Introduction to Computer Information Systems/E-Commerce

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What is E-Commerce?[edit]

Advantages of E-Commerce

E-Commerce Electronic Shopping Cart

For businesses, the most prominent advantages to using E-Commerce are the reduced costs associated with it, the broader customer base, the increased customer satisfaction, and the potentially higher sales it produces. Because E-Commerce transactions are done through a website and not a brick and mortar store, much of the overhead associated with running a retail store is reduced. The need to pay for heating, lighting, staffing, and restocking a store is practically eliminated. This results in fewer employees and smaller facilities which in turn allows for larger capital gains. Usually, only a company headquarters is needed along with a few warehouses that can cover larger areas than a single retail store normally would. Also, more individuals can be reached through a website rather than the small geographical area that a retail store would cover. Multiple retailers are required to cover larger geographical areas, but with E-Commerce anyone anywhere can access the website at anytime! This increases the possible amount of customers dramatically. Websites also allow people to shop from the comfort of their own home without having to consume time and money (gas) to view a companies products in their retail store. Plenty of times have people gone to the store for a specific item only to be disappointed that it wasn't in stock. With E-Commerce this doesn't happen. The comfort provided, the time saved, and the money saved can easily increase the satisfaction of the consumer. The potentially higher sales is another advantage. By using E-Commerce, a business can be open every hour of the year and accessible to everyone across the globe. They're no longer limited by a geographical area or a 40 hr work week.[1]

For Consumers, the greatest advantages lie in it's convenience, selection, customization, price comparison, and potential cost savings. As mentioned above, the convenience of shopping from home (in your underwear if you like) is very appealing to many consumers. Shopping can be done during anytime of the day or night through the use of a website and it's no longer a necessity to rush home from work to buy an item before its store closes. A person can also compare the prices, quality, and features of multiple items from multiple stores. Their selection is no longer limited to the facilities closest to them, but to their attention span. Before, consumers would drive from store to store comparing these characteristics before driving back to make their final purchase. The time, effort, and expense involved in this type of comparison is nullified through E-Commerce. Many individuals want to make their purchases unique to their preferences. With the option to communicate with a company directly through their site instead of buying a pre-manufactured item on a store shelf, the ability to customize the item they are looking for is greatly improved. The company can take the order and payment while putting it through to the warehouse so that the final product to be shipped is tweaked to the consumer's desire. Also, the ability to save on cost is increased for the consumer using E-Commerce. The person can compare prices to find the lowest and often the item can be shipped to their front door for less than it would normally have taken to find it in a motor vehicle. They say time is money, so if your spending less time looking for what you need then you can potentially spend more time working for what you want.[2]

Disadvantages of E-Commerce

Wikimedia Servers-0051 19

As mentioned above, there are a lot of advantages, but it is not perfect. One of these disadvantages is that those who are running the site must keep the site open 24/7 since at any point it is morning somewhere in the world. This takes money to run the servers, and takes money to pay the programmers to make the site in the first place. Also a business that is running a site should make it interesting by having something change, like having a daily deal like Newegg[3] or return coupons like Kohls[4], otherwise people may not return to the site. Another disadvantage is that anyone can make a website, driving competition and prices. So some sites may spend extra money on multimedia for some extra allure.

As a customer shopping online I always fear someone may be stealing my credit card number and even my identity. But with safe practices online you can avoid this fairly well, yet the risk still looms around. Also if you are buying clothes online, you can't physically touch nor have the ability to try to see if they would fit in the first place. Sure you can ship it back, but that could be expensive.

E-Commerce Business Models[edit]

Four E-Commerce Business Models[edit]

Online Shop

There are four types of E-Commerce business models. The four types of E-Commerce business models are B2C which stands for Business-to-Consumer, B2B which stands for Business-to-Business model, C2C which stands for Consumer-to-Consumer, and B2G which stands for Business-to-Government. When working, selling, or buying with any of these models, it is important to be familiar with what each model contains. B2C represents most of E-Commerce websites. Businesses that sell to consumers are considered B2C. Online stores and shopping are all examples of B2C. B2B are businesses selling products to other businesses. B2B are usually larger companies that are supplying a service to other businesses. For example, office max is a business that sells office supplies to other businesses. Also, they are almost always doing business over the web. C2C is a website that consumers sell to other consumers. People are brought together to sell and buy products for this model. For example, EBay is a common place for consumers to sell and buy items. B2G consists of businesses working with the government. For example, the IRS is a way for businesses to pay their taxes through the web. These four E-Commerce business models are very common in this day-in-age. [5]

E-Commerce Web Sites[edit]

Manufacturer and E-Tailer Sites[edit]

An example of a manufacturer site

Manufacturer and E-tailer sites are basically just companies that can sell their product directly to their customers via a website. [6] They are just online stores. Most websites like this have an online catalog of their products for the consumer to look at and choose their desired product. Then if the product is shipped to the home there is a shipping fee, or some products like music or books can just be directly downloaded. This would include websites like,, or

Subscription Sites[edit]

An example of a subscription site

Subscription sites are an online product that a consumer purchases and pays periodically and then receives the product periodically via the Internet. An example would be Netflix, which is a monthly fee and then you can receive streaming of movies or TV shows through the Internet. Some sites are considered subscription sites even if they don’t require a monthly fee. They may just require you to subscribe to their site to receive all the information provided. [7]

Brokerage Sites[edit]

Online Auction Site example

A Brokerage Site is used to bring sellers and buyers together to simplify transactions between the two. The site earns revenue as a form of commission for every sale it incurs. Online auction sites are examples of brokerage sites, in that they enable consumers to buy and sell goods and services to one another. The site acts as a median between the two. One clear example of this is eBay. Business online auction sites are online auctions sites that are mostly for business transactions. An automatic bidding system is used by eBay so that consumers can easily keep up with the bidding process if he or she wishes to make a bid on a specific item. There are rules put in place so that every bidder is treated the same. A dynamic pricing site can be used instead of online auction sites. is an example of how this works: buyers are allowed to bid on items for sale, and the seller can then make the final decision of who shall receive the item. Financial brokerage sites are also used between buyers and sellers for stock, bonds, opinions, and more. These sites earn money by charging for each transaction. Real estate and travel are other types of brokerage sites. A market exchange site matches organizations with different goods or services to sell with buyers and to help the buyers look for specific items that the suppliers can provide.Commodity exchanges are sometimes used when dealing with natural resources and raw goods.

Implementing E-Commerce[edit]

Business Models & E-Commerce Applications[edit]

Like this smiling tech support worker, you need to have be both innovative and eager to please if you hope to get your online business off the ground.

If you're a business owner living in today's technological age, your eye is surely on expansion through e-commerce. Whether you are the owner in question who is tech-savvy enough to build your own site, or a third-party Web page developer, there are 5 rough steps to keep in mind to ensure the success of your e-commerce endeavors.

The first of these steps is to just figure out what your website hopes to accomplish. You can either pick one model (such as B2B, or Business to Business) or combine a few of them depending on your ambition and the needs of your business. Within this model, you also need to be making decisions such as whether your site will be taking a Storefront approach (basically being an online version of a physical store) a Subscription approach (where customers pay for premium content that is web-only), or even Affiliate Marketing (where your business would sell the products of another business for a commission).[8] As you browse the Web and study the models of your competitors you'll get a good idea about what is and isn't the goal of the e-commerce site you're creating.

The next important step is deciding on the applications of your e-commerce page. If you're a business owner creating a Web page, it's a given that one part of your site will be online selling, but there are ways you can establish the name of your company that go above and beyond so your customers will remember you in a positive light and keep coming back, hopefully with their friends and family in tow. These extra features are called e-commerce applications and they can range from merely providing in-depth product information to providing technical support, or even letting them track online purchases through the mail. For the adventurous and creative developers, you can program games, surveys, and even music, all for the sake of providing a more intriguing online shopping experience.[9]

Effective E-Commerce Websites[edit]

E-commerce is something we are bombarded with on a daily basis. Any time that we go to the internet we are almost guaranteed to see an ad or access some kind of site that is selling something to consumers. Whether or not we choose to click and access these sites is another story. Although, when we do, there are a few things that these sites can take advantage of to try to ensure user purchases are made. Firstly, these sites are going to want to look appealing to the group they are advertising to (e.g. a website selling kids toys would want to be colorful and full of pictures not just plain black and white text with limited images). Next, it is important that the website be user friendly. This involves: easy navigation, pages loading in a timely manner, and having some special perks like a search box or a dropdown of links to all the main pages on the site. While these are not necessary things to create a website, they are useful things for websites to contain in order to satisfy visitors. Other helpful, but not necessary, things to include are contact information, special promotions, and even social media links so customers can share about their experience with the site[10].

In the realm of E-commerce, there are two things that are very important: the shopping cart and security when processing transactions. Have you ever bought (or tried to buy) something from a site and had a hard time finding the shopping cart? Or have you had trouble editing the items in your shopping cart? These problems are big E-commerce no-no's and something most sites do try to avoid. However, they do still happen. The shopping cart is something that, ideally, would be accessible and easy to find from any page on a website, and once you are looking at the items in your cart, it should be simple to modify the items (add or delete products). Another thing that E-commerce sites should do is ensure that their checkout page is in fact secure. When purchases are made online, most people use their credit/debit cards to pay for their items. With the number of people in the world who know how to hack computer systems or decrypt code, it is important that websites ensure the security of such important personal information. Without this security there would be virtually no way to protect yourself from credit fraud or identity theft. While there are still ways for people to access the information, it is much harder to access it from a secured site. There are a few ways to check a sites security including the "http://" section of a URL being green in color, the URL beginning with "https" instead of just "http", as well as the security certificates that most secure sites will post on their pages to advertise their security to their customers.

E-Commerce Sales and Marketing Strategies[edit]

Click Fraud[edit]

Click Fraud

Click fraud is an illegal practice that occurs when individuals click on the Web site’s advertisements in order to increases the number of click through to the advertiser. The individuals who use click fraud use it in order to increase their own personal banner ad revenues and also by companies who use click fraud as a way to deplete a competitor's advertising budget. Click fraud was once known to be a very large problem within paid searches in which Google was first introduces with the invalid click to be known as a metric. A metric was intended to provide some insight into how much fraud was occurring and ease the minds of advertisers. Google identifies three areas they determine to be invalid clicks: Manual clicks intended to increase your advertising costs or to increase profits for website owners hosting your ads, Clicks by automated clicking tools, robots, or other deceptive software, Extraneous clicks that provide no value to the advertiser, such as the second click of a double-click. The difference between then and now and the source of the invalid clicks of today. Click fraud still occurs in paid search, and at some level always will. However, the engines at this point do a solid job at monitoring the problem. The issue for search marketers is to ensure the metrics don't go out of whack from a normal level of variance. Meanwhile the focus will be on emerging media types where fraud is ahead of the development curve.[11]

Procedures for Handling Electronic Financial Transactions[edit]

Learn to do it safely

There are different ways an e-commerce site can set up payment options, and it is important to understand what type of payment option is best for the nature of the site. Credit cards, debit cards, PayPal, Bill Me Later, and gift cards are the most common payment options used by e-commerce sites. Payment by credit/debit card is the dominant method. Businesses usually open an e-commerce merchant account to allow for these payments. For payment with credit, a buyer makes a transaction with the credit card where money is then transferred from the credit credit card company to the merchant account. For debit cards, money is simply taken from the checking account and transferred to the merchant account. Businesses pay fees to the banks for this service. A relatively new system is for consumers to use low-cost card-swipe devices that enable merchants to get by the higher rates when the card is not physically present. Airline and travel sites are some businesses currently taking advantage of this method.

Virtual account numbers, smart cards and prepaid credit cards are all used to better improve the security and safety of both the transaction process and the account information of the card holder. These cards can be secured with a PIN and/or a one-time password (OTP) to decrease the chances of a hacker obtaining account information.

Online payment services, like PayPal, and the use of gift cards, coupons and digital gift certificates are two other popular payment options. PayPal allows individuals to transfer money from their online payment account to another, and it is the prefered payment method for transactions on Ebay.[12] This type of service is prefered because it does not require consumers to reveal their credit card numbers to the merchants, and merchants pay lower fees than conventional credit and debit card purchases. Lastly, gift cards, coupons, and digital gift certificates allow gift recipients to select their own items at an online store. These can be purchased in physical or digital form where the codes are then entered in the checkout process. Also, coupons are becoming much more popular with the increasing use of mobile phones.

Driving Business through Meta Tags[edit]

Drive your search engine business through meta tags!

Keeping and maintain your company’s website is very important in working towards driving business. Many of us, when we search the Internet, are not just going directly to one specific page. We want to browse and find what pages pull up for the topic in which we are searching for. That is why most of us use search engines such as Google, Yahoo, etc. The problem is, you need to make sure that your getting business and traffic from these searches. Most of the time, people don’t make it past the second page of results to find what they are looking for, so what does a company need to do to make its page relevant? They use meta tags. Basically, these meta tags are things which they know people would be searching to come across a website such a theirs. For example, for a hair salon’s website, they would meta tag things such as haircuts, hairstyles, and many more. This ensures that when someone is using a search engine to find something and they use your meta tag keywords, your business’s web page is going to pop up right with it. This is crucial to making sure that the page is getting the traffic that it needs to drive business. [13]

Anticybersquatting Consumer Protection Act[edit]

Trademark symbol

Domain names are unique and are registered through an official domain name registrar. This forces businesses to come up with a very unique website domain name that will only attract their customers. Some people try to register domain names in the hopes of stealing profit from a company or another person, but this is actually illegal. The Anticybersquatting Consumer Protection Act protects businesses trademarks in cyberspace, by making it illegal for others to create a confusingly similar domain name with the intent to profit off the trademark without regards to the goods or services of the original trademark owner. This can be related to the recent news of Johnny Manziel’s friend trying to trademark “Johnny Football” in the hopes of profiting off of Johnny Manziel’s legacy. The only difference is that the ACPA affects online domain names instead of the actual trademark. There are many factors that are considered when a domain name is registered. This includes if the domain name is the legal or nickname of the registrant, if the registrant has a trademark of the same name, if the intent of the website is to harm the trademark owner’s good will, if the registrant resells the domain name without having ever used it for the sell of goods or services, and multiple more factors. All of this has come into fruition to help protect trademark owners from being scammed out of their rightful profit and to stop people of ill will from buying a wrongful domain name. [14]

Search Engine Optimization[edit]

Getting to the top of Google results is important.

Search site optimization is one way that a website can make themselves more easily found online when being searched for through search engine websites like Google. Typically, the most popular website with the most relevant information based on the searched keywords is displayed as the top result. To optimize a website, one can edit the content of the website itself and the HTML code so that when the search engine is crawling through its database that page is determined to be more relevant. Another way of optimizing a website is through increasing the amount of backlinks, or incoming weblinks that lead to that page. The more back links that a website has, the more popular the website is to the search engine. In the modern world, search engine optimization is a huge deal for any businesses that are trying to promote themselves on the internet. Regardless of the size and content of a website, proper search engine optimization can get any web page to the top of the search results, which would therefore increase the overall visits to that site. [15] Most users of search engines do not look much farther than the first few results or the first page, making it crucial for any company trying to break into the business and beat the competition to be amongst those results. [16]


brick-and-mortar store A conventional store with a physical presence.

brokerage site A type of Web site that brings buyers and sellers together to facilitate transactions between them; the site earns revenue in the form of commissions on sales made via the site.

digital wallet A program or online service that holds a buyer’s information (such as electronic payment, billing, and shipping information) that can be used to speed up online purchase transactions.

dot-com An Internet-only store with no physical presence.

e-commerce The act of doing business transactions over the Internet or similar technology.

meta tag A special HTML or XHTML tag containing information about a Web page that is added by the person creating the Web page and is used primarily by search sites.

online auction site A Web site where potential buyers bid on an item and, at the end of a set time period, the highest bidder buys the item as long as all bidding criteria (such as minimum selling price) have been met.

online payment service A type of payment service accessed via the Internet and used to make electronic payments to others, such as via deposited funds, a bank account, or a credit card.

search site optimization (SSO) The process of evaluating a Web site and making changes to improve search site results.

shopping cart software E-commerce software designed to add ordering capabilities to an existing Web site.

storefront software E-commerce software that facilitates the creation of an online store.

subscription site A site that sells access to its online content.

Review Questions[edit]

1. What is the process of evaluating a web site to improve the search site results?

2. What is a program that holds a buyer’s information?

3. What is a type of Web site that brings buyers and sellers together to facilitate transactions between them?

4. What is a special HTML tag containing information about a Web page?

5. What is a web site where potential buyers bid on an item?

6. What is a type of payment service accessed via the Internet which are made to make electronic payments to others?

7. What is E-commerce software that facilitates the creation of an online store?

8. What is a site that sells access to its online content?

9. What is a type of Web site that brings buyers and sellers together to facilitate transactions between them?

10. What is a conventional store with a physical presence?

Answers: 1. search site optimization 2. digital wallet 3. brokerage site 4. meta tag 5. online auction site 6. online payment service 7. storefront software 8. subscription site 9. brokerage site 10. brick-and-mortar store