Springer Texts in Business and Economics

More information about this series at http://www.springer.com/series/10099

Efraim Turban • David King Jae Kyu Lee • Ting-Peng Liang Deborrah C. Turban

Electronic Commerce

A Managerial and Social Networks Perspective

Eighth Edition, Revised Edition

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

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Efraim Turban University of Hawaii Honolulu , 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

David King JDA Software Scottsdale , AZ , USA

Ting-Peng Liang National Chengchi University (Taipei, Taiwan) and National Sun Yat-Sen University ( Kaohsiung , Taiwan)

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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 networking, 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 • Shopping for virtual goods

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• 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

E-commerce can be approached from two major perspectives: technological and managerial. This text uses the second approach. Most of the presentations are about EC applications and their implementation. However, we do recog-nize the importance of the technology; therefore, we present the essentials of security in Chapter 10 and the essentials of infrastructure and systems devel-opment in Chapter 16 . We also provide some detailed technology material in

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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. International 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, operations 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 affordable-ecommerce-textbook.com/turban .

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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 5 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 enterprise 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. Chapter 16 is unique; it describes how to build an e-business from scratch, as well as how to add e-commerce projects to conventional businesses. It also takes the reader through all the major steps of online store building and provides guidelines for success.

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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 exercises send students to interesting websites to conduct research, learn about applications, download demos, or research state-of-the-art technology.

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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. • Test bank. A broad set of multiple-choice, true-false, and essay questions

for all chapters. Written by Jon C. Outland. • 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.” • Judy Strauss contributed an example in Chapter 13 .

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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 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 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 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

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

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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 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 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 ................................................................. 57 Disintermediation and Reintermediation .............................. 59

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

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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 Penny Auctions ..................................................................... 70 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

Concerns About Craigslist .................................................... 77 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 Platform ........... 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

Managerial Issues........................................................................... 88 Closing Case: Madagascar’s Port Modernizes Customs with TradeNet ................................................................. 93 Glossary ......................................................................................... 95 References ...................................................................................... 96

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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 ............................................ 115 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 On-Demand Delivery of Products ......................................... 129 Online Delivery of Digital Products, Entertainment, and Media ..................................................... 130 Internet TV and Internet Radio ............................................. 130 Social Television (TV) .......................................................... 131

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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 The Basic Types of B2B Transactions and Activities....................................................................... 165

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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: Webstores ............................................ 172 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 ............................ 174 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 ..................................... 175

Examples of B2B Forward Auctions .................................... 175 4.4 One-From-Many: E-Procurement at Buy-Side

E-Marketplaces ..................................................................... 176 Ineffi ciencies in Traditional Procurement Management .......................................................................... 176 Procurement Methods ........................................................... 177 E-Procurement Concepts ....................................................... 178 The Benefi ts and Limitations of E-Procurement ................... 178

4.5 Reverse Auctions at Buy-Side E-Marketplaces (E-Tendering) ........................................................................ 180 The Major Benefi ts of Reverse Auctions .............................. 181 Conducting Reverse Auctions ............................................... 181

Case 4.2: EC Application: Branas Isaf Competes by Using E-Tendering .................................................................... 182 4.6 Other E-Procurement Methods ............................................. 183

Desktop Purchasing ............................................................... 183 Group Purchasing .................................................................. 183 Buying from Other Sources .................................................. 185 Acquisition Via Electronic Bartering .................................... 185 Selecting an Appropriate E-Procurement Solution ................. 185

4.7 B2B Exchanges (E-Marketplaces): Defi nitions and Concepts ...................................................... 185 Functions of and Services Provided by Exchanges ............... 186 Ownership of B2B Exchanges .............................................. 187 Dynamic Pricing in B2B Exchanges ..................................... 189 Advantages, Limitations, and the Revenue Model of Exchanges .............................................................. 189

4.8 B2B Portals and Directories .................................................. 190 B2B Portals: An Overview .................................................... 190 Corporate (Enterprise) Portals............................................... 190 Directory Services and Search Engines ................................ 191

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4.9 B2B in Web 2.0 and Social Networking ............................. 192 E-Communities in B2B ....................................................... 192 The Opportunities of Social Commerce in B2B ................. 193 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 .......................................... 196 The Marketing and Advertising Processes in B2B ............. 197 Methods for B2B Online Advertising and Marketing ........ 197 Other B2B Support Mechanisms ........................................ 198

Managerial Issues........................................................................... 199 Closing Case: The University of Sheffi eld’s 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 Learning On Demand .......................................................... 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 5.1: EC Application: Knowledge Management at Infosys Technologies .................................................................. 230

How Is Knowledge Management 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 Voice-Support Services ......................................................... 268 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 the Workforce to Improving Internal Operations.................. 273

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Defi ning Mobile Enterprise (Enterprise Mobility) ................ 273 The Framework and Content of Mobile Enterprise Applications ........................................ 274 Mobile Workers ..................................................................... 274 Other Enterprise Mobile Applications .................................. 274 Trends for 2015 and Beyond ................................................. 275

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 ........................................... 280 L-Commerce Infrastructure ................................................... 281 Barriers to Location-Based M-commerce ............................. 285

6.7 Ubiquitous (Pervasive) Computing and Sensory Networks ............................................................................... 286 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 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 ........................................................................ 316

7.3 The Benefi ts and Limitations of Social Commerce .............. 317 Benefi ts to Customers ........................................................... 317 Benefi ts to Retailers .............................................................. 318 Benefi ts to Other Types of Enterprises ................................. 318 The Social Business: An IBM Approach .............................. 319 New or Improved Business Models ...................................... 320 Concerns and Limitations of Conducting Social Commerce .................................................................. 320

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 .................. 326 Other Innovative Models ....................................................... 328 Social Shopping Aids: From Recommendations to Reviews, Ratings, and Marketplaces ................................. 329 Other Shopping Aids and Services ....................................... 332 Social Marketplaces and Direct Sales ................................... 333 Shopping for Virtual Goods in a Virtual Economy ............... 335 Real-Time Online Shopping .................................................. 336 Social Shopping in the Near Future ...................................... 336

7.5 Social Advertising: From Viral Advertising to Location-Based Advertisement/Marketing ....................... 337 Social Ads and Social Apps .................................................. 337 Viral (Word-of-Mouth) Marketing and Social Networking .......................................................... 337 Location-Based Advertisements and Social Networks ......... 338 Using YouTube and Other Social Presentation Sites for Advertising ............................................................. 339 Using Twitter as an Advertising and Marketing Tool ........... 340 Other Innovative Ways to Advertise in Social Media ........... 341

7.6 Social Customer Service and CRM ...................................... 342 How Does Social Networking Empower Customers? .......... 342 Social CRM ........................................................................... 343 How to Serve the Social Customers ...................................... 343 The Benefi ts of Social CRM ................................................. 344

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Case 7.2: iRobot Uses Social Media for Multichannel CRM ........ 345 The Evolution of Social CRM ............................................... 346 Cipriani’s Multidimensional Presentation ............................. 346 Implementation of Social Customer Service and CRM .................................................................. 349 Some Recent Applications .................................................... 350 Reputation Management System........................................... 351

Managerial Issues........................................................................... 351 Closing Case: Groupon: Will the Company Prosper?.................... 356 Glossary ......................................................................................... 360 References ...................................................................................... 360

8 Social Enterprise and Other Social Commerce Topics ............. 365 Opening Case: How a Private Enterprise Network Transformed CEMEX into a Social Business ................................ 366 8.1 Social Business and Social Enterprise .................................. 367

Defi nitions: Social Business and Social Enterprise .............. 367 Business Networks ................................................................ 368 The Benefi ts and Limitations of Enterprise Social Networking ................................................................. 369 How Web 2.0 Tools Are Used by Enterprises ....................... 369

8.2 Business-Oriented Public Social Networking ....................... 370 Entrepreneur Networks ......................................................... 371

8.3 Enterprise Social Networks ................................................... 371 Taxonomy of Social Enterprise Applications ....................... 371 How Enterprise Social Networking Helps Employees and Organizations ............................................... 373 Support Services for Enterprise Social Networks ................. 373 How Companies Interface with Social Networking ............. 374

8.4 Social Commerce: Applications in Virtual Worlds ............... 375 The Features of Virtual Worlds ............................................. 376 The Major Categories of Virtual World Applications ........... 376 The Landscape of Virtual World Commercial Applications ... 378 The Major Drivers of Social Commerce in Virtual Worlds ..... 379 Concerns and Limitations of Commercial Activities in Virtual Worlds ................................................... 380

8.5 Social Entertainment ............................................................. 381 Entertainment and Social Networks ...................................... 381 Multimedia Presentation and Sharing Sites .......................... 382

8.6 Social Games and Gamifi cation ............................................ 383 Games on Social Networks ................................................... 383 The Business Aspects of Social Games ................................ 384 Educational Social Games .................................................... 384 Gamifi cation .......................................................................... 384

8.7 Crowdsourcing for Problem Solving and Content Creation ............................................................ 385 Crowdsourcing as a Distributed Problem Solving Enabler ..... 385 The Process of Crowdsourcing ............................................. 386

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Successfully Deployed Crowdsourcing Systems: Some Representative Examples ............................................ 386 Tools for Crowdsourcing ....................................................... 387

8.8 Social Collaboration (Collaboration 2.0) .............................. 388 Supporting Social Collaboration ........................................... 388 The Future of Social Commerce ........................................... 391

Managerial Issues........................................................................... 392 Closing Case: EC Application: Linkedin: The Premier Public Business-Oriented Social Network ................ 396 Glossary ......................................................................................... 398 References ...................................................................................... 398

Part IV EC Support Services

9 Marketing and Advertising in E-Commerce ............................. 403 Opening Case: Market Research Helps Del Monte Improve Dog Food ......................................................................... 404 9.1 Learning About Online Consumer Behavior ........................ 405

A Model of Online Consumer Behavior ............................... 405 The Major Infl uential Factors ............................................... 406

9.2 The Consumer Purchasing Decision Process ........................ 408 A Generic Purchasing-Decision Model ................................ 408 Players in the Consumer Decision Making Process ............. 409 Shopping Cart Abandonment ............................................... 409

9.3 Loyalty, Satisfaction, and Trust in E-Commerce .................. 409 Customer Loyalty ................................................................. 410 Satisfaction in EC ................................................................. 411 Trust in EC ............................................................................ 411

9.4 Mass Marketing, Market Segmentation, and Relationship Marketing ................................................ 412

From Mass Marketing to One-to-One Marketing ................. 413 How One-to-One Relationships are Practiced ...................... 414

9.5 Personalization and Behavioral Marketing ........................... 416 Personalization in E-Commerce ........................................... 416 Behavioral Marketing and Collaborative Filtering ............... 417

9.6 Market Research for E-Commerce ....................................... 418 Objectives and Concepts of Online Market Research .......... 419 Representative Market Research Approaches ...................... 419 Limitations of Online Market Research and How to Overcome Them ................................................ 422 Biometric and Smartphone Marketing Helps Market Research ......................................................... 423

9.7 Web Advertising .................................................................... 423 Overview of Web Advertising .............................................. 424 Basic Internet Advertising Terminology ............................... 425 Why Internet Advertising? .................................................... 425

9.8 Online Advertising Methods: From E-Mail to SEO and Video Ads ....................................................................... 426

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Major Categories of Ads ..................................................... 426 Banners ............................................................................... 426 Pop-Up and Similar Type Ads ............................................ 427 Search Engine Advertisement and Optimization .................. 429 Google: The Online Advertising King ................................ 431 Video Advertising ............................................................... 433 Augmented Reality in Advertising ...................................... 435 Advertising in Chat Rooms and Forums ............................. 436

9.9 Mobile Marketing and Advertising ..................................... 436 Mobile Marketing and Mobile Commerce .......................... 436 Mobile Marketing Implementation Guidelines ................... 439 Tools to Support Mobile Advertisement ............................. 439 Mobile Ad Trends ............................................................... 439

9.10 Advertising Strategies and Promotions ............................... 440 Permission Advertising ....................................................... 440 Other Advertising Strategies ............................................... 440 Online Events, Promotions, and Attractions ....................... 442 Localization in Advertising ................................................. 442 Developing an Online Advertising Plan .............................. 443 Advertising on Facebook .................................................... 443

Managerial Issues........................................................................... 444 Closing Case: Johnson & Johnson Uses New Media Marketing ...... 450 Glossary ......................................................................................... 452 References ...................................................................................... 454

10 E-Commerce Security and Fraud Issues and Protections ........ 457 Opening Case: How State University of New York College at Old Westbury Controls Its Internet Use ........................ 458 10.1 The Information Security Problem...................................... 459

What Is EC Security? .......................................................... 459 Cyberwars and Cyberespionage Across Borders ................ 461 The Drivers of EC Security Problems ................................. 463 The Darknet and the Underground Economy ..................... 464

10.2 Basic E-Commerce Security Issues and Landscape............ 465 Basic Security Terminology ................................................ 466 The EC Security Battleground ............................................ 466 The Threats, Attacks, and Attackers ................................... 466 The Targets of the Attacks in Vulnerable Areas ..................... 468 EC Security Requirements .................................................. 469 The Defense: Defenders, Strategy, and Methods ................ 470 Recovery.............................................................................. 471

10.3 Technical Malware Attack Methods: From Viruses to Denial of Service ............................................................. 471 Technical and Nontechnical Attacks: An Overview ........... 471 The Major Technical Attack Methods ................................. 472 Malware (Malicious Code): Viruses, Worms, and Trojan Horses ............................................................... 472

10.4 Nontechnical Methods: From Phishing to Spam and Fraud ............................................................................. 476

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Social Engineering and Fraud ............................................. 476 Social Phishing .................................................................... 476 Fraud and Scams on the Internet ......................................... 478

Case 10.1: Anyone Can Be a Victim (From Students to Lawyers to Textbook Authors) .................................................. 480

Identity Theft and Identity Fraud ........................................ 481 Cyber Bank Robberies ........................................................ 481 Spam Attacks ...................................................................... 481

Case 10.2: Internet Stock Fraud Aided by Spam ........................... 482 Spyware ............................................................................... 482 Social Networking Makes Social Engineering Easy ........... 483 Data Breach (Leak) ............................................................. 484

10.5 The Information Assurance Model and Defense Strategy ............................................................................... 484 Confi dentiality, Integrity, and Availability .......................... 484 Authentication, Authorization, and Nonrepudiation ........... 485 E-Commerce Security Strategy ........................................... 485 The Defense Side EC Systems ............................................ 487

10.6 The Defense I: Access Control, Encryption, and PKI ........ 488 Access Control .................................................................... 488 Encryption and the One-Key (Symmetric) System ............. 490 Public Key Infrastructure .................................................... 490 Other Topics and Methods of Defense ................................ 493

10.7 The Defense II: Securing E-Commerce Networks .............. 494 Firewalls .............................................................................. 494 Virtual Private Networks (VPNs) ........................................ 495 Intrusion Detection Systems (IDS) ..................................... 495 Dealing with DoS Attacks ................................................... 496 Honeynets and Honeypots ................................................... 496 E-Mail Security ................................................................... 496

10.8 The Defense III: General Controls, Spam, Pop Ups, Fraud, and Social Engineering Controls ............................. 497 General, Administrative, and Other Controls ...................... 498 Protecting Against Spam ..................................................... 498 Protecting Your Computer from Pop-Up Ads ..................... 499 Protecting Against Other Social Engineering Attacks ........ 499 Protecting Against Spyware ................................................ 499 Protecting Against Cyberwars ............................................. 500 Fraud Protection .................................................................. 500 Business Continuity, Disaster Recovery, and Risk Management ......................................................... 500

10.9 Implementing Enterprisewide E-Commerce Security......... 500 The Drivers of EC Security Management ........................... 500 Senior Management Commitment and Support .................. 501 EC Security Policies and Training ...................................... 502 EC Risk Analysis and Ethical Issues .................................. 502 Why Is It Diffi cult to Stop Internet Crime? ........................ 503

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Protecting Mobile Devices, Networks, and Applications ................................................ 503

Managerial Issues ........................................................................... 504 Closing Case: How One Bank Stopped Scams, Spams, and Cybercriminals ........................................................... 509 Glossary ......................................................................................... 511 References ...................................................................................... 514

11 Electronic Commerce Payment Systems .................................... 519 Opening Case: Pay-per-Page: Alternatives to E-Micropayments ....................................................................... 520 11.1 The Payment Revolution ..................................................... 522

The PayPal Alternative ........................................................ 523 Digital Currencies ............................................................... 524

11.2 Using Payment Cards Online .............................................. 525 Processing Cards Online ..................................................... 526 Fraudulent Card Transactions ............................................. 527

11.3 Smart Cards ......................................................................... 529 Types of Smart Cards .......................................................... 530 Stored-Value Cards.............................................................. 530 Applications of Smart Cards ............................................... 531

11.4 Micropayments .................................................................... 532 11.5 E-Checking .......................................................................... 534 11.6 Mobile Payments ................................................................. 536

Mobile Proximity Payments ................................................ 536 Mobile Remote Payments ................................................... 537

Case 11.1: EC Application: Crutchfi eld Goes Mobile ................... 538 Mobile Payment Participants and Issues ............................. 539 Mobile POS Payments ........................................................ 540 MasterPass™: Automating the Shopping and Payment Processes ....................................................... 541 Innovative Social Commerce Payments .............................. 541

11.7 B2B and International Electronic Payments ....................... 542 B2B Payment Practices in the Financial Supply Chain ...... 542 Enterprise Invoice Presentment and Payment ..................... 542 International Payments ........................................................ 544

11.8 Emerging EC Payment Systems and Issues ........................ 545 Bitcoin: Ups and Downs, but Alive ..................................... 545 Other Interesting Systems ................................................... 546

Managerial Issues ........................................................................... 548 Closing Case: Innovative Credit Card Micropayments for the Korean Metropolitan Unifi ed Fare System ......................... 553 Glossary ......................................................................................... 555 References ...................................................................................... 556

12 Order Fulfillment Along the Supply Chain ............................... 559 Opening Case: How Amazon.com Fulfi lls Orders ........................ 559 12.1 Order Fulfi llment and Logistics: An Overview ................... 561

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Basic Concepts of Order Fulfi llment and Logistics ............ 561 Overview of Logistics ......................................................... 562 Traditional Versus EC Logistics .......................................... 562 The EC Order Fulfi llment Process ...................................... 562 The Importance of Order Fulfi llment .................................. 564

12.2 Problems in Order Fulfi llment Along Supply Chains ......... 565 Uncertainties in Demand ..................................................... 565 Inadequate Logistical Infrastructure ................................... 566 Ineffi cient Financial Flows .................................................. 566 Lack of Information Sharing ............................................... 566

12.3 Solutions to Order Fulfi llment Problems Along the Supply Chain ...................................................... 567 Improvements in the Order-Taking Activity ....................... 567 Warehousing and Inventory Management Improvements ...................................................................... 567 Changing the Structure and Process of the Supply Chain ............................................................. 568 Speeding Deliveries: From Same Day to a Few Minutes ................................................................. 568 Partnering Efforts and Outsourcing Logistics ..................... 570

Case 12.1: UPS Provides Broad EC Services ................................ 570 Integrated Global Logistics Program .................................. 572 Order Fulfi llment in Make-to-Order and Mass Customization ..................................................................... 572 Handling Returns (Reverse Logistics) ................................ 573 Order Fulfi llment in B2B .................................................... 574 Innovative E-Fulfi llment Strategies ..................................... 575

Case 12.2: Dell’s World-Class Supply Chain and Order Fulfi llment System ......................................................................... 576

Integration and Enterprise Resource Planning .................... 577 12.4 RFID and CPFR as Key Enablers in Supply

Chain Management ............................................................. 578 The Essentials of RFID ....................................................... 578 RFID Applications in the Supply Chain Around the Globe ................................................................ 579 Collaborative Planning, Forecasting, and Replenishment .............................................................. 581

Case 12.3: Stanley Black & Decker’s Collaborative Success with Lowe’s and Home Depot ....................................................... 581 12.5 Other E-Commerce Support Services ................................. 583

Consulting Services ............................................................. 583 Directory Services, Newsletters, and Search Engines......... 583 More EC Support Services .................................................. 584 Outsourcing EC Support Services ....................................... 585

Managerial Issues ........................................................................... 586 Closing Case: Multichannel Retailers – Experiences of Nordstrom and REI .................................................................... 590 Glossary ......................................................................................... 592 References ...................................................................................... 592

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Part V E-Commerce Strategy and Implementation

13 EC Strategy, Globalization, and SMEs ...................................... 597 Opening Case: Procter & Gamble’s E-Commerce Strategy .......... 597 13.1 Organizational Strategy: Concepts and Overview .............. 600

Strategy in the Web Environment........................................ 600 Porter’s Five Forces Model and Strategies as Infl uenced by the Internet and EC .................................. 600 The Impact of the Internet ................................................... 601 Strategic Planning for IT and EC ........................................ 602

13.2 The Strategy and Performance Cycle and Tools ................. 603 Strategy and Performance Cycle ......................................... 603 Strategy Initiation ................................................................ 603 Strategy Formulation ........................................................... 604 Strategy Implementation ..................................................... 605 Strategy Assessment ............................................................ 605 Performance Improvement and Innovations ....................... 605

Case 13.1: Warner Music Group’s Digital Strategy ....................... 605 Major Tools for Strategic Planning ..................................... 606

13.3 E-Commerce Strategy Initiation ......................................... 606 Representative Issues in E-Strategy Initiation in E-Commerce ................................................................... 607 Strategy in the Web 2.0 Environment and in Social Networking .................................................... 609

13.4 E-Commerce Strategy Formulation .................................... 610 Selecting E-Commerce Opportunities................................. 610 Determining an Appropriate EC Application Portfolio Mix ....................................................................... 610 Risk Analysis in Strategy Formulation ............................... 611 Collaborative Efforts in Strategy Formulation .................... 612

Case 13.2: Red Hat: Collaborative Strategic Planning .................. 612 Security Issues to Consider During Strategy Formulation ......................................................................... 613 Other Issues in E-Commerce Strategy Formulation ......................................................................... 613

13.5 E-Commerce Strategy Implementation ............................... 615 E-Commerce Strategy Implementation Process ....................... 615 E-Commerce Strategy Implementation Issues ....................... 616 Redesigning Business Processes: BPR and BPM ............... 617

13.6 E-Commerce Performance Assessment .............................. 618 The Objectives of Assessment ............................................ 618 The Performance Assessment Process ................................ 618 Establish and Use Metrics ................................................... 619 Monitoring Performance ..................................................... 621 Analyzing Performance Data .............................................. 621 Defi ning EC Analytics ........................................................ 622 Web Analytics and Its Major Tools ..................................... 622

13.7 Performance Improvement and Innovation ......................... 623 An Overview of Performance Improvement ....................... 623

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Dashboards in E-Commerce ............................................... 624 Innovation for Performance Improvement .......................... 624 Innovative Strategies: Some Illustrative Examples ............. 625

13.8 A Strategy for Global E-Commerce .................................... 626 Benefi ts and Extent of Global Operations ........................... 627 Barriers to Global E-Commerce.......................................... 627 Breaking Down the Barriers to Global E-Commerce ......... 630

13.9 E-Commerce Strategy for Small and Medium-Sized Enterprises ........................................................................... 631 Globalization and SMEs ..................................................... 633 Resources to Support SME Activities in EC ....................... 633 SMEs and Social Networks ................................................. 634

Managerial Issues ........................................................................... 634 Closing Case: Innovative Web Auction Strategy Nets Higher Productivity for Portland Fish Exchange ........................... 639 Glossary ......................................................................................... 641 References ...................................................................................... 641

14 Implementing EC Systems: From Justification to Successful Performance ........................................................... 645 Opening Case: Telstra Corporation Helps Its Corporate Customers Justify EC Initiatives .................................................... 646 14.1 The Implementation Landscape .......................................... 647

The Major Implementation Factors ..................................... 647 14.2 Why Justify E-Commerce Investments? How Can

They Be Justifi ed? ............................................................... 648 Increased Pressure for Financial Justifi cation ..................... 648 Other Reasons Why EC Justifi cation Is Needed ................. 649 EC Investment Categories and Benefi ts .............................. 649 How Is An EC Investment Justifi ed?................................... 650 What Needs to Be Justifi ed? When Should Justifi cation Take Place? ..................................................... 650 Using Metrics in EC Justifi cation ....................................... 650 Web Analytics ..................................................................... 651

14.3 Diffi culties in Measuring and Justifying E-Commerce Investments .......................................................................... 652 The EC Justifi cation Process ............................................... 652 Diffi culties in Measuring Productivity and Performance Gains ....................................................... 653 Relating EC and Its Expenditures to Organizational Performance............................................ 653 Intangible Costs and Benefi ts .............................................. 653 The Process of Justifying EC and IT Projects ..................... 654 The Use of Gartner’s Hype Cycle ....................................... 654

14.4 Methods and Tools for Evaluating and Justifying E-Commerce Investments ................................................... 656 Opportunities and Revenue Generated by EC Investments............................................................... 656

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Methodological Aspects of Justifying EC Investments ................................................................. 656 Traditional Methods for Evaluating EC Investments ........ 656 ROI Calculators ................................................................. 657 Advanced Methods for Evaluating IT and EC Investments ........................................................... 658

14.5 Examples of E-Commerce Metrics and Project Justifi cation ....................................................................... 659 Justifying E-procurement .................................................. 659 Justifying Social Networking and the Use of Web 2.0 Tools ............................................................... 660 Justifying an Investment in Mobile Computing and in RFID ....................................................................... 660 Justifying Security Projects ............................................... 660 Justifying Buying Products or Services from Vendors ..... 661

14.6 The Economics of E-Commerce ....................................... 661 Reducing Production Costs ............................................... 661 Increased Revenues ........................................................... 663 Facilitating Product Differentiation .................................. 664 EC Increases Agility ......................................................... 664 Valuation of EC Companies .............................................. 664

14.7 A Five-Step Approach to Developing an E-Commerce System .................................................... 665 The Essentials of the SDLC: An EC Application ............. 666 Managing the Development Process ................................. 667

14.8 Development Strategies for E-Commerce Projects ........... 668 In-House Development: Insourcing .................................. 669 Buy the Applications (Off-the-Shelf Approach) ............... 669 Outsourcing EC Systems Development and Applications................................................................ 669 Leasing EC Applications: Cloud Computing and Software as a Service (SaaS) ...................................... 670 Other Development Options .............................................. 671 Selecting a Development Option ....................................... 671

14.9 Organizational Impacts of E-Commerce ........................... 672 Improving Direct Marketing and Sales ............................. 672 Transforming Organizations and Work ............................. 672 Redefi ning Organizations .................................................. 673 Change Management ......................................................... 675 How to Organize an EC Unit in a Company ..................... 675

14.10 Opportunities for Success in E-Commerce and Avoiding Failure ......................................................... 676 Factors that Determine E-Commerce Success ..................... 676 E-Commerce Successes .................................................... 676 Cultural Differences in EC Successes and Failures ....................................................................... 678

Managerial Issues ........................................................................... 679 Closing Case: Memphis Invest Excels Thanks to E-Commerce .... 684

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Glossary ......................................................................................... 685 References ...................................................................................... 686

15 E-Commerce: Regulatory, Ethical, and Social Environments ................................................................................ 689 Opening Case: Why Was Disney Funding Chinese Pirates? ......... 689 15.1 Ethical Challenges and Guidelines...................................... 691

Ethical Principles and Guidelines ....................................... 691 Business Ethics.................................................................... 691 EC Ethical and Legal Issues ................................................ 692

15.2 Intellectual Property Law and Copyright Infringement ...... 694 Intellectual Property in E-Commerce.................................. 694 Fan and Hate Sites ............................................................... 697

15.3 Privacy Rights, Protection, and Free Speech ...................... 697 Social Networks Changing the Landscape of Privacy and Its Protection ............................................... 698 Privacy Rights and Protection ............................................. 698 Free Speech Online Versus Privacy Protection ................... 699 The Price of Protecting an Individual’s Privacy .................. 700

Case 15.1: School Administrators Used Webcams to Spy on Students at Home ............................................................... 701

How Information About Individuals Is Collected and Used Online .................................................................. 701 Privacy Protection by Information Technologies ................ 704 Privacy Issues in Web 2.0 Tools and Social Networks ........ 704 Privacy Protection by Ethical Principles ............................. 705 Privacy Protection in Countries Other than the United States ................................................................. 705

15.4 Other EC Legal Issues ......................................................... 706 Selected Legal and Regulatory Environment: E-Discovery and Cyberbullying .......................................... 706

15.5 Consumer and Seller Protection from Online Fraud ........... 707 Consumer (Buyer) Protection ............................................. 707 Seller Protection .................................................................. 710 Protecting Both Buyers and Sellers: Using Electronic Signatures and Other Security Features .............................. 711

15.6 Public Policy, Taxation, and Political Environments .......... 711 Net Neutrality ...................................................................... 711 Taxation of EC Transactions ............................................... 712 Internet Censorship by Countries ........................................ 713

15.7 Societal Issues and Green EC ............................................. 713 The Digital Divide ............................................................... 713 Telecommuting .................................................................... 713 Green EC and IT ................................................................. 714 Other Societal Issues ........................................................... 716

15.8 The Future of E-Commerce ................................................ 717 Integrating the Marketplace with the Marketspace ............. 718 M-Commerce ...................................................................... 718

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Social Commerce ................................................................ 718 Future Technological Trends that May Accelerate the Speed of E-Commerce ................................ 718 Future Trends That Are Limiting the Spread of EC ............ 718 Enjoy Some Interesting Videos About the Future of E-Commerce ................................................................... 719

Managerial Issues ........................................................................... 719 Closing Case: The Pirate Bay and the Future of File Sharing ....... 724 Glossary ......................................................................................... 727 References ...................................................................................... 728

16 Launching a Successful Online Business and EC Projects ...... 731 Opening Case: I Am Hungry: Cheap Eats Is Not the Solution ...... 732 16.1 Getting into E-Commerce and Starting

a New Online Business ....................................................... 734 Getting into E-Commerce ................................................... 734 Starting a New Online Business .......................................... 734 An E-Startup Is a Startup .................................................... 734 Creating a New Company or Adding an Online Project ..... 735

Case 16.1: Innovation and Creativity at Amazon.com .................. 735 Planning Online Businesses ................................................ 737 Funding a New Online Business ......................................... 738

16.2 Adding E-Commerce Initiatives or Transforming to an E-Business .................................................................. 740 Adding EC Initiatives to an Existing Business ......................... 740 Transformation to an E-Business and Social Business ....... 741

16.3 Building or Acquiring a Website ......................................... 742 Classifi cation of Websites ................................................... 742 Building a Website .............................................................. 743

16.4 Website Hosting and Obtaining a Domain Name ............... 745 Web Hosting Options .......................................................... 745 Selecting and Registering a Domain Name ........................ 746

Case 16.2: Alibaba.com Opens Doors to E-Commerce Entrepreneurs ........................................................... 746

Where Technology Meets Business .................................... 746 16.5 Web Content Creation and Management ............................ 747

Categories and Types of Content ........................................ 747 Content Management and Maintenance .............................. 748 Catalog Content and Its Management ................................. 748

16.6 Website Design .................................................................... 749 Information Architecture for a Website .............................. 749 Site Navigation .................................................................... 750 Performance (Speed) ........................................................... 751 Colors and Graphics ............................................................ 751 Website Usability ................................................................ 751 Software for Helping Web Designers .................................. 752

16.7 Providing E-Commerce Support Services .......................... 752 Who Builds the Website? .................................................... 752

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Payments: Accepting Credit Cards ..................................... 752 Website Promotion .............................................................. 753 An Example: How Does Baidu Succeed? ........................... 753

Case 16.3: EC Application: Baidu’s Strategies for Success ......... 753 Customer Relationship Management (CRM)...................... 755

16.8 Opening a Webstore ............................................................ 755 Options For Acquiring Webstores ....................................... 755 Yahoo! Small Business ........................................................ 757

Managerial Issues ........................................................................... 757 Closing Case: Facebook: A College Project that Took the World by Storm ........................................................ 761 Glossary ......................................................................................... 763 References ...................................................................................... 764

Index ...................................................................................................... 767

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