transactions using wireless mobile devices • Mobile networks • Wireless • Switched public network • Smart phones • High-speed data transfer • “Always-on” connectivity

28. M-Commerce • M-Commerce services and applications • Popular for services that are time-critical, that appeal to people on the move, or that accomplish task more efficiently than other methods • Content and location-based services • Example: checking train schedules, searching for local businesses • Banking and financial services • Example: Wireless alerts about changes in account information • Wireless advertising • Example: Wireless service providers including advertising for local restaurants, movie theaters on cell phones and Wi-Fi devices • Games and entertainment • Example: downloading ringtones, movie clips • Wireless portals • Feature content optimized for mobile devices to steer users to information most likely to need

29. M-Commerce Applications

30. Location-Based M-Commerce • Highly personalized mobile services • Based on location • GPS functionality • Bluetooth • e911 • Federal mandate • Correct routing of emergency calls • GPS specifies location within 50 meters • Phone locator • Location of family members’ cell phones • Alerting system when child leaves a certain area

31. Location-Based Services • Next big thing: cell phone social networking • Example: Facebook Gowalla

32. Key Drivers of M-Commerce • Growth of consumer interest in adoption of the Internet and e-commerce • Real-time transfer of data over 3G and 4G cellular networks • “Always-on” connectivity • M-commerce market in the United States grew from $396 million to $1.2 billion from 2008 to 2009.

33. Mobile Entertainment • Slingbox • Acts as a personal media server • “Placeshifts” television content to any Internet-enabled device • Television signal received at the user’s house • Relayed over the Internet to be accessed from anywhere

34. Extra Content

35. Opening Case—Doing Virtual Business: Second Life • Commerce in MMOGs (massively multiplayer online game)? • 8.5 million “residents” • Avatars can: • Buy property • Build businesses and homes • Shop for clothing and other virtual items • What do users do there? • Only 1.6 million active users • Reebok, Scion, Coca-Cola, H&R Block entering SL

36. Virtual Crime • $11,500 ATM theft…in Second Life • International Problem • South Korean crime gangs • Chinese MMOG player loaned a virtual sword to another player, who then sold the sword. The loaner then killed the seller. • Japanese teen arrested for stealing from in-world accounts • Crime-based games • Crime inherent in some games

37. Managing in the Digital World: Taobao and the World of e-Commerce • Taobao is the largest digital marketplace in China • By 2011 more registered users (370 million) than the population of the United States • Online marketplace for multiple companies • Online consumer-to-consumer sales, much like eBay • Notorious for piracy and counterfeit goods • 360buy new fast growing competitor • Not on the list of notorious markets • Sales in China pose huge logistics headaches • Widely varying population densities • No ‘overnight shipping’ infrastructure

38. Brief Case: Catchafire—Fueling “Volunteer-to-Charity” e-Commerce • Many people want to donate time / service as well as or instead of money • Matching people and charities is difficult • Catchafire is an online platform to bridge this gap • Potential volunteers can “shop” for a good fit

39. Ethical Dilemma:The Ethics of Reputation Management • Online reviews can be critical to a customers buying decision • Biased and fake reviews can affect a businesses profitability, or even survival • Owners are tempted to post fake positive reviews • Competitors are tempted to post fake negative reviews • Reputation Management can help offset negative biased reviews, but poses ethical dilemmas

40. Key Players: Behind the Online Storefront: How e-Commerce Giants Help Small Businesses Flourish • Starting an online business can be complex • Commercial giants such as eBay and Amazon allow small retailers to sell through their sites • Large hosting companies such as GoDaddy provide hosting and online shopping carts • Payment services such as Intuit and PayPal offer credit card services • Fulfillment centers, such as Amazon, handle packaging and shipping individual orders • These simplify small business implementations

41. When Things Go Wrong:Rigging Search Results • Sites often try to raise their search profile • Many sites use techniques Google considers ‘cheating’ • When Google discovers a site cheating, they demote them or remove them from the search results altogether • There is a constant struggle between search engines trying to provide accurate results and sites seeking to skew results in their favor

42. Coming Attractions:Smartphones of the Future • Upcoming smartphone technologies are a closely guarded secret • However, some suppliers have announced new developments • Tactus Technology has developed a layer for a screen that can make shapes rise, so a virtual keyboard would have bumps with the keys • Near-field communication allows devices to exchange information with a tap

43. Who’s Going Mobile:Mobile Payments • Electronic payment technologies can now eliminate the need for cash and checks • Emerging technologies use near field communication or on-screen barcodes to allow payment by phone • In Kenya subscribers can use M-Pesa to pay via text message • Security concerns remain, as there is a record of every transaction

44. Industry Analysis:Retailing • Retailing has embraced new technologies • Bar code scanning for price, inventory management, self-checkout • RFID functions like a barcode but uses wireless technologies, and can be integrated with other information technologies • New forms of electronic payment, whether by pin, phone barcode, near-field communication technologies, or fingerprint are gaining traction

45. Managing in the Digital World: Businesses Get Social • Social media are no longer just being used by private individuals. • Businesses are racing to establish and promote themselves within social media networks. • It is costly in time and money. • Nevertheless, many large companies see the value of social media. • This is often handled through the marketing department.

46. WHEN THINGS GO WRONGApple Versus Adobe • Apple has been a champion of popularizing the mobile Web (iPhone, iPod, iPad). • But Apple products cannot display Adobe Flash content due to proprietary reasons. • Flash is used by many of Apple’s competitors. • Flash is used in YouTube and many advertisements. • Apple cites security and performance concerns. • Steve Jobs criticized Flash and encouraged its abandonment in open standards. • Adobe announced: • It will discontinue providing Flash substitutes for Apple platforms. • It is distributing free Google Android-powered phones to employees.

47. ETHICAL DILEMMAMonitoring Productive Employees • “You have zero privacy; get over it” (Scott McNeely, CEO of Sun Microsystems) • Use of company provided Internet connection can be legally monitored • American Management Association survey (2007): • 66% of employers monitor employee’s Internet use. • 65% use software to block access to certain Web sites. • 45% monitor key strokes. • 43% review and retain employee e-mails. • 73% use automatic e-mail monitoring technology. • 84% of the companies disclose the practices to the employees. • 30% fired employees for Internet misuse. • 28% fired employees for e-mail abuse.