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International Diploma in Computer Studies (IDCS) 2008

eCommerce

For any other enquiries please contact one of our regional offices: UK & Europe - Tel +44 (0) 161 438 6200 | Africa and the Caribbean - Tel +27 (0) 21 913 8928 East Asia - Tel +86 (0) 10 6518 9327 | Middle East and South Asia - Tel +971 (0) 4 391 2727 South East Asia - Tel +60 (0) 3 7710 5755

ISBN 1418837032

The main areas covered are as follows:

• How eCommerce is used by organisations to create new products and services, and reduce the cost of existing business processes

• The technologies used to conduct business online

• An introduction to Internet marketing and online advertising

• Business-to-business strategies

• Online auctions and virtual communities

• Planning for eCommerce, including the integration of business and technology strategies

Each chapter includes a real life business case, together with a short summary of related eCommerce failures that provide valuable lessons for the student.

This textbook provides complete coverage of the key business and technology elements of eCommerce. It is intended to introduce the student to both the theory and practice of conducting business over the Internet and World Wide Web, and does not assume any previous eCommerce knowledge or experience.

E L E C T R O N I C C O M M E R C E

Seventh Annual Edition

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E L E C T R O N I C C O M M E R C E

Seventh Annual Edition

Gary P. Schneider, Ph.D., CPA University of San Diego

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Australia • Canada • Mexico • Singapore • Spain • United Kingdom • United States

Electronic Commerce (Seventh Edition) Authorised English Reprint from the English language edition: Course Technology, a division of Thomson Learning, Inc. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage retrieval system, without permission from the publisher. ENGLISH language edition published by Galatea Training Services Limited. Copyright © 2007. ISBN: 1-418803703-2 Printed by B & Jo Enterprise Pte Ltd in Singapore.

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BRIEF CONTENTS

Preface xvii

Part 1: Introduction

Chapter 1

Introduction to Electronic Commerce 2

Chapter 2

Technology Infrastructure: The Internet and the World Wide Web 51

Part 2: Business Strategies for Electronic Commerce

Chapter 3

Selling on the Web: Revenue Models and Building a Web Presence 106

Chapter 4

Marketing on the Web 165

Chapter 5

Business-to-Business Strategies: From Electronic Data Interchange to Electronic Commerce 217

Chapter 6

Online Auctions, Virtual Communities, and Web Portals 263

Chapter 7

The Environment of Electronic Commerce: Legal, Ethical, and Tax Issues 309

Part 3: Technologies for Electronic Commerce

Chapter 8

Web Server Hardware and Software 354

Chapter 9

Electronic Commerce Software 397

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Chapter 10

Electronic Commerce Security 438

Chapter 11

Payment Systems For Electronic Commerce 493

Part 4: Integration

Chapter 12

Planning for Electronic Commerce 536

Glossary 569

Index 601

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vi Electronic Commerce, Seventh Annual Edition

TABLE OF CONTENTS

Preface xvii

Part 1: Introduction

Chapter 1 Introduction to Electronic Commerce 2 Electronic Commerce: The Second Wave 4

Electronic Commerce and Electronic Business 5 Categories of Electronic Commerce 5 The Development and Growth of Electronic Commerce 8 The Dot-Com Boom, Bust, and Rebirth 9 The Second Wave of Electronic Commerce 11

Business Models, Revenue Models, and Business Processes 14 Focus on Specific Business Processes 14 Role of Merchandising 15 Product/Process Suitability to Electronic Commerce 15 Advantages of Electronic Commerce 17 Disadvantages of Electronic Commerce 18

Economic Forces and Electronic Commerce 20 Transaction Costs 21 Markets and Hierarchies 22 Using Electronic Commerce to Reduce Transaction Costs 24 Network Economic Structures 24 Network Effects 25 Using Electronic Commerce to Create Network Effects 26

Identifying Electronic Commerce Opportunities 26 Strategic Business Unit Value Chains 26 Industry Value Chains 28 SWOT Analysis: Evaluating Business Unit Opportunities 30

International Nature of Electronic Commerce 31 Trust Issues on the Web 32 Language Issues 33 Culture Issues 34 Culture and Government 36 Infrastructure Issues 38

Summary 41 Key Terms 41 Review Questions 42 Exercises 42 Cases 43 For Further Study and Research 47

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Chapter 2 Technology Infrastructure: The Internet and the World Wide Web 51 The Internet and the World Wide Web 53

Origins of the Internet 54 New Uses for the Internet 54 Commercial Use of the Internet 55 Growth of the Internet 56 Emergence of the World Wide Web 57

Packet-Switched Networks 60 Routing Packets 60

Internet Protocols 62 TCP/IP 62 IP Addressing 63 Domain Names 64 Web Page Request and Delivery Protocols 66 Electronic Mail Protocols 66 Unsolicited Commercial E-Mail (UCE, Spam) 67

Markup Languages and the Web 68 Standard Generalized Markup Language 69 Hypertext Markup Language 70 Extensible Markup Language (XML) 76 HTML and XML Editors 81

Intranets and Extranets 82 Intranets 82 Extranets 83 Public and Private Networks 83 Virtual Private Network (VPN) 84

Internet Connection Options 85 Connectivity Overview 85 Voice-Grade Telephone Connections 86 Broadband Connections 86 Leased-Line Connections 88 Wireless Connections 88

Internet2 and the Semantic Web 92 Summary 94 Key Terms 95 Review Questions 97 Exercises 97 Cases 98 For Further Study and Research 101

Part 2: Business Strategies for Electronic Commerce