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E-Commerce Systems
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Ebiz Categories

B2B C2C

B2C
BUSINESS
BUSINESS CONSUMER
CONSUMER

B2G
G2C
GOVERNMENT
GOVERNMENT

G2G
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Key Ideas
 There are several types of electronic commerce
categories: business to business (B2B),
business to consumer (B2C), consumer to
consumer (C2C), and government to constituent
(G2C).
 Electronic commerce is having an impact on all
levels of the economy.
 Electronic commerce affects economies,
organizations and individuals in some positive and
some negative ways.
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Business Models

 How a company generates revenue


 Architecture of the business – flow of
goods/services
TRADITIONAL SUPPLY / VALUE CHAIN
•Assembly,
Raw Materials Parts •Distribution Retail
manufacturing
, packaging
Customer
1st tier suppliers
2nd tier suppliers
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Business to Business (B2B)


 The largest category by far
 EDI required large volume of transactions for
economic application
 B2B buyer and seller both interact with
exchange of information.
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Business to Consumer (B2C)


 Electronic stores
 Traditional catalogue translated to the web
 Clicks and bricks (aka clicks and mortar)
 Different levels of integration of web and store activities
 On-line auctions (BidButler for min & max bid)
 Electronic mall (Fashionmall.com)
 Promotion and customer service sites (Hewlett
Packard)
 Content and advertising sites (Edmunds Car Search)
 Subscription models (Wall Street Journal)
 Clubs and communities (ClubTommy)
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Consumer to Consumer (C2C)

 Auctions and classifieds (eBay,


Half.com)
 Need for a feedback forum
 Meetings and buddy lists, discussion
groups
 Advertisement model…
 Popularity…
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Government to Constituent (G2C)

 Information regarding services Savings


 Permits and licenses (lower
costs),
 Portals efficiency
 Voting and governance
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Ebiz Impacts on the Economy


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The “New” Economy (Digital)

 Kelly (1998)
 The “new” economy is global
 The “new” economy prefers the intangible
 Intellectual goods / services
 The ‘tertiary economy’

 The “new” economy is “intensely


interlinked”
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Economic Efficiency

 Reduces cost of posting or calling for


an order
 But, substitutes costs of building and
maintaining the system
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Network Effects
 Email is more valuable if more people
are using it
 Growth can be explosive

2 nodes, 1 connection

4 nodes, 6 connections
/ 2
]
- 1)
(N
*
3 nodes 3 connections [N
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Globalization

 Effect of internetworking
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Ebiz Impacts on Organizations


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Operational Efficiency

 Extension of Electronic Data


Interchange (EDI)
 Supply chain management
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Effects of Operational Efficiency


 Disintermediation
 Cutting out some of the steps in the supply chain
 Lowering communication costs
 May also lower inventories with “just in time” deliveries
 Enterprise resource planning (ERP) systems
 Enable efficient and integrated data management
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Electronic Business Investments

 Cost of staffing
 Skills such as Java and ASP programming, still
somewhat scarce
 Significant technology investment often required
 May require significant capital expenditure
 May “cannibalize” existing products
 Difficult to accurately estimate traffic and
capacity needs
 Dangers of over or under estimating
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RELATIVE IMPACT OF ELECTRONIC COMMERCE IN VARIOUS INDUSTRIES


• Product substitution,
innovation
• Global reach
• Product fragmentation,
re-bundling Lowest
Impact
High Nuclear Submarines
(Differentiated) …..

Big 3 Auto
Manufacturer
s
UNIQUENESS
• Features
• Tailoring Amazon.com
• Buying Dell
experience Gasoline
• Brand
Retail Pharmacy
Banking/Brokerage
Food

Low • Unbundling of relationships


(Commodity) • Intense price competition
• New intermediaries

Highest
Impact High Low
CUSTOMIZATION DEGREE
• Product/service
• Buying/servicing experience
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Ebiz Impacts on Individuals


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Advantages & Limitations


 Almost half of on-line shoppers cite convenience
 24 hours a day, seven days a week (anywhere, anytime)
 Informed buyer

 Limitations
 Better for products you don’t need to ‘touch & feel’
 Time delay from purchase to receipt of product (if tangible)
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Advantages: Increased Choice

 Broader array of suppliers


 Interactive catalogues
 Consumer “pull” rather than merchant
“push”
 Customer relationship management
 Building profiles of users (potentially
anticipating needs as they arise)
 Differentiating products and prices
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Limitations: Access Inequalities

 The “digital divides”


 Wealthy nations and poorer nations
 Development skills for those with access versus

those without
 Different access to government services and

protections
 Potential distinction by gender, race, age
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Potential for Fraud

 Credit card fraud  Multilevel

Similar to traditional fraud


 Difficulty authenticating marketing/pyramids
purchaser identity
 Travel and vacation
 On-line auction fraud  Substandard services
 Rating and commenting
 Web “cramming”
 Health care products
and services
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Electronic Payment Security


Technologies
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Authentication

 Digital signatures
 A unique code applied to an electronically
transmitted message that identifies the
sender
 Uses hashing technology so that changing

the code will no longer match with the


document
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Digital Certificates
 An electronic document that verifies the sender or
receiver’s identify
 Certificate authority
 Types and classes of digital certificate
 Site certificates
 Personal authority certificates

 Certifying authority certificates

 Software publisher certificates


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Privacy & Security

 Privacy statement or policy


 Trust seals

 BBBOnLine,subsidiary of Better Business Bureau


 AICPA WebTrust, examination by CPA

 TRUSTe, administered by non-profit group


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Secure Sockets Layer (SSL)

 A protocol designed to provide a


secure connection between the sender
and receiver of information
 Server name of https://
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Functioning of SSL

 Three basic properties of secure


channel
 The channel is private
 The channel is authenticated

 The channel is reliable


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Establishing an SSL Secure Connection

1. User browses Web


2. Selects payment screen
3. Request sent to server 4. Server returns payment
screen
6. Browser picks one algorithm 5. Server returns certificate
7. Browser creates key pair
8. Browser encrypts secret key 10. Server decrypts
9. Browser sends encrypted key to server

Two-way encrypted transmissions can


occur
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Secure Electronic Transaction (SET)

 A security protocol designed for handling


encrypted electronic payments online
 Specifications include:
 Confidentiality of information
 Payment data integrity

 Authentication of merchants, cardholders,


and clearinghouses
 Interoperability with other protocols

 Dual Signature
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Digital Wallet

 Software that encrypts payment information


and stores it in a file
 Opponents suggest serious privacy and
security issues