EE--Commerce: Digital Commerce: Digital

items d to enhance game play 3Prepaid cards used to purchase Nexon game items are second best- selling entertainment gift card at Target " Nexon gamesallfeatureForumswhereuserscan 10.3 © 2010 by Prentice Hall " Nexon games all feature Forums where users can socialize, share tips " Demonstrates digital technology 9s role in generating new business models Electronic Commerce and the Internet " E-commerce " UseoftheInternetandWebtotransactbusiness Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods " Use of the Internet and Web to transact business "Digitally enabled transactions " History of e-commerce "Began in 1995 and grew exponentially; still growing at an annual rate of 16 percent "Ra p id g rowth led to market bubble In the late 1990s, secure transactions allowed E-Commerce sales to accelerate 10.4 © 2010 by Prentice Hall pg "While many companies failed, many survived with soaring revenues "E-commerce today the fastest growing form of retail trade in U.S., Europe, Asia 11/9/2009 3 The Growth of E The Growth of E--Commerce Commerce Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet 10.5 © 2010 by Prentice Hall Figure 10-1 Retail e-commerce revenues have grown exponentially since 1995 and have only recently cslowed d to a very rapid 16 percent annual increase, which is projected to remain the same until 2010.<br><br> " Eight unique features of e-commerce technology Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet Com p are to radio , TC , and tele p hone 1.Ubiquity - Internet/Web technology available everywhere: work, home, etc., and anytime 2.Global reach - Market size for e-commerce merchants is world 9s on-line population (>1B) 3.Universal standards - Shared by all nations of the world (unlike TV , cell p hone standards ) p,,p 10.6 © 2010 by Prentice Hall ,p) 4.Richness - Supports video, audio, and text messages. Previously there was a tradeoff of richness vs. reach 11/9/2009 4 " Eight unique features (cont.) 5 Interactivity - The technologyworksthroughinteractionwiththe Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet 5 .<br><br> Interactivity - The technology works through interaction with the user 6.Information density - Vast increases in information density 4the total amount and quality of information available to all market participants. Prices and costs are more transparent 7.Personalization/Customization: - Technology permits modification of messages, goods (e.g., targeted banner ads) 10.7 © 2010 by Prentice Hall 8.Social technology - The technology promotes user content generation and social networking Turner Sports New Media Marries TV and the Internet Turner Sports New Media Marries TV and the Internet " Read the Interactive Session: Organizations and Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet then discuss the following questions: " Describe the unique features of e-commerce technology illustrated in this case. " How does the Web enhance the TV businesses for the companies discussed in this case?<br><br> How does it add value? 10.8 © 2010 by Prentice Hall " Why is NASCAR TrackPass a good example of Turner Sports New Media 9s value to sports league sites? " Do you think Turner Sports New Media will continue to grow steadily?<br><br> Why or why not? 11/9/2009 5 " Key concepts in e-commerce " Digitalmarketsreduce Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet " Digital markets reduce "Information asymmetry 3determines relative bargaining power "Search costs "Transaction costs "Menu costs (cost of changing prices) " Digitalmarketsenable Compare E-Commerce shopping with mall shopping 10.9 © 2010 by Prentice Hall Digital markets enable "Price discrimination "Dynamic pricing (prices responsive to supply and demand) "Disintermediation 3elimination of brokers The Benefits of Disintermediation to the Consumer The Benefits of Disintermediation to the Consumer Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet 10.10 © 2010 by Prentice Hall Figure 10-2 The typical distribution channel has several intermediary layers, each of which adds to the final cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer.<br><br> 11/9/2009 6 " Key concepts in e-commerce (cont.) " Digitalgoods Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet " Digital goods "Goods that can be delivered over a digital network "E.g., Music tracks, video, software, newspapers, books "Cost of producing first unit almost entire cost of product: marginal cost of producing 2 nd unit is about zero "Costs of deliver y over the Internet ver y low 10.11 © 2010 by Prentice Hall yy "Marketing costs remain the same; pricing highly variable "Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.) " Internet business models " Pure - playmodels Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet Pure play models " Clicks-and-mortar models " Social Network "Online meeting place " Social shopping sites "Can provide ways for corporate clients to target customers through banner ads and pop-up ads 10.12 © 2010 by Prentice Hall " Online marketplace: "Provides a digital environment where buyers and sellers can meet, search for products, display products, and establish prices for those products 11/9/2009 7 " Content provider " Providingdigitalcontentsuchasdigitalnewsmusicphotos Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet " Providing digital content , such as digital news , music , photos , or video, over the Web " Service provider "Provides Web 2.0 applications such as photo sharing and interactive maps, and services such as data storage " Portal 10.13 © 2010 by Prentice Hall " cSupersite d that provides comprehensive entry point for huge array of resources and services on the Internet " Virtual storefront: " Sellsphysicalproductsdirectlytoconsumersorto Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet " Sells physical products directly to consumers or to individual businesses " Information broker: "Provides product, pricing, and availability information to individuals and businesses " Transaction broker: 10.14 © 2010 by Prentice Hall "Saves users money and time by processing online sales transactions and generating a fee for each transaction 11/9/2009 8 Types of Electronic Commerce Types of Electronic Commerce Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce " Business-to-consumer (B2C) " Business-to-business (B2B) " Consumer-to-consumer (C2C) " Mobile commerce (m-commerce) 10.15 © 2010 by Prentice Hall " Interactive marketing and personalization Wbitbtiflfdtilbtt Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce " W e b s it es are b oun tif u l source o f d e t a il s a b ou t cus t omer behavior, preferences, buying patterns used to tailor promotions, products, services, and pricing " Clickstream tracking tools: Collect data on customer activities at Web sites "Used to create personalized Web pages 10.16 © 2010 by Prentice Hall " Collaborative filtering: Compares customer data to other customers to make product recommendations (e.g., Amazon cCustomers who purchased this book/CD have also purchased _____ d 11/9/2009 9 Web Site Visitor Tracking Web Site Visitor Tracking Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce Figure10 - 3 10.17 © 2010 by Prentice Hall Figure 10 3 E-commerce Web sites have tools to track a shopper 9s every step through an online store. Close examination of customer behavior at a Web site selling women 9s clothing shows what the store might learn at each step and what actions it could take to increase sales. Web Site Personalization Web Site Personalization Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce 10.18 © 2010 by Prentice Hall Figure 10-4 Firms can create unique personalized Web pages that display content or ads for products or services of special interest to individual users, improving the customer experience and creating additional value.<br><br> 11/9/2009 10 " Blogs " P ersonalwebpagesthatcontainseriesofchronological Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce P ersonal web pages that contain series of chronological entries by author and links to related Web pag es "Has increasing influence in politics, news " Corporate blogs: New channels for reaching customers, introducing new products and services "Blog analysis by marketers " Customer self-service 10.19 © 2010 by Prentice Hall "E.G., Airlines "Web sites and e-mail to answer customer questions or to provide customers with product information "Reduces need for human customer-support expert " B2B e-commerce: New efficiencies and relationshi p s Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce XML interchan g e p " Electronic data interchange (EDI) "Computer-to-computer exchange of standard transactions such as invoices, purchase orders "Major industries have EDI standards that define structure and information fields of electronic documents for that industry g 10.20 © 2010 by Prentice Hall " More companies increasingly moving away from private networks to Internet for linking to other firms "E.g., Procurement: Businesses can now use Internet to locate most low-cost supplier, search online catalogs of supplier products, negotiate with suppliers, place orders, etc. 11/9/2009 11 " Private industrial networks (private exchanges) " L argefirmusingextranettolinktoitssuppliersdistributors Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce " L arge firm using extranet to link to its suppliers , distributors and other key business partners "Owned by buyer "Permits sharing of: "Product design and development "Marketin g 10.21 © 2010 by Prentice Hall g "Production scheduling and inventory management "Unstructured communication (graphics and e-mail) A Private Industrial Network A Private Industrial Network Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce 10.22 © 2010 by Prentice Hall Figure 10-6 A private industrial network, also known as a private exchange, links a firm to its suppliers, distributors, and other key business partners for efficient supply chain management and other collaborative commerce activities. 11/9/2009 12 " Net marketplaces (e-hubs) " Singlemarketformanybuyersandsellers Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce E.g., Proposed health insurance cooperative " Single market for many buyers and sellers "Industry-owned or owned by independent intermediary "Generate revenue from transaction fees, other services "Use prices established through negotiation, auction, RFQs, or fixed prices "Ma y focus on direct or indirect g oods 10.23 © 2010 by Prentice Hall yg "May support long-term contract purchasing or short-term spot purchasing "May serve vertical or horizontal marketplaces A Net Marketplace A Net Marketplace Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce 10.24 © 2010 by Prentice Hall Figure 10-7 Net marketplaces are online marketplaces where multiple buyers can purchase from multiple sellers.<br><br> 11/9/2009 13 M-Commerce " M-commerce services and applications Althoghm commercerepresentssmallfractionof Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods " Altho u gh m - commerce represents small fraction of total e-commerce transactions, revenue has been steadily growing " Location-based services " Banking and financial services " WirelessAdvertising Any use their iPhone for m-commerce? 10.25 © 2010 by Prentice Hall Wireless Advertising " Games and entertainment Global M Global M--commerce Revenue 2000 commerce Revenue 2000--2012 2012 Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods M-Commerce 10.26 © 2010 by Prentice Hall Figure 10-8 M-commerce sales represent a small fraction of total e- commerce sales, but that percentage is steadily growing. Compare to 2009 E-commernce revenues of almost $300B 11/9/2009 14 " Types of electronic payment systems " Digitalwallet Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce Payment Systems " Digital wallet "Stores credit card and owner identification information and enters the shopper 9s name, credit card number, and shipping information automatically when invoked to complete a purchase " Accumulated balance digital payment systems 10.27 © 2010 by Prentice Hall "Used for micropayments ($10 or less) "Accumulating debit balance that is paid periodically on credit card or telephone bills Electronic Commerce Payment Systems " Stored value payment systems " E nableonlinepaymentsbasedonvaluestoredinonline Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods E nable online payments based on value stored in online digital account "May be merchant platforms or peer-to-peer (PayPal) " Digital checking "Extend functionality of existing checking accounts to be used for online payments " Electronic billin g p resentment and p a y ment 10.28 © 2010 by Prentice Hall gppy systems "Paying monthly bills through electronic fund transfers or credit cards 11/9/2009 15 " Digital payments systems for m-commerce " Threetypesofmobilepaymentsystemsin Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Electronic Commerce Payment Systems " Three types of mobile payment systems in use in Japan " Stored value system charged by credit cards or bank accounts " Mobile debit cards " Mobile credit cards 10.29 © 2010 by Prentice Hall " In the U.S., the cell phone has not yet evolved into a mobile payment system Management Information Systems Management Information Systems Chapter 10 E Chapter 10 E- -Commerce: Digital Markets, Digital Goods Commerce: Digital Markets, Digital Goods Facebook Case Study " Dilemma 3how to capitalize on the vast number of Facebook users " Describe the weaknesses of Facebook 9s privacy policies and features.<br><br> What management, organization, and technology factors have contributed to those weaknesses? DFbkhiblbi 10.30 © 2010 by Prentice Hall " D oes F ace b oo k h ave a v i a bl e b us i ness model? " Is Facebook worth it market capitalization ($15B)?<br><br> 11/9/2009 16 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanicalphotocopyingrecordingorotherwisewithoutthepriorwritten 10.31 © 2010 by Prentice Hall mechanical , photocopying , recording , or otherwise , without the prior written permission of the publisher. Printed in the United States of America.<br><br> Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

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