Chapter 9 Electronic
Commerce Systems
James A. O'Brien, and George Marakas.
Management Information Systems with MISource
2007, 8th ed. Boston, MA: McGraw-Hill, Inc.,
2007. ISBN: 13 9780073323091
Learning Objectives
Identify the major categories and trends of
e-commerce applications
Identify the essential processes of an e-commerce
system, and give examples of how they are
implemented in e-commerce applications
Identify and give examples of several key factors
and Web store requirements need to succeed in e-
commerce
Identify and explain the business value of several
types of e-commerce marketplaces
Discuss the benefits and trade-offs of several e-
commerce clicks and bricks alternatives
Chapter 9 Electronic Commerce Systems 2
Introduction to e-Commerce
Electronic commerce encompasses the entire
online process of
Developing
Marketing
Selling
Delivering
Servicing
Paying for products and services
It relies on the Internet and other information
technologies to support every step of the
process
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Case 1 eBay, Running the
Right Play
eBay is one of the fastest-growing companies in
history, and business is surging
31 sites around the world
$1.1 billion in international sales in 2004, and
growing twice as fast as the domestic market
Half of their 125 million registered users are
outside of the United States
eBay keeps a playbook
Several hundred pages of wisdom collected
from worldwide managers
Chapter 9 Electronic Commerce Systems 4
Case Study Questions
Why has eBay become such a successful and
diverse online marketplace?
What do you think of eBay’s playbook concept?
Why do they call it a playbook?
Is eBay’s move into the international arena a
good long-term strategy?
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The Scope of e-Commerce
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E-Commerce Technologies
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Categories of e-Commerce
Business-to-Consumer
Virtual storefronts, multimedia catalogs,
interactive order processing, electronic
payment, online customer support
Business-to-Business
Electronic business marketplaces, direct links
between businesses, auctions and exchanges
Consumer-to-Consumer
Online auctions, posting to newspaper sites,
personal websites, e-commerce portals
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Essential e-Commerce Architecture
Chapter 9 Electronic Commerce Systems 9
Access Control and Security
E-commerce processes must establish mutual
trust and secure access between parties
User names and passwords
Encryption key
Digital certificates and signatures
Restricted access areas
Other people’s accounts
Restricted company data
Webmaster administration areas
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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
Chapter 9 Electronic Commerce Systems 12
Content and Catalog Management
Content Management Software
Helps develop, generate, deliver, update, and
archive text and multimedia information at
e-commerce websites
Catalog Management Software
Helps generate and manage catalog content
Catalog and content management software
works with profiling tools to personalize content
Includes product configuration and
mass customization
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Workflow Management
E-business and e-commerce workflow
management depends on a workflow software
engine
Contains software model of business
processes
Workflow models express predefined
Sets of business rules
Roles of stakeholders
Authorization requirements
Routing alternative
Databases used
Task sequences
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Example of Workflow
Management
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Event Notification
Most e-commerce applications are event driven
Responds to such things as customer’s 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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Collaboration and Trading
Processes that support vital collaboration
arrangements and trading services
Needed by customers, suppliers, and other
stakeholders
Online communities of interest
E-mail, chat, discussion groups
Enhances customer service
Builds loyalty
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Electronic Payment Processes
Complex processes
Near-anonymous and electronic nature
of transactions
Many security issues
Wide variety of debit and credit alternatives
Financial institutions may be part of the
process
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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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Electronic Payment Example
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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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E-Commerce Application Trends
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Case 2 Battle for e-Commerce
Supremacy
eBay commands more than 90 percent of the
online auction market
Growth is at least 40 percent per year
CraigsList is an online classifieds meeting place
Buying and selling, but no payment system
Online classifieds growing faster than
auctions
Google and Microsoft entering the market with
added features
Search by zip code, online maps, free listings
Chapter 9 Electronic Commerce Systems 23
Case Study Questions
Do you agree with Google and Microsoft that
eBay is now vulnerable to their assaults via
Google Base and Windows Live Expo?
What are the major advantages and limitations
of Google Base and Windows Live Expo?
Which do you prefer, or would you use both?
Are eBay’s development of Kijiji, acquisition
of Skype, alliance with Yahoo, and other
acquisitions enough to ward off the competitive
assaults of Google and Microsoft?
Chapter 9 Electronic Commerce Systems 24
E-Commerce Success Factors
Some of the success factors in e-commerce
Selection and value
Performance and service
Look and feel
Advertising and incentives
Personal attention (one-to-one marketing)
Community relationships
Security and reliability
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Differences in Marketing
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Web Store Requirements
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Developing a Web Store
Build a website
Choose or set up web hosting
Use simple design tools and templates
Include a shopping cart and payment support
Market the website
Include Web page and e-mail advertising
and promotions
Exchange advertising with other Web stores
Register with search engines and directories
Sign up for affiliate programs
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Serving Your Customers
Convert visitors into loyal customers
Develop one-to-one relationship with
customers
Create incentives to encourage registration
Use Web cookies to identify visitors
Use tracking services to record and analyze
website behavior and customer preferences
Create an attractive, friendly, efficient store
Offer fast order processing and payment
Notify when orders are processed and
shipped
Provide links to related websites
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Managing a Web Store
Manage both the business and the website
Record and analyze traffic, inventory, sales
Use CRM features to help retain customers
Link sales, inventory data to accounting
systems
Operate 24 hours a day, seven day a week
Protect transactions and customer records
Use security monitors and firewalls
Use redundant systems and power sources
Employ passwords and encryption
Offer 24-hour tech support
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B2B E-Commerce
B2B is the wholesale and supply side of
the commercial process
Businesses buy, sell, or trade with other
businesses
Relies on multiple electronic information
technologies
Catalog systems
Trading systems
Data interchange
Electronic funds transfers
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E-Commerce Marketplaces
One to Many
Sell-side marketplaces
One supplier dictates product offerings and
prices
Many to One
Buy-side marketplaces
Many suppliers bid for the business of a buyer
Some to Many
Distribution marketplaces
Unites suppliers who combine their product
catalogs to attract a larger audience
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E-Commerce Marketplaces
Many to Some
Procurement marketplaces
Unites major buyers who combine purchasing
catalogs
Attracts more competition and thus lower
prices
Many to Many
Auction marketplaces
Dynamically optimizes prices
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E-Commerce Portals
B2B e-commerce portals offer multiple
marketplaces
Catalogs
Exchanges
Auctions
Often developed and hosted by third-party
market-maker companies
Infomediaries serve as intermediaries in
e-business and e-commerce transactions
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B2B E-Commerce Web Portal
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Clicks and Bricks
Success will go to those who can integrate
Internet initiatives with traditional operations
Merging operations has trade-offs
See Figure 9.18
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E-Commerce Integration
The business case for merging e-commerce
with traditional business operations
Move strategic capabilities in traditional
operations to the e-commerce business
Integrate e-commerce into the traditional
business
Sharing of established brands
Sharing of key business information
Joint buying power and distribution
efficiencies
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Other Clicks and Bricks Strategies
Partial e-commerce integration
Joint ventures and strategic partnerships
Complete separation
Spin-off of an independent e-commerce
company
Barnes and Noble’s experience
Spun off independent e-commerce company
Gained venture capital, entrepreneurial
culture, and flexibility
Attracted quality management
Accelerated decision making
Failed to gain market share
Chapter 9 Electronic Commerce Systems 38
E-Commerce Channel Choices
An e-commerce channel is the marketing or
sales channel created by a company for its e-
commerce activities
There is no universal strategy or e-commerce
channel choice
Both e-commerce integration and separation
have major business benefits and
shortcoming
Most businesses are implementing some
measure of clicks and bricks integration
Chapter 9 Electronic Commerce Systems 39
E-Commerce Strategy Checklist
Questions to ask and answer
What audiences are we attempting to reach?
What action do we want those audiences to
take?
Who owns the e-commerce channel within the
organization?
Is the e-commerce channel planned alongside
other channels?
Is there a process for generating, approving,
releasing, and withdrawing content?
Will our brand translate to the new channel?
How will we market the channel itself?
Chapter 9 Electronic Commerce Systems 40
Case 3 Yahoo and Flickr
Flickr is a photo sharing site
14,000 images per hour are uploaded
There are 1.5 million users
80 percent of the 60 million photos are public
More than half have user-created labels that
make them searchable
Yahoo purchased Flickr
The user-generated content (social media)
will be used in the war against Google
It would like to apply the same concept to
web content as well
Chapter 9 Electronic Commerce Systems 41
Case 3 Yahoo and Flickr
Google takes an automated approach to
searches
Armies of Ph.D.s and servers
Creates more relevant searches by using
algorithms
Yahoo’s strategy
Also uses algorithms, but not as well
Is gambling that the collective intelligence
of its audience will produce more relevant
search results
Chapter 9 Electronic Commerce Systems 42
Case Study Questions
How does the Web foster the growth of social
media and social networking?
What business benefits does Yahoo hope to
gain from its acquisition of Flickr and drive to
“Flickize” its business?
How realistic are such planned benefits?
Can social media and networking serve as a
strategic competitive differentiator that enables
Yahoo to overtake Google in the multibillion-
dollar targeted search ads market?
Chapter 9 Electronic Commerce Systems 43
Case 4 Today’s Web; Anything
but Usual
Customers aren’t just reading these days
They’re writing and watching as well
Community features
Interactive webcasts
Newsgroups
Online chat forums
Customer-to-customer interactions help
Microsoft learn which product features work, and
which don’t
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Case 4 Today’s Web; Anything
but Usual
Federated will be using FedAd software to
Coordinate the efforts of 4,000 marketing
staffers in six divisions
Buy and publish the company’s newspaper,
radio, and TV ads
Pay invoices
Ship ads to publications
Manage marketing expenses against the
company’s budget
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Case 4 Today’s Web; Anything
but Usual
Dell’s initiatives
Redesign of its website to make it easier to
use
Make IT costs smaller by being more efficient
Combine the website re-launch with an
e-commerce consolidation
Chapter 9 Electronic Commerce Systems 46
Case Study Questions
What is the primary driver behind the Web
upgrade activities of Microsoft and Dell?
What is the business value of Microsoft’s
Web-based, live-feedback program?
What lessons on developing successful
e-commerce projects can be gained from the
information in this case?
Chapter 9 Electronic Commerce Systems 47
