E-COMMERCE

MANAGEMENT INFORMATION SYSTEM

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LEARNING OBJECTIVES
Define

e-commerce and important ecommerce terms. Understand the effect of e-commerce on market efficiency.

E-COMMERCE

E-commerce is the buying and selling of goods and services over public and private computer networks. E-Commerce has become one of the biggest growth areas in recent years. Almost everybody has engaged with buying and selling over the internet. This includes individual consumers purchasing or trading online, through to retailers that have extended their business provision to include a website and online presence, reaching out to a global market. Poor choices of technology and processes will result in poorly managed opportunities which could lose business, market position and profitability.

UNDERSTAND THE STRUCTURE AND AIMS OF

BUSINESS ORGANIZATIONS Organizations: type e.g. private, public, voluntary, charitable business organizations Stakeholders: identification of stakeholders; satisfying stakeholder objectives; Business functions: key internal business functions e.g. marketing, sales, accounting,administration; Management Information Systems (MIS), operations

UNDERSTAND THE IMPACT OF E-COMMERCE

Consumer impact: empowered customers e.g. online sales, direct communication with customers, greater choice, lower prices, availability of new products; global markets; new marketing models; on-line advertising Business impact: global business and consumer markets; issues e.g. challenge of new technology, security issues, impact and implications of dealing with customers on-line, creating new distribution channels, greater competition, challenge to monopoly power, retraining of staff, lower overheads, new selling chains; legislation

E-COMMERCE MERCHANT COMPANIES

There are two types of merchant companies: those that sell directly to consumers and those that sell to companies. Each uses slightly different information systems in the course of doing business. B2C, or business-to-consumer, e-commerce concerns sales between a supplier and a retail customer (the consumer). A typical information system for B2C provides a Web-based application or Web storefront by which customers enter and manage their orders (i.e., Amazon.com, REI.com) The term B2B, or business-to-business, e-commerce refers to sales between companies (raw materials suppliers use B2B systems to sell to manufacturers, manufacturers use B2B to sell to distributors, and distributors uses B2B systems to sell to retailers). B2G, or business-to-government, refers to sales between companies and government organizations.

NONMERCHANT E-COMMERCE

The most common nonmerchant e-commerce companies are auctions and clearing houses. E-commerce auctions match buyers and sellers by using an ecommerce version of a standard auction.
This e-commerce application enables the auction company to offer goods for sale and to support a competitive bidding process. The best-known auction company is eBay, but many other auction companies exist; many serve particular industries.

Clearinghouses provide goods and services at a stated price, and they arrange for the delivery of the goods but they never take title. As a clearinghouse, Amazon matches the seller and the buyer and then takes payment from the buyer and transfers the payment to the seller, minus commission. Other examples of clearinghouse are electronic exchanges that match buyers and sellers; the business process is similar to that of a stock exchange. 7

WHY USE E-COMMERCE?

Reduce transaction cost Speed the flow of goods and services Improve level of customer service Enable close coordination among manufacturers, suppliers, and customers Reach worldwide markets

For example, when Cisco Systems placed its procurement operation on-line in 1998, the company saved $350 million
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BASIC COMPONENTS OF A SUCCESSFUL ECOMMERCE MODEL

BE ABLE TO DESIGN E-COMMERCE

SOLUTIONS

Objectives: business idea e.g. unique selling proposition, business-to-business opportunities, Market research: purpose of research e.g. identifying information sources Target markets: market analysis e.g. size, characteristics, dynamics, competitors, historical background, emerging trends, market share, market segmentation Key processes: technology requirements e.g. hardware, software, security, maintenance, backend systems; supply sources; distribution channels e-Commerce payment systems e.g. electronic cheque, PayPal, credit or debit cards; Security: key areas e.g. prevention of hacking, viruses, identity theft,, strong passwords, alternative authentication methods Legislation: relevant legislation eg Data Protection Act 1998, Computer Misuse Act 1990,

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BE ABLE TO PLAN AN E-COMMERCE

STRATEGY

Customer expectations: raised expectations for a quick and efficient service e.g. timely responses to customer communications, quick delivery of the product or service, accurate information. Strategy: general e.g. marketing, supply chain, electronic payment Internet strategy: hosting e.g. internal, sub-contracted; designing the website; maintaining 24/7 access Marketing strategy: methods e.g. targeting market segments and interest groups, developing electronic web-communities, promotion strategies to target specific market segments, search engine optimization, e-marketing software Supply chain strategy: methods e.g. satisfying customer demand, responsive supply chain, developing partnership relationships with suppliers

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BASIC COMPONENTS IN AN E-COMMERCE WEBSITE

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Profiling and Personalizing Search Management Event Notification Electronic Payment Processes Securing Electronic Payments

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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 A 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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EVENT NOTIFICATION

Most e-commerce applications are event driven

Responds to such things as customers first website visit and payments

Monitors all e-commerce processes Records all relevant events, including problem situations

Notifies all involved stakeholders

Works in conjunction with user-profiling software

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ELECTRONIC PAYMENT PROCESSES

Web

Payment Processes

Shopping cart process Credit card payment process Debit and other more complex processes

Electronic

Funds Transfer (EFT)

Major payment system in banking, retail Variety of information technologies capture and process money and credit card transfers Most point-of-sale terminals in retail stores are networked to bank EFT systems
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SECURING ELECTRONIC PAYMENTS

Network sniffers easily recognize credit card formats

Encrypt data between customer and merchant Encrypt data between customer and financial institution Take sensitive information off-line

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