Turban Aronson and Liang Decision Support Systems and

Turban, Aronson, and Liang Decision Support Systems and Intelligent Systems, Seventh Edition Chapter 14 Electronic Commerce © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 1

Learning Objectives • • • Describe the concepts involved in electronic commerce. Understand auctions and portal mechanisms. Know the applications involved in e-commerce. Learn about electronic market research, e. CRM, and online advertising. Define collaborative commerce and B 2 B applications. Understand e-government activities. Describe mobile commerce and pervasive computing. Learn e-commerce infrastructure and support services. Understand the ethical and legal issues involved in ecommerce. © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 2

E-commerce Provides Decision Support to Hi-Life Corp. Vignette • Convenience store chain needs accurate stock count – – Overstocking expensive Understocking results in customer dissatisfaction Losses due to shrinkage Manual counts used data collection sheets • Expensive, labor intensive • Solution based on handheld computer – Counts entered relayed immediately to headquarters – Bar code scanner employed to shorten process, minimize errors – Allows for real time product totals – Dramatic reduction in labor involved – Lower inventory levels and quicker response time © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 3

E-commerce • Process of buying, selling, transferring, exchanging products, services, or information over computer networks • Pure versus partial – Based on degree of digitization • Product • Process • Intermediary – Pure requires all three components to be fully digitized • Internet versus non-Internet – Most are Internet based – May be value-added networks or local area networks © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 4

E-commerce Transactions • • • Business-to-business (B 2 B) Business-to-consumer (B 2 C) Consumer-to-consumer (C 2 C) Consumer-to-business (C 2 B) Government-to-citizens (G 2 C) Collaborative commerce between partners Business to employees Intrabusiness/Intraorganizational commerce Mobile commerce (M-commerce) © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 5

Scope of E-commerce • Applications supported by infrastructure – Hardware – Software • Messaging, multimedia, interfaces, business services – Networks • communications • Support areas – – – People Legal and public policy and regulations Marketing and advertisements Support services ranging from payments to order delivery Business partnerships like joint ventures, e-marketplaces, affiliations © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 6

Advantages • Advantages: – Expands marketplace globally – Expands availability of resources – Shortens marketingdistribution channels – Decreases expenses – Reduces inventory – Aids small businesses in competing – Enables specialized niches – Quicker delivery of information – Enables individuals to work from home – Facilitates delivery of public services – Allows for purchase of goods at lowered prices – Enables customization, personalization – Decreases costs to customers, while increasing their choices – Allows for 24 hour shopping – Makes electronic auctions possible – Enables people to interact in electronic communities © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 7

Limitations • Limitations: – Lack of universal standards – Insufficient bandwidth – Software-development tools are still evolving – Integration difficulties – Need for special Web servers in addition to network servers – Accessibility expensive – Unresolved legal issues – Lack of national and international governmental regulations – Lack of mature methodologies to measure benefits and justify – Customer resistance – Security questions – Insufficient number of buyers and sellers for profitable ecommerce operations © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 8

DSS and E-commerce • DSS supports e-commerce – DSS allows for scheduling and transportation optimization – Match buyers to sellers – Improves market operations – Conducts risk analysis – Optimizes selection of transportation routes – Assists in running B 2 C operations – Data collection – Business intelligence © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 9

DSS and E-commerce • E-commerce facilitates decision support – Efficient transfer of information – Enhances decision-support process – Data collection and storage • E-commerce works with DSS – Inventory management – Produce strategic change in call center by integration of simulation decision support – Marketing database applications and distribution systems – Streaming financial reports – Comparison shopping engines – Data transfer and storage for BI analysis © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 10

E-commerce Mechanisms • Electronic auctions – Competitive market mechanisms • Forward auctions – Sellers place offers and buyers make sequential bids • Reverse auctions – Sellers are invited to submit bids on product or service buyer wants • Bartering – Exchange of goods or services without money transactions • Portals – Information gateways • Single point of access through Web browser © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 11

Portals • Commercial – Offer content to broad audiences • Routine • Little personalization • Publishing – Based on specific interests • Extensive search capabilities • Personal – Target specific filtered information • Narrow content • Personalized • Mobile – Accessible through mobile devices © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 12

Portals • Voice – Audio interfaces – Accessible through phones • Corporate – Access to business information located both within and outside of organization • Rich content • Limited communities • Organized focal point – – Suppliers Customers Employees Supervisors © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 13

Business to Consumer Applications • E-tailing – Storefronts • General or specialized • May be extensions of physical stores – E-Malls • Collection of stores under single Internet address – Manufacturers may sell direct – Retailers may act as intermediaries © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 14

DSS Support • Channel conflict resolution through GDSS tools • DSS and GDSS can be used for conflict resolution on pricing, resource allocation, logistics services • DSS can aid in order fulfillment and logistics of small quantities • DSS models can foster strategies and determine viability • Identification of appropriate revenue models • Risk analysis with DSS modeling © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 15

Online Service Industries • • • Electronic banking International banking Securities trading Online job market Travel Real estate © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 16

Market Research • E-commerce model of consumer behavior – Independent uncontrollable variables • Personal characteristics – Age, gender, demographics • Environmental characteristics – Social, cultural, available information, government regulations, legal constraints – Intervening variables • Vendor controlled • Market stimuli • E-commerce systems – Physical environment, logistics support, customer services © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 17

Market Research – Decision making process • Influenced by independent and intervening variables • Feeds into buyers’ decisions – Dependent variables • Buyers’ decisions © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 18

Market Research – Decision-making process • Generic model – Identification of needs, information search, evaluation of alternatives, purchase and delivery, after-purchase evaluation • Consumer decision support system model – Support facilities from CDSS and Internet and Web produce framework for Web purchasing • Online buyer decision support model – Customer decision-making guided by Web purchasing models © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 19

© 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban,

Discovering Customer Desires • Software agent search engines • Intelligent agents – Monitor site activity – Searching and filtering agents for customers – Comparison agents • Electronic questionnaires • Site tracking – Cookies, Web bugs, spyware • Collaborative filtering through inference of interest © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 21

E-commerce CRM • During life cycle of product – – Determine customer requirements Help customer acquire product or service Ongoing support Aid in disposal • Tools available – – FAQs E-mail messaging Track status of order Personalization of Web pages and information at vendor’s site – Chat rooms and communities – Web-based call centers © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 22

Online Advertising • Media rich, dynamic, interactive • Types – – – Banners Pop-ups and pop-unders E-mail advertisements Electronic catalogs and brochures Advertisement postings in chatrooms, communities, and newsgroups – Online classifieds • Issues – Spam • Permission marketing • Viral marketing – Passive, mass market advertising • Interactive advertising © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 23

B 2 B Applications • Sell-side marketplaces – Private e-marketplaces operated by seller • Electronic catalogs • Forward auctions • Buy-side marketplaces – Reverse auction – Third-party bidding marketplace or buyer’s Web site – Procurement models • Group purchasing • Desktop purchasing © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 24

B 2 B Applications • Electronic exchanges – E-marketplaces with many sellers and buyers • Types – Systematic sourcing by vertical distributors of direct materials – Indirect materials sold on “as needed” basis with dynamic pricing – Systematic sourcing for indirect materials at fixed pricing – Spot sourcing of services on “as needed” basis © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 25

Collaborative E-commerce • Non-sales based e-commerce transactions between organizations • Electronic support of communication, information sharing, joint decision making • Types – Retailers/suppliers – Vendor-managed inventories supplied to retailers – Product design – Collaborative manufacturing through outsourcing of components and subassemblies © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 26

Collaborative E-commerce • Collaborative workflow management – Planning and scheduling – Design – New product information – Product-content management – Order management – Sourcing and procurement © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 27

Intrabusiness E-commerce • B 2 E – Intranet-enabled business between business and employees • E-commerce between business units – Organization units sell and buy materials and products from each other • E-commerce between corporate employees – Classified ads • Sales force automation – Empowerment of salespersons © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 28

E-government • Use of Internet technologies and e-commerce to deliver information and services to citizens – Gives citizens more access to information – Allows for more feedback from citizens – Facilitates fundamental changes in relationships between citizen and government • Types – Government-to-citizens (G 2 C) • Electronic benefits transfer, payment of taxes – Government-to-business (G 2 B) • RFQs, RFBs, reverse auctions – Government-to-government (G 2 G) • Sharing of databases, information © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 29

E-learning • Online delivery of information for educational or training purposes • Benefits – Eliminates barriers of time, distance, socioeconomic status – Saves money, reduces travel time – Increases access to experts – Enables large numbers to take classes – Provides on-demand, self-paced learning • Limitations – Special training for instructors and students – Requires special equipment and support services – Lack of face-to-face interaction © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 30

Customer to Customer E-commerce • Buyers and sellers not businesses • Types – Auctions – Classified ads – Personal services – Bartering © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 31

Variants of E-Commerce • Mobile commerce – E-commerce through use of mobile computing devices on wireless networks • Advantages – Mobility – People can be reached at any time • L-commerce – Location-based mobile commerce • Information pushed out to recipient based on their current location • Pervasive computing – Computations become part of the environment • Embodied in things • Based on intelligent systems © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 32

E-commerce Support Systems • Electronic payments – – – Electronic checks Electronic credit cards Virtual credit cards Purchasing cards Electronic cash • Stored value money cards • Smart cards with microprocessors • Person-to-person payments – Payment of bills online © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 33

Security in Electronic Payments • Authentication of all parties • Protection of data from alteration or destruction during transmission • Protection from buyer’s unjustified repudiation • Privacy • Customer safety • Protection of information at seller’s end © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 35

Order Fulfillment in Electronic Commerce • Provide customers with ordered goods • Goods must be quickly packaged, shipped, and delivered • Payment collection system must be in force • Handle the return of unwanted or defective merchandise • Customer relations © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 36

Legal and Ethical Issues • Fraud – Seller’s and buyer’s • Buyer protection • Seller protection – Unwarranted repudiation – Intellectual property rights – Domain names • Privacy issues – – Cookies Web tracking Sales of lists Monitoring e-mails and site visits • Taxation • Disintermediation • Intellectual Property issues © 2005 Prentice Hall, Decision Support Systems and Intelligent Systems, 7 th Edition, Turban, Aronson, and Liang 37