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Springer Texts in Business and Economics

Efraim Turban

David King

Jae Kyu Lee

Ting-Peng Liang

Deborrah C. Turban

Electronic

Commerce

A Managerial and

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Springer Texts in Business

and Economics

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Efraim Turban • David King

Jae Kyu Lee • Ting-Peng Liang

Deborrah C. Turban

Electronic Commerce

A Managerial and Social Networks

Perspective

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ISSN 2192-4333 ISSN 2192-4341 (electronic)

ISBN 978-3-319-10090-6 ISBN 978-3-319-10091-3 (eBook)

DOI 10.1007/978-3-319-10091-3

Springer Cham Heidelberg New York Dordrecht London

Library of Congress Control Number: 2014950448

© Springer International Publishing Switzerland 2015

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. Exempted from this legal reservation are brief excerpts in connection with reviews or scholarly analysis or material supplied specifi cally for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Duplication of this publication or parts thereof is permitted only under the provisions of the Copyright Law of the Publisher’s location, in its current version, and permission for use must always be obtained from Springer. Permissions for use may be obtained through RightsLink at the Copyright Clearance Center. Violations are liable to prosecution under the respective Copyright Law.

The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

While the advice and information in this book are believed to be true and accurate at the date of publication, neither the authors nor the editors nor the publisher can accept any legal responsibility for any errors or omissions that may be made. The publisher makes no warranty, express or implied, with respect to the material contained herein.

Printed on acid-free paper

Springer is part of Springer Science+Business Media (www.springer.com)

University of Hawaii Kihei , HI , USA

Jae Kyu Lee

Graduate School of Management Korea Advanced Institute of Science and Technology (KAIST)

Seoul, Republic of South Korea

Deborrah C. Turban Turban Company Inc. Kihei , HI , USA

JDA Software Scottsdale , AZ , USA

Ting-Peng Liang

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v

There has been a severe recession in the world economy in recent years, yet electronic commerce, the topic of this book, has grown rapidly, with compa-nies like Facebook, Google, Pinterest, Alibaba Group and Amazon.com set-ting new levels of performance every year.

Electronic commerce (EC) is a business model in which transactions take place over electronic networks, mostly the Internet. It includes the process of electronically buying and selling goods, services, and information. Certain EC applications, such as buying and selling stocks and airline tickets online, are reaching maturity, some even exceeding non-Internet trade volumes. However, EC is not just about buying and selling; it also is about electroni-cally communicating, collaborating, and discovering information. It is about e-learning, customer service, e-government, social networks, and much more. EC is having an impact on a signifi cant portion of the world, affecting busi-nesses, professions, trade, and of course, people.

The most important developments in EC since 2012 are the phenomenal growth of social networks, especially Facebook, Google+, and Twitter, and the trend toward conducting EC via mobile devices. Other major developments are the global expansion of EC, especially in China, where you can fi nd the world’s largest EC company. In addition, some emerging EC business models are changing industries (e.g., travel, banking, fashion, and transportation).

In the 8th edition, we bring forth the latest trends in e-commerce, includ-ing social businesses, social networkinclud-ing, social collaboration, innovations, and mobility.

Note: Portions of this book were previously published by: Pearson Education, Inc. under the title: Electronic Commerce 2012: A Managerial and Social Networks Perspective.

What’s New in This Edition?

The following are the major changes in this edition: • New chapters

Chapter 7 in EC 2012 has been replaced by two chapters. The new Chapter 7 concentrates on social media marketing, social shopping, and social CRM. Chapter 8 focuses on enterprise social networks, crowdsourcing, and other applications of social media.

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• New topics

Many new topics were added in all chapters, while obsolete topics were deleted. The major new topics are divided here into the following categories:

1. Topics in basic e-commerce and m-commerce • Cyberwars

• Digital coupons • Gamifi cation

• Global payment systems • IBM’s Smarter Commerce • Mobile apps

• Mobile banking • Mobile shopping/sales

• Mobile videos and advertising

• New shopping aid tools (that shoppers must have)

• New wearable computing applications including smart glasses, cities, and cars

2. EC technology • Augmented reality • Crowdsourcing

• Micro payments devices • Big data in EC and its analysis • E-payments, including Bitcoin

• Develop your own applications (DYOA) • IBM’s Pure Data Systems for analytics • Internet of Things (IoT)

• Machine-to-machine (M2M) communications • New devices for e-learning

• 3D printing and EC • Wearable devices 3. Managerial topics

• The issues surrounding Bring Your Own Device (BYOD) • Collaborative strategic planning

• Crowdfunding

• Innovation and performance improvement • Internet sales tax

• New aspects of online competition • Sharing economy (P2P economy) • Small retailers going global 4. Social media and commerce topics

• Collaboration 2.0 (social collaboration)

• New methods of social networking data collection and analysis • Gamifi cation in social networks

• Innovation and creativity in social commerce • P2P lending and other P2P activities

• Sentiment analysis

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vii

• Social customers • Social graph

• Social media frameworks, characteristics, and tools • Social media search engines (social search) • Social TV and social radio

• Transformation of traditional companies into social businesses 5. New cases

The following are some of the new cases:

Starbucks, Pinterest, Cemax of Mexico, P&G, Sony USA, Madagascar’s Port, Red Hat, Axon of New Zealand, Yodobuch (Japan), eGovernment in Germany, Korea’s multipurpose smart cards, iRobot, Telstra (Australia), Etsy, Del Monte, Polyvore, and I am Hungry (a failure case).

6. New Features

In additional to the regular features of the book (discussed later) we added:

• A large number of links to resources, examples, and videos • Many examples of mobile applications

• Short video cases (as exercises)

7. Wikipedia and other wiki-based resources

Given the copyright issues and some uneven quality issues, we elimi-nated citations from Wikipedia and similar wiki-based sources. Furthermore, these sources are evolving and changing. Yet, we strongly recommend that instructors encourage students to look at these sources. Note that Wikipedia provides information about the completeness and the quality of many of its entries. Therefore, instructors should review the entries before recommending them to students.

• Online tutorials

We provide fi ve technology-related online tutorials (instead of 12 in EC 2012).

The following tutorials are not related to any specifi c chapter. They cover the essentials of EC technologies and provide a guide to relevant resources. T1 – eCRM

T2 – EC technology: EDI, Extranet, RFID, and cloud computing T3 – Business intelligence and analytics, data, text, and Web mining T4 – Competition in cyberspace

T5 – E-collaboration

The tutorials are available at affordable-ecommerce-textbook.com/ turban

The Book’s Learning Objectives (Learning Outcomes)

Upon completion of this book, the reader will be able to:

1. Defi ne all types of e-commerce systems and describe their major busi-ness and revenue models.

2. Describe all the major mechanisms that are used in e-commerce. 3. Describe all methods and models of selling products and services online.

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4. Understand all online business-to-business activities, including selling, procurement, auctions, and collaboration.

5. Describe EC activities other than selling online, such as e-government, e-learning/training, and e-collaboration.

6. Describe the importance of mobile commerce, its content, and implementation.

7. Describe social networks, social customers, virtual worlds, and social software as facilitators of e-commerce.

8. Describe the landscape of social commerce applications, including social shopping and advertising, social CRM, social entertainment, and crowdsourcing.

9. Describe social enterprise systems. 10. Understand online consumer behavior.

11. Describe marketing and advertising in the Web environment. 12. Describe security issues and their solutions in e-commerce.

13. Describe the use of e-payments, including mobile payments, in e-commerce. 14. Understand order fulfi llment in e-commerce and its relationship to

sup-ply chain management.

15. Understand e-commerce strategy and describe its process and steps, including justifi cation, planning, implementation, and assessment. 16. Describe the global aspects of e-commerce.

17. Explain the issues of using e-commerce by small- and medium-sized companies.

18. Understand the ethical, legal, social, and business environments within which e-commerce operates.

19. Describe the options of acquiring or building EC systems.

Features of This Book

Several features are unique to this book.

Most Comprehensive EC Textbook

This is the most comprehensive EC textbook available. It covers more topics than any other text and it provides numerous examples and case studies as well as links to resources and references.

Managerial Orientation

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ix

the fi ve online tutorials on the book’s website ( affordable-ecommerce-textbook.

com/turban ). Managerial issues are also provided at the end of each chapter.

Experienced Co-authors and Contributors

In contrast to other EC books written by one or two authors who claim to be polymaths, we have a diversifi ed team of authors who are experts in a variety of fi elds, including a senior vice president of an e-commerce-related com-pany. All contributions were copyedited to assure quality and uniformity.

Real-World Orientation

Extensive, vivid examples from large corporations, small businesses from different industries and services, governments, and nonprofi t agencies from all over the world make concepts come alive. These examples, which were collected by both academicians and practitioners, show the students the capa-bilities of EC, its cost and justifi cation, and the innovative ways corporations are using EC in their operations.

Solid Theoretical Background and Research Suggestions

Throughout the book, we present the theoretical foundations necessary for understanding EC, ranging from consumer behavior to the economic theory of competition. Furthermore, we provide website resources, numerous exer-cises, and extensive references to supplement the theoretical presentations. At the end of each chapter, we provide a list of online resources with links to their websites.

Most Up-to-Date and Current Topics

This book presents the most current topics relating to EC, as evidenced by the many citations from 2013 to 2014. Finally, we introduce some of the most promising newcomers to e-commerce such as Pinterest, Instagram, Volusion, and Shopify.

Integrated Systems

In contrast to other EC books that highlight isolated Internet-based systems, we emphasize integrated systems that support the entire life cycle of e- commerce. Social network-based systems are highlighted, as are the latest developments in global EC, mobile commerce, and in Web-based Apps.

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Global Perspective

The importance of global competition, partnerships, and trade is increasing rapidly. EC facilitates exporting and importing, the management of multina-tional companies, and electronic trading around the globe. Internamultina-tional exam-ples are provided throughout the book. The world’s largest e-commerce company, Alibaba Group, is featured in Chapter 4 . Our authors and contributors are from the USA, Macau (China), Korea, Germany, Taiwan, Brazil, Australia, and the Philippines. Examples and cases presented are from over 20 countries.

Small- and Middle-Sized Companies

Throughout the book, we provide discussions and examples of small- and middle-sized companies in addition to the large ones.

The Public Sector

In numerous places, we cover the topic of e-commerce in governments and other public and not-for-profi t organizations.

Interdisciplinary Approach

E-commerce is interdisciplinary in nature, and we illustrate this throughout the book. Major EC-related disciplines include accounting, fi nance, informa-tion systems, marketing, management, operainforma-tions management, and human resources management. In addition, some non-business disciplines are touched upon, especially public administration, computer science, sociology, engineering, psychology, political science, and law. Economics also plays a major role in the understanding of EC.

EC Failures and Lessons Learned

In addition to EC success stories, we also present EC failures and, wherever possible, analyze the causes of those failures with lessons learned (e.g., in the opening case to Chapter 16 ).

Online Support

More than 50 online fi les are available to supplement text material on a chapter- by-chapter basis. These are available at

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User-Friendliness

While covering all major EC topics, this book is clear, simple, and well organized. It provides all the basic defi nitions of terms as well as logical and conceptual support. Furthermore, the book is easy to understand and is full of real-world examples that keep the reader’s interest. Relevant review ques-tions are provided at the end of each section so the reader can pause to digest the new material.

Links, Links, Links

In this book, the reader will fi nd several hundred links to useful resources supplementing all topics and providing up-to-date information. Note: With so many links, some may change over time.

Other Outstanding Features

1. Five to ten topics for individual discussions, seven to twelve class discus-sion and debate issues are available in each chapter.

2. A class assignment that involves the opening case is available in each chapter.

3. A class assignment that requires watching one or more short videos (3–10 minutes) about a certain technology or a mini case, followed by questions or some other student engagement are included.

4. Videos related to specifi c topics are suggested in the text, some related to cases.

5. Over 75 real-world examples on specifi c topics and subtopics are used. 6. Learning objectives for the entire book are provided in this preface.

Organization of the Book

The book is divided into 16 chapters grouped into 6 parts.

Part I – Introduction to E-Commerce and E-Marketplaces

In Part I, we provide an overview of today’s business environment as well as the fundamentals of EC and some of its terminology (Chapter 1 ). A dis-cussion of electronic markets and their impacts is provided in Chapter 2 , where special attention is given to EC mechanisms ranging from traditional shopping carts to social networks and social software tools. We also intro-duce augmented reality, crowdsourcing and virtual worlds as platforms for EC in this chapter.

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Part II – E-Commerce Applications

In Part II, we describe EC applications in three chapters. Chapter 3 addresses e-tailing and electronic service industries (e.g., e-travel, e-banking) as they relate to individual consumers. In Chapter 4 , we examine the major B2B models, including online auctions, online trading, e-procurement, and online marketplaces. In Chapter 5 , we present several non-selling applications, such as e-government, e-learning, e-books, collaborative commerce, and person-to- person EC.

Part III – Emerging EC Platforms

Chapter 6 explores the developing applications in the world of wireless EC (m-commerce, l-commerce, and pervasive computing). In addition, we cover the Internet-of-Things, smart systems and wearables. In Chapter 7 , we explore the world of social media marketing and social CRM. Chapter 8 covers enter-prise social networks, crowdsourcing, and other social media applications.

Part IV – EC Support Services

There are four chapters in this part. Chapter 9 is dedicated to online consumer behavior, market research and advertising. Chapter 10 begins with a discus-sion of the need to protect EC systems. It also describes various types of attacks on e-commerce systems and their users, including fraud, and how to minimize these risks through appropriate security programs. The chapter also deals with the various aspects of cyberwars. Chapter 11 describes a major EC support service – electronic payments including mobile payments. Chapter 12 concentrates on order fulfi llment, supply chain improvement, and the role of RFID and CPFR.

Part V – E-Commerce Strategy and Implementation

Chapter 13 discusses the process of EC strategy and strategic issues in imple-menting EC. The chapter also presents global EC and EC for small busi-nesses. Chapter 14 deals with implementation issues, concentrating on justifi cation and cost–benefi t analysis, system acquisitions and developments, and the impacts of EC on organizations. Chapter 15 deals with legal, ethical, and societal issues concentrating on regulatory issues, privacy, and green IT.

Part VI – Launching Online Businesses and EC Projects

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takes the reader through all the major steps of online store building and provides guidelines for success.

Learning Aids

The text offers the student a number of learning aids:

Chapter Outlines. A listing of the main headings (“Content”) at the begin-ning of each chapter provides a quick overview of the major topics covered. • Learning Objectives. Learning objectives at the beginning of each chap-ter help students focus their efforts and alert them to the important con-cepts to be discussed. Additionally, note the newly added learning objectives for the entire book.

• Opening Cases. Each chapter opens with a real-world example that illus-trates the importance of EC to modern corporations. These cases were carefully chosen to call attention to some of the major topics to be covered in the chapters. Following each opening case is a short section titled “Lessons learned from the case,” that relates the important issues in the case to the forthcoming content of the chapter.

• EC Application Cases. In-chapter cases highlight real-world problems encountered by organizations as they develop and implement EC. Questions follow each case to help direct the student’s attention to the implications of the case material.

• Real World Examples. Dozens of examples illustrate how EC concepts and tools are applied. These are usually linked to detailed descriptions. • Figures and Tables. Numerous eye-catching fi gures and tables extend

and supplement the text presentation.

• Review Questions. Each section in each chapter ends with a series of review questions about that particular section. These questions are intended to help students summarize the concepts introduced and digest the essentials of each section before moving on to another topic.

• Glossary and Key Terms. Each key term is defi ned in the text when it fi rst appears. In addition, an alphabetical list of key terms appears at the end of each chapter.

• Managerial Issues. At the end of every chapter, we explore some of the special concerns managers face as they prepare to do business in cyber-space. These issues are framed as questions to maximize the readers’ active participation.

• Chapter Summary. The chapter summary is linked one-to-one with the learning objectives introduced at the beginning of each chapter.

• End-of-Chapter Exercises. Different types of questions measure the stu-dents’ comprehension and their ability to apply the learned knowledge. Questions for Discussion by individual students are intended to challenge them to express their thinking about relevant topics. Topics for Class Discussion and Debates promote dialogs and develop critical-thinking skills. Internet Exercises are challenging assignments that require students to surf the Internet and apply what they have learned. Over 250 hands-on

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exercises send students to interesting websites to conduct research, learn about applications, download demos, or research state-of-the-art technol-ogy. The Team Assignments and Projects are thought-provoking group projects designed to foster teamwork.

• Closing Cases. Each chapter ends with a comprehensive case, which is presented somewhat more in depth than the in-chapter EC Application Cases. Questions follow each case relating the case to the topics covered in the chapter.

• List of Online Resources. At the end of each chapter, we provide a list of the chapter’s online fi les with a brief description of their content. In addi-tion, we provide a list of Web addresses linked to relevant resources that can be used to supplement the chapter.

Supplementary Materials

The following support materials are also available.

• The Instructor’s Manual , written by Jon. C. Outland, includes answers to all review and discussion questions, exercises, and case questions. He also wrote the Test Item File that is an broad set of multiple-choice, true-false, and essay questions for each chapter.

• The PowerPoint Lecture Notes , by Judy Lang, highlight the important areas and are related to the text learning objectives.

Companion Website: ( affordable-ecommerce-textbook.com/ turban )

The book is supported by a companion website that includes: • Five online tutorials.

• Bonus EC Application Cases and other features, which can be found in each chapter’s online fi les.

Content Contributors

The following individuals contributed material for this edition. • Linda Lai updated Chapter 3 and created Chapter 16 .

• Fabio Cipriani contributed his eCRM and social CRM slides to Chapters 1 and 7 .

• San Murugesan contributed to Chapter 8 and to the Online Tutorials. • Judy Lang updated material in several chapters and conducted supporting

research.

• Ivan C. Seballos II contributed the new illustrations and helped update several chapters.

• Jörg Blankenbach and Christian Hickel contributed to the closing case of Chapter 5 : “From Local SDI to E-Government.”

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Acknowledgments

Many individuals helped us create this text. Faculty feedback was solicited via written reviews and through individual interviews. We are grateful to them for their contributions.

Several individuals helped us with the research and the administrative work. We thank all these individuals for their dedication and excellent perfor-mance shown throughout the project. We recognize the outstanding contribu-tion of Daphne Turban in reading the entire manuscript, researching and providing relevant sources, performing a preliminary copyediting, and offer-ing over 3,000 useful comments.

We also recognize the various organizations and corporations that pro-vided us with their permission to reproduce material. Last, but not least, we thank Judy Lang, who as coordinator, advisor, and problem solver, contrib-uted innovative ideas and provided the necessary editing and formatting of this text.

We appreciate the assistance provided by the Springer team under the lead-ership of Neil Levine, Matthew Amboy, and Christine Crigler. We also recog-nize Ramesh Sharda (Oklahoma State University) for his guidance and advise.

Reviews

The previous editions of the book were reviewed by many professors. We wish to thank all of them for the valuable comments they provided. We also thank the reviewers of this edition, the anonymous faculty from the fol-lowing universities: Franklin Pierce University, University of Maryland, California State University, Clark State Community College, and the University of Houston, who provided a very useful and comprehensive reviews.

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Part I Introduction to E-Commerce and E-Marketplaces

1 Overview of Electronic Commerce ... 3

Opening Case: How Starbucks Is Changing to a Digital and Social Enterprise ... 3

The Problem ... 4

The Solution: Going Digital and Social ... 4

The Results... 6

1.1 Electronic Commerce: Defi nitions and Concepts ... 7

Defi ning Electronic Commerce... 7

Defi ning E-Business... 7

Major EC Concepts ... 7

Electronic Markets and Networks ... 8

1.2 The Electronic Commerce Field: Growth, Content, Classifi cation, and a Brief History ... 8

The Content and Framework of E-Commerce ... 8

An EC Framework ... 9

Classifi cation of EC by the Nature of the Transactions and the Relationships Among Participants ... 10

A Brief History of EC ... 11

Case 1.1: Net-a-Porter: Dress for Success ... 13

The Opportunity ... 14

The Solution ... 14

The Results... 14

1.3 Drivers and Benefi ts of E-Commerce ... 15

The Drivers of E-Commerce ... 15

The Benefi ts of E-Commerce... 15

1.4 E-Commerce 2.0: From Social Commerce to Virtual Worlds ... 16

Social Computing ... 16

Web 2.0 ... 17

Social Media ... 18

Social Networks and Social Network Services ... 18

Enterprise Social Networks ... 19

Social Commerce ... 19

Virtual Worlds and Second Life ... 20

The Major Tools of Web 2.0 ... 20

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1.5 The Digital and Social Worlds: Economy, Enterprises,

and Society ... 20

The Digital Economy ... 21

The Digital Enterprise ... 22

The Social Business (Enterprise) ... 23

The Digital Revolution and Society ... 24

1.6 The Changing Business Environment, Organizational Responses, and EC and IT Support ... 27

The Changing Business Environment ... 28

Performance, Business Pressures, and Organizational Responses and EC Support ... 28

1.7 Electronic Commerce Business Models ... 31

The Structure and Properties of Business Models ... 31

Typical EC Business Models... 33

Classifi cation of Business Models in E-Commerce ... 34

1.8 The Limitations, Impacts, and the Future of E-Commerce ... 34

The Limitations and Barriers of EC ... 34

Why Study E-Commerce? ... 35

The Future of EC ... 36

1.9 Overview of This Book ... 37

Part I: Introduction to E-Commerce and E-Marketplaces ... 37

Part II: EC Applications ... 38

Part III: Emerging EC Delivery Platforms ... 38

Part IV: EC Support Services ... 38

Part V: EC Strategy and Implementation ... 38

Part VI: Launching Online Businesses and EC Projects ... 38

Online Mini Tutorials ... 38

Online Supplements ... 38

Managerial Issues... 38

Closing Case: E-Commerce at the National Football League (NFL) ... 43

Glossary ... 45

References ... 46

2 E-Commerce: Mechanisms, Platforms, and Tools ... 51

Opening Case: Pinterest: A New Kid on the E-Commerce Block ... 51

The Opportunity ... 52

The Solution ... 52

Results and Managerial Issues ... 53

Conclusion ... 54

2.1 Electronic Commerce Mechanisms: An Overview ... 54

EC Activities and Support Mechanisms ... 54

The Online Purchasing Process ... 55

2.2 E-Marketplaces ... 55

Electronic Markets ... 57

Components of and the Participants in E-Marketplaces ... 58

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Case 2.1: EC Application: How Blue Nile Inc.

Is Changing the Jewelry Industry... 59

Types of E-Marketplaces ... 60

2.3 Customer Shopping Mechanisms: Webstores, Malls, and Portals ... 61

Webstores ... 61

Electronic Malls ... 61

Web (Information) Portals ... 62

The Roles and Value of Intermediaries in E-Marketplaces ... 63

2.4 Merchant Solutions: Electronic Catalogs, Search Engines, and Shopping Carts ... 64

Electronic Catalogs ... 64

EC Search Activities, Types, and Engines ... 65

Shopping Carts ... 66

2.5 Auctions, Bartering, and Negotiating Online ... 67

Defi nition and Characteristics ... 67

Dynamic Pricing ... 67

Traditional Auctions Versus E-Auctions... 68

Types of Auctions ... 68

Benefi ts and Limitations of E-auctions ... 70

Impacts of Auctions ... 72

Online Bartering... 72

Online Negotiating ... 72

2.6 Virtual Communities and Social Networks ... 73

Characteristics of Traditional Online Communities and Their Classifi cation ... 73

Online Social Networks and Social Network Sites ... 74

Social Network Services ... 74

Business-Oriented Public Social Networks ... 75

Case 2.2: EC Application: Craigslist: The Ultimate Online Classifi ed Community ... 76

Private (or Enterprise) Social Networks ... 77

Business Models and Services Related to Social Networking... 77

Mobile Social Commerce ... 78

Mobile Social Networking ... 78

Recent Innovative Tools and Platforms for Social Networking ... 79

2.7 Virtual Worlds as an Electronic Commerce Platforms ... 80

Major Features ... 80

Avatars ... 80

Business Activities and Value in Virtual Worlds... 81

2.8 Emerging EC Platforms: Augmented Reality and Crowdsourcing ... 83

Augmented Reality ... 83

Crowdsourcing ... 83

2.9 The Future: Web 3.0, Web 4.0 and Web 5.0 ... 86

Web 3.0: What Does the Future Hold? ... 86

The Technological Environment ... 87

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Managerial Issues... 88

Closing Case: Madagascar’s Port Modernizes Customs with TradeNet ... 93

Glossary ... 95

References ... 96

Part II E-Commerce Applications 3 Retailing in Electronic Commerce: Products and Services ... 103

Opening Case: Amazon.com: The King of E-Tailing ... 104

3.1 Internet Marketing and B2C Electronic Retailing ... 106

Overview of Electronic Retailing ... 107

Size and Growth of the B2C Market ... 107

What Sells Well on the Internet ... 108

Characteristics and Advantages of Successful E-Tailing ... 108

3.2 E-Tailing Business Models ... 110

Classifi cation of Models by Distribution Channel ... 110

Other B2C Models and Special Retailing ... 113

B2C Social Shopping ... 113

Virtual Visual Shopping ... 114

3.3 Online Travel and Tourism (Hospitality) Services ... 114

Characteristics of Online Travel ... 114

Special Online Travel Services ... 115

Case 3.1: EC Application: WAYN: A Lifestyle and Travel Social Network ... 116

Benefi ts, Limitations, and Competition in Online Travel Services ... 117

Competition in Online Travel ... 117

Corporate Travel ... 117

3.4 Employment and the Online Job Market ... 118

The Internet Job Market ... 118

Benefi ts and Limitations of the Electronic Job Market ... 120

3.5 Online Real Estate, Insurance, and Stock Trading ... 121

Real Estate Online ... 121

Insurance Online ... 122

Online Stock Trading and Investments ... 123

3.6 Online Banking and Personal Finance ... 124

E-Banking ... 125

Online Banking Capabilities ... 125

Pure Virtual Banks ... 125

International and Multiple-Currency Banking ... 126

Online Financial Transaction Implementation Issues ... 126

Case 3.2: EC Application: Security for Online Bank Transactions ... 126

Online Billing and Bill Paying ... 128

3.7 On-Demand Delivery of Products, Digital Items, Entertainment, and Gaming ... 129

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Online Delivery of Digital Products,

Entertainment, and Media ... 130 Social Television (TV) ... 131 3.8 Other B2C Services: From Dating Services

to Wedding Planning ... 133 Online Dating Services ... 133 Planning a Wedding ... 134 Buying Cars Online ... 134 Selling-Build-to-Order Cars Online ... 134 Other Online Services ... 135 3.9 Online Purchasing-Decision Aids ... 136 Shopping Portals ... 136 Helping Communities ... 136 Price and Quality Comparison

by Shopbot Software Agents ... 136 Ratings, Reviews, and Recommendation Sites ... 137 Comparison Shopping Websites... 138 Trust Verifi cation Sites ... 138 Other Shopping Assisting Tools ... 139 Virtual Visual Shopping ... 140 Mobile Apps ... 141 3.10 The New Face of Retail Competition: Retailers

Versus E-Tailers... 141 The Online Versus Offl ine Competition:

An Overview ... 141 Retailers Versus E-Tailers ... 142 What Can Traditional Retailers Do? ... 144 3.11 Issues in E-Tailing and Lessons Learned ... 145 Disintermediation and Reintermediation ... 145 Channel Confl ict... 146 Possibility of a Price Confl ict and Determining

the Right Price by Sellers ... 146 Product and Service Customization

and Personalization ... 147 Fraud and Other Illegal Activities ... 147 Lessons Learned from Failures and Lack

of Success of E-Tailers ... 147 Managerial Issues... 148 Closing Case: Etsy – A Social-Oriented B2C Marketplace ... 154 Glossary ... 156 References ... 156

4 Business-to-Business E-Commerce ... 161 Opening Case: Alibaba.com: The World’s Largest

B2B Marketplace ... 161 4.1 Concepts, Characteristics, and Models

of B2B E-Commerce ... 164 Basic B2B Concepts and Process ... 164

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The Basic Types of B2B Transactions

and Activities... 165 The Basic Types of B2B E-Marketplaces

and Services ... 165 Market Size and Content of B2B ... 166 B2B Components ... 167 Service Industries Online in B2B ... 168 Partner and Supplier Relationship Management ... 170 The Benefi ts and Limitations of B2B ... 170 4.2 One-to-Many: Sell-Side E-Marketplaces ... 171

Sell-Side Models ... 171 Sales from Catalogs: Webstore ... 171 Comprehensive Sell-Side Systems ... 173 Selling via Distributors and Other Intermediaries ... 173 4.3 Selling via E-Auctions ... 173 The Benefi ts of Auctions on the Sell Side ... 173 Auctioning from the Company’s Own Site ... 174 Using Intermediaries in Auctions ... 174 Case 4.1: EC Application: How the Commonwealth

of Pennsylvania Sells Surplus Equipment ... 174 Examples of B2B Forward Auctions ... 175 4.4 One-From-Many: E-Procurement at Buy-Side

E-Marketplaces ... 175 Ineffi ciencies in Traditional Procurement

Management ... 175 Procurement Methods ... 176 E-Procurement Concepts ... 177 The Benefi ts and Limitations of E-Procurement ... 179 4.5 Reverse Auctions at Buy-Side E-Marketplaces

(E-Tendering) ... 180 The Major Benefi ts of Reverse Auctions ... 180 Conducting Reverse Auctions ... 180 Case 4.2: EC Application: Branas Isaf Competes

by Using E-Tendering ... 181 Group Reverse Auctions. ... 182 4.6 Other E-Procurement Methods ... 183 Desktop Purchasing ... 183 Group Purchasing ... 183 Buying from Other Sources ... 183 Acquisition Via Electronic Bartering ... 184 Selecting an Appropriate E-Procurement Solution ... 185 4.7 B2B Exchanges (E-Marketplaces):

Defi nitions and Concepts ... 185 Ownership of B2B Exchanges ... 187 Dynamic Pricing in B2B Exchanges ... 188 Advantages, Limitations, and the Revenue

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Corporate (Enterprise) Portals... 190 Directory Services and Search Engines ... 191 4.9 B2B in Web 2.0 and Social Networking ... 192 E-Communities in B2B ... 192 The Opportunities of Social Commerce in B2B ... 192 The Use of Web 2.0 Tools in B2B ... 193 Virtual Trade Shows and Trade Fairs ... 193 Social Networking in B2B ... 194 Examples of Other Activities of B2B Social Networks ... 194 Strategy for B2B Social Networking ... 195 The Future of B2B Social Networking ... 195 4.10 Some B2B Support Mechanisms ... 195 Organizational Buyer Behavior ... 195 The Marketing and Advertising Processes in B2B ... 196 Methods for B2B Online Advertising and Marketing ... 197 Other B2B Support Mechanisms ... 197 Managerial Issues... 198 Closing Case: The University of Sheffi eld

E-Tendering System ... 203 Glossary ... 204 References ... 206

5 Innovative EC Systems: From E-Government to E-Learning, Collaborative Commerce,

and C2C Commerce ... 209 Opening Case: Compass Group Turns Managers

into Detectives to Enhance E-Training ... 209 5.1 E-Government: An Overview ... 211

Defi nition and Scope ... 211 Government-to-Citizens ... 211 Government-to-Business ... 214 Government-to-Government ... 215 Government-to-Employees and Internal Effi ciency

and Effectiveness ... 215 Implementing E-Government ... 216 The Transformation to E-Government ... 216 E-Government 2.0 and Social Networking ... 216 M-Government ... 217 5.2 E-Learning, E-Training, and E-Books ... 218

The Basics of E-Learning: Defi nitions

and Concepts ... 218 Benefi ts and Drawbacks of E-Learning ... 219 Distance Learning and Online Universities ... 221 Online Corporate Training ... 222 Social Networks and E-Learning ... 224 Learning in Virtual Worlds and Second Life ... 224 Visual Interactive Simulation ... 225 E-Learning Management Systems ... 226 Electronic Books (E-Books) ... 226

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5.3 Knowledge Management, Advisory Systems,

and Electronic Commerce ... 229 An Overview of Knowledge Management ... 229 Knowledge Management Types and Activities ... 229 Knowledge Sharing ... 230 Case 5.2: EC Application: Knowledge Management

at Infosys Technologies ... 230 How Is Knowledge Related to E-Commerce? ... 231 KM and Social Networks ... 232 Finding Expertise and/or Experts Electronically

and the Use of Expert Location Systems ... 233 5.4 Collaborative Commerce ... 236

Essentials of Collaborative Commerce ... 236 The Elements and Processes of C-Commerce ... 236 Collaboration Hubs ... 237 Representative Examples of Collaborative

Commerce ... 238 Barriers to C-Commerce ... 240 5.5 Consumer-to-Consumer Electronic Commerce ... 241 E-Commerce: C2C Applications ... 241 Managerial Issues... 243 Closing Case: From Local SDI to E-Government ... 247 Glossary ... 251 References ... 252

Part III Emerging EC Delivery Platforms

6 Mobile Commerce and Ubiquitous Computing ... 257 Opening Case Hertz Goes Mobile All the Way ... 258 6.1 Mobile Commerce: Concepts, Landscape, Attributes,

Drivers, Applications, and Benefi ts ... 259 Basic Concepts, Magnitude, and the Landscape ... 260 The Attributes of M-Commerce ... 261 An Overview of the Applications of M-Commerce ... 262 The Benefi ts of M-Commerce ... 264 6.2 The Enabling Infrastructure: Components

and Services of Mobile Computing ... 265 Overview of Mobile Computing ... 265 Mobile Devices ... 265 Mobile Computing Software and Services ... 267 Wireless Telecommunications Networks ... 268 Putting It All Together ... 271 6.3 Mobile Financial Applications ... 271 Mobile Banking ... 271 Other Mobile Finance Applications ... 272 6.4 Mobile Enterprise Solutions: From Supporting

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The Framework and Content

of Mobile Enterprise Applications ... 274 Mobile Workers ... 274 Other Enterprise Mobile Applications ... 274 6.5 Mobile Entertainment, Gaming, Consumer Services,

and Mobile Shopping ... 275 Overview of Mobile Entertainment ... 275 Mobile Streaming Music and Video Providers ... 276 Entertainment in Cars ... 276 Mobile Games ... 276 Mobile Gambling ... 277 Mobility and Sports ... 277 Service Industry Consumer Applications... 278 Mobile Shopping and Advertising ... 279 6.6 Location-Based Mobile Commerce

and Mobile Social Networks ... 280 Basic Concepts in L−Commerce ... 281 L-Commerce Infrastructure ... 281 Barriers to Location-Based M-commerce ... 285 6.7 Ubiquitous (Pervasive) Computing and Sensory

Networks ... 285 Overview of Ubiquitous Computing ... 286 Smart Application: Grid, Homes, Cars, and More ... 287 Wireless Sensor Networks... 289 Case 6.1: EC Application: Sensors at INRIX Help

People Avoid Traffi c Jams ... 290 Implementation Issues in Ubiquitous Computing... 291 6.8 Emerging Topics: From Wearables and Google Glass

to Smart Cities ... 291 Wearable Computing Devices ... 291 Google Glass ... 292 Smart Cities ... 293 6.9 Implementation Issues in Mobile Commerce:

From Security and Privacy to Barriers to M-commerce ... 293 M-commerce Security and Privacy Issues ... 293 Technological Barriers to M-commerce ... 294 Failures in Mobile Computing and M-commerce ... 294 Ethical, Legal, Privacy, and Health Issues

in M-commerce ... 294 Enterprise Mobility Management ... 295 Managerial Issues... 296 Closing Case: Motorola Enterprise: Wireless Solutions

for a Hospital and a Manufacturer ... 301 Glossary ... 303 References ... 305

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7 Social Commerce: Foundations, Social Marketing,

and Advertising ... 309 Opening Case: How Sony Uses Social Media

for Improving CRM ... 309 The Problem ... 309 The Solution: Social Media Projects ... 310 The Results ... 310 7.1 Social Commerce: Defi nitions and Evolution ... 311 Defi nitions and Characteristics ... 311 The Evolution of Social Commerce ... 312 7.2 The Content of the Social Commerce Field ... 313 The Landscape and Major Components of the Field ... 314 Social Media Marketing ... 314 Enterprise 2.0 ... 317 7.3 The Benefi ts and Limitations of Social Commerce ... 318

Benefi ts to Customers ... 318 Benefi ts to Retailers ... 318 Benefi ts to Other Types of Enterprises ... 319 The Social Business: An IBM Approach ... 319 New or Improved Business Models ... 320 Concerns and Limitations of Conducting

Social Commerce ... 321 7.4 Social Shopping: Concepts, Benefi ts, and Models ... 321 Defi nitions, and Drivers of Social Shopping ... 321 Traditional E-Commerce Sites

with Social Media Additions ... 323 The Major Types and Models of Social Shopping ... 324 Case 7.1: Polyvore: A Trendsetter in Social Shopping ... 327 Kaboodle: A Unique Social Shopping Community ... 328 Other Innovative Models ... 328 Social Shopping Aids: From Recommendations

to Reviews, Ratings, and Marketplaces ... 330 Other Shopping Aids and Services ... 333 Social Marketplaces and Direct Sales ... 334 Shopping for Virtual Goods in a Virtual Economy ... 336 Real-Time Online Shopping ... 336 Social Shopping in the Near Future ... 337 7.5 Social Advertising: From Viral Advertising

to Location-Based Advertisement/Marketing ... 338 Social Ads and Social Apps ... 338 Viral (Word-of-Mouth) Marketing

and Social Networking ... 338 Location-Based Advertisement and Social Networks ... 339 Using YouTube and Other Social Presentation

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7.6 Social Customer Service and CRM ... 343 How Does Social Networking Empower Customers? ... 343 How to Serve the Social Customers ... 344 The Benefi ts of Social CRM ... 345 Case 7.2: iRobot Uses Social Media for Multichannel CRM ... 346

Social CRM: Serve the Customers

While Learning from Them ... 346 The Evolution of Social CRM ... 347 Cipriani’s Multidimensional Presentation... 347 Implementation of Social Customer

Service and CRM ... 350 Some Recent Applications ... 351 Reputation Management System ... 352 Managerial Issues... 353 Closing Case: Groupon: Will the Company Prosper?... 357 The Opportunity ... 357 The Solution ... 357 The Results ... 360 Glossary ... 361 References ... 361

8 Social Enterprise and Other Social Commerce Topics ... 367 Opening Case: How a Private Enterprise Network

Transformed CEMEX into a Social Business ... 368 8.1 Social Business and Social Enterprise ... 369

Defi nitions: Social Business and Social Enterprise ... 369 Business Networks ... 370 The Benefi ts and Limitations of Enterprise

Social Networking ... 371 How Web 2.0 Tools Are Used by Enterprises ... 371 8.2 Business-Oriented Public Social Networking ... 372

Entrepreneur Networks ... 372 8.3 Enterprise Social Networks ... 373 Taxonomy of Social Enterprise Applications ... 373 How Enterprise Social Networking Helps

Employees and Organizations ... 374 Support Services for Enterprise Social Networks ... 375 How Companies Interface with Social Networking ... 376 8.4 Social Commerce: Applications in Virtual Worlds ... 377 The Features of Virtual Worlds ... 377 The Major Categories of Virtual World Applications ... 378 The Landscape of Virtual World Commercial Applications ... 380 The Major Drivers of Social Commerce in Virtual Worlds ... 381 Concerns and Limitations of Commercial

Activities in Virtual Worlds ... 382 8.5 Social Entertainment ... 383

Entertainment and Social Networks ... 383 Multimedia Presentation and Sharing Sites ... 384

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8.6 Social Games and Gamifi cation ... 385 Games on Social Networks ... 385 The Business Aspects of Social Games ... 386 Educational Social Games ... 386 Gamifi cation ... 387 8.7 Crowdsourcing for Problem Solving

and Content Creation ... 387 Crowdsourcing as a Distributed Problem Solving Enabler ... 387 The Process of Crowdsourcing ... 388 Successfully Deployed Crowdsourcing Systems:

Some Representative Examples ... 389 Tools for Crowdsourcing ... 389 8.8 Social Collaboration (Collaboration 2.0) ... 390 Supporting Social Collaboration ... 390 The Future of Social Commerce ... 393 Managerial Issues... 394 Closing Case: EC Application: Linkedin:

The Premier Public Business-Oriented Social Network ... 398 Smart Ways to Use Linkedin ... 399 Mobile Applications ... 399 Some Resources for Linkedin ... 400 Glossary ... 400 References ... 400

Part IV EC Support Services

9 Marketing and Advertising in E-Commerce ... 405 Opening Case: Market Research Helps Del Monte

Improve Dog Food ... 406 9.1 Learning About Online Consumer Behavior ... 407 A Model of Online Consumer Behavior ... 407 The Major Infl uential Factors ... 408 9.2 The Consumer Purchasing Decision Process ... 409 A Generic Purchasing-Decision Model ... 410 Players in the Consumer Decision Making Process ... 411 Shopping Cart Abandonment ... 411 9.3 Loyalty, Satisfaction, and Trust in E-Commerce ... 411 Customer Loyalty ... 412 Satisfaction in EC ... 413 Trust in EC ... 413 9.4 Mass Marketing, Market Segmentation,

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9.6 Market Research for E-Commerce ... 420 Objectives and Concepts of Online Market Research ... 421 Representative Market Research Approaches ... 421 Limitations of Online Market Research

and How to Overcome Them ... 424 Biometric and Smartphone Marketing

Helps Market Research ... 425 9.7 Web Advertising ... 426 Overview of Web Advertising ... 426 Basic Internet Advertising Terminology ... 426 Why Internet Advertising? ... 427 9.8 Online Advertising Methods: From E-Mail to SEO

and Video Ads ... 428 Major Categories of Ads ... 428 Banners ... 429 Pop-Up and Similar Type Ads ... 430 E-Mail Advertising ... 430 Search Engine Advertisement and Optimization ... 431 Google: The Online Advertising King ... 432 Viral Marketing (Advertising) ... 434 Video Advertising ... 435 Augmented Reality in Advertising ... 438 Advertising in Chat Rooms and Forums ... 438 9.9 Mobile Marketing and Advertising ... 438 Mobile Marketing and Mobile Commerce ... 439 Mobile Marketing Implementation Guidelines ... 441 Tools to Support Mobile Advertisement ... 441 Mobile Ad Trends ... 442 9.10 Advertising Strategies and Promotions ... 442 Permission Advertising ... 442 Other Advertising Strategies ... 442 Online Events, Promotions, and Attractions ... 444 Localization in Advertising ... 444 Developing an Online Advertising Plan ... 445 Advertising on Facebook ... 446 Managerial Issues... 446 Closing Case: Johnson & Johnson Uses New Media Marketing ... 452 Glossary ... 454 References ... 456

10 E-Commerce Security and Fraud Issues and Protections ... 459 Opening Case: How State University of New York

College at Old Westbury Controls Its Internet Use ... 460 10.1 The Information Security Problem... 461

What Is EC Security? ... 461 Cyberwars and Cyberespionage Across Borders ... 463 The Drivers of EC Security Problems ... 465

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10.2 Basic E-Commerce Security Issues and Landscape... 467 Basic Security Terminology ... 468 The EC Security Battleground ... 468 The Threats, Attacks, and Attackers ... 468 The Targets of the Attacks in Vulnerable Areas ... 470 EC Security Requirements ... 471 The Defense: Defenders, Strategy, and Methods ... 472 Recovery... 473 10.3 Technical Malware Attack Methods: From Viruses

to Denial of Service ... 473 Technical and Nontechnical Attacks: An Overview ... 473 The Major Technical Attack Methods ... 474 Malware (Malicious Code): Viruses, Worms,

and Trojan Horses ... 474 10.4 Nontechnical Methods: From Phishing to Spam

and Fraud ... 478 Social Engineering and Fraud ... 478 Social Phishing ... 478 Fraud and Scams on the Internet ... 480 Case 10.1 Anyone Can Be a Victim (from Students

to Lawyers to Textbook Authors) ... 482 Cyber Bank Robberies ... 483 Spam Attacks ... 483 Case 10.2: Internet Stock Fraud Aided by Spam ... 484

Social Networking Makes Social Engineering Easy... 485 Data Breach (Leak) ... 486 10.5 The Information Assurance Model and Defense

Strategy ... 486 Confi dentiality, Integrity, and Availability ... 486 Authentication, Authorization, and Nonrepudiation ... 487 E-Commerce Security Strategy ... 487 The Defense Side EC Systems ... 489 10.6 The Defense I: Access Control, Encryption, and PKI ... 490

Access Control ... 490 Encryption and the One-Key (Symmetric) System ... 492 Public Key Infrastructure ... 492 Other Topics and Methods of Defense ... 495 10.7 The Defense II: Securing E-Commerce Networks ... 496

Firewalls ... 496 Intrusion Detection Systems (IDS) ... 497 Honeynets and Honeypots ... 498 10.8 The Defense III: General Controls, Spam, Pop Ups,

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10.9 Implementing Enterprisewide E-Commerce Security... 502 The Drivers of EC Security Management ... 502 Senior Management Commitment and Support ... 503 EC Security Policies and Training ... 504 EC Risk Analysis and Ethical Issues ... 504 Why Is It Diffi cult to Stop Internet Crime? ... 505 Managerial Issues ... 506

Closing Case: How One Bank Stopped Scams,

Spams, and Cybercriminals ... 511 Glossary ... 513 References ... 516

11 Electronic Commerce Payment Systems ... 521 Opening Case: Pay-per-Page: Alternatives

to E-Micropayments ... 522 11.1 The Payment Revolution ... 524 The PayPal Alternative ... 525 Digital Currencies ... 526 11.2 Using Payment Cards Online ... 527 Processing Cards Online ... 528 Fraudulent Card Transactions ... 529 11.3 Smart Cards ... 531 Types of Smart Cards ... 532 Stored-Value Cards... 532 Applications of Smart Cards ... 533 11.4 Micropayments ... 534 11.5 E-Checking ... 536 11.6 Mobile Payments ... 538 Mobile Proximity Payments ... 538 Mobile Remote Payments ... 539 Case 11.1: EC Application: Crutchfi eld Goes Mobile ... 540 Mobile Payment Participants and Issues ... 541 Mobile POS Payments ... 542 MasterPass™: Automating the Shopping

and Payment Processes ... 543 11.7 B2B and International Electronic Payments ... 544 B2B Payment Practices in the Financial Supply Chain ... 544 Enterprise Invoice Presentment and Payment ... 544 International Payments ... 546 11.8 Emerging EC Payment Systems and Issues ... 547 Bitcoin: Ups and Down but Alive ... 547 Other Interesting Systems ... 548 Managerial Issues ... 550 Closing Case: Innovative Credit Card Micropayments

for the Korean Metropolitan Unifi ed Fare System ... 555 Glossary ... 557 References ... 558

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12 Order Fulfillment Along the Supply Chain ... 561 Opening Case: How Amazon.com Fulfi lls Orders ... 561 12.1 Order Fulfi llment and Logistics: An Overview ... 563

Basic Concepts of Order Fulfi llment and Logistics ... 563 Overview of Logistics ... 564 Traditional Versus EC Logistics ... 564 The EC Order Fulfi llment Process ... 564 The Importance of Order Fulfi llment ... 566 12.2 Problems in Order Fulfi llment Along Supply Chains ... 567

Uncertainties in Demand ... 567 Inadequate Logistical Infrastructure ... 568 Ineffi cient Financial Flows ... 568 Lack of Information Sharing ... 568 12.3 Solutions to Order Fulfi llment Problems

Along the Supply Chain ... 569 Improvements in the Order-Taking Activity ... 569 Warehousing and Inventory Management

Improvements ... 569 Changing the Structure and Process

of the Supply Chain ... 570 Speeding Deliveries: From Same Day

to a Few Minutes ... 570 Partnering Efforts and Outsourcing Logistics ... 572 Case 12.1: UPS Provides Broad EC Services ... 572 Integrated Global Logistics Program ... 574 Order Fulfi llment in Make-to-Order

and Mass Customization ... 574 Handling Returns (Reverse Logistics) ... 575 Order Fulfi llment in B2B ... 576 Innovative E-Fulfi llment Strategies ... 577 Case 12.2: Dell’s World-Class Supply Chain and Order

Fulfi llment System ... 578 Integration and Enterprise Resource Planning ... 579 12.4 RFID and CPFR as Key Enablers in Supply

Chain Management ... 580 The Essentials of RFID ... 580 RFID Applications in the Supply Chain

Around the Globe ... 581 Collaborative Planning, Forecasting,

and Replenishment ... 583 Case 12.3: Stanley Black & Decker’s Collaborative Success

with Lowe’s and Home Depot ... 583 12.5 Other E-Commerce Support Services ... 585

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Closing Case: Multichannel Retailers – Experiences

of Nordstrom and REI ... 592 Glossary ... 594 References ... 594

Part V E-Commerce Strategy and Implementation

13 EC Strategy, Globalization, and SMEs ... 599 Opening Case: Procter & Gamble’s E-Commerce Strategy ... 599 13.1 Organizational Strategy: Concepts and Overview ... 602 Strategy in the Web Environment... 602 Porter’s Five Forces Model and Strategies

as Infl uenced by the Internet and EC ... 602 The Impact of the Internet ... 603 Strategic Planning for IT and EC ... 604 13.2 The Strategy and Performance Cycle and Tools ... 605

Strategy and Performance Cycle and Tools ... 605 Strategy Initiation ... 605 Strategy Formulation ... 606 Strategy Implentation ... 607 Strategy Assessment ... 607 Performance Improvement and Innovations ... 607 Case 13.1: EC Application: Warner Music Group’s

Digital Strategy ... 607 The Opportunity ... 608 The Results ... 608 Major Tools for Strategic Planning ... 608 13.3 E-Commerce Strategy Initiation ... 608

Representative Issues in E-Strategy Initiation

in E-Commerce ... 609 Strategy in the Web 2.0 Environment

and in Social Networking ... 611 13.4 E-Commerce Strategy Formulation ... 612

Selecting E-Commerce Opportunities... 612 Determining an Appropriate EC Application

Portfolio Mix ... 612 Risk Analysis in Strategy Formulation ... 613 Collaborative Efforts in Strategy Formulation ... 614 Case 13.2: EC Application: Red Hat: Collaborative

Strategic Planning ... 614 Security Issues to Consider During Strategy

Formulation ... 615 Other Issues in E-Commerce Strategy

Formulation ... 615 13.5 E-Commerce Strategy Implementation ... 617 E-Commerce Strategy Implementation Process ... 617 E-Commerce Strategy Implementation Issues ... 618 Redesigning Business Processes: BPR and BPM ... 619

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13.6 E-Commerce Performance Assessment ... 620 The Objectives of Assessment ... 620 The Performance Assessment Process ... 620 Establish Metrics ... 621 Monitoring Performance ... 623 Analyzing Performance Data ... 623 Defi ning EC Analytics ... 624 Web Analytics and Its Major Tools ... 624 13.7 Performance Improvement and Innovation ... 625

An Overview of Performance Improvement ... 625 Dashboards in E-Commerce ... 626 Innovation for Performance Improvement ... 626 Innovative Strategies: Some Illustrative Examples ... 627 13.8 A Strategy for Global E-Commerce ... 628 Benefi ts and Extent of Global Operations ... 629 Barriers to Global E-Commerce... 629 Breaking Down the Barriers to Global E-Commerce ... 632 13.9 E-Commerce Strategy for Small and Medium-Sized

Enterprises ... 633 If Judy Can – You Can Too!: The Story

of Blissful Tones Webstore ... 634 Globalization and SMEs ... 635 Resources to Support SME Activities in EC ... 635 SMEs and Social Networks ... 636 Managerial Issues ... 636 Closing Case: Innovative Web Auction Strategy Nets

Higher Productivity for Portland Fish Exchange ... 641 The Problem ... 641 The Solution ... 641 The Results ... 642 Glossary ... 642 References ... 643

14 Implementing EC Systems: From Justification

to Successful Performance ... 647 Opening Case: Telstra Corporation Helps Its Corporate

Customers Justify EC Initiatives ... 648 The Problem ... 648 The Solution ... 648 The Results ... 649 14.1 The Implementation Landscape ... 649 The Major Implementation Factors ... 649 14.2 Why Justify E-Commerce Investments? How Can

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What Needs to Be Justifi ed? When Should

Justifi cation Take Place? ... 652 Using Metrics in EC Justifi cation ... 652 Web Analytics ... 653 14.3 Diffi culties in Measuring and Justifying E-Commerce

Investments ... 654 The EC Justifi cation Process ... 654 Diffi culties in Measuring Productivity

and Performance Gains ... 655 Relating EC and Its Expenditures

to Organizational Performance... 655 Intangible Costs and Benefi ts ... 655 The Process of Justifying EC and IT Projects ... 656 The Use of Gartner’s Hype Cycle ... 656 14.4 Methods and Tools for Evaluating and Justifying

E-Commerce Investments ... 658 Opportunities and Revenue Generated

by EC Investments... 658 Methodological Aspects of Justifying

EC Investments... 658 Traditional Methods for Evaluating EC Investments ... 658 ROI Calculators ... 659 Advanced Methods for Evaluating IT

and EC Investments ... 660 14.5 Examples of E-Commerce Metrics and Project

Justifi cation ... 661 Justifying E-procurement ... 661 Justifying Social Networking and the Use

of Web 2.0 Tools ... 662 Justifying an Investment in Mobile Computing

and in RFID ... 662 Justifying Security Projects ... 662 Justifying Buying Products or Services from Vendors ... 663 14.6 The Economics of E-Commerce ... 663

Reducing Production Costs ... 663 Increased Revenues ... 665 Facilitating Product Differentiation ... 666 EC Increases Agility ... 666 Valuation of EC Companies ... 666 14.7 A Five-Step Approach to Developing

an E-Commerce System ... 667 The Essentials of the SDLC: An EC Application ... 668 Managing the Development Process ... 669 14.8 Development Strategies for E-Commerce Projects ... 670 In-House Development: Insourcing ... 671 Buy the Applications (Off-the-Shelf Approach) ... 671 Outsourcing EC Systems Development

and Applications... 672

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Leasing EC Applications: Cloud Computing

and Software as a Service (SAAS) ... 672 Other Development Options ... 673 Selecting a Development Option ... 673 14.9 Organizational Impacts of E-Commerce ... 674 Improving Direct Marketing and Sales ... 674 Transforming Organizations and Work ... 674 Redefi ning Organizations ... 675 Change Management ... 677 How to Organize an EC Unit in a Company ... 677 14.10 Opportunities for Success in E-Commerce

and Avoiding Failure ... 678 Factors that Determine E-Commerce Success ... 678 E-Commerce Successes ... 678 Cultural Differences in EC Successes

and Failures ... 680 Managerial Issues ... 681 Closing Case: Memphis Invest Excels Thanks to E-Commerce .... 686

The Problem ... 686 The Solution ... 686 The Results ... 686 Glossary ... 687 References ... 688

15 E-Commerce: Regulatory, Ethical, and Social

Environments ... 691 Opening Case: Why Was Disney Funding Chinese Pirates? ... 691

The Problem ... 691 The Solution ... 692 The Results ... 692 15.1 Ethical Challenges and Guidelines... 693 Ethical Principles and Guidelines ... 693 Business Ethics... 693 EC Ethical and Legal Issues ... 694 15.2 Intellectual Property Law and Copyright Infringement ... 696 Intellectual Property in E-Commerce... 696 Fan and Hate Sites ... 699 15.3 Privacy Rights, Protection, and Free Speech ... 699

Social Networks Changing the Landscape

of Privacy and Its Protection ... 700 Privacy Rights and Protection ... 700 Free Speech Online Versus Privacy Protection ... 701 The Price of Protecting an Individual’s Privacy ... 702 Case 15.1: EC Application: School Administrators

Used Webcams to Spy on Students at Home ... 703 How Information About Individuals Is Collected

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