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Chapter Extension 11 E-Commerce © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Study Questions CE11-2 What is e-commerce? How does e-commerce improve market efficiency? What economic factors disfavor e-commerce? What Web technology is used for e-commerce? What is three-tier architecture? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke What Is E-Commerce? Buying and selling of goods and services Over public and private computer networks Merchant companies – – Non-merchant companies – – – CE11-3 Take title to goods they sell Sell their own services Do not own goods Arrange for purchase and sale Sell services of others © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke E-Commerce Merchant Companies B2C – – – Business-to-consumer Sales between supplier and retail costumer Web storefront application employed B2B – – CE11-4 Customers enter site Manage orders Business-to-business Sales between companies © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke E-Commerce Merchant Companies, continued B2G – – CE11-5 Business-to-government Sales between companies and government agencies © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke B2B, B2G, and B2C Figure CE11-2 CE11-6 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Non-Merchant E-Commerce E-commerce auctions – – – Clearinghouses – – – – CE11-7 Online versions of standard auctions Supports competitive bidding Example: eBay Provide goods and services Arrange for delivery Do not take title Example: electronic exchanges © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke How Does E-Commerce Improve Market Efficiency? For buyers: – Leads to disintermediation – Improves flow of price information CE11-8 Elimination of middle layers in supply chain Distributor and associated inventories are unnecessary waste Many sites offer price comparisons Avoid state tax Eliminate or reduce shipping expenses © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke How Does E-Commerce Improve Market Efficiency?, continued For sellers: – Produces information about price elasticity CE11-9 Amount that demand rises and falls based on price changes Allows companies to experiment on customers Allows management of prices through direct interaction © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke E-Commerce Market Consequences Figure CE11-4 CE11-10 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke What Economic Factors Disfavor E-Commerce? Companies consider: – Channel conflict – Price conflict – Costs of entering and processing small quantities increases Customer service expense CE11-11 Price offered online may cause conflicts with existing channels Logistics expense – Value of lost sales must be less than value of e-commerce sales Manufacturer will have to service small customers on one-byone basis © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke What Web Technology Is Used for E-Commerce? SMTP – FTP – E-mail File exchange HTTP – – Transmits Web pages over the Internet Web pages encoded in HTML CE11-12 Defines structure and layout of Web pages © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Web Pages Encoded in HTML – Tag used to define data element – – – Hyperlinks point to other Web pages Heading provides metadata about page Body contains content Transmitted by Web servers Consumed by browsers – – – CE11-13 Attribute provides properties about tag Program that processes HTTP protocol Receives, displays, and processes HTML documents Transmits responses © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke What Is Three-Tier Architecture? Commerce server applications use three-tier architecture – User tier – Service tier – Computers that run Web servers and generate Web pages Database tier CE11-14 Computers use browsers to request and process Web pages Computers that process SQL requests to retrieve and store data © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Three-Tier Architecture Figure CE11-8 CE11-15 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Active Review CE11-16 What is e-commerce? How does e-commerce improve market efficiency? What economic factors disfavor e-commerce? What Web technology is used for e-commerce? What is three-tier architecture? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke