INFO 3435 Administrivia

INFO 3435 Alexander Nikov

 User Experience Design
 Human-Computer Interaction
eCommerce 

Usability Engineering
Adaptive and Adaptable User Interfaces
 Personalization and User Modelling
 Affective Engineering
 Ergonomics / Human Factors Engineering
  http://www2.sta.uwi.edu/~anikov

Contact information
  [email protected]
  6622002 ext. 84127
 asnikov
 DCIT

Office hours
– two hours (10:00-12:00) on Tuesday and Wednesday

Alexander Nikov – by email any time

– by appointment: email or phone to arrange one
– drop in for urgent requests (but no guarantees!)

1-2

How you will be evaluated

Objectives (subject to change)
The objectives of the course are to introduce the concept of electronic commerce, and to
understand how electronic commerce is affecting business enterprises, governments, consumers  Course work 40%
and people in general. In addition, we will study the development of websites using relevant
software tools. • Project 40%
o Assignment 1 12%
1. Acquaint students with a fundamental understanding of the environment and strategies in the o Assignment 2 12%
New Economy.
o Assignment 3 16%
2. Provide analytical tools to understand opportunities in unserved or underserved New Economy
markets.  Final exam: one 2-hours written paper 60%
3. Provide a fundamental understanding of the different types and key components on business
models in the New Economy.
4. Provide guiding principles behind the design and strategy of the customer web interface.
5. Understand the traditional and new communication/marketing approaches that create competitive
advantage in the New Economy.
6. Provide insights on how to implement strategy in the New Economy.
7. Understand the metrics that New Economy firms to use to measure progress, customer
satisfaction, and financial performance.
8. Understand the fundamentals of financially valuing New Economy companies.
9. Provide an overview of the hardware, software, servers, and the parts that make up the enabling
“railroad” for the New Economy.

1-3 1-4
 Text and additional references Course topics
(subject to change)

Week Lecture Topics

Week 1 Introduction to EC and the course

Week 2 eCommerce business models and concepts

 Lecture notes
• http://www2.sta.uwi.edu/~anikov/info3435/lectures.htm Week 3 eCommerce Infrastructure: Internet, Web and Mobile Platform
 Textbook Week 4 Building an eCommerce presence: Websites, Mobile Sites, and Apps
Laudon K., C. G. Traver, eCommerce 2015, 11/E, Prentice Hall, 2015
ISBN-10: 013350715 ISBN-13: 978-0133507164 Week 5 eCommerce shopper experience

 Other resources Week 6 eCommerce personalization

 http://www2.sta.uwi.edu/~anikov/info3435/links.htm
Week 7 eCommerce security and payment systems

Week 8 eCommerce marketing concepts and marketing communications

Week 9 Ethical, social, and political issues in eCommerce

Week 10 Online retailing and services

Week 11 Online content and media

Week 12 Social networks, auctions, and portals

1-5 1-6

The focus of this lecture is on several

learning objectives
• Define eCommerce and describe how it differs from eBusiness.
• Identify and describe the unique features of eCommerce technology and
1. Introduction to •
discuss their business significance.
Recognize and describe Web 2.0 applications.

eCommerce •
•
Describe the major types of eCommerce .
Discuss the origins and growth of eCommerce .
• Explain the evolution of eCommerce from its early years to today.
• Identify the factors that will define the next five years of eCommerce .
• Describe the major themes underlying the study of eCommerce .
• Identify the major academic disciplines contributing to eCommerce .

1-7 1-8
 Outline First Things First
 Welcome to the new world of electronic commerce
(eCommerce or EC)
1. eCommerce : The Revolution Is Just Beginning
• The industry of the twenty-first century
• Do business electronically from virtually anywhere in the world that
2. eCommerce : A Brief History
has a computer.
• In 2014 alone, US eCommerce generated well over $304 billion in
3. Understanding eCommerce : Organizing Themes retail business and over $1 trillion business-to-business sales.
 The Internet - an international network of independent computer systems
precipitated the revolution.

• Security
• Privacy
• Other problems
• Has permeated virtually every phrase of society

1-9 1-10

The First 30 Seconds

E-commerce Trends 2014–2015
• Retail e-commerce grows over 15% • First 20 years of eCommerce
• Continued expansion of mobile, social, and local – Just the beginning
e-commerce – Rapid growth and change
• Technologies continue to evolve at exponential rates
• Mobile platform rivals PC platform
– Disruptive business change
• Continued growth of cloud computing – New opportunities

• Localization of e-commerce (Groupon)

• Explosive growth in Big Data
• Continued growth of user-generated content on
social networks, blogs, wikis
1-12
 What is eCommerce?
What is eCommerce ?
 Communications Perspective - the ability to deliver products, services,
information, or payments via networks.
• Use of Internet and Web to transact business
 Interface View - eCommerce means information and transaction
• More formally: exchanges:
• Business-to-Business (B2B)
– Digitally enabled commercial transactions between • Business-to-Consumer (B2C)
and among organizations and individuals • Consumer-to-Consumer (C2C)
• Business-to-Government (B2G)
 Business Process - eCommerce means activities that support commerce
electronically by networked connections.
 Online Perspective - eCommerce is an electronic environment that
allows sellers to buy and sell products, services, and information on the
Internet.
 A Structure - eCommerce deals with various media: data, text, Web
pages, Internet telephony, and Internet desktop video.
 A Market - eCommerce is a worldwide network.
1-13 1-14

Myths about eCommerce The Drivers for eCommerce

 Digital Convergence - digital devices communicating with one another
 Setting up a Web site is easy.
 Anytime, anywhere, anyone - eCommerce is available to anyone (24/7)
 eCommerce means no more mass marketing.
 eCommerce means a new economy.  Changes in Organizations - today’s businesses empower frontline
 eCommerce is revolutionary. workers to do the kind of work once performed by junior management
 eCommerce is a commercial fad that crashed in 2000.
 Increasing pressure on operating costs and profit margins - global
 All products can be sold online using identical business competition and the proliferation of products and services worldwide have
models. added pressure on operating costs and profit margins
 Build it and they will come.
 The middleman is out.  Demand for customized products and services - mass customization puts
pressure on firms to handle customized requests on a mass-market scale

1-15 1-16
 Changes in Organizational Makeup eCommerce Versus eBusiness
 eCommerce
• Selling goods and services on the retail level with
anyone, anywhere, via the Internet
• Greater efficiency and effective exchange of goods and
services
• Exchange based upon transaction
• A block of information exchange between the merchant
and its customers via the corporate Web site
• www.amazon.com

 eBusiness
• Connecting critical business systems and constituencies
directly via the Internet
1-17 1-18

eCommerce vs. eBusiness

• eBusiness:

– Digital enablement of transactions and

processes within a firm, involving information
systems under firm’s control
– Does not include commercial transactions
involving an exchange of value across
organizational boundaries

EC primarily involves transactions that cross firm boundaries

EB primarily involves the application of digital technologies to business processes within the firm

1-19 1-20
 eCommerce Is Not eBusiness Why Study eCommerce ?

 eBusiness - the conduct of business on the Internet, in • eCommerce technology is different, more
supply-chain planning, tracking, fulfillment, invoicement, and
payment. powerful than previous technologies
• Includes buying and selling as well as servicing customers • eCommerce bringing fundamental
and collaborating with business partners changes to commerce
• Electronic information is used to boost performance and
create value by forming new relationships between and • Traditional commerce:
among businesses and customers. – Passive consumer
• One example of eBusiness is SAP (www.sap.com) – Sales-force driven
– Fixed prices
– Information asymmetry
1-21 1-22

Unique Features of
eCommerce Technology Web 2.0
1. Ubiquity (available everywhere, all the time)
2. Global reach (across cultural/national boundaries) • Applications, technologies that allow users to:
3. Universal standards (lowers market entry for merchants – Create and share content, preferences, bookmarks,
and online personas
and search costs for consumers)
– Participate in virtual lives
4. Information richness
– Build online communities
(more powerful selling environment)
• Examples
5. Interactivity (can simulate face-to-face experience, but
– YouTube, Photobucket, Flickr, Google, iPhone
on a global scale)
– MySpace, Facebook, LinkedIn
6. Information density (amount and quality of information
– Second Life
available to all market participants)
– Wikipedia
7. Personalization/customization
8. Social technology
1-23 1-24
 Web 2.0
Types of eCommerce

• User-centered applications and social media May be classified by market relationship or technology
technologies • Business-to-Consumer (B2C)
– User-generated content and communication • Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
– Highly interactive, social communities
• Mobile e-commerce (M-commerce)
– Large audiences; yet mostly unproven business • Social e-commerce
models
• Local e-commerce
– e.g., Twitter, YouTube, Facebook, Second Life,
Wikipedia, Digg

1-25 1-26

Types of eCommerce Examples eCommerce Applications

 Business-to-Consumer (Internet)
 Business-to-Business (Internet and Extranet)
 Supply-Chain Management
 Business-within-Business (Intranet)
 Business-to-Government (B2G)

1-27 1-28
 eCommerce with Teeccino Herbal Coffee
Business-to-Consumer (Internet)

 The consumer’s use of a merchant’s Web storefront or Web

site
 Modeled on the traditional shopping experience
 Shopping cart is used to hold goods until the customer is ready
to check out
– Online order form supported by the appropriate software
 Checkout is order and payment processing

1-29 1-30

The Growth of B2C E-commerce in the U.S. Business-to-Business (Internet and Extranet)

 Business-to-Business eCommerce is industrial marketing

among the processes it handles are fulfillment and
procurement
 Companies can conveniently and quickly check their
suppliers’ inventories or make instant purchases
 Competing online should also force prices for materials and
supplies to drop dramatically
 B2B often use an extranet: a shared intranet vendors,
contractors, suppliers, and key customers

SOURCE: Based on data from eMarketer, Inc., 2014b; authors’ estimates.

1-31 1-32
 The Growth of B2B E-commerce in the U.S. Consumer-to-Consumer eCommerce

 Provide a way for consumers to sell to each other

 Consumer:
 prepares the product for market
 places the product for auction or sale
 relies on market maker to provide catalog, search engine, and
transaction clearing capabilities

SOURCE: Based on data from U.S. Census Bureau, 2014; authors’ estimates.
1-33 1-34

Business-within-Business (Intranet) Benefits of an Intranet

 Strictly a “within company” type of information exchange  Low development and maintenance costs
• Restricted to internal employees and customers
 Environmentally friendly because it is company-
• Firewalls to keep out non employees specific

 E-mail replaces paper for the communication of messages,  Availability and sharing of information
order acknowledgement and approvals, and other forms of
correspondence  Timely, current information
 The intranet becomes a facilitator for the exchange of  Quick and easy dissemination of information
information and services among the departments or
divisions of a company
 Different departments with different PCs or local area
networks can interact on an intranet

1-35 1-36
 Key Elements of Internet, Extranet, and
Business-to-Government (B2G)
Intranet eCommerce
 The government market is strikingly similar to B2B.
 Huge potential for savings in $1.8 trillion federal and $1
trillion state and local expenditures
 Changing the status quo in government is not so easy
• Changes to employee tasks and job restructuring often
create resistance
• Tax savings potential is not easily recognized
• Committing to technology means constant need for
upgrades and additional costs

1-37 1-38

Relative size of different types of

The Internet eCommerce in USA

• Worldwide network of computer networks built on

common standards

• Created in late 1960s

• Services include the Web, e-mail, file transfers, etc.

• Can measure growth by looking at number of Internet

hosts with domain names

1-39 1-40
 The Web The Mobile Platform

• Most popular Internet service • Most recent development in Internet infrastructure

• Developed in early 1990s • Enables access to the Internet via wireless networks or cell-
• Provides access to Web pages phone service
– HTML documents that may include text, graphics, • Mobile devices include
animations, music, videos – Tablets
• Web content has grown exponentially – Smartphones
– Google reports 60 trillion unique URLs – Ultra-lightweight laptops

1-41 1-42

Mobile Internet access in USA

1-43 1-44
1-45 1-46

1-47 1-48
1-49 1-50

1-51 1-52
 Top 10 Most Popular Search Engines | August 2015
Global retail and eCommerce sales forecast
excludes travel and event tickets / US$ trillions

2013-2018

Source:
http://www.ebizmba.com/articl
es/search-engines

1-53 1-54

Source: http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf

1-55 1-56
B2C eCommerce sales worldwide

1-57 1-58

1-59 1-60
 Advantages through eCommerce Issues and Constraints of eCommerce

 The cost factor

 Lower cost to the eMerchant
 Security
 Economy
 System and data integrity
 Higher margins
 System scalability
 Better customer service
 eCommerce is not free
 Quick comparison shopping
 Fulfillment and customer relations problems
 Productivity gains
 Products people resist buying online
 Teamwork
 Cultural, language, and trust issues
 Growth in knowledge markets
 Corporate vulnerability
 Information sharing, convenience, and control
 Lack of a blueprint for handling eCommerce
 Customization
 High risk of Internet start-up
1-61 1-62

Benefits and Limitations of the Internet Limitations of the Internet

 The Internet is the enabler of the eCommerce

 Security and privacy
 Marketing and selling products and services
 Doing business fast
 Fakes and forgeries
 Gathering opinions and trying out new ideas
 Leveling the playing field
 Cyber terrorism
 Promoting a paper-free environment
 Providing superior customer service and support resources
 Problems and stress
 Efficiency and unequaled cost-effectiveness
 Supporting managerial functions, spreading ideas, ease of
technical support  Abuses in the workplace
 Triggering new business
 Providing Web services 1-63 1-64
 Potential Limitations on the Growth of
Role of eStrategy
B2C eCommerce
• Expensive technology
 For a successful eCommerce business:
• Sophisticated skill set – Identify the critical success factors (CSFs)
• A sound strategy that has the full support of top management
• Persistent cultural attraction of physical markets and • A clear goal of long-term customer relationships and value
traditional shopping experiences • Making full use of the Internet and related technologies
• A scalable and integrated business process and infrastructure
• Persistent global inequality limiting access to telephones
and computers – Develop a realistic strategy for the business
• Sustainable business strategy based on unique opportunities to provide
value for the firm
• Saturation and ceiling effects • Requires a clear understanding of the company, the industry and available
Internet technologies
• Strategy should be difficult to duplicate, have high barriers to entry for
competitors, and high switching costs to customers
• Be realistic

1-65 1-66

Outline Origins & Growth of eCommerce

1. eCommerce : The Revolution Is Just Beginning • Precursors:

– Baxter Healthcare (1970, pharmaceutical firm, B2B, telephone-
based modem, hospital reorder supplies)
2. eCommerce : A Brief History – Electronic Data Interchange (EDI) standards (exchange
commercial documents and transactions)

3. Understanding eCommerce : Organizing Themes – French Minitel (1980s videotext system, B2C, 13,000 services:
ticket agencies, travel services, retail products, online banking)
– None had functionality of Internet

• 1995: Beginning of eCommerce

– First sales of banner advertisements by AT&T, Volvo, Sprint

• Since then, eCommerce fastest growing form of

commerce in the United States
1-67 1-68
 Periods in the development of eCommerce eCommerce: A Brief History

• 1995–2000: Innovation
– Key concepts developed
– Limited bandwidth and media
– Euphoric visions of
• Friction-free commerce
– Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive
advantage
• First-mover advantages
– Network profits
– Dot-com crash of 2000
1-69 1-70

E-commerce: A Brief History (cont.) E-commerce: A Brief History (cont.)

• 2001–2006: Consolidation • 2007–Present: Reinvention

– Emphasis on business-driven approach – Rapid growth of:
– Traditional large firms expand presence • Online social networks
• Mobile platform
– Start-up financing shrinks up
• Local commerce
– More complex products and services sold
– Growth of search engine advertising – Entertainment content develops as source of revenues
– Business Web presences expand to include e-mail, – Transformation of marketing
display and search advertising, and limited community • Coordinated marketing on social, mobile, local platforms
feedback features • Analytic technologies

1-71 1-72
Evolution of
eCommerce Early Visions of eCommerce

• Computer scientists:
– Inexpensive, universal communications and computing environment
accessible by all
• Economists:
– Nearly perfect competitive market and friction-free commerce
– Lowered search costs, disintermediation, price transparency, elimination
of unfair competitive advantage
• Entrepreneurs:
– Extraordinary opportunity to earn far above normal returns on
investment—first mover advantage

1-73 1-74

The Digital Divide Marks of Maturity

Digital Divide refers to:  Characteristics of early eCommerce:

• The gap between the haves and have nots in computers,
Internet access, access to information, and eCommerce – Slow dial-up modems
• Is slowly leveling off, but not fast enough – E-mail was a novelty
– Bar codes scanned for fulfillment phase of the
 Digital Divide Network (www.digitaldividenetwork.org) is the
eCommerce life cycle
Internet’s largest environment
– Digital products were a challenge to sell on the Internet
– Concerned citizens and activists can build their own
online community – Took deep pockets to set up Web sites and the
accompanying technical infrastructure
– Publish blogs, share documents, and announce news
and events – eCommerce activities were primarily national

1-75 1-76
 Marks of Maturity – cont’d Assessing eCommerce
 Maturation of eCommerce
• Many early visions not fulfilled
– Broadband connections to homes is fulfilling the ultimate – Friction-free commerce
mission of eCommerce. • Consumers less price sensitive
– E-mail is now the very connectivity of eCommerce. • Considerable price dispersion
– Bar code scanning is on the way out, replaced by – Perfect competition
sophisticated biometric technology. • Information asymmetries persist
– Legal downloading of music, video, and other digital – Disintermediation
products via the Web is increasing. – First mover advantage
– Big businesses, as well as small- and medium-sized • Fast-followers often overtake first movers
firms, can afford to develop a Web presence quickly,
reliably, and at an affordable cost.
– eCommerce has gone international.
1-77 1-78

Share of US online retail sales

Predictions for the Future by type of company
• Technology will propagate through all commercial
activity
• Large, traditional companies will continue to play
dominant role, consolidating audiences
– Start-up ventures can still attract large audiences in
non-dominated arenas
• Integrated online/offline companies will experience more
growth than purely online companies
• Additional factors:
– Increased regulation and control
– Cost of energy

1-79 1-80
 1-81 1-82

eCommerce Case Study Multichannel Retailer

1-83 1-84
 Outline
Understanding eCommerce:
Organizing Themes
1. eCommerce : The Revolution Is Just Beginning
• Technology:
– Development and mastery of digital computing and
2. eCommerce : A Brief History communications technology

• Business:
3. Understanding eCommerce : Organizing Themes – New technologies present businesses with new ways of
organizing production and transacting business

• Society:
– Intellectual property, individual privacy, public welfare policy

1-85 1-86

Academic Disciplines
The Internet Concerned with eCommerce
and the
Evolution
of Corporate • Technical • Behavioral
Computing approach approach
– Computer science – Information systems
Figure 1.11 – Management science – Economics
– Information systems – Marketing
– Management
– Finance/accounting
– Sociology

1-87 1-88
 Disciplines concerned with eCommerce Competitive Advantage

 Competitive advantage is achieved when an organization

links the activities in its value chain more cheaply and
effectively than its competitors.

1-89 1-90

Roles for eCommerce Trend in eCommerce

 Reducing costs  Integrate the entire transaction life cycle, from the time the
consumer purchases the product on the Web site to the
 Improving product quality and integrity
time the product is actually received
 Promoting a loyal customer base
 Creating a quick and efficient way of selling products and services
 Incorporate information technology and telecommunications to improve
overall productivity
 Web sites are used to provide and collect information between the e-
merchant and the customer

• Competitive pricing information

• Invoicing facilitates online payment flows
• Customized products or orders can be shipped and delivered by independent
shippers directly to the customer

1-91 1-92
 A Generic eCommerce Model Path to Successful eCommerce

 The path to success is integration of the various links

(departments) in the chain to work together for a common
objective - profitability and customer satisfaction.
• Supplier links with manufacturing
• Manufacturing adds value by the finished products
• Finished products are then made available to sales
• Finished products
• Sales add value by advertising and selling the products to
the customer
• Today, ERP software integrates information about
finished products, costs, sales figures, accounting and
human resources
1-93 1-94

An Integrated Approach to eCommerce

1-95