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FIFTH EDITION
CHAPTER 8
E-COMMERCE APPLICATIONS
E. Wainright Martin Carol V. Brown Daniel W. DeHayes Jeffrey A. Hoffer William C. Perkins
E-COMMERCE TECHNOLOGIES
Electronic commerce the electronic transmission of buyer/seller transactions and related information between individuals and businesses or between two or more businesses that are trading partners
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E-COMMERCE TECHNOLOGIES
Will we see continued growth in e-commerce (Internet) applications? Consider Metcalfes Law: The value of a network to each of its members is proportional to the number of other users, expressed as (n2 n) / 2
There are increasing returns to be gained as more organizations and people use the Web
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E-COMMERCE TECHNOLOGIES
Commercial History of the Internet
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E-COMMERCE TECHNOLOGIES
Technologies for B2C Applications Improvements for online sales or auction bidding New channels for customer service Collection of clickstream metrics and personal data from Web site users Acceptance of Web cookies stored on users hard drive to enable customization of Web sites Web browser improvements with multimedia
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E-COMMERCE TECHNOLOGIES
Technologies for B2B Applications
Most important technological advance for B2B applications XML markup language
Now have accepted standards Can be used for a flexible, low-entry form of EDI
Electronic data interchange (EDI) proprietary applications for communicating with trading partners based on agreedupon standards for business document transmission
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E-COMMERCE TECHNOLOGIES
Technologies for B2B Applications
EDI Benefits:
Reduced cycle times for doing business Cost savings for automated transaction handling and elimination of paper documents Improved interfirm coordination and reduced interfirm coordination costs Start-up coordination challenges (EDI standards agreement and legal issues) Start-up and ongoing IT costs
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EDI Constraints:
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E-COMMERCE TECHNOLOGIES
Technologies for B2B Applications
Prediction:
Web forms using XML and extranet applications will continue to grow!
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E-COMMERCE TECHNOLOGIES
Technologies for IT Security
How to control access to a computer that is physically networked to the Internet How to ensure that security of a given communication is not violated
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E-COMMERCE TECHNOLOGIES
Technologies for IT Security
How to control access to a computer that is physically networked to the Internet?
Use of a firewall devices that sit between the Internet and an organizations internal network to block intrusions from unauthorized users and hackers
How to ensure that security of a given communication is not violated?
Encryption based on two decoding keys and mathematical principles for factoring a product into its two prime numbers, where one key codes a message and the other decodes it
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(Adapted from Applegate, Holsapple, et al. 1996; Kalakota and Whinston, 1996)
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Supplier power Customer power Threat of new entrants Threat of substitute products or services Responses of competitors
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Procurement of supplies via Internet can increase companys power over suppliers Size of potential market is expanded Distribution channels between traditional company and customer can be eliminated
2. 3.
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Migration to price competition difficult to keep offerings proprietary Increased number of potential competitors Internet reduces some traditional barriers (such as in-person sales force) Customers increase their bargaining power Internet reduces customers switching costs
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Intermediaries
Content providers companies that use the Internet to distribute copyrighted content, including news, music, games, books, movies, and many other types of information Online brokers intermediaries between buyers and sellers of goods and services Market makers intermediaries that aggregate three services for market participants A place to trade Rules to govern trading An infrastructure to support trading
Types of Intermediaries
E-BUSINESS MODELS
B2C Applications
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B2B Applications If Buyers and Sellers are Fragmented, Independent Intermediaries are likely to be successful.
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E-BUSINESS MODELS
Atomic Business Models
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E-BUSINESS MODELS
Atomic Business Models
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E-BUSINESS MODELS
Atomic Business Models
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DIRECT-TO-CUSTOMER EXAMPLES
Amazon.com
Dot-com pioneer in online retailing of third-party products Began as bookseller competitor Now a multi-store, online mall First profitable year 2003 Provides excellent online shopping experiences for millions of customers
2005 Pearson Prentice-Hall Chapter 8 - 25
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DIRECT-TO-CUSTOMER EXAMPLES
Dell.com
Traditional direct seller and market leader of made-to-order microcomputers Developed custom software to support mass customization strategy Took advantage of early penetration of Internet market
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DIRECT-TO-CUSTOMER EXAMPLES
Landsend.com
Traditional catalog company that developed capability to give online tools to customers so they could make orders for new custom clothing via its Web site
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DIRECT-TO-CUSTOMER EXAMPLES
Successful Online Models
All developed B2C Web sites that use advanced technologies to support customized interactions with customers
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DIRECT-TO-CUSTOMER EXAMPLES
Successful Online Models
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INTERMEDIARY EXAMPLES
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INTERMEDIARY EXAMPLES
eBay
A dot-com pioneer in electronic auctions One of first to achieve profitability Now is a C2C, B2B, and B2C intermediary
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These materials have been reproduced with the permission of eBay, Inc. Copyright eBay, Inc. All rights reserved.
2005 Pearson Prentice-Hall Chapter 8 - 35
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INTERMEDIARY EXAMPLES
Yahoo!
Early dot-com intermediary Has recently leveraged IT innovations and business acquisitions to become a leading portal As a portal, site owns only the customer relationship Primary source of revenue is advertisements Through acquisition, now offers online job searches
2005 Pearson Prentice-Hall Chapter 8 - 36
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(Reproduced with permission of Yahoo! Inc. Copyright 2004 by Yahoo! Inc. YAHOO! And the YAHOO! Logo are trademarks of Yahoo! Inc.) 2005 Pearson Prentice-Hall Chapter 8 - 37
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INTERMEDIARY EXAMPLES
Manheim
Traditional B2B intermediary for sale of used cars Has leveraged the Internet to reduce purchasing and sales costs Provides remote, real-time bidding during physical auctions
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Types of Intermediaries
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