Chapter 4: Enabling Business-To-Consumer Electronic Commerce

Brick-and Mortar Business Strategy

A business approach exclusively utilizing physical locations, such as department stores, business offices, and manufacturing plants, without an online presence.

Bricks-and-clicks business strategy

A business approach utilizing both physical locations and virtual locations. Also referred to as "bricks-and-clicks"

Bounce rate

The percentage of single-page visits; reflecting the percentage of users for who a particular page is the only page visited on the web site during a session

Business-to-business (B2B)

Electronic commerce transactions between business partners, such as suppliers and intermediaries.

Business-to-consumer (B2C)

Electronic commerce transactions between businesses and consumers

Card Verification Value (CVV2)

A three digit code located on the back a credit card; used in transaction when physical card is not present

Click fraud

the abuse of pay-per-click advertising models by repeatedly clicking on a link to inflate revenue to the host or increase costs for the advertiser.

Click and mortar business strategy (Bricks-and-Clicks business strategy)

A business approach utilizing both physical locations and virtual locations. Also referred to as virtual companies.

Example: Barnes & Noble, choose to utilize the Internet to extend their traditional offline retail channels.

conducting physical and virtual operations present special challenges: business activities must be tailored to each of these different environments in order for the firms to compete effectively (differential pricing or shipping and inventory management)

Different Skills are necessary to support the increase complexity of their IS needs.

Click only business strategy

A business approach that exclusively utilizes an online presence. Companies using this strategy are also referred to as virtual companies

Example: Amazon, Ebay
Also sometimes called "Pure Play Companies" focusing on very distinct way of doing business;

Can often compete more effectively on price
These companies can reduce prices to rock bottom levels

Tend to be highly adept with technology and can innovate very rapidly as new technologies become available. Can help them stay one step ahead of their competition.

Some problems with this strategy: Hard for customers to return products they bought online versus returning it to their local department store.
Customers might not be comfortable making purchases online (giving out their credit card information, etc.)

Click-through rate

The number of surfers who click on an ad (i.e., clicks), divided by bu the number of times it was displayed (i.e., impressions)

Consumer-to-business (C2B)

Electronic commerce transactions in which consumers sell goods or services to businesses

Consumer-to-consumer (C2C)

electronic commerce transactions taking place solely between consumers.

Conversion Rate

The percentage of visitors to a website who perform the desired action.

Digital rights management (DRM)

A technological solution that allows publishers to control their digital media (music, movies, and so on) to discourage, limit or prevent illegal copying and distribution.

disintermediation

The phenomenon of cutting out the "middleman" in transactions and reaching customers more directly and efficiently.

e-auction

An electronic auction

E-Government

The use of information systems to provide citizens, organizations, and other governmental agencies with information about and access to public services

Electronic Bill Pay

The use of online banking for bill paying.

Electronic Commerce

The exchange of goods and services via the Internet among and between customers, firms, employees, business partners, suppliers, and so on.

E-Tailing

Electronic retailing; online sales of goods and services

Exit Rate

The percentage of visitors who leave the Web site (terminate the session) after viewing a particular page.

Functional Convenience

A web page's characteristics that make the interaction with the site easier or more convenient

Government-to-business (G2B)

Electronic commerce that involves a country's government and businesses

Involves relationships with all levels of government. Includes e-procurement, in which the govt streamlines its supply chain bu purchasing materials directly from suppliers using its proprietary internet enabled procurement system.

Also includes forward auctions that allow businesses to buy seized and surplus government equipment. Other G2B services are: Online applications for export licenses, verification of employees SSN and online tax filing.

Government-to-citizen (G2C)

Online interactions between federal, state, and local governments and their constituents.

The IRS internet tax filing, or e-filing, is one of the more recognizable G2C tools, saving resources in terms of time and paper.

Government-to-government (G2G)

Electronic interactions that take place between countries or between different level of government within a country.

group buying

Special volume discounts negotiated with local businesses and offered to people in the form of "daily deals" if enough people agree to purchase the product or service, everyone can purchase the product at the discounted price.

Internet Tax Freedom Act

An act mandating a moratorium on electronic commerce taxation in order to stimulate electronic commerce.

Location Based Services

Highly personalized mobile services based on a user's location

Long Tail

The large parts of consumer demand that are outside the relatively small number of mainstream tastes.

Mass Customization

Tailoring products and services to meet the particular needs of individual customers on a large scale

M-commerce (mobile commerce)

Any electronic transaction or information interaction conducted using a wireless, mobile device and mobile networks that leads to a transfer of real or perceived value in exchange for information, services, or goods.

Menu-driven pricing

A pricing system in which companies set and present non-negotiable prices for products to consumers

Mobile banking

Conducting financial transactions using mobile devices

Net Neutrality

The principal that all Internet traffic should be treated the same.

Online Banking

The use of the Internet to conduct financial transactions

Online Investing

The use of the Internet to obtain information about stock quotes and manage financial portfolios

Paid Inclusiom

The inclusion of a website in a search engine's listing after payment of a fee.

Pay-Per Click

A payment model used in online advertising where the advertiser pays the web site owner a fee for visitors click-ing on a certain link.

QR code

A two-dimensional barcode with a high storage capacity

reintermediation

The design of a business model that reintroduces middlemen in order to reduce the chaos brought on by disintermediation.

representational delight

A web page's characteristics that stimulate a consumer's senses.

reverse pricing

A pricing system in which customers specify the product they are looking for and how much they are willing to pay; this information is routed to appropriate companies that either accept or reject the customer's offer.

search advertising

Advertising that is listed in the sponsored search results for a specific search term.

search engine optimization (SEO)

Methods for improving a site's ranking in search engine results

showrooming

Shoppers coming into a store to evaluate the look and feel of a product, and then purchasing it online or at a competitor's store.

social commerce

Leveraging visitors social networks in e-commerce interactions to build lasting relationships, advertise products, or otherwise create value.

sponsored search

Advertising that is listed in the sponsored search results for a specific search term

structural firmness

A web page's characteristics related to security and performance

Virtual Company

See Click-only business strategy

Watermark

A digital or physical mark that is difficult to reproduce; used to prevent counterfeiting or to trace illegal copies to the original purchaser

Web analytics

The analysis of web surfers behavior in order to improve a site's performance

Business to Consumer (B2C)

Description: Transaction between businesses and their customers

Example: A person buys a book from Amazon.com

Business to Business (B2B)

Description: Transaction among businesses

Example: A manufacturer conducts business over the web with its suppliers

Consumer to business (C2B)

Desciption: Transactions between customers and businesses

Example: A person offers his photography at shutterstock.com

Consumer to Consumer (C2C)

Description: Transaction between people not necessarily working together

Example: A person purchases some memorabilia from another person via eBay.com

In order to increase conversion rate, e-tailers should use these 3 recommendations:

1.) Recommendation: The website should offer something unique: Providing visitors with information or products that they can find nowhere else leads to EC profitability.

2.) Recommendation- The web site must motivate people to visit, to stay, and to return: Online consumers can choose form a variety of vendors for products they are looking for and less likely to be loyal to a particular e-tailer.

3.) Recommendation: You must advertise your presence on the web: First you must include the website address on call company materials, from business cards and letterheads to advertising copy. Companies will list their URL at the end of television commercials.

QR codes are also a plus: when scanning the bar codes of qr codes they point the consumer to a particular web page when he or she scans the barcode with their mobile device camera.

4.) Recommendation: You should learn from your web site. Can track the path that vistors take through many pages of its web site and record the length of the visits, page views common entry pages, a page's bounce rate and exit rate, and even the user's region, browser, or Internet service provider, among other statistics.

Internet Marketing:

1.) Search Marketing: Includes paid search, placing ads on search websites based on search terms and SEO
2.) Dsiplay Ads: Simple banner ads, but now often contextualized to what the person is viewing.
Only need to know these two from the chart on slide 29*


•Search Engine optimization (SEO) can be critical to web site's success
•Alphabet*
•Microsoft created Bing to compete with Google search engine
•Search marketing: 33 billion and display advertising are 2 most dominant of internet marketing
•Search engine zone in on key words when bringing up results. The range of key words that would be important to someone. "Search Engine Optimization"

EC Business Strategies: Revenue Models:

Information Systems Provider

ISP: used to maintain provider accounts

Sales Tax Issues in EC

•Internet tax freedom act of 1998: federal law
•No state tax for online purchases
•Why? Create economic incentive for our economy
•Effect on brick and mortar retailers don't like it
•Is this a "Pareto improvement?" (Means neither of both parties will be harmed) No, doesn't help states since purchases online are tax free.

Arguments for tighter sales taxation:

•Increases revenue for states from sales tax
•Removes "unfair" advantage for e-tailers over brick-and-mortar stores
•Increases accountability to states for e-tailers

Arguments "Against" Tighter Sales Taxation:

Slows EC growth and opportunity

Creates additional compliance burden for e-tailers

Drives EC sales and businesses to other countries

Search Marketing

• Google AdWords, Bing ads, Yahoo Ads
• Freeconomics: Google's revenue from advertising
• Common pricing model is PPC
• Google's AdWords Video
Budget: Minimum budget requirement is nonexistent
Smart, targeted marketing: Quick access to data results, big audience, geographic targeting,
Use by all types of businesses
Results reports (with Google Analytics)
Keywords and pricing: Only charged when people click on your ads to go to your website.

Types of Electronic Commerce

Describe different business models used to compete in cyberspace as well as different forms of electronic government.

EC is the online exchange of goods, services, and money between firms and between firms and their customers. Companies and individuals are engaging in B2B, B2C, C2C, or C2B. In addition, e-government is a govt use of IS to provide a variety of services to citizens (governments to citizens), businesses (government to business), and other governmental agencies (either within a country or between countries; government-to-government).

Describe Business-to-consumer electronic commerce strategies.

Companies must strategically position themselves to compete in the EC environment, and choose between operating as brick and mortar companies, click and mortar (or bricks and clicks) companies, or click-only (or virtual) companies. Capabilities of the Web have enabled new business models based on mass customization, disintermediation, or group buying. In addition, companies are trying to harness users social networks. E-tailers can benefit from being able to offer a wider variety of goods to more people at lower prices. On the other hand, a major drawback is customers lack of trust.

Understand the keys to successful electronic commerce websites, and explain the different forms of Internet Marketing:

Successful B2C companies have a website that offers something unique, is aesthetically pleasing, is easy to use, and to return. A company should also advertise its presence on the web (using search engine marketing) and should try to learn from its web site (using web analytics). Popular ways to advertise products or services on the web are search marketing, display ads, email marketing, social media, and mobile marketing. Advertisers pay for these types of Internet marketing on the basis of either the number of impressions or pay-per click.

Describe mobile commerce, C2C electronic commerce, and C2B electronic commerce.

M-commerce is rapidly expanding with the continued evolution of faster cellular networks, more powerful handheld devices and more sophisticated applications. Location based services, based on GPS technology, are a key driver enabling even more innovative m commerce applications. As mobile consumers not only use their devices to obtain time information on the go, but also increasingly purchase products or content in mobile settings, businesses have to consider the specific settings and devices of their target customers. Further, the Internet has fuled the development of variety of way people can trade goods, socialize, or voice their thoughts and opinions. Specifically, e-auctions allow private people to sell goods to large markets. One emerging topic in EC is C2B EC, where individuals offer products or services to businesses.

Describe how to conduct financial transaction and navigate legal issues of electronic commerce

Internet has enabled obtaining real-time financial information as well as making transaction online. Yet, securing payments in the digital world is still of concern, both for customers and for merchants, who have to minimize their risk arising from potentially fraudulent credit card transactions; as a result, many (especially smaller) retailers use online payment services. Finally, legal issues surrounding web site content, contracts, taxation, transactions, protecting intellectual property, and net neutrality continue to be major issues and impediments to EC.