Ch2_E-Commerce-Mechanism-BIT - E-Commerce Mechanisms Infrastructure and Tools 2.1 ELECTRONIC COMMERCE MECHANISMS AN OVERVIEW The many EC models and

Ch2_E-Commerce-Mechanism-BIT - E-Commerce Mechanisms...

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Unformatted text preview: E-Commerce: Mechanisms, Infrastructure, and Tools 2.1 ELECTRONIC COMMERCE MECHANISMS: AN OVERVIEW The many EC models and types of transactions (presented in Chapter 1) are enabled by different mechanisms. To begin with, most B2C applications are conducted on the Internet. In addition, the generic enablers of any information system including databases, networks, security, software and server software, operating systems, hardware (Web servers), and hosting services need to be established. 1-2 2.1 ELECTRONIC COMMERCE ECHANISMS: AN OVERVIEW Added to the above are the specific EC mechanisms presented in this chapter, such as electronic markets, shopping carts, ecatalogs, and support services such as payment and order fulfillment. In addition to of all of the above, there are different methods for executing EC, such as buying at a fixed price or at an auction, and each method has a different support mechanism. Finally, there are the Web 2.0-based collaboration and communication 1-3 EC Activities and Support Mechanisms EC activities are divided into six categories, which are listed on the left side of Figure2.1 . Each activity is supported by one or more EC mechanisms, which are shown on the right side of Figure2.1. Additional mechanisms exist for special activities, such as payment, security, and order fulfillment. Also, standard IT technologies such as RFID, EDI, and extranets are described in Online Tutorial T2. 1-4 1-5 SELLERS BUYERS, AND TRANSACTIONS The Purchasing Process Customers buy goods online in different ways. The most common is purchasing from catalogs at fixed prices. Sometimes prices may be negotiated or discounted. Another way to determine price is dynamic pricing, which refers to non-fixed prices such as those in auctions or stock (commodity) exchanges. 1-6 SELLERS BUYERS, AND TRANSACTIONS The Purchasing Process The process starts with a buyer logging on to a seller’s website, registering (if needed), and entering an online catalog or the buyer’s “My Account.” E-catalogs can be very large, so using a search engine may be useful. Buyers usually like to compare prices; therefore, an online price comparison service can be useful. If not satisfied, the buyer may abandon the seller’s site. If satisfied, the buyer will place the chosen item in a virtual shopping cart (or 1-7 SELLERS BUYERS, AND TRANSACTIONS The Purchasing Process The buyer may return to the seller’s catalog to choose more items. Each selected item is placed in the shopping cart. When the item selection is completed, the buyer goes to a checkout page, where a shipment option is selected from a menu. Finally, a payment option is selected. After checking all the details for accuracy, the buyer submits the order. This process is illustrated in Figure2.2 . The place where buying and selling occurs is called an e-marketplace, which we introduce 1-8 1-9 2.2 E-MARKETPLACES Electronic markets play a central role in the digital economy, facilitating the exchange of information, goods, services, and payments. In executing the trading process, emarketplaces create economic value for buyers, sellers, market intermediaries, as well as for society at large. Markets have three major functions: (1) enabling transactions to occur by providing a meeting place for buyers and sellers; (2) enabling the flow of relevant information; (3) providing services associated with market transactions, such as payments and 1-10 1-11 Electronic Markets The electronic market is the major venue for conducting EC transactions. An e-marketplace (also called e-market, virtual market, or market space), is an electronic space where sellers and buyers meet and conduct different types of transactions. Customers receive goods and services for money. The functions of an e-market are the same as those of a physical marketplace; however, computerized systems tend to make electronic markets much more efficient by providing more updated information and various 1-12 EC has increased market efficiency by expediting and or improving the functions listed in Table2.1 . Furthermore, EC has been able to significantly decrease the cost of executing these functions. The emergence of electronic marketplaces, especially Internet-enabled ones, has changed several of the processes used in trading and supply chains. 1-13 In many cases, these changes, driven by technology, have frequently resulted in: - Greater information - Lower information search time and cost for buyers. - Diminished information asymmetry. - Possibly less time between purchase and possession. - The ability of buyers, sellers, and the virtual market to each to be in a different location. 1-14 Components of and the Participants in EMarketplaces The major components and players in a marketspace are: customers. More than 2 billion Internet users worldwide are potential buyers of goods and services offered on the Internet. These consumers are looking for bargains, customized items, collectors’ items, entertainment, socialization, and more. Sellers. Millions of webstores are advertising and offering a huge variety of items. These stores are owned by companies, government agencies, or individuals. Every day it is possible to find new offerings of products and1-15 Components of and the Participants in EMarketplaces Products and services. One of the major differences between the marketplace and the marketspace is the possible digitization of products and services in a marketspace. Infrastructure. The marketspace infrastructure includes electronic networks, databases, hardware, software, and more. Front end. Customers interact with a marketspace via a front end. The major components of the front end can include the seller’s portal, electronic catalogs, a shopping cart, a search engine, an auction engine, a payment gateway, and1-16 Components of and the Participants in EMarketplaces Back end. All the activities that are related to order aggregation and fulfillment, inventory management, purchasing from suppliers, accounting and finance, insurance, payment processing, packaging, and delivery are done in what is termed the back end of the business. Intermediaries. is typically a third party that operates between sellers and buyers. Intermediaries of all kinds offer their services on the Web. Some intermediation is done manually; many are done electronically. 1-17 Types of E-Marketplaces 1. Private E-Marketplaces Private e-marketplaces are those owned and operated by a single company. starbucks.com ,dell. com, and sell from their websites. Private markets are either sellside or buy-side. In a sell-side e-marketplace , a company, (e.g.,net-a-porter.com or cisco.com ) will sell either standard or customized products to individuals (B2C) or to businesses (B2B); this type of selling is considered to be one-tomany. In a buy-side e-marketplace, a company purchases from many potential suppliers; this1-18 Types of E-Marketplaces 2. Public E-Marketplaces - Public e-marketplaces are in many cases B2B markets. - They often are owned by a third party (not a seller or a buyer) or by a group of buying or selling companies (referred to as a consortium), and they serve many sellers and many buyers. - These markets also are known as exchanges 1-19 2.3 CUSTOMER SHOPPING MECHANISMS: STOREFRONTS, MALLS, AND PORTALS Several kinds of interactions exist among sellers, buyers, and e-marketplaces. The major B2C mechanisms are webstores (storefronts) and Internet malls. STOREFRONTS (Webstores) - refers to a single company’s (or individual seller’s) website where products and services are sold. - Webstores may target an industry, a location, or a niche market (e.g.,cattoys.com ). - The webstore may belong to a manufacturer (dell.com ), to 1-20 a retailer (e.g.,amazon.com A webstore includes tools known as merchant software (available in a suite), that are necessary for conducting online sales. The most common tools are: - an electronic catalog; - a search engine that helps the consumer find products in the catalog; - an electronic shopping cart for holding items until check out; - e-auction facilities where auctions take place; - a payment gateway where payment arrangements can be made; - a shipment center where shipping arrangements 1-21 are made; Microsites microsite is a webpage(s) that acts as a supplement to a primary website, but is external to it. It expands on the content by adding editorial, commercial, or educational material. Electronic Malls Similar to malls in the physical world, an e-mall is an online shopping location where many stores present their catalogs. The mall charges commission from the sellers based on their sale volume. For example, (emallofmaine.com ) is an e-mall that aggregates products, services, and providers in the state of Maine. When a consumer indicates the category he or she is interested in, the consumer is 1-22 transferred to the appropriate independent This kind of mall does not provide any shared services; it is merely a directory. Other malls, such as choicemall.com do provide some shared services. Both yahoo.com and ebay.com operate electronic malls. 1-23 Types of Stores and Malls There are several different Stores and Malls: General stores / malls. These are large marketspaces that sell all kind of products. Special stores / malls. These sell only one or few kinds of products, such as shoes, books, flowers Regional versus global stores. Some stores that serve customers live nearby. Pure and play versus click-and-mortar Stores. 1-24 Web (Information) Portals A portal is an information gateway that is used in e-marketplaces, webstores, and other types of EC (e.g., in e-collaboration, intrabusiness, and e-learning). A Web (information) portal is a single point of access, through a Web browser, to critical business information located inside and outside of organizations. This information is aggregated and is accessed and presented in a consistent way. Many Web portals personalize for users. Note that wireless devices are becoming portals for both enterprise and Internet access. A schematic view of a portal is shown in Figure 1-25 1-26 Web (Information) Portals Information sources (external and internal) are shown on the left side, and integrated and process data are shown as output on the monitor’s screen. Web portals offer some generic services such as e-mail, news, stock prices, entertainment, shopping capabilities, and so forth. 1-27 Types of Portals One way to distinguish among them is to look at their content, which can vary from narrow to broad, and their community or audience, which also can differ. The major types of portals are as follows: Commercial (public) portals. These popular portals offer content for anyone. Although they can be customized by the user, they are still intended for broad audiences and offer fairly routine content, some in real time (e.g., a stock ticker and news). Examples of such sites are yahoo.com and google.com. Corporate (private) portals. Corporate 1-28 Types of Portals Publishing portals. These portals are intended for communities with specific interests and involve relatively little customization of content; however, they provide extensive online search features and some interactive capabilities. Examples of such sites are techweb.com and zdnet.com Mobile portals. Mobile portals are portals that are accessible from mobile devices. One example of such a mobile portal is i-mode. Voice portals. Voice portals are websites, usually portals, with audio interfaces. This means that they can be accessed by a standard telephone or a cell phone. AOL by 1-29 Types of Portals Personal portals. These target specific filter information for individual. (netvibes.com) Knowledge portals. Knowledge portals enable easy access to knowledge by knowledge workers and facilitate collaboration. Communities’ portals. These are usually parts of online communities. they are dedicated to some theme and may be sponsor by a vendor such as SONY. An example is 17173.co-- portal for gamers in China. 1-30 The Roles and Value of Intermediaries in EMarketplaces Intermediaries, such as brokers, play an important role in commerce by providing value-added activities and services to buyers and sellers. (well-known intermediaries are wholesalers and retailers). The two major types of online intermediaries are brokers and infomediaries. 1-31 Brokers A broker in EC is a person or a company that facilitates transactions between buyers and sellers. The following are different types of brokers: Trading. A company that aids online trading (e.g., E*TRADE or eBay). Organization of online malls A company that organizes many online stores in one place (e.g., Yahoo! Shopping and Alibaba.com). Comparison agent. A company that helps consumers compare prices, encourages user comments, and customer service at different stores (e.g., Bizrate for a great diversity of products). Shopping aids provider. A company that helps online shopping by providing escrow, payments, shipping, and security (e.g., PuntoMio, Inc). Matching services. These services match entities 1-32 such as jobs to applicants, and buyers to sellers Infomediaries. Electronic intermediaries that provide and / or control information flow in cyberspace, often aggregate information and selling it to others. Distributors in B2B A special type of intermediary in e-commerce is the B2B e-distributor . These intermediaries connect manufacturers with business buyers (customers), such as retailers (or resellers in the computer industry). E-distributors aggregate product information from many manufacturers, sometimes thousands of them, in the e-distributor’s catalog. The distributor buys the products and then sells them, as supermarkets do. (grainger.com). Changing Role and Location of intermediaries acted mostly between two parties in a markets 1-33 2.4 MERCHANT SOLUTIONS: ELECTRONIC CATALOGS, SEARCH ENGINES, AND SHOPPING CARTS To enable selling online, a website usually needs EC merchant server software. Merchant software includes several tools and platforms. Such software offers basic tools that include electronic catalogs, search engines, and shopping carts; all are intended to facilitate the electronic trading process. Examples of such software are oscommerce.com and smallbusiness.yahoo.com/ecommerce .1-34 Electronic Catalogs Catalogs have been printed on paper for generations. Recently, electronic catalogs on a DVD (or CDROM) and on the Internet have gained popularity. Electronic catalogs (e-catalogs) consist of a product database, directory, and a presentation function. They are the backbone of most ecommerce sales sites. For merchants, the objective of e-catalogs is to advertise and promote products and services. For the customer, the purpose of such catalogs is to locate information on products and services. E-catalogs can be very large; for example, Amazon.com’s catalog contains millions of products. 1-35 Electronic Catalogs Most early online catalogs were static presentations of text and messages from paper catalogs. However, online catalogs have evolved to become more dynamic, customizable, and integrated with selling and buying procedures, shopping carts, order taking, and payment. E-catalogs may include video clips. The tools for building them are being integrated with merchant software suites and Web hosting tools. Although used only occasionally in B2C commerce, customized catalogs are used frequently in B2B e-commerce 1-36 EC Search Activities, Types, and Engines Search activities are popular in EC, and many tools for conducting searches are available. A study by Stambor (2010 ) published in Internet Retailer revealed that 94% of shoppers conduct research online before making any purchase, and 61% use a search engine when shopping online. Consumers may search inside one company’s catalog to find a product or service, or use Google or Bing to find companies that sell the product they need. Let us now look at three major types of searches. 1-37 Types of EC Searches Internet/Web Search. This is the most popular search that involves looking for any documents on the Web. (finding information is one of the most frequent activities done on the Web) Enterprise Search. Describes the search for information within the files and databases of an organization. (Google has a powerful Enterprise Search Appliance known as GSA). Desktop Search. Involves a search of a user’s own computer files (e.g., windows.microsoft.com/enus/windows7/products/features/windowssear ch ). 1-38 Search Engines Customers tend to ask for information (e.g., requests for product information or pricing) in similar ways. This type of request is repetitive, and answering such requests manually is costly. Search engine is a computer program that can access databases of Internet or intranet resources, search for specific information or keywords, and report the results. Google and Bing are the most popular search engines in the U.S. Baidu is the primary search engine in China. Thousands of different public search engines are available. Each of these tools excels in one area. These can be very specialized with different capabilities. 1-39 Software (Intelligent) Agent Unlike Search Engines a Software (Intelligent) agent can be used to perform routine task that require Intelligence (monitoring activities and working as an assistant). Question and Answers Online Intelligent Search Engines can answer user questions. A leading engine is ask.com , Ask.com had over 300 million questions and answers in its database. The Q&A service matches answers from the database to questions users ask. A competing engine is answers.com , a question and answer (Q&A) site, which comprises wikianswers.com . 1-40 Voice-Powered Search To ease searching, especially when using a smartphone, Google introduced a voice-powered tool that allows you to skip the keyboard altogether. The first product was included as part of iPhone’s mobile search application. It allows you to talk into your phone, ask any question, and the results of your query are provided on your iPhone. In addition to asking questions by talking into your iPhone, you can also listen to search engine results. 1-41 Video and Mobile Search There are dozens of dedicated search tools and sites that will search for videos and other images. Some of them, such as bing.com/videos will search across multiple sites; others, such as YouTube will search only for their own content. Mobile Search Several search engines are adapted to mobile search. Notable are Google, Clusty, and Yahoo! 1-42 Visual Shopping Search Engine Visual search means looking for information that is presented visually (photos, images, etc.). This technology can be used to support e-commerce. For example, Like.com provides a visual search engine based on machine learning and computer vision that focuses on consumer products. 1-43 Shopping Carts An electronic shopping cart (also known as shopping bag or shopping basket ) is software that allows customers to accumulate items they wish to buy before they arrange payment and check out, much like a shopping cart in a supermarket. The electronic shopping cart software program automatically calculates the total cost, and adds tax and shipping charges when applicable. Customers can review and revise their shopping list before finalizing their purchase by clicking on the “submit” button 1-44 Shopping Carts Shopping carts for B2C are fairly simple (amazon.com , but for B2B, a shopping cart may be more complex. Shopping cart software is sold or provided free to store builders as an independent component outside a merchant suite (e.g., see networksolutions.com/ecommerce/index-v3.jsp . Free online shopping carts (trials and demos) are available at volusion.com and 1freecart.com For shopping cart applications for Facebook, see ecwid. com/facebook-app.html and the Ecwid app page on Facebook at facebook.com/ecwid 1-45 2.5 AUCTIONS, BARTERING, AND NEGOTIATING ONLINE One of the most interesting market mechanism...
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