Turban Company Inc. with contributions by. Judy Lang ... CHAPTER 1
OVERVIEW OF ELECTRONIC COMMERCE. 43. Beijing 2008: A Digital Olympics
. 44. 1.1.
Electronic Commerce
2010 A Managerial Perspective Global Edition Efraim Turban ' '
University of Hawaii
David King JDA Software Group, Inc.
Jae Lee Korea Advanced Institute of Science and Technology
Ting-Peng Liang City University of Hong Kong and National Sun Yat-Sen University (Taiwan)
Deborrah C. Turban Turban Company Inc.
with contributions by
Judy Lang Lang Associates
Christy Cheung Hong Kong Baptist University
Linda Lai Macau Polytechnic Institute of China
Carol Pollard Appalachian State University
Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
Contents
T
Part 1 Tntroriurtinn to E-Commerre and E-Marketplaces CHAPTER 1 OVERVIEW OF ELECTRONIC COMMERCE
43 43
Beijing 2008: A Digital Olympics
44
1.1
46 46 47 47
1.2
ELECTRONIC COMMERCE: DEFINITIONS AND CONCEPTS Defining Electronic Commerce Defining E-Business Other EC Concepts Electronic Markets and Interorganizational and Intraorganizational Information Systems THE ELECTRONIC COMMERCE FIELD: CLASSIFICATION, CONTENT, AND HISTORY An EC Framework Classification of EC by the Nature, Direction of the Transactions, and Interactions
Case 1.1 E C A p p l i c a t i o n : Want to Buy Chocolate Online? Try Godiva.com A Brief History of EC The Future of EC 1.3
48 49 49 50 52 53 54
E-COMMERCE 2.0: FROM WEB 2.0 TO ENTERPRISE SOCIAL NETWORKING AND VIRTUAL WORLDS Social Computing Web 2.0 Social Networks and Social Network Services
55 55 55 56
Case 1.2 EC A p p l i c a t i o n : MySpace: The World's Most Popular Social Networking Web Site Enterprise Social Networks Virtual Worlds and Second Life
58 59 60
1.4
THE DIGITAL WORLD: ECONOMY, ENTERPRISES, AND SOCIETY The Digital Economy The Digital Enterprise The Digital Society
62 62 62 64
ELECTRONIC COMMERCE DRIVERS AND THE CHANGING BUSINESS ENVIRONMENT The Drivers of EC and Its Growth Performance, Business Pressures, and Organizational Responses
68 68 69
1.6
ELECTRONIC COMMERCE BUSINESS MODELS The Structure and Properties of Business Models Typical EC Business Models
72 72 75
1.7
THE BENEFITS, LIMITATIONS, AND IMPACTS OF ELECTRONIC COMMERCE The Benefits and Impacts of EC The Limitations and Barriers of EC Why Study E-Commerce?
76 76 76 77
OVERVIEW OF THIS BOOK
78
1.5
1.8
Contents Case 1.3
EC Application: How College Students Become Entrepreneurs Part 1: Introduction to E-Commerce and E-Marketplaces Part 2: Internet Consumer Retailing Part 3: Business-to-Business E-Commerce Part 4: Other EC Models and Applications Part 5: EC Support Services Part 6: EC Strategy and Implementation Online Part 7: Auctions and Application Development Online Tutorials Online Appendix Online Supplements
I
79 80 80 80 81 81 81 81 81 81 81
MANAGERIAL ISSUES
81
SUMMARY
82
KEY TERMS
83
QUESTIONS FOR DISCUSSION
83
INTERNET EXERCISES
84
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
84
CLOSING CASE: MARY KAY'S EC SYSTEMS
85
ONLINE RESOURCES
86
REFERENCES
87
CHAPTER 2 E-MARKETPLACES: MECHANISMS, TOOLS, AND IMPACTS OF E-COMMERCE
89
Web 2.0 Tools at Eastern Mountain Sports
90
2.1
ELECTRONIC COMMERCE MECHANISMS: AN OVERVIEW EC Activities and Mechanisms Sellers, Buyers, and Transactions
92 92 93
2.2
E-MARKETPLACES Electronic Markets E-Marketplace Components and Participants Types of E-Marketplaces
94 95 95 96
2.3
CUSTOMER INTERACTION MECHANISMS: STOREFRONTS, MALLS, AND PORTALS Electronic Storefronts Electronic Malls Types of Stores and Malls Web (Information) Portals The Roles and Value of Intermediaries in E-Marketplaces
Case 2.1 EC Application: TradeEgypt.com 2.4
2.5
97 97 98 98 99 100 101
ELECTRONIC CATALOGS, SEARCH ENGINES, AND SHOPPING CARTS Electronic Catalogs EC Search Activities, Types, and Engines Shopping Carts
102 102 104 105
AUCTIONS, BARTERING, AND NEGOTIATING ONLINE Definition and Characteristics Traditional Auctions Versus E-Auctions Dynamic Pricing and Types of Auctions Benefits, Limitations, and Impacts of E-Auctions
106 106 106 108 109
Contents
2.6
2.7
Online Bartering Online Negotiating
110 111
WEB 2.0 TOOLS AND SERVICES: FROM BLOGS TO WIKIS Blogging (Weblogging) Mechanism Aids for Web 2.0 Tools: Tags, Folksonomy, and Social Bookmarks Wikis
Ill 112
VIRTUAL WORLDS AS AN ELECTRONIC COMMERCE MECHANISM Business Activities and Value in Virtual Worlds
2.8
116 117
117 118
COMPETITION IN THE DIGITAL ECONOMY AND ITS IMPACT ON INDUSTRIES Competition in the Internet Ecosystem
119 119
Case 2.2 t
E C A p p l i c a t i o n : How Blue Nile, Inc., Is Changing the Jewelry Industry Impact on Competition
120 122
EC Impact on Whole Industries
123
Case 2.3 2.9
E C A p p l i c a t i o n : Craigslist: The Ultimate Online Classified Site
124
IMPACTS OF ELECTRONIC COMMERCE ON BUSINESS PROCESSES AND ORGANIZATIONS Improving Marketing and Sales
125 125
Transforming Organizations Redefining Organizations
126 128
MANAGERIAL ISSUES
130
SUMMARY
131
KEY TERMS
132
QUESTIONS FOR DISCUSSION
132
INTERNET EXERCISES
133
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
133
CLOSING CASE: SECOND LIFE
134
ONLINE RESOURCES
135
REFERENCES
136
2A
138
BUILD-TO-ORDER PRODUCTION
Part 2 Internet Consumer Retailing CHAPTER 3 RETAILING I N ELECTRONIC COMMERCE: PRODUCTS AND SERVICES
14Q_ 140
Amazon.com: E-Tailing Grows Despite t h e Slumping Economy . . . . 1 4 1 3.1
3.2
INTERNET MARKETING AND ELECTRONIC RETAILING
143
Overview of Electronic Retailing Size and Growth of the B2C Market What Sells Well on the Internet Characteristics and Advantages of Successful E-Tailing
143 143 144 144
E-TAILING BUSINESS MODELS Classification by Distribution Channel
147 147
Insights and Additions 3.1 Selling Cars Online: Build-to-Order Other B2C Models and Special Retailing
150
B2C in Social Networks
150
Contents 3.3
TRAVEL AND TOURISM (HOSPITALITY) SERVICES ONLINE Services Provided Special Services Online Benefits and Limitations of Online Travel Services
Case 3.1 EC Application: WAYN: A Social Network for Travelers Corporate Travel Impact of EC on the Travel Industry
151 152 152 153 154 154 154
3.4
EMPLOYMENT PLACEMENT AND THE JOB MARKET ONLINE The Internet Job Market Benefits and Limitations of the Electronic Job Market
155 156 158
3.5
REAL ESTATE, INSURANCE, AND STOCK TRADING ONLINE Real Estate Online Insurance Online Online Stock Trading
159 159 160 160
3.6
BANKING AND PERSONAL FINANCE ONLINE Home Banking Capabilities Virtual Banks International and Multiple-Currency Banking Online Financial Transaction Implementation Issues
162 162 162 163 164
Case 3.2 EC Application: Security for Online Bank Transactions . . . . 164 Personal Finance Online 165 3.7
ON-DEMAND DELIVERY OF PRODUCTS, DIGITAL ITEMS, ENTERTAINMENT, AND GAMING On-Demand Delivery of Products Fresh Direct Online Delivery of Digital Products, Entertainment, and Media Online Entertainment
166 166 167 167 168
3.8
ONLINE PURCHASE-DECISION AIDS Shopping Portals Shopbots Software Agents "Spy" Services Business Ratings Sites Trust Verification Sites Other Shopping Tools
169 170 170 170 171 171 171
3.9
PROBLEMS WITH E-TAILING AND LESSONS LEARNED
172
3.10
ISSUES IN E-TAILING Disintermediation and Reintermediation Channel Conflict Determining the Right Price Product and Service Customization and Personalization Fraud and Other Illegal Activities How to Make Customers Happy
173 173 174 175 175 175 175
MANAGERIAL ISSUES
176
SUMMARY
176
KEY TERMS
177
QUESTIONS FOR DISCUSSION
178
INTERNET EXERCISES
178
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
179
CLOSING CASE: WAL-MART POWERS ONLINE
179
ONLINE RESOURCES
181
REFERENCES
181
10
Contents
CHAPTER 4 CONSUMER BEHAVIOR, INTERNET MARKETING, AND ADVERTISING Netflix Increases Sales Using DVD Recommendations and Advertisements
184 185
4.1
LEARNING ABOUT CONSUMER BEHAVIOR ONLINE A Model of Consumer Behavior Online
186 186
4.2
THE CONSUMER PURCHASING DECISION-MAKING PROCESS A Generic Purchasing-Decision Model Customer Decision Support in Web Purchasing Players in the Consumer Decision Process
189 189 190 191
4.3
MASS MARKETING, MARKET SEGMENTATION, AND ONE-TO-ONE MARKETING From Mass Marketing to One-to-One Marketing How One-to-One Relationships Are Practiced
191 191 192
PERSONALIZATION AND BEHAVIORAL MARKETING Personalization in E-Commerce
194 194
Behavioral Marketing and Collaborative Filtering
195
4.5
LOYALTY, SATISFACTION, AND TRUST IN EC Customer Loyalty Satisfaction in EC Trust in EC
196 196 197 198
4.6
MARKET RESEARCH FOR EC Objectives and Concepts of Market Research Online
200 200
Case 4.1 EC Application: Internet Market Research Expedites Time-to-Market at Procter & Gamble Representative Market Research Approaches
201 201
4.4
Insights and Additions 4.2: Market Research by Comscore, Inc Limitations of Online Market Research and How to Overcome Them Biometric Marketing
206 206
4.7
WEB ADVERTISING Overview of Web Advertising Some Internet Advertising Terminology Why Internet Advertising? Advertising Networks
207 207 208 208 209
4.8
ONLINE ADVERTISING METHODS Banners Pop-Up and Similar Ads E-Mail Advertising Newspaper-Like and Classified Ads Search Engine Advertisement Google—The Online Advertising King Advertising in Chat Rooms
210 210 211 211 212 212 213 213
Insights and Additions 4.3: Google's Major Advertisement Methods 4.9
Other Forms of Advertising
215
ADVERTISING STRATEGIES AND PROMOTIONS . . . Social Network Advertising Video Ads on the Web and in SociaL Networking Viral Marketing
217 217 217 218
Contents
4.10
Other Advertising Strategies
219
Online Events, Promotions, and Attractions Mobile Marketing and Advertising
220 221
SPECIAL ADVERTISING AND IMPLEMENTATION TOPICS Permission Advertising Some Implementation Issues Ad Management Localization
222 222 223 224 224
Ad Content Intelligent Agents Applications
225 226
MANAGERIAL ISSUES
227
SUMMARY
228
KEY TERMS
229
QUESTIONS FOR DISCUSSION
229
INTERNET EXERCISES
230
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
230
CLOSING CASE: TOYOTA SCION GOES SOCIAL FOR ADVERTISING AND MARKET RESEARCH
231
ONLINE RESOURCES
233
REFERENCES
233
Part 3 B i K i n e s s - t o - B u s i n e s s E-Commerce CHAPTER 5 B2B E-COMMERCE Auction for Supplies Helps Portsmouth Hospitals 5.1
CONCEPTS, CHARACTERISTICS, AND MODELS OF B2B E-COMMERCE Basic B2B Concepts Market Size and Content of B2B The Basic Types of B2B Transactions and Activities The Basic Types of B2B E-Marketplaces and Services B2B Characteristics Supply Chain Relationships in B2B
Insights and Additions 5.1: Summary of B2B Characteristics Service Industries Online in B2B The Benefits and Limitations of B2B The Content of the B2B Field 5.2
235__ 235 236 237 237 237 237 238 239 240
241 242 242
ONE-TO-MANY: SELL-SIDE E-MARKETPLACES Sell-Side Models Sales from Catalogs
243 243 245
Case 5.1 EC Application: Gregg's Cycles Goes Online Online Direct Sales: The Example of Cisco Systems
246 246
Case 5.2 EC Application: Whirlpool B2B Trading Portal
247
5.3
247
SELLING VIA DISTRIBUTORS AND OTHER INTERMEDIARIES
Case 5.3 EC Application: W. W. Grainger and Goodrich Corporation . . 248 5.4
SELLING VIA E-AUCTIONS Using Auctions on the Sell Side Auctioning from the Company's Own Site Using Intermediaries in Auctions Examples of B2B Forward Auctions
249 249 249 249 250
11
12
Contents Case 5.4 EC Application: How the U.S. State of Pennsylvania Sells Surplus Equipment 250 5.5
ONE-FROM-MANY: BUY-SIDE E-MARKETPLACES AND E-PROCUREMENT Procurement Methods Inefficiencies in Traditional Procurement Management The Goals and Benefits of E-Procurement
251 251 252 253
5.6
BUY-SIDE E-MARKETPLACES: REVERSE AUCTIONS Conducting Reverse Auctions Group Reverse Auctions
255 255 256
5.7
OTHER E-PROCUREMENT METHODS An Internal Purchasing Marketplace: Aggregating Suppliers' Catalogs and Desktop Purchasing Buying at Sellers' E-Auctions Group Purchasing Buying at Sellers' Sites and Collaborative Commerce Purchasing Direct Goods Electronic Bartering
257 257 258 258 259 259 259
B2B ELECTRONIC EXCHANGES: DEFINITIONS AND CONCEPTS
260
5.8
Case 5.5 EC Application: ChemConnect: The World Commodity Chemical Exchange Functions of Exchanges Dynamic Pricing in B2B Exchanges Advantages, Limitations, and the Revenue Model of Exchanges 5.9
B2B PORTALS, DIRECTORIES, AND OWNERSHIP OF B2B MARKETPLACES B2B Portals
261 262 262 263 265 265
Case 5.6 EC Application: Alibaba.com Ownership of B2B Marketplaces
266 268
Case 5.7 EC Application: Agentrics: A Giant Retail Exchange Comparing the Many-to-Many B2B Models
269 270
5.10
271 271 271
PARTNER AND SUPPLIER RELATIONSHIP MANAGEMENT Partner and Supplier Relationship Management E-Communities and PRM
5.11 B2B IN THE WEB 2.0 ENVIRONMENT AND SOCIAL NETWORKING The Opportunities The Use of Web 2.0 Tools in B2B Social Networks in the B2B Marketplace Examples of Other Activities of B2B Social Networks Strategy for B2B Social Networking
272 272 272 272 273 273
5.12 INTERNET MARKETING IN B2B EC Organizational Buyer Behavior The Marketing and Advertising Processes in B2B Methods for B2B Online Marketing Affiliate Programs, Infomediaries, and Data Mining
274 274 274 275
MANAGERIAL ISSUES
277
SUMMARY
277
KEY TERMS
279
276
Contents QUESTIONS FOR DISCUSSION
279
INTERNET EXERCISES
279
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
280
CLOSING CASE: IMARKETKOREA
281
ONLINE RESOURCES
282
REFERENCES
283
CHAPTER 6 E-SUPPLY CHAINS, COLLABORATIVE COMMERCE, AND CORPORATE PORTALS
285
Boeing's Global Supply Chain for the Dreamliner 787
286
6.1
E-SUPPLY CHAINS Definitions and Concepts Supply Chain Parts Managing Supply Chains
287 287 288 289
6.2
SUPPLY CHAIN PROBLEMS AND SOLUTIONS Typical Problems Along the Supply Chain EC Solutions Along the Supply Chain
292 292 293
6.3
RFID AS A KEY ENABLER IN SUPPLY CHAIN MANAGEMENT The RFID Revolution RFID Applications in the Supply Chain Limitations and Concerns of RFID
295 295 296 298
Case 6.1 EC Application: Airbus Improves Productivity with RFID RuBee: An Alternative to RFID?
299 300
6.4
COLLABORATIVE COMMERCE Essentials of Collaborative Commerce Collaboration Hubs Collaborative Networks Representative Examples of E-Collaboration Barriers to C-Commerce
301 301 301 301 302 306
6.5
COLLABORATIVE PLANNING, CPFR, APS, AND PLM Collaborative Planning, Forecasting, and Replenishment Advanced Planning and Scheduling
306 307 307
Case 6.2 EC Application: West Marine: A CPFR Success Story Product Lifecycle Management Supporting Joint Design
308 308 309
6.6
SUPPLY CHAIN INTEGRATION How Information Systems Are Integrated Integration Along the Extended Supply Chain
309 309 310
6.7
CORPORATE (ENTERPRISE) PORTALS Corporate Portals: An Overview Types of Corporate Portals Corporate Portal Applications and Issues
310 310 312 313
6.8
COLLABORATION-ENABLING ENVIRONMENTS AND TOOLS Workflow Technologies and Applications Collaboration and Groupware: Some Basic Concepts Electronic Meeting Systems: Face-to-Face Support and Virtual Meetings Real-Time Collaboration Tools for Virtual Meetings
314 314 315 317 318
13
14
Contents
Electronic Teleconferencing Unified Communication: Integration and Groupware Suites Collaboration 2.0 ' Implementation Issues for Online Collaboration Case 6.3
319 320 323 325
E C A p p l i c a t i o n : Wikis, Blogs, and Chats Support Collaboration at DrKW
326
MANAGERIAL ISSUES
327
SUMMARY
328
KEY TERMS
328
QUESTIONS FOR DISCUSSION
329
INTERNET EXERCISES
329
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
330
CLOSING CASE: HOW WAL-MART USES EC IN ITS SUPPLY CHAIN
331
ONLINE RESOURCES
333
REFERENCES
333
Part 4 Other EC Models and Applications CHAPTER 7 INNOVATIVE EC SYSTEMS: FROM E-GOVERNMENT AND E-LEARNING TO CONSUMER-TO-CONSUMER E-COMMERCE
ai6_
336
Caterpillar Inc. Champions E-Learning
337
7.1
E-GOVERNMENT: AN OVERVIEW Definition and Scope Government-to-Citizens Government-to-Business Government-to-Govemment Government-to-Employees and Internal Efficiency and Effectiveness
338 338 338 342 343
7.2
IMPLEMENTING E-GOVERNMENT The Transformation to E-Government E-Government and Social Networking Implementation Issues of E-Government M-Government
344 344 346 346 347
7.3
E-LEARNING The Basics of E-Learning: Definitions and Concepts
347 347
343
Case 7.1 EC Application: E-Learning at Cisco Systems Benefits and Drawbacks of E-Learning Preventing E-Learning Failures Distance Learning and Online Universities Online Corporate Training Implementing E-Learning and E-Training Edutainment Social Networks and E-Learning Learning in Virtual Worlds and Second Life Visual Interactive Simulation E-Learning Tools and Management
349 350 352 352 353 354 354 354 355 357 357
7.4
359 359 360 363
ONLINE PUBLISHING AND E-BOOKS Content Providers, Publishers, and Distributors Electronic Books Print-on-Demand
Contents
7.5
KNOWLEDGE MANAGEMENT, LEARNING, AND ELECTRONIC COMMERCE An Overview of Knowledge Management KM Types and Activities -
Case 7.2 A p p l i c a t i o n C a s e : Knowledge Management at Infosys Technologies How Is Knowledge Management Related to E-Commerce? Knowledge Portals Online Advice and Consulting Employee Knowledge Networks and Expert Location Systems
363 363 364 365 366 367 367 368
Case 7.3 EC A p p l i c a t i o n : How the U.S. Department of Commerce Uses an Expert Location System 370 7.6
CONSUMER-TO-CONSUMER ELECTRONIC COMMERCE E-Commerce: C2C Applications C2C Activities in Social Networks Support Services for C2C
371 371 372 373
MANAGERIAL ISSUES
374
SUMMARY
374
KEY TERMS
375
QUESTIONS FOR DISCUSSION
375
INTERNET EXERCISES
376
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
376
CLOSING CASE: A WORLD-CLASS E-GOVERNMENT: SINGAPORE
377
ONLINE RESOURCES
379
REFERENCES
379
CHAPTER 8 MOBILE COMPUTING AND COMMERCE, AND PERVASIVE COMPUTING The Blooming of Food Lion 8.1
8.2
8.3
381 382
MOBILE COMMERCE: ATTRIBUTES, BENEFITS, AND DRIVERS Attributes of M-Commerce Drivers of M-Commerce
383 383 384
COMPONENTS, TECHNICAL INFRASTRUCTURE, AND SERVICES OF MOBILE COMPUTING Mobile Devices
385 386
Mobile Computing Software and Services Wireless Telecommunications Networks
387 388
MOBILE FINANCIAL APPLICATIONS Mobile Banking Mobile Payments
391 391 391
Case 8.1 EC A p p l i c a t i o n : Closing the Digital Divide with Mobile Microfinance
393
8.4
MOBILE MARKETING AND ADVERTISING Mobile Marketing Campaigns Mobile Marketing Guidelines
394 394 395
8.5
MOBILE WORKFORCE SOLUTIONS Needs of the Mobile Workforce
396 396
8.6
MOBILE ENTERTAINMENT Growth of the Mobile Entertainment Market
399 399
15
Contents
Mobile Music and Video Mobile Games Mobile Gambling
400 400 401
8.7
LOCATION-BASED MOBILE COMMERCE L-Commerce Infrastructure Location-Based Services and Applications Barriers to Location-Based M-Commerce
402 403 404 405
8.8
SECURITY AND OTHER IMPLEMENTATION ISSUES IN MOBILE COMMERCE M-Commerce Security Issues Technological Barriers to M-Commerce Ethical, Legal, and Health Issues in M-Commerce
406 406 407 408
I I I I | |
8.9
PERVASIVE COMPUTING Overview of Pervasive Computing Radio Frequency Identification (RFID) Sensor Networks and Smart Items Case 8.2 EC Application: Wi-Fi Sensor Net Aids Winemakers Privacy and Pervasive Computing
409 409 410 413 415 416
j
MANAGERIAL ISSUES
417
|
SUMMARY
418
1
KEY TERMS
419
|
QUESTIONS FOR DISCUSSION
420
j
INTERNET EXERCISES
420
|
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
421
|
CLOSING CASE: WAL-MART TURNS TO MOBILE FOR WEATHER ALERTS . . . 421
I I
1 j
.
ONLINE RESOURCES
422
REFERENCES
423
CHAPTER 9 THE WEB 2.0 ENVIRONMENT AND SOCIAL NETWORKS
1 |
Wikipedia and Its Problems of Content, Quality, and Privacy Protection
! | I | j 1 |
9.1
I | |
9.2
I j I | I
9.3
I | | |
9.4
THE WEB 2.0 REVOLUTION, SOCIAL MEDIA, AND INDUSTRY DISRUPTORS What Is Web 2.0? Representative Characteristics of Web 2.0 Web 2.0 Companies and New Business Models Social Media Industry and Market Disruptors
425 426 427 427 427 428 429 429
VIRTUAL COMMUNITIES Characteristics of Traditional Online Communities and Their Classification
431 431
ONLINE SOCIAL NETWORKING: BASICS AND EXAMPLES A Definition and Basic Information Representative Social Networks Sites and Services Mobile Social Networking
434 434 436 437
MAJOR SOCIAL NETWORK SERVICES: FROM FACEBOOK TO FLICKR Facebook: The Network Effect Bebo
438 438 439
Contents
9.5
Orkut: Exploring the Very Nature of Social Networking Sites Flickr Ticks Off Some of Its Users .
440 441
BUSINESS AND ENTERPRISE SOCIAL NETWORKS Definitions, Concepts, Types, and Examples Business Social Networking: Concepts and Benefits Enterprise Social Networks Other Social Networking Structures Social Marketplaces
441 441 442 443 445 446
9.6
COMMERCIAL ASPECTS OF WEB 2.0 AND SOCIAL NETWORKING APPLICATIONS Why Is There an Interest? Case 9.2 EC Application: Revenue Sources at YouTube Advertising Using Social Networks, Blogs, and Wikis Shopping in Social Networks Feedback from Customers: Conversational Marketing Commercial Activities in Business and Enterprise Social Networks Revenue-Generation Strategies in Social Networks Risks and Limitations When Interfacing with Social Networks Justifying Social Media and Networking 9.7
9.8
447 447 447 448 450 450 451 453 454 454
ENTERTAINMENT WEB 2.0 STYLE: FROM SOCIAL NETWORKS TO MARKETPLACES Entertainment and Social Networks Advertising Movies and Events in Communities Online Marketplace for Movies Mobile Web 2.0 Devices for Entertainment and Work Yahoo! Go
455 455 456 456 457 457
THE FUTURE: WEB 3.0 AND WEB 4.0
459
Web 3.0: What's Next?
459
MANAGERIAL ISSUES
461
SUMMARY
462
KEY TERMS
462
QUESTIONS FOR DISCUSSION
463
INTERNET EXERCISES
463
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
464
CLOSING CASE: LINKEDIN: THE BUSINESS-ORIENTED SOCIAL NETWORK
465
ONLINE RESOURCES
466
REFERENCES
467
Part 5 Ff Support Servires
46Q
CHAPTER 10 E-COMMERCE FRAUD AND SECURITY
469
How Seattle's Hospital Survived a Bot Attack
470
10.1 THE INFORMATION SECURITY PROBLEM What Is EC Security? The Drivers of EC Security Problems Why Is E-Commerce Security Strategy Needed?
471 471 473 475
10.2
476 476
BASIC E-COMMERCE SECURITY ISSUES AND LANDSCAPE The Security Basic Terminology
17
Contents The EC Security Battleground Security Scenarios and Requirements in E-Commerce The Defense: Defenders and Their Strategy
476 478 479
10.3 TECHNICAL ATTACK METHODS Technical and Nontechnical Attacks: An Overview The Major Technical Attack Methods Malicious Code: Viruses, Worms, and Trojan Horses
480 480 481 481
10.4 PHISHING, FINANCIAL FRAUD, AND SPAM Phishing Fraud on the Internet
484 485 485
Case 10.1 EC Application: Internet Stock Fraud Aided by Spam
489
Social Networking Makes Social Engineering Easy
489
10.5 THE INFORMATION ASSURANCE MODEL AND DEFENSE STRATEGY Confidentiality, Integrity, and Availability Authentication, Authorization, and Nonrepudiation E-Commerce Security Strategy The Defense Strategy
491 491 491 492 492
10.6 THE DEFENSE I : ACCESS CONTROL, ENCRYPTION, AND PKI Access Control Encryption and the One-Key (Symmetric) System Public Key Infrastructure (PKI)
493 493 495 496
10.7 THE DEFENSE I I : SECURING E-COMMERCE NETWORKS Firewalls Demilitarized Zone VPNs Intrusion Detection Systems (IDSs) Honeynets and Honeypots
499 499 499 500 500 501
10.8 THE DEFENSE I I I : GENERAL CONTROLS AND OTHER DEFENSE MECHANISMS General Controls Application Controls Internal Control and Compliance Management Protecting Against Spam Protecting Against Pop-Up Ads Protecting Against Spyware
501 502 503 504 504 505 506
.
10.9 BUSINESS CONTINUITY, SECURITY AUDITING, AND RISK MANAGEMENT Business Continuity and Disaster Recovery Planning Auditing Information Systems
506 506 507
Case 10.2 EC Application: Business Continuity and Disaster Recovery
Risk-Management and Cost-Benefit Analysis 10.10IMPLEMENTING ENTERPRISEWIDE E-COMMERCE SECURITY Senior Management Commitment and Support EC Security Policies and Training EC Security Procedures and Enforcement Industry Standards for Credit Card Protection (PCI DSS) Security Tools: Hardware and Software Why Is It Difficult to Stop Internet Crime?
508
508 509 509 510 510 511 511 511
Contents MANAGERIAL ISSUES
513
SUMMARY
514
KEY TERMS
516
QUESTIONS FOR DISCUSSION
516
INTERNET EXERCISES
517
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
518
CLOSING CASE: UBS PAINEWEBBER'S BUSINESS OPERATIONS DEBILITATED BY MALICIOUS CODE
518
ONLINE RESOURCES
519
REFERENCES
520
CHAPTER 11 ELECTRONIC COMMERCE PAYMENT SYSTEMS
522
Pay-Per-View Pages: The Next iTunes
523
11.1
THE PAYMENT REVOLUTION
524
11.2
USING PAYMENT CARDS ONLINE Processing Cards Online Fraudulent Card Transactions
526 526 527
11.3
SMART CARDS Types of Smart Cards Applications of Smart Cards
529 530 530
Case 11.1 E C A p p l i c a t i o n : TaiwanMoney Card
533
11.4
STORED-VALUE CARDS
533
11.5
E-MICROPAYMENTS
534
11.6
E-CHECKING
536
Case 11.2 E C A p p l i c a t i o n : To POP or BOC: Digital Checks in the Offline World 11.7
B2B ELECTRONIC PAYMENTS Current B2B Payment Practices Enterprise Invoice Presentment and Payment
537 539 539 540
MANAGERIAL ISSUES
542
SUMMARY
543
KEY TERMS
545
QUESTIONS FOR DISCUSSION
545
INTERNET EXERCISES
545
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
546
CLOSING CASE: THE CHECK IS IN THE NETWORK
546
ONLINE RESOURCES
547
REFERENCES
548
CHAPTER 12 FULFILLING E-COMMERCE ORDERS AND OTHER EC SUPPORT SERVICES How Amazon.com Fulfills Orders 12.1
550 551
ORDER FULFILLMENT AND LOGISTICS—AN OVERVIEW Acquiring Goods and Services Basic Concepts of Order Fulfillment and Logistics
552 553 553
19
20
Contents Overview of Logistics The EC Order Fulfillment Process
553 553
Insights and Additions 12.1: What Services Do Customers Need? 12.2 PROBLEMS IN ORDER FULFILLMENT Typical Supply Chain Problems Why Supply Chain Problems Exist
557 557 557
12.3 SOLUTIONS TO ORDER FULFILLMENT PROBLEMS ' Improvements in the Order-Taking Activity Warehousing and Inventory Management Improvements
558 558 558
Case 12.1 EC Application: How WMS Helps Schurman Improve Its Internal and External Order Fulfillment System Speeding Deliveries Partnering Efforts and Outsourcing Logistics Integrated Global Logistics Systems
559 560 561 561
Insights and Additions 12.2: UPS Provides Broad EC Services Order Fulfillment in Mass Customization Handling Returns (Reverse Logistics) Order Fulfillment in B2B
562 563 564
Case 12.2 EC Application: How Daisy Brand Fulfills B2B Orders Innovative E-Fulfillment Strategies
565 566
Case 12.3 EC Application: How Sundowner Motor Inns Fulfills Its Online Reservations
566
12.4 INTEGRATION AND ENTERPRISE RESOURCE PLANNING Enterprise Resource Planning: An Overview Advantages and Benefits of ERP Systems
567 568 568
12.5 INTELLIGENT AGENTS AND THEIR ROLE IN E-COMMERCE Definitions and Basic Concepts Multiagent Systems Applications of Software and Intelligent Agents in E-Commerce
570 570 572 573
12.6 OTHER E-COMMERCE SUPPORT SERVICES Consulting Services Directory Services, Newsletters, and Search Engines More EC Support Services Outsourcing EC Support Services
574 574 574 576 576
MANAGERIAL ISSUES
579
SUMMARY
580
KEY TERMS
580
QUESTIONS FOR DISCUSSION
580
INTERNET EXERCISES
581
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
582
CLOSING CASE: HOW MASS CUSTOMIZATION EC ORDERS ARE FULFILLED—MULTIBRAS OF BRAZIL
582
ONLINE RESOURCES
583
REFERENCES
584
Contents
Part 6 EC Strategy and Implementation
585
CHAPTER 13 E-COMMERCE STRATEGY AND GLOBAL EC
585
The Success of Travelocity's E-Strategy
586
13.1 ORGANIZATIONAL STRATEGY: CONCEPTS AND OVERVIEW Strategy and the Web Environment The Strategic Planning Process Strategic Planning Tools
587 587 590 593
Case 13.1 EC Application: Strategic Planning at InternetNZ
593
13.2
BUSINESS PLANNING IN E-COMMERCE Business Plan Fundamentals Business Case
594 594 595
13.3
E-COMMERCE STRATEGY: CONCEPTS AND OVERVIEW
596
13.4 E-STRATEGY INITIATION Representative Issues in E-Strategy Initiation
598 598
Case 13.2 EC Application: Measuring Profit on the Web Strategy in the Web 2.0 Environment and in Social Networking
600 601
13.5
603 603 603 604 605
E-STRATEGY FORMULATION Selecting EC Opportunities Determining an Appropriate EC Application Portfolio Mix Risk Analysis and Management Issues in Strategy Formulation
13.6 E-STRATEGY IMPLEMENTATION E-Strategy Implementation Process Strategy Implementation Issues
607 607 608
13.7
611 611 611
E-STRATEGY AND PROJECT ASSESSMENT The Objectives of Assessment Measuring Results and Using Metrics
13.8 GLOBAL E-COMMERCE Benefits and Extent of Operations Barriers to Global EC Breaking Down the Barriers to Global EC 13.9
'
E-COMMERCE IN SMALL AND MEDIUM-SIZED ENTERPRISES Supporting SMEs
614 614 615 616 617 618
Case 13.3 E C A p p l i c a t i o n : Networx Events Uses E-Commerce
619
MANAGERIAL ISSUES
620
SUMMARY
621
KEY TERMS
622
QUESTIONS FOR DISCUSSION
622
INTERNET EXERCISES
622
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
623
CLOSING CASE: PIERRE LANG EXPANDS INTO EASTERN EUROPE
623
ONLINE RESOURCES
624
REFERENCES
:
625
22
Contents
CHAPTER 14 ECONOMICS AND JUSTIFICATION OF ELECTRONIC COMMERCE Justifying Investment in IT and EC at California State Automobile Association 14.1 WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Increased Pressure for Financial Justification Other Reasons Why EC Justification Is Needed EC Investment Categories and Benefits How Is an EC Investment Justified? What Needs to Be Justified? When Should Justification Take Place? Using Metrics in EC Justification
627 628 629 629 630 630 630 631 631
14.2 DIFFICULTIES IN MEASURING AND JUSTIFYING E-COMMERCE INVESTMENTS The EC Justification Process Difficulties in Measuring Productivity and Performance Gains Relating IT Expenditures to Organizational Performance Intangible Costs and Benefits The Process of Justifying EC and IT Projects
633 633 634 634 635 636
14.3 METHODS AND TOOLS FOR EVALUATING AND JUSTIFYING E-COMMERCE INVESTMENTS Opportunities and Revenue Generated by EC Investment Methodological Aspects of Justifying EC Investments Traditional Methods for Evaluating EC Investments Implementing Traditional Methods ROI Calculators Advanced Methods for Evaluating IT and EC Investments
637 637 637 638 640 640 640
14.4 EXAMPLES OF E-COMMERCE PROJECT JUSTIFICATION Justifying E-Procurement
642 642
Insights and Additions 14.1: E-Procurement Metrics Customer Service and e-CRM Justifying a Portal Justifying E-Training Projects Justifying an Investment in Mobile Computing and in RFID
643 644 645 646
Case 14.1 EC Application: Paesano Restaurant Justifies Wireless E-Commerce Justifying Security Projects Justifying Social Networking and the Use of Web 2.0 Tools
646 648 648
14.5 THE ECONOMICS OF E-COMMERCE Reducing Production Costs Increased Revenues Reducing Transaction Friction or Risk Facilitating Product Differentiation EC Increases Agility Valuation of EC Companies
648 648 651 652 652 652 652
14.6 OPPORTUNITIES FOR SUCCESS IN E-COMMERCE AND AVOIDING FAILURE Factors That Determine E-Commerce Success E-Commerce Failures E-Commerce Successes Opportunities for Success: Creating Digital Options Cultural Differences in EC Successes and Failures Can EC Succeed in Developing Economies?
653 654 655 656 658 658 658
Contents MANAGERIAL ISSUES
659
SUMMARY
660
KEY TERMS
661
QUESTIONS FOR DISCUSSION
661
INTERNET EXERCISES
662
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
662
CLOSING CASE: JUSTIFYING EC AND IT INVESTMENT IN THE U.S. STATE OF IOWA
663
ONLINE RESOURCES
664
REFERENCES
664
CHAPTER 15 LAUNCHING A SUCCESSFUL ONLINE BUSINESS AND EC PROJECTS OBO Sets Its Goals for Success 15.1 GETTING INTO E-COMMERCE AND STARTING A NEW ONLINE BUSINESS Getting into E-Commerce Starting a New Online Business An E-Start-up Is a Start-up Creating a New Company or Adding an Online Project Case 15.1 EC Application: Innovation and Creativity at Amazon.com Planning Online Businesses Funding a New Online Business 15.2 ADDING E-COMMERCE INITIATIVES OR TRANSFORMING TO AN E-BUSINESS Adding EC Initiatives to an Existing Business Transformation to an E-Business 15.3
BUILDING OR ACQUIRING A WEB SITE Classification of Web Sites Building a Web Site
666 667 668 668 668 668 669 669 672 672 674 674 675 677 678 678
15.4 WEB SITE HOSTING AND OBTAINING A DOMAIN NAME Web Hosting Options
679 679
Case 15.2 EC Application: How Small Companies Use a Storebuilder Registering a Domain Name
680 681
15.5 CONTENT CREATION, DELIVERY, AND MANAGEMENT 682 Categories and Types of Content 683 Creation or Acquisition of Content 684 Content Management and Maintenance 685 Catalog Content and Its Management 686 Case 15.3 EC Application: Anglesea Online Uses Content Management Software for Success 687 Content Maximization and Streaming Services 687 Case 15.4 EC Application: Akamai Technologies 688 15.6 WEB SITE DESIGN Information Architecture Site Navigation Performance (Speed) Colors and Graphics Web Site Usability
690 690 691 692 693 693
24
Contents 15.7
PROVIDING E-COMMERCE SUPPORT SERVICES Who Builds the Web Site? Payments: Accepting Credit Cards Web Site Promotion Customer Relationship Management
694 694 694 695 696
15.8 OPENING A WEB STOREFRONT Options for Acquiring Storefronts Yahoo! Small Business
697 697 699
MANAGERIAL ISSUES
699
SUMMARY
700
KEY TERMS
701
QUESTIONS FOR DISCUSSION
701
INTERNET EXERCISES
702
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
702
CLOSING CASE: HOW TELECOM NEW ZEALAND (TNZ) EXCELS WITH CONTENT MANAGEMENT
703
ONLINE RESOURCES
704
REFERENCES
704
CHAPTER 16 REGULATORY, ETHICAL, AND COMPLIANCE ISSUES IN EC Why Is Disney Funding Chinese Pirates? 16.1 THE COMPLEXITY OF LEGAL AND REGULATORY ISSUES Laws Are Subject to Interpretation
707 708 709 709
Case 16.1 EC Application: Is eBay a Store or a Bulletin Board? The Law: A System for Social Control and Protection Personal and Property Rights Regulatory Compliance in EC
710 710 710 711
16.2 CIVIL LAW, INTELLECTUAL PROPERTY LAW, COMMON LAW, AND EC LEGAL ISSUES Criminal Law and Civil Law Intellectual Property Law Common Law in E-Commerce Fan and Hate Sites Other E-Commerce Legal Issues
712 712 713 715 716 717
16.3 ETHICAL CHALLENGES AND GUIDELINES Ethical Principles and Guidelines Business Ethics EC Ethical Issues
718 718 719 720
16.4 PRIVACY RIGHTS, PROTECTION AND FREE SPEECH Privacy Rights and Protection Free Speech Online Versus Privacy Protection The Price of Protecting an Individual's Privacy How Information About Individuals Is Collected Privacy Protection by Information Technologies Privacy Issues in Web 2.0 Tools and Social Networks Privacy Protection by Ethical Principles
721 721 722 722 723 725 725 725
Case 16.2 EC Application: Property Rights Extended to Domain Names and Digital Property The USA PATRIOT Act Privacy Protection in Countries Other Than the United States
726 727 728
Contents 16.5
16.6
CONSUMER AND SELLER PROTECTION FOR ONLINE FRAUD Consumer (Buyer) Protection Seller Protection Protecting Buyers and Sellers: Electronic and Digital Signatures
729 729 731
SOCIETAL ISSUES AND GREEN EC
733
The Digital Divide Electronic Discovery Operating Greener Businesses and Eco-Friendly Data Centers How to Operate Greener Businesses, Data Centers, and Supply Chains Global Green Regulations Other Societal Issues
733 733 733
732
734 734 735
MANAGERIAL ISSUES
737
SUMMARY
738
KEY TERMS
739
QUESTIONS FOR DISCUSSION
739
INTERNET EXERCISES
740
TEAM ASSIGNMENTS, PROJECTS, AND CLASS DISCUSSIONS
740
CLOSING CASE: NET NEUTRALITY: GOOD FOR E-BUSINESS?
741
ONLINE RESOURCES
742
REFERENCES
742
GLOSSARY
746
INDEX
763
25
