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Electronic Commerce 2008: A Managerial Perspective

by Efraim Turban; David King; Judy McKay; Peter Marshall; Jae Lee; Dennis Viehland

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Copyright, iv
Preface, xli
Part 1. Introduction to E-Commerce and E-Marketplaces, 1
Chapter 1. Overview of Electronic Commerce, 1
Dell—Using E-Commerce for Success, 2
1.1. Electronic Commerce: Definitions and Concepts, 4
Defining Electronic Commerce, 4
Defining E-Business, 4
Pure Versus Partial EC, 4
Internet Versus Non-Internet EC, 5
Electronic Markets and Interogranizational and Intraorganizational Information Systems, 6
1.2. The EC Framework, Classification, and Content, 6
An EC Framework, 6
Classification of EC by the Nature of the Transactions or Interactions, 8
Case 1.1. EC Application: Buy Chocolate Online? Try Godiva.com, 9
A Brief History of EC, 10
Case 1.2. EC Application: Boeing Changes the Nature of its Business with Global Collaboration, 11
The Interdisciplinary Nature of EC, 12
The Future of EC, 13
1.3. The Digital Revolution Drives E-Commerce, 14
The Digital Revolution and Economy, 14
Insights and Additions 1.1. Interesting and Unique Applications of EC, 16
1.4. The Business Environment Drives EC, 16
The Business Environment, 17
1.5. EC Business Models, 18
The Structure of Business Models, 19
Typical EC Business Models, 22
1.6. Benefits and Limitations of EC, 24
The Benefits of EC, 25
Insights and Additions 1.2. Enhancing Homeland Security Electronically, 26
The Limitations of Barriers of EC, 26
1.7. Social and Business Networks, 27
Social Networks, 27
Case 1.3. EC Application: MySpace: The World’s Most Popular Social Networking Web Site, 28
1.8. The Digital Enterprise, 29
The Digital Enterprise, 29
1.9. Overview of this Book, 31
Part 1: Introduction to E-Commerce and E-Marketplaces, 32
Part 2: Internet Consumer Retailing, 32
Part 3: Business-to-Business E-Commerce, 33
Part 4: Other EC Models and Applications, 33
Part 5: EC Support Services, 33
Part 6: EC Strategy and Implementation, 33
Online Part 7: Application Development, 33
Online Tutorial, 33
Online Appendices, 33
Online Supplements, 33
Managerial Issues, 34
Research Topics, 35
Summary, 35
Key Terms, 36
Questions for Discussion, 36
Internet Exercises, 37
Team Assignments and Role Playing, 37
Real-World Case: Google is Changing Everything, 38
References, 39
Chapter 2. E-Marketplaces: Structures, Mechanisms, Economics, and Impacts, 42
How Blue Nile Inc. is Changing the Jewelry Industry, 43
2.1. E-Marketplaces, 44
Electronic Markets, 44
E-Marketplace Components and Participants, 45
Case 2.1. EC Application: WEBMD, 46
2.2. Types of E-Marketplaces: From Storefronts to Portals, 47
Electronic Storefronts, 47
Electronic Malls, 47
Types of Stores and Malls, 47
Types of E-Marketplaces, 48
Information Portals, 49
2.3. Transactions, Intermediation, and Processes in E-Commerce, 51
Sellers, Buyers, and Transactions, 51
The Roles and Value of Intermediates in E-Marketplaces, 51
Disintermediation and Reintermediation, 53
The Purchasing Process, 54
2.4. Electronic Catalogs and other Market Mechanisms, 55
Electronic Catalogs, 55
Search Engines and Intelligent Agents, 57
Shopping Carts, 58
2.5. Auctions as EC Market Mechanisms, 59
Definition and Characteristics, 59
Traditional Auctions versus E-Auctions, 59
Case 2.2. EC Application: Innovative Auctions, 60
Dynamic Pricing and Types of Auctions, 60
Benefits, Limitations, and Impacts of E-Auctions, 62
Insights and Additions 2.1. Benefits of E-Auctions, 62
2.6. Bartering and Negotiating Online, 63
Online Bartering, 63
Online Negotiating, 64
2.7. E-Commerce in the Wireless Environment: M-Commerce and L-Commerce, 64
The Mobility Revolution, 65
The Promise of M-Commerce, 65
I-Mode: A Successful Mobile Portal, 66
Case 2.3. EC Application: Wireless Pepsi Increases Productivity, 67
2.8. Competition in the Digital Economy and its Impact on Industries, 67
The Internet Ecosystem, 67
Case 2.4. EC Application: Craigslist: The Ultimate Online Classified Site, 71
Impact on Whole Industries, 71
2.9. Impacts of EC on Business Processes and Organizations, 72
Improving Marketing and Sales, 73
Transforming Organizations, 75
Redefining Organizations, 75
Managerial Issues, 79
Research Topics, 80
Summary, 81
Key Terms, 81
Questions for Discussion, 82
Internet Exercises, 82
Team Assignments and Role Playing, 83
Real-World Case: Wal-Mart Leads RFID Adoption, 83
References, 84
2A Build-to-Order Production, 87
Part 2. Internet Consumer Retailing, 90
Chapter 3. Retailing in Electronic Commerce: Products and Services, 90
Amazon.com: Taking E-Tailing to the Next Level, 91
3.1. Internet Marketing and Electronic Retailing, 93
Overview of Electronic Retailing, 93
Size and Growth of the B2C Market, 93
What Sells Well on the Internet, 94
Insights and Additions 3.1. Mobile B2C Shopping in Japan, 97
Characteristics of Successful E-Tailing, 98
3.2. E-Tailing Business Models, 99
Classification By Distribution Channel, 99
Case 3.1. EC Application: Littlewoods Shop Direct Group: From Mail-Order Catalogue to High Street to the Web, 101
Insights and Additions 3.2. Selling Cars Online: Build to Order, 102
Other B2C Models and Special Retailing, 103
3.3. Travel and Tourism Services Online, 105
Services Provided, 106
Special Services, 107
Benefits and Limitations of Online Travel Services, 107
Corporate Travel, 108
Impact of EC on the Travel Industry, 108
Intelligent Agents in Travel Services, 109
Insights and Additions 3.3. Travel Bots Make Online Travel Purchases Easier, 109
3.4. Employment Placement and the Job Market Online, 110
The Internet Job Market, 111
Benefits and Limitations of the Electronic Job Market, 112
Intelligent Agents in the Electronic Job Market, 113
Case 3.2. EC Application: Using Intelligent Software and Social Networking to Improve Recruiting Processes, 114
3.5. Real Estate, Insurance, and Stock Trading Online, 115
Real Estate Online, 115
Real Estate Applications, 116
Insurance Online, 117
Online Stock Trading, 117
3.6. Banking and Personal Finance Online, 120
Home Banking Capabilities, 120
Virtual Banks, 120
International and Multiple-Currency Banking, 121
Case 3.3. EC Application: ING Direct: An Online Banking Success Story, 122
Online Financial Transaction Implementation Issues, 122
Case 3.4. EC Application: Online Security at a Bank, 123
Personal Finance Online, 124
3.7. On-Demand Delivery Services and E-Grocers, 125
The Case of E-Grocers, 126
3.8. Online Delivery of Digital Products, Entertainment, and Media, 128
Online Entertainment, 129
Case 3.5. EC Application: The YouTube Phenomenon, 129
Developments in the Delivery of Digital Products, 131
3.9. Online Purchase-Decisions AIDS, 132
Shopping Portals, 132
Shopbots Software Agents, 132
Business Ratings Sites, 133
Trust Verification Sites, 133
Other Shopping Tolls, 133
Case 3.6. EC Application: Reseller Ratings: Making Online Retailers Accountable to Customers, 134
3.10. Problems with E-Tailing and Lessons Learned, 136
What Lessons Can be Learned From These Failures, 136
Insights and Additions 3.4. B2C Dot-Com Failures, 137
Successful Click-and-Mortar Strategies, 139
3.11. Issues in E-Tailing, 140
Disintermediation and Reintermediation, 140
Channel Conflict, 142
Determining the Right Price, 142
Personalization, 143
Fraud and Other Illegal Activities, 143
How to Make Customers Happy, 143
Managerial Issues, 144
Research Topics, 144
Summary, 145
Key Terms, 146
Questions for Discussion, 146
Internet Exercises, 147
Team Assignments and Role Playing, 148
Real-World Case: Wal-Mart Powers Online, 149
References, 150
Chapter 4. Consumer Behavior, Market Research, and Advertisement, 155
Netflix Increases Sales Using DVD Recommendations and Advertisements, 156
4.1. Learning about Consumer Behavior Online, 157
A Model of Consumer Behavior Online, 157
4.2. The Consumer Decision-Making Process, 160
A Generic Purchasing-Decision Model, 160
A Customer Decision Model in Web Purchasing, 161
Online Buyer Decision Support Model, 162
Other Models, 162
4.3. Mass Marketing, Market Segmentation, and One-to-One Marketing, 162
From Mass Marketing To One-to-One Marketing, 162
How One-to-One Relationships Are Practiced, 164
4.4. Personalization, Loyalty, Satisfaction, and Trust in EC, 165
Personalization in E-Commerce, 165
Insights and Additions 4.1. Cookies in E-Commerce, 166
Customer Loyalty, 167
Satisfaction In EC, 168
Trust In EC, 169
4.5. Market Research for EC, 171
Methods for Conducting Market Research Online, 171
Case 4.1. EC Application: Internet Market Research Expedites Time-To-Market At Procter & Gamble, 172
Limitations of Online Market Research and How to Overcome Them, 178
Biometric Marketing, 178
4.6. Internet Marketing in B2B, 179
Organizational Buyer Behavior, 179
The Marketing and Advertising Processes in B2B, 179
Methods for B2B Online Marketing, 180
Affiliate Programs, Infomediaries, And Data Mining, 181
4.7. Web Advertising, 182
Overview of Web Advertising, 182
Some Internet Advertising Terminology, 183
Why Internet Advertising?, 184
Advertising Networks, 185
4.8. Online Advertising Methods, 186
Banners, 186
Pop-Up and Similar Ads, 187
E-Mail Advertising, 188
Newspaper-Like and Classified Ads, 189
Search Engine Advertisement, 189
Associated Ad Display, 190
Advertising In Chat Rooms, Blogs, And Social Networks, 190
Insights and Additions 4.2. Google’s Advertisement Methods, 191
Other Forms Of Advertising, 192
Insights and Additions 4.3. Innovation in Targeted Ads, 192
4.9. Advertising Strategies and Promotions Online, 194
Affiliate Marketing and Advertising, 194
Ads as a Commodity, 194
Viral Marketing, 194
Customizing Ads, 195
Online Events, Promotions, and Attractions, 195
4.10. Special Advertising Topics, 197
Permission Advertising, 197
Advertisement as a Revenue Model, 197
Measuring Online Advertising’s Effectiveness, 197
Ad Management, 197
Localization, 198
Wireless Advertising, 199
Ad Content, 200
4.11. Software Agents in Marketing and Advertising Applications, 200
A Framework for Classifying EC Agents, 200
Case 4.2. EC Application: Fujitsu Uses Agents for Targeted Advertising in Japan, 202
Character-Based Animated Interactive Agents, 203
Insights and Additions 4.4. Brand Names at a Korean Virtual Mall, 204
Other EC Agents, 205
Managerial Issues, 205
Research Topics, 206
Summary, 207
Key Terms, 209
Questions for Discussion, 209
Internet Exercises, 210
Team Assignments and Role Playing, 211
Real-World Case: 1-800–Flowers.com Uses Data Mining to Foster Customer Relationship Management, 211
References, 212
Part 3. Business-to-Business E-Commerce, 217
Chapter 5. B2B E-Commerce: Selling and Buying in Private E-Markets, 217
General Motors’ B2B Initiatives, 218
5.1. Concepts, Characteristics, and Models of B2B EC, 219
Basic B2B Concepts, 219
Market Size and Content of B2B, 219
The Basic Types of B2B Transactions and Activities, 219
The Basic Types of B2B E-Marketplaces and Services, 221
B2B Characteristics, 221
Supply Chain Relationships in B2B, 222
Insights and Additions 5.1. Summary of B2B Characteristics, 223
Virtual Service Industries in B2B, 223
The Benefits and Limitations of B2B, 224
5.2. One-to-Many: Sell-Side E-Marketplaces, 225
Sell-side Models and Activities, 225
Direct Sales from Catalogs, 226
Case 5.1. EC Application: Gregg’s Cycles Goes Online, 227
Case 5.2. EC Application: Whirlpool B2B Trading Portal, 228
Direct Sales: The Example of Cisco Systems, 228
Tracking Order Status, 229
5.3. Selling VIA Intermediaries and Distributors, 230
5.4. Selling VIA Auctions, 230
Using Auctions on the Sell Side, 230
Case 5.3. EC Application: W.W. Grainger and Goodrich Corporation, 231
Auctioning from the Company’s Own Site, 231
Using Intermediaries in Auctions, 232
Examples of B2B Forward Auction, 232
Case 5.4. EC Application: How the State of Pennsylvania Sells Surplus Equipment, 233
5.5. One-from-Many: Buy-Side E-Marketplaces and E-Procurement, 233
Procurement Methods, 233
Inefficiencies in Traditional Procurement Management, 234
The Goals and Benefits of E-Procurement, 235
Implementing E-Procurement, 236
Case 5.5. EC Application: Regent Inns: Successful Implementation of E-Procurement, 238
5.6. Buy-Side E-Marketplaces: Reverse Auctions, 239
Insights and Additions 5.2. Comparison of Pre-Internet and Web-Based Reverse Auction Processes, 239
Conducting Reverse Auctions, 240
Group Reverse Auctions, 241
Case 5.6. EC Application: Reverse Auctions Become a Diplomatic Tool, 241
5.7. Other E-Procurement Methods, 242
An Internal Purchasing Marketplace: Aggregating Suppliers’ Catalogs, 242
Case 5.7. EC Application: E-Procurement at DEFRA, 243
Buying at E-Auctions, 243
Group Purchasing, 244
Buying from E-Distributors, 245
Purchasing Direct Goods, 245
Electronic Bartering, 245
Buying in Exchanges and Industrial Malls, 245
5.8. Automating B2B Tasks, 246
Contract Management, 246
Spend Management, 246
Sourcing Management and Negotiation, 246
Insights and Additions 5.3. Ozro Negotiate, 247
E-Procurement Management, 248
5.9. Infrastructure, Integration, and Software Agents in B2B EC, 248
Infrastructure for B2B, 248
Integration, 249
The Role of Standards, Especially XML, in B2B Integration, 250
The Role of Software Agents in B2B EC, 251
Managerial Issues, 252
Research Topics, 252
Summary, 253
Key Terms, 254
Questions for Discussion, 254
Internet Exercises, 255
Team Assignments and Role Playing, 255
Real-World Case: Eastman Chemical Makes Procurement a Strategic Advantage, 256
References, 257
Chapter 6. B2B Exchanges, Directories, and other Support Services, 260
Chemconnect: The World Commodity Chemical Exchange, 261
6.1. B2B Electronic Exchanges—An Overview, 262
Classification of Exchanges, 263
Dynamic Pricing, 264
Functions of Exchanges, 265
Ownership, Governance, and Organization of Exchanges, 265
Advantages, Limitations, and the Revenue Model of Exchanges, 266
6.2. B2B Portals and Directories, 268
Thomas Global, 269
Alibaba.com Corporation, 269
Directory Services and Search Engines, 270
6.3. Third-Party and Directories Exchanges, 270
Case 6.1. EC Application: Agentrics: A Giant Retail Exchange, 272
The Supplier Aggregation Model, 273
The Buyer Aggregation Model, 273
Suitability of Third-Party Exchanges, 273
6.4. Consortium Trading Exchanges, 274
Case 6.2. EC Application: Global Transportation Network Ocean Portal, 275
Purchasing-Oriented Consortia, 276
Selling-Oriented Consortia, 276
Legal Issues for Consortia, 277
6.5. Dynamic Trading: Matching and Auctions, 279
Matching, 279
Auctions, 279
6.6. Partner and Supplier Relationship Management, 280
Partner and Supplier Relationship Management, 280
E-Communities and PRM, 281
6.7. Building and Integrating E-Marketplaces and Exchanges, 282
Building E-Marketplaces, 282
The Integration Issue, 282
6.8. B2B Networks, 283
Company Centered (Private) Networks, 284
Public IndustryWide (Vertical) Networks, 284
Transindustry and Global Networks, 284
6.9. Other B2B Implementation Issues, 285
Insights and Additions 6.1. Public Networks, 286
Private Marketplaces Versus Public Exchanges, 288
Software Agents in B2B Exchanges, 288
Case 6.3. EC Application: Asitie’s B2B E-Marketplace for the Construction Industry, 289
Disintermediation and Reintermediation, 290
6.10. Managing and the Future of Exchanges, 291
Evaluating Exchanges, 291
Centralized Management, 291
Critical Success Factors for Exchanges, 291
New Directions for B2B Marketplaces, 292
Insights and Additions 6.2. Some Critical Success Factors for Exchanges, 293
Managerial Issues, 294
Research Topics, 295
Summary, 296
Key Terms, 297
Questions for Discussion, 297
Internet Exercises, 297
Team Assignments and Role Playing, 298
Real-World Case: Imarketkorea, 298
References, 300
6A Communication Networks and Extranets for B2B, 302
Chapter 7. E-Supply Chains, Collaborative Commerce, and Corporate Portals, 304
Boeing’s Global Supply Chain for the Dreamliner 787, 305
7.1. E-Supply Chains, 306
Definitions and Concepts, 307
Supply Chain Parts, 308
Managing Supply Chains, 308
7.2. Supply Chain Problems and Solutions, 312
Typical Problems Along the Supply Chain, 312
The Need for Information Sharing Along the Supply Chain, 314
EC Solutions Along the Supply Chain, 314
Case 7.1. EC Application: Nike’s Supply Chain: Failure and Eventual Success, 315
Case 7.2. EC Application: Netafim: Problems and Solutions on the Way to an Agile Global Supply Chain, 316
7.3. Key Enabling Supply Chain Technologies: RFID and RuBee, 318
The RFID Revolution, 318
Limitations of RFID, 322
RuBee: An Alternative to RFID?, 323
7.4. Collaborative Commerce, 324
Essentials of Collaborative Commerce, 324
Collaboration Hubs, 325
Case 7.3. EC Application: Leightons Opticians Sees the Value of Collaborative Hubs, 325
Collaborative Networks, 326
Representative Examples of E-Collaboration, 328
Barriers to C-Commerce, 330
Insights and Additions 7.1. Using EC in the Retail Industry to Reduce Time and Cost, 331
Case 7.4. EC Application: Zara: Fast Fashion Supply Chain Innovator, 332
7.5. Collaborative Planning, CPFR, and Collaborative Design, 334
Collaborative Planning, Forecasting, and Replenishment (CPFR), 334
Case 7.5. EC Application: West Marine: A CPFR Success Story, 336
Advanced Planning and Scheduling, 336
Product Lifecycle Management, 337
Supporting Joint Design, 338
7.6. Supply Chain Integration, 338
How Information Systems are Integrated, 338
Enabling Integration and the Role of Standards and Web Services, 339
Integration Along the Extended Supply Chain, 339
Insights and Additions 7.2. Seamless Integration of Business of Partners’ Systems, 339
7.7. Corporate (Enterprise) Portals, 340
Corporate Portals: An Overview, 340
Types of Corporate Portals, 340
Insights and Additions 7.3. Some Large-Company Corporate Portals, 342
Corporate Portal Applications, 343
Justifying Portals, 344
Developing Portals, 344
7.8. Collaboration-Enabling Tools: From Workflow to Groupware, 344
Workflow Technologies and Applications, 345
Case 7.6. EC Application: Poste Italiane Gains Efficiency and Compliance Through Implementing Workflow Systems, 346
Groupware: Collaboration Tools, 347
Other Collaborative Tools and Wikis, 353
Implementation Issues for Online Collaboration, 353
Managerial Issues, 354
Research Topics, 354
Summary, 355
Key Terms, 356
Questions for Discussion, 356
Internet Exercises, 357
Team Assignments and Role Playing, 358
Real-World Case: Sysco—Excellence in Supply Chain Management Through Business Process Innovation and IT, 358
References, 359
Part 4. Other EC Models and Applications, 363
Chapter 8. Innovative EC Systems: From E-Government and E-Learning to Consumer-to-Consumer Commerce, 363
Dresdner Kleinwort Wasserstein Uses Wiki for Collaboration and Information Dissemination, 364
8.1. E-Government: An Overview, 365
Definition and Scope, 365
Government-to-Citizens, 365
Government-to-Business, 368
Case 8.1. EC Application: Contract Management in Australia, 369
Government-to-Government, 370
Government-to-Employees and Internal Efficiency and Effectiveness, 370
Case 8.2. EC Application: G2E in the U.S. Navy, 371
Facilitating Homeland Security, 371
8.2. Implementing E-Government, 372
The Transformation to E-Government, 373
Implementation Issues of E-Government, 374
Citizen Adoption of E-Government, 375
Non-Internet E-Government, 375
8.3. E-Learning, 376
The Basics of E-Learning: Definitions and Concepts, 376
Case 8.3. EC Application: E-Learning at Cisco Systems, 377
Benefits and Drawbacks of E-Learning, 378
Insights and Additions 8.1. Blackboard and WebCT, 379
Preventing E-Learning Failures, 380
Distance Learning and Online Universities, 381
Online Corporate Training, 381
Insights and Additions 8.2. Examples of Corporate Training, 382
Implementing E-Learning and E-Training in Learning Centers, 383
Edutainment, 383
Case 8.4. EC Application: Online Global Learning Center at W. R. Grace, 384
E-Learning Tools, 384
8.4. Online Publishing and E-Books, 385
Approaches and Methods to Online Publishing, 385
Electronic Books, 387
Print-on-Demand, 390
8.5. Blogs and WIKIS, 390
Blogging (Weblogging), 390
Case 8.5. EC Application: Stonyfield Farm Adopts Blogs for Public Relations, 392
8.6. Knowledge Management and E-Commerce, 393
KM Types and Activities, 393
How is Knowledge Management Related to E-Commerce?, 394
Case 8.6. EC Application: Online Knowledge Sharing at Xerox, 394
Knowledge Portals, 395
Online Advice and Consulting, 396
Employees’ Knowledge Networks and Expert Advice Within Organizations, 397
Case 8.7. EC Application: How the U.S. Department of Commerce Uses an Expert Location System, 399
Insights and Additions 8.3. X1 Enterprise Software Searches for Knowledge, 399
8.7. Customer-to-Customer E-Commerce, 400
C2C Auctions, 400
Classified Ads, 400
Personal Services, 400
C2C Exchanges, 401
Selling Virtual Properties, 401
Support Services for C2C, 401
8.8. Peer-to-Peer Networks and Applications, 401
Characteristics of P2P Systems, 402
Models of P2P Applications, 403
C2C P2P Applications, 403
Intrabusiness P2P Applications, 404
B2B P2P Applications, 404
B2C P2P Applications, 405
Managerial Issues, 405
Research Topics, 406
Summary, 407
Key Terms, 407
Questions for Discussion, 407
Internet Exercises, 408
Team Assignments and Role Playing, 408
Real-World Case: A Decade of E-Government Development in Hong Kong (1998 to 2007), 409
References, 410
Chapter 9. Mobile Computing and Commerce and Pervasive Computing, 415
Food Lion’s M-Commerce Innovations, 416
9.1. Mobile Computing: Content, Infrastructure, and Services, 417
New Computing Environment: Mobile Computing, 417
Enabling Technologies for Mobile Computing, 419
Mobile Computing Software, 419
Mobile Computing Services, 422
9.2. Wireless Telecommunications Networks, 423
Personal Area Networks, 423
Wireless Local Area Networks and Wi-Fi, 424
Insights and Additions 9.1. Wi-Fi Takes Off, 426
Municipal Wi-Fi Networks, 427
Wireless Metropolitan Area Networks and WiMax, 427
Wireless Wide Area Networks, 428
9.3. Mobile Commerce: Attributes, Benefits, and Drivers, 431
Overview of Mobile Commerce, 431
Attributes of M-Commerce, 431
Drivers of M-Commerce, 433
9.4. Mobile Financial Applications, 434
Mobile Banking and Financial Services, 434
Wireless Electronic Payment Systems, 434
Wireless Bill Payments, 436
9.5. Mobile Shopping, Advertising, and Content Provision, 437
Wireless Shopping, 437
Mobile and Targeted Advertising, 437
Mobile Portals, 437
9.6. Mobile Enterprise and Supply Chain, 438
Support of Mobile Employees, 438
Case 9.1. EC Application: Marketsource Mobilizes its Workforce, 439
Supporting Other Types of Work, 441
Customer and Partner Support, 442
Non-Internet Enterprise Applications, 442
B2B M-Commerce and Supply Chain Management, 443
9.7. Mobile Consumer and Personal Service Applications, 443
Mobile Entertainment, 444
Insights and Additions 9.2. Sports-Related Mobile Applications, 445
Wireless Telemedicine, 445
Other Mobile Computing Services for Consumers, 446
Non-Internet Mobile Applications for Consumers, 446
9.8. Location-Based Mobile Commerce, 446
The Technology for L-Commerce, 447
Location-Based Advertising, 448
Emergency Response Cell Phone Calls, 448
Telematics and Telemetry Applications, 449
Other Applications of Locations-Based Systems, 449
Barriers to Location-Based M-Commerce, 450
9.9. Security and other Implementation Issues in M-Commerce, 450
M-Commerce Security Issues, 450
Technological Barriers to M-Commerce, 452
Ethical, Legal, and Health Issues in M-Commerce, 453
Barriers for Enterprise Mobile Computing, 453
Project Failures in M-Commerce, 453
9.10. Pervasive Computing, 454
Overview of Pervasive Computing, 454
Radio Frequency Identification (RFID), 456
Smart Applications: Homes, Cars, and More, 458
Case 9.2. EC Application: Wi-Fi Sensor Net Aids Wine Makers, 460
Barriers to Pervasive Computing, 461
Managerial Issues, 461
Research Topics, 462
Summary, 463
Key Terms, 463
Questions for Discussion, 464
Internet Exercises, 465
Team Assignments and Role Playing, 465
Real-World Case: 7-Eleven Tracks Inventory Wirelessly, 466
References, 467
Part 5. EC Support Services, 471
Chapter 10. Dynamic Trading: E-Auctions, Bartering, and Negotiations, 471
eBay—The World’s Largest Auction Site, 472
10.1. Fundamentals of Dynamic Pricing and E-Auctions, 473
One Buyer, One Seller, 474
One Seller, Many Potential Buyers, 474
One Buyer, Many Potential Sellers, 475
Insights and Additions 10.1. B2C Forward Auctions: Dell Auction, 475
Case 10.1. EC Application: Procurement via Auctions at STE, 476
Many Sellers, Many Buyers, 476
10.2. Benefits, Limitations, and Strategic Uses of E-Auctions, 477
Benefits of E-Auctions, 477
Limitations of E-Auctions, 479
Strategic Uses of Auctions and Pricing Mechanisms, 479
Auctions for Publicity, 479
10.3. The “Name-your-Own-Price” C2B Model, 480
10.4. The Forward E-Auction Process and Software Support, 481
Phase 1: Searching and Comparing, 481
Phase 2: Getting Started at an Auction, 482
Insights and Additions 10.2. Finding a Pool Table and More, 483
Phase 3: Bidding, 484
Phase 4: Postauction Follow-up, 484
Additional Terms and Rules, 485
10.5. Double Auctions, Bundle Trading, and Pricing Issues, 486
Double Auctions, 486
Bundle Trading, 486
Prices in Auctions: Higher or Lower?, 486
10.6. Bartering and Negotiating Online, 487
Bartering Online, 487
Case 10.2. EC Application: Turning a Paper Clip into a House, 488
Negotiation and Bargaining, 489
10.7. E-Auction Fraud and its Prevention, 490
Types of E-Auction Fraud, 490
Protecting Against E-Auction Fraud, 491
Insights and Additions 10.3. Analysis Predicts Auction Fraud, 493
10.8. Issues in E-Auction Implementation, 493
Using Intermediaries, 493
Trading Assistants, 494
Auction Rules, 494
Strategic Issues, 494
Insights and Additions 10.4. Using Trading Assistants at eBay, 494
Auctions in Exchanges, 495
Infrastructure for E-Auctions, 495
Auctions on Private Networks, 495
Case 10.3. EC Application: Online Grapes and Wine Auctions, 495
10.9. Mobile E-Auctions and the Future of Auctions, 498
Benefits and Limitations of Mobile Auctions, 498
The Future of E-Auctions, 499
Managerial Issues, 500
Research Topics, 501
Summary, 502
Key Terms, 503
Questions for Discussion, 503
Internet Exercises, 503
Team Assignments and Role Playing, 504
Real-World Case: Dynamic Trading at Oceanconnect.com, 505
References, 506
Chapter 11. E-Commerce Security, 508
Cyber Cons Target Online Shoppers, 509
11.1. Stopping E-Commerce Crimes, 510
11.2. E-Commerce Security Strategy and Life Cycle Approach, 514
The Internet’s Vulnerable Design, 514
The Shift to Profit-Motivated Crimes, 515
Treating EC Security as a Project, 515
Ignoring EC Security Best Practices, 516
11.3. Information Assurance, 516
Confidentiality, Integrity, and Availability, 517
Authentication, Authorization, and Nonrepudiation, 517
E-Commerce Security Taxonomy, 519
11.4. Enterprisewide E-Commerce Security and Privacy Model, 519
Senior Management Commitment and Support, 520
EC Security Policies and Training, 520
EC Security Procedures and Enforcement, 520
Security Tools: Hardware and Software, 521
11.5. Basic E-Commerce Security Issues and Perspectives, 522
11.6. Threats and Attacks, 523
Social Networking Makes Social Engineering Easy, 523
Technical Attacks, 523
Case 11.1. EC Application: Who is Using Your PC?, 525
11.7. Securing E-Commerce Communications, 527
Access Control, 527
Public Key Infrastructure, 528
Case 11.2. EC Application: The Eyes Have It, 529
11.8. Securing E-Commerce Networks, 532
Firewalls, 533
Demilitarized Zone, 534
Personal Firewalls, 535
VPNS, 535
Intrusion Detection Systems (IDS), 536
Honeynets and Honeypots, 536
Case 11.3. EC Application: Honeynets and the Law, 537
Managerial Issues, 538
Research Topics, 539
Summary, 540
Key Terms, 541
Questions for Discussion, 542
Internet Exercises, 542
Team Assignments and Role Playing, 543
Real-World Case: UBS Painewebber’s Business Operations Debilitated by Malicious Code, 543
References, 545
Chapter 12. Electronic Payment Systems, 547
Pay-Per-View Pages: The Next iTunes, 548
12.1. The Payment Revolution, 549
12.2. Using Payment Cards Online, 551
Processing Cards Online, 551
Fraudulent Card Transactions, 553
Virtual Credit Cards, 554
Case 12.1. EC Application: CompUSA Relies on MasterCard Securecode, 555
12.3. Smart Cards, 556
Types of Smart Cards, 556
Applications of Smart Cards, 557
Case 12.2. EC Application: TaiwanMoney Card, 560
Securing Smart Cards, 562
12.4. Stored-Value Cards, 562
Case 12.3. EC Application: Stored-Value Cards: Tapping the Teen and Preteen Markets, 564
12.5. E-Micropayments, 565
12.6. E-Checking, 566
Case 12.4. EC Application: To POP or BOC: Digital Checks in the Offline World, 568
12.7. Electronic Bill Presentment and Payment, 569
Types of E-Billing, 570
Advantages of E-Billing, 572
12.8. B2B Electronic Payments, 572
Current B2B Payment Practices, 572
Enterprise Invoice Presentment and Payment, 573
12.9. The Sales Tax Issue, 577
Managerial Issues, 578
Research Topics, 579
Summary, 579
Key Terms, 581
Questions for Discussion, 581
Internet Exercises, 582
Team Assignments and Role Playing, 582
Real-World Case: Eliminating Letters of Credit: Rite AID Deploys the Tradecard Solution, 583
References, 584
Chapter 13. Order Fulfillment, ECRM, and other Support Services, 587
How Amazon.com Fulfills Orders, 588
13.1. Order Fulfillment and Logistics—An Overview, 589
Overview of Order Fulfillment, 590
Overview of Logistics, 591
The EC Order Fulfillment Process, 591
Insights and Additions 13.1. What Service Do Customers Need?, 593
13.2. Problems in order Fulfillment, 594
Typical Supply Chain Problems, 594
Why Supply Chain Problems Exist, 595
13.3. Solutions to order Fulfillment Problems, 596
Improvements in the Order-Taking Process, 596
Warehousing and Inventory Management Improvements, 596
Case 13.1. EC Application: How WMS Helps Schurman Improve its Internal and External Order Fulfillment System, 597
Case 13.2. EC Application: Peacocks Uses Wireless WMS to Smooth its Supply Chain, 598
Speeding Deliveries, 599
Case 13.3. EC Application: The Rise and Fall of Kozmo.com, 600
Partnering Efforts and Outsourcing Logistics, 600
Insights and Additions 13.2. UPS Provides Broad EC Services, 601
Integrated Global Logistics Systems, 601
Handling Returns (Reverse Logistics), 602
Order Fulfillment in B2B, 602
Case 13.4. EC Application: How Daisy Brand Fulfills B2B Orders, 603
Innovative E-Fulfillment Strategies, 605
Case 13.5. EC Application: How Sundowner Motor Inns Fulfills its Online Reservations, 605
13.4. CRM and its Relationship with EC, 606
What is CRM: Definitions, Types, and Classifications, 607
eCRM, 607
The Scope of CRM, 608
Benefits and Limitations of CRM, 608
CRM Implementation Issues, 608
Case 13.6. EC Application: How Companies Use eCRM, 609
Integrating CRM into the Enterprise, 610
Justifying Customer Service and CRM Programs, 611
Future Directions of CRM, 612
13.5. Delivering Customer Service in Cyberspace: CRM Applications and Tools, 613
Classifications of CRM Applications, 613
Customer-Facing Applications, 614
Case 13.7. EC Application: Developing IBM’s Teleweb Channel, 615
Customer-Touching Applications, 618
Case 13.8. EC Application: American Airlines Offers Personalized Web Sites, 618
Customer-Centric Applications, 620
Online Networking and Other Applications, 620
Case 13.9. EC Application: How HSBC Mexico Attracts New Business and Maximizes Existing Relationship with CRM, 621
13.6. Other EC Support Services, 624
Consulting Services, 624
CRM Suites, 625
Directory Services, Newsletters, and Search Engines, 625
More EC Support Services, 626
13.7. Outsourcing EC Support Services, 628
Why Outsource EC Services?, 628
IT Outsourcing and Application Service Providers, 628
Managerial Issues, 630
Research Topics, 630
Summary, 631
Key Terms, 632
Questions for Discussion, 632
Internet Exercises, 633
Team Assignments and Role Playing, 633
Real-World Case: How Cigna Fulfills Service Orders and Improves CRM, 634
References, 635
Part 6. EC Strategy and Implementation, 638
Chapter 14. E-Commerce Strategy and Global EC, 638
The Success of Travelocity E-Strategy, 639
14.1. Organizational Strategy: Concepts and Overview, 640
Strategic and the Web Environment, 640
The Strategic Planning Process, 641
Strategic Planning Tools, 643
Case 14.1. EC Application: Strategic Planning at InternetNZ, 644
14.2. Business Planning in E-Commerce, 645
Business Plan Fundamentals, 646
Business Case, 647
Insights and Additions 14.1. Putting the “E” in E-Business Planning, 647
14.3. E-Commerce Strategy: Concepts and Overview, 648
14.4. E-Strategy Initiation, 649
Issues in E-Strategy Initiation, 649
Insights and Additions 14.2. First-Mover and Best-Mover Success Stories, 650
Case 14.2. EC Application: Measuring Profit on the Web, 653
14.5. E-Strategy Formulation, 654
Selecting EC Opportunities, 654
Determining an Appropriate EC Application Portfolio Mix, 654
Risk Analysis and Management, 656
Issues in Strategy Formulation, 656
14.6. E-Strategy Implementation, 659
Strategy Implementation Issues, 660
14.7. E-Strategy and Project Assessment, 662
The Objectives of Assessment, 662
Measuring Results and Using Metrics, 663
14.8. Global E-Commerce, 665
Benefits and Extent of Operations, 665
Barriers to Global EC, 666
Case 14.3. EC Application: Web Page Translation at the Denver Metro Conventional and Visitors Bureau, 667
Breaking Down the Barriers to Global EC, 668
14.9. E-Commerce in Small and Medium-Sized Enterprises, 669
Critical Success Factors for SMES, 670
Supporting SMES, 671
Case 14.4. EC Application: Networx Events Uses E-Commerce, 672
Managerial Issues, 672
Research Topics, 673
Summary, 674
Key Terms, 675
Questions for Discussion, 675
Internet Exercises, 676
Team Assignments and Role Playing, 676
Real-World Case: Pierre Lang Expands into Eastern Europe, 677
References, 678
Chapter 15. Economics and Justification of Electronic Commerce, 681
Justifying Investment in IT and EC at California State Automobile Association, 682
15.1. Why Justify E-Commerce Investments; How can they be Justified?, 683
Increased Demand for Financial Justification, 683
Other Reasons Why EC Justification is Needed, 684
EC Investment Categories and Benefits, 684
How is an EC Investment Justified?, 685
What Needs to be Justified? When Should Justification Take Place?, 685
Using Metrics in EC Justification, 685
15.2. Difficulties in Measuring and Justifying E-Commerce Investments, 686
The EC Justification Process, 686
Difficulties in Measuring Productivity and Performance Gains, 687
Relating IT Expenditures to Organizational Performance, 688
Difficulties in Measuring Intangible Costs and Benefits, 689
The Process of Justifying EC and IT Projects, 691
15.3. Methods and Tools for Evaluating and Justifying E-Commerce Investments, 692
Opportunities and Revenue Generated by EC Investment, 692
Methodological Aspects of Justifying EC Investments, 692
Traditional Methods for Evaluating EC Investments, 693
NPV, 693
Advanced Methods for Evaluating IT and EC Investments, 696
15.4. Examples of E-Commerce Project Justification, 698
E-Procurement, 698
Insights and Additions 15.1. E-Procurement Metrics, 698
Customer Service and eCRM, 699
Case 15.1. EC Application: American Express Uses Project Management Software to Increase ROI, 700
Advancement Analytics and Combining Methods, 700
Justifying a Portal, 700
Justifying E-Training Projects, 701
Justifying an Investment in Mobile Computing and in RFID, 702
Justifying Security Projects, 702
Calculating the Cost of the Sarbanes-Oxley Act, 702
15.5. The Economics of E-Commerce, 703
Reducing Production Costs, 704
Increased Revenues, 706
Reducing Transaction Friction or Risk, 707
Facilitating Product Differentiation, 708
EC Increases Agility, 708
Markets Versus E-Markets, 708
Valuation of EC Companies, 708
Other Issues, 709
15.6. Factors that Determine E-Commerce Success, 710
Categories of EC Success, 710
The Levels of EC Measurement, 711
15.7. Opportunities for Success in E-Commerce and Avoiding Failure, 711
E-Commerce Failures, 712
E-Commerce Successes, 712
Creating Digital Options, 715
Complementary Investments, 715
Cultural Differences and EC, 715
Case 15.2. EC Application: GE Aircraft Engines’ Digital Options, 716
EC in Developing Economies, 716
Case 15.3. EC Application: The Success Story of E-Choupal, 717
Managerial Issues, 718
Research Topics, 718
Summary, 719
Key Terms, 720
Questions for Discussion, 720
Internet Exercises, 721
Team Assignments and Role Playing, 721
Real-World Case: Justifying EC and IT Investment in the State of IOWA, 722
References, 723
Chapter 16. Launching a Successful Online Business and EC Projects, 726
OBO Sets Its Goals for Success, 727
16.1. Getting into E-Commerce, 728
16.2. Starting a New Online Business, 728
An E-Start-Up Is a Start-Up, 729
Creating a New Company or Adding an Online Project, 729
Case 16.1. EC Application: Innovation and Creativity at Amazon.com, 730
Online Business Planning, 731
Funding a New Online Business, 732
Insights and Additions 16.1. A High-Level Business Case Template, 733
16.3. Adding E-Commerce Initiatives or Transforming to an E-Business, 734
Adding EC Initiatives to an Existing Business, 735
Transformation to an E-Business, 735
16.4. Building or Acquiring a Web Site, 738
Classification of Web Sites, 738
Building a Web Site, 739
16.5. Web Site Hosting and Obtaining a Domain Name, 740
Web Hosting Options, 740
Case 16.2. EC Application: How Small Companies Use a Storebuilder, 742
Registering a Domain Name, 743
16.6. Content Creation, Delivery, and Management, 744
Categories and Types of Content, 744
Creation or Acquisition, 746
Content Management and Maintenance, 748
Case 16.3. EC Application: Anglesea Online Uses Content Management Software for Success, 750
Catalog Content and Its Management, 750
Content Maximization and Streaming Services, 750
16.7. Web Site Design, 751
Information Architecture, 751
Case 16.4. EC Application: Akamai Technologies, 752
Site Navigation, 754
Performance, 755
Colors and Graphics, 755
Web Site Usability, 756
16.8. Providing E-Commerce Support Services, 756
Who Builds the Web Site?, 757
Payments: Accepting Credit Cards, 757
Web Site Promotion, 758
Customer Relationship Management, 758
16.9. Opening a Web Storefront, 759
Options for Acquiring Storefronts, 760
Yahoo! Small Business, 761
Managerial Issues, 762
Research Topics, 763
Summary, 764
Key Terms, 765
Questions for Discussion, 765
Internet Exercises, 766
Team Assignments and Role Playing, 766
Real-World Case: How Telecom New Zealand (TNZ) Excels with Content Management, 767
References, 768
Chapter 17. Legal, Ethical, and Compliance Issues in EC, 771
Splogs and Search Engine Spam to Capture Customer Traffic, 772
Fundamental Legal, Ethical, and Regulatory Issues, 773
Laws are Subject to Interpretation, 774
Law: A System for Social Control, 775
Personal and Property Rights, 776
Criminal Law and Civil Law, 777
17.2. Civil Law, Intellectual Property Law and Common Law, 778
Civil Law, 778
Intellectual Property Law, 778
Common Law, 780
17.3. Legal and Ethical Challenges and Guidelines, 782
EC Ethical Issues, 782
17.4. Privacy, Free Speech, and Defamation, 784
Origin of Privacy Rights and the Evolution of its Meaning, 784
Free Speech, 784
The Price of Protection, 785
Case 17.1. EC Application: Protection Pitted Against Privacy, 785
Privacy Protection, 787
Case 17.2. EC Application: Property Rights Extended to Domain Names and Digital Property, 788
The USA PATRIOT Act, 788
Privacy Protection in Other Countries, 789
17.5. Spam, Splogs, and Pop-Ups, 789
Spam and Splogs, 789
Protecting Against Pop-Ups Ads, 790
Fan and Hate Sites, 791
17.6. Fraud and Consumer and Seller Protection, 792
Fraud on the Internet, 792
Insights and Additions 17.1. Typical Fraud Schemes, 792
Other Legal Issues, 793
Case 17.3. EC Application: Internet Stock Fraud, 794
Consumer Protection, 794
Insights and Additions 17.2. Resources for Further Information, 796
Seller Protection, 798
Managerial Issues, 798
Research Topics, 799
Summary, 800
Key Terms, 801
Questions for Discussion, 801
Internet Exercises, 802
Team Assignments and Role Playing, 803
Real-World Case: Net Neutrality: Good for E-Business?, 803
References, 804
Chapter 18. Social Networks and Industry Disruptors in the Web 2.0 Environment, 806
Wikipedia and Its Problems of Content Quality and Privacy Protection, 807
18.1. The Web 2.0 Revolution, Social Networks, Innovations, and Industry Disruptors, 808
The Web 2.0 Revolution, 808
What Is In Web 2.0?, 808
Foundation of Web 2.0, 809
Representative Characteristics of Web 2.0, 809
Social Media, 810
Industry and Market Disruptors, 811
Insights and Additions 18.1. Weddings Are Going W2.0 High Tech, 813
18.2. Google and Company: Advertisement and Search Engine Wars, 814
Search Engine Concepts, 814
Search Wars: Google Versus Yahoo! And Others, 814
Answer-Based Search Engines, 817
Disruptors of Google: Will They Succeed?, 817
Insights and Additions 18.2. Amazon.com’s Askville Service, 818
18.3. Virtual Communities, 819
Characteristics of Communities and Classifications, 819
Insights and Additions 18.3. Examples of Communities, 820
Commercial Aspects of Communities, 820
Key Strategies for Successful Online Communities, 821
18.4. Online Social Networks, 822
Concepts and Definitions, 822
Representative Social Networks: From Facebook to Classmates.com, 823
18.5. YouTube and Company—A Whole New World, 825
YouTube: The Essentials, 825
Brief History and Technology, 826
The Business and Revenue Models, 827
Implementation Difficulties: The Copyright Problem, 827
Case 18.1. EC Application: How YouTube Capitalizes on Major Events and Commercial Videos, 828
The Competition, 829
18.6. Business and Entrepreneurial Networks, 829
Business Networks, 829
Social Marketplace, 830
18.7. Travel and Tourism—The EC Revolution is Here, 831
The Major Players, 831
The Impacts of the Web, 832
Travelers and Social Networks, 832
Case 18.2. EC Application: Content-Based Filtering at Eurovacations.com, 834
18.8. ZOPA, Prosper, and P2P Lending: Will they Disrupt Banking?, 834
The Innovation: Person-to-Person Lending, 834
ZOPA Ltd., 835
Prosper, 836
Competition, 836
18.9. Entertainment Web 2.0 Style: From Communities to Entertainment Marketplaces, 837
Entertainment and Business Communities, 837
Advertising Movies and Events in Communities, 838
Online Marketplace for Movies, 838
The Hype Machine, 838
Internet Series, 839
Mobile Web 2.0 Devices for Entertainment and Work, 839
18.10. Technology Support: From Blogger.com to Infrastructure Services, 840
Web 2.0 and Social Software, 841
Tools for Blogging and Wikis, 841
Mashups, 843
Personalization Tools: From My Yahoo! To Netvibes, 843
Development Tools, 843
Tools that Support Applications, 844
Infrastructure Support, 845
Where is Web 2.0 Software Going?, 846
18.11. Web 2.0, Social Networks, and E-Commerce, 847
Why is There an Interest?, 847
Advertising, 847
Case 18.3. EC Application: Revenue Sources at YouTube, 848
Shopping, 849
Feedback from Customers, 850
Other Revenue-Generation Strategies in Social Networks, 851
Web 2.0 Commerce Activities Inside the Enterprise, 852
18.12. The Future of EC and Web 3.0, 852
Web 3.0: What’s Next?, 853
Integrating the Marketplace with the Market Space, 854
Mobile Social Networks, 854
Managerial Issues, 855
Research Topics, 856
Summary, 856
Key Terms, 857
Questions for Discussion, 857
Internet Exercises, 858
Team Assignments and Role Playing, 858
Real-World Case: Web 2.0 at Eastern Mountain Sport, 859
References, 861
Glossary, 866
Index, 885

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