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Title: Introduction to E-Commerce and E-Marketplaces


1
Introduction to E-Commerce and E-Marketplaces
Sharif University of Technology, Ali A. Nazari
Shirehjini shirehjini_at_sharif.edu Fall 1392
2
Learning Objectives
  1. Define Electronic Commerce (EC) and describe its
    categories
  2. Discuss the content and framework of EC
  3. Describe the major types of EC transactions
  4. Describe the digital revolution as the major
    driver of EC
  1. Describe some EC business models
  2. Describe benefits and limitations of EC
  3. Describe the contribution of EC to organizations
    responding to environmental pressure
  4. Describe social business networks

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
3
Learning Objectives
  1. Define Electronic Commerce (EC) and describe its
    categories
  2. Define e-marketplaces and list their components.
  3. List the major types of e-marketplaces and
    describe their features.
  1. Describe the various types of EC intermediaries
    and their roles.
  2. Describe electronic catalogues, shopping carts,
    and search engines.
  3. Describe the major types of auctions and list
    their characteristics.

3
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
4
Learning Objectives
  1. Discuss the benefits, limitations, and impacts of
    auctions.
  2. Describe bartering and negotiating online.
  3. Define m-commerce and explain its role as a
    market mechanism.
  1. Discuss competition in the digital economy.
  2. Describe the impact of e-marketplaces on
    organizations and industries.

4
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
5
What is Commerce?
  • Commerce com- (together) mercis-
    (merchandise).
  • 1530s, from Middle French commerce (14c.),
  • from Latin commercium "trade, trafficking,"
  • from com- "together" merx (genitive mercis)
    "merchandise
  • Source Online Etymology Dictionary, retrieved on
    29.09.2013 from http//www.etymonline.com

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
6
Traditional Commerce
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
7
Elements of Traditional Commerce
  • Products or services to sell
  • Location or storefront in which to sell
  • Marketing plan to promote and advertise
  • Way(s) to accept orders
  • Way(s) to accept payment

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
8
Electronic Commerce
  • The process of buying, selling, or exchanging
    products, services, or information via computer
    networks

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
9
Different perspectives on EC
  • Doing business electronically by completing
    business processes over networks
  • A tool to cut service costs while improving the
    quality of customer service and increasing the
    speed of service delivery
  • Enabler of online learning and training
  • Framework for inter- and intra-organizational
    collaboration
  • A gathering place for community members to learn,
    transact, and collaborate such as in social
    networks

9
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
10
What is Electronic Business?
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
11
Types of Commerce
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
12
Dimensions of Electronic Commerce
Source Choi et al. The Economics of Electronic
Commerce. In Macmillan Technical Publishing,
Indianapolis, 1997.
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
13
EC Classification
  • Pure vs. Partial
  • Partial, when at least 1 dim is electronic such
    as ordering food online
  • Pure, when no physical dimensions is involved
  • Internet vs. Non-Internet EC
  • Internet
  • Private networks (e.g., ATM)
  • LAN (e.g., using services at airports accessed
    via intranet)

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
14
Organisations
  • Brick-and-mortar (old economy) organizations
  • Primary business conducted offline
  • E.g. the super market around the corner
  • Virtual (pure-play) organizations
  • business conducted purely online
  • E.g. online gaming providing web space
  • Click-and-mortar (click-and-brick) organizations
  • Some EC activities
  • E.g., the super store around the SUT Metro
    station uses an eShop to sell food, drinks, and
    fruit

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
15
Information Systems
  • Interorganizational information systems (IOSs)
  • Communications systems that allow routine
    transaction processing and information flow
    between two or more organizations
  • Intraorganizational information systems
  • Communication systems that enable e-commerce
    activities to go on within individual
    organizations

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
16
EC Framework
17
EC Framework
EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
18
EC Framework
  • EC applications are supported by infrastructure
    and by these five support areas
  • People
  • Public policy
  • Marketing and advertisement
  • Support services
  • Business partnerships

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
19
Classification by Transaction Nature
  • Business-to-business (B2B)
  • E-commerce model in which all of the
    participants are businesses or other
    organizations
  • Business-to-consumer (B2C)
  • E-commerce model in which businesses sell to
    individual shoppers

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
20
Classification by Transaction Nature
  • E-tailing
  • Online retailing, usually B2C
  • Business-to-business-to-consumer (B2B2C)
  • E-commerce model in which a business provides
    some product or service to a client business that
    maintains its own customers

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
21
Classification by Transaction Nature
  • Consumer-to-business (C2B)
  • E-commerce model in which individuals use the
    Internet to sell products or services to
    organizations or individuals who seek sellers to
    bid on products or services they need
  • Mobile commerce (m-commerce)
  • E-commerce transactions and activities conducted
    in a wireless environment

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
22
Classification by Transaction Nature
  • Location-based commerce (l-commerce)
  • M-commerce transactions targeted to individuals
    in specific locations, at specific times
  • Intrabusiness EC
  • E-commerce category that includes all internal
    organizational activities that involve the
    exchange of goods, services, or information among
    various units and individuals in an organization

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
23
Classification by Transaction Nature
  • Business-to-employees (B2E)
  • E-commerce model in which an organization
    delivers services, information, or products to
    its individual employees
  • Collaborative commerce (c-commerce)
  • E-commerce model in which individuals or groups
    communicate or collaborate online
  • Consumer-to-consumer (C2C)
  • E-commerce model in which consumers sell
    directly to other consumers

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
24
Classification by Transaction Nature
  • Peer-to-peer (P2P)
  • Technology that enables networked peer computers
    to share data and processing with each other
    directly can be used in C2C, B2B, and B2C
    e-commerce
  • E-learning
  • The online delivery of information for purposes
    of training or education
  • E-government
  • E-commerce model in which a government entity
    buys or provides goods, services, or information
    from or to businesses or individual citizens

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
25
Classification by Transaction Nature
  • Exchange
  • A public electronic market with many buyers and
    sellers
  • Exchange-to-exchange (E2E)
  • E-commerce model in which electronic exchanges
    formally connect to one another for the purpose
    of exchanging information

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
26
Driver, Benefits, and Limitations
EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
27
Driver, Benefits, and Limitations
  • Business Pressure Drives EC

EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
28
Driver, Benefits, and Limitations
EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
29
Elements of EC
Source Habib Mir Hosseini, Course content
EBC6210, uOttawa, Ottawa, ON, Canada
EC Framework
E-Marketplaces
Overview
Definition
Business Models
Summary
30
Business Models
31
EC Business Model
  • Business model
  • A method of doing business by which a company
    can generate revenue to sustain itself

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
32
Elements of A Business Model
Customers People to be served and the companys relationships with these customers including customers value proposition
Products services That the business will offer
Business Processes required to make and deliver the products and services
Resources required and the identification of which ones are available, which will be developed in house, and which will need to be acquired
Supply Chain including suppliers and other business partners
Expected Revenue anticipated costs, sources of financing, and estimated profitability (financial viability)
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
33
Functions of a BM
  • Articulate a customer value proposition
  • Identify a market segment
  • Define the ventures specific value chain
    structure
  • Estimate the cost structure and profit potential
  • Describe the ventures positioning within the
    value network linking suppliers and customers
  • Formulate the ventures competitive strategy

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
34
EC Business Models
  • Revenue model
  • Description of how the company or an EC project
    will earn revenue
  • Value proposition
  • The benefits a company can derive from using EC

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
35
Major Revenue Models
  • Sales
  • Transaction fees
  • Subscription fees
  • Advertising fees
  • Affiliate fees
  • Other revenue sources

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
36
Typical EC Business Models
  • Online direct marketing
  • Electronic tendering systems.
  • Name your own price
  • Find the best price
  • Affiliate marketing
  • Viral marketing
  • Group purchasing
  • Online auctions
  • Product and service customization
  • Electronic marketplaces and exchanges
  • Information brokers (informediaries)
  • Bartering
  • Deep discounting
  • Membership
  • Value-chain integrators
  • Value-chain service providers
  • Supply chain improvers
  • Social networks, communities, and blogging
  • Direct sale by manufacturers
  • Negotiation

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
37
Typical EC Business Models
  • Tendering (bidding) system Model in which a
    buyer requests would-be sellers to submit bids
    the lowest bidder wins
  • Name-your-own-price model Model in which a
    buyer sets the price he or she is willing to pay
    and invites sellers to supply the good or service
    at that price

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
38
Typical EC Business Models
  • Affiliate marketing An arrangement whereby a
    marketing partner (a business, an organization,
    or even an individual) refers consumers to the
    selling companys Web site
  • Viral marketing Word-of-mouth marketing in which
    customers promote a product or service to friends
    or other people

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
39
Typical EC Business Models
  • SME Small-to-medium enterprises
  • Group purchasing Quantity (aggregated)
    purchasing that enables groups of purchasers to
    obtain a discount price on the products purchased

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
40
Typical EC Business Models
  • Customization Creation of a product or service
    according to the buyers specifications

E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
41
Major Revenue Models
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
42
Benefits
  • To customers
  • Increases Choice of Vendors.
  • Enables customers to shop or do other transaction
    anytime
  • Increased amount of information on demand.
  • Allows quick delivery.
  • Facilitates competition which leads to more
    discounted prices.
  • Increased price comparison capabilities.
  • Simple method to check on order status.
  • Customization of products and services.
  • Creates virtual communities.
  • Makes it possible to participate in virtual
    auctions

42
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
43
Benefits
  • To society
  • Enables more individuals to work at home.
  • Allows consumers to do less travelling for
    shopping, resulting in less traffic on the roads,
    and lower air pollution.
  • Allows some merchandise to be sold at lower
    prices benefiting less affluent people.
  • Enables people in rural areas to enjoy products
    and services which otherwise are not available to
    them.
  • Facilitate delivery of public services

43
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
44
Benefits
  • To organisations
  • Expand the marketplace to global markets
  • Creates virtual communities.
  • Decreases the cost of creating, processing,
    distributing, storing and retrieving paper-based
    information.
  • Allows reduced inventories.
  • Provides customization of products and services.
  • Support business process reengineering efforts
  • Lower telecommunication cost

44
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
45
Limitations
  • Technical limitations
  • Lack of system security, reliability, standards
    and communication protocols.
  • Rapid developing pace of underlying technologies.
  • The need for special Web servers and other
    infrastructures, in addition to the network
    servers.
  • Insufficient telecommunication bandwidth.
  • The cost of developing an Electronic Commerce
    business in house can be very high, and mistakes
    due to lack of experience may result in delays.
  • Software development tool are still evolving and
    changing rapidly.
  • limited choices of Payment systems and universal
    e-cash

45
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
46
Limitations
  • Lack of Trust and User Resistance
  • Customers do not trust
  • Unknown faceless sellers
  • Paperless transactions
  • Electronic money
  • Switching from a physical to a virtual store may
    be difficult.
  • Security and Privacy
  • The Electronic Commerce industry has a very long
    and difficult task of convincing customers that
    online transactions and privacy are secure.

46
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
47
Limitations
  • Lack of touch and feel online
  • Many unresolved legal issues
  • Insufficiently large number of sellers and buyers
  • Breakdown of human relationships
  • Expensive and/or inconvenient accessibility to
    the Internet
  • Different Policies
  • Pricing - granularity of price (micro payment),
    pricing policy

47
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
48
Discussion Major problems of Iranian society
48
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
49
Discussion
  • Can EC help us to solve our problems?
  • Traffic congestion / reliable and efficient
    transportation
  • Unemployment / Job creation
  • Pollution
  • Fair distribution of opportunities
  • Inflation
  • Service provision in remote areas
  • Transparency in processes
  • traceability in public administration
  • reliable statistics

49
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
50
Discussion
  • Reliable transportation
  • Job creation
  • Avoiding Pollution
  • Fair distribution of opportunities
  • Reducing Inflation
  • Services for all
  • Transparency in processes
  • High quality processes
  • Traceability
  • Reliable statistics

Health Wealth Justice .. ..
50
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
51
Discussion
51
E-Marketplaces
Overview
Definition
Business Models
Summary
EC Framework
52
E-Marketplaces
53
E-Marketplace
  • An online market, usually B2B, in which buyers
    and sellers exchange goods or services
  • 3 types of e-marketplaces
  • private
  • public
  • consortia

Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
54
Elements of E-Marketplaces
  • Customers
  • Sellers
  • Products and services
  • digital products
  • Goods that can be transformed to digital format
    and delivered over the Internet
  • Infrastructure
  • Front end
  • Back end
  • Intermediaries
  • Third parties that operates between sellers and
    buyers
  • Other business partners
  • Support services

54
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
55
Functions of a Market
55
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
56
E-Marketplace
  • Front end
  • The portion of an e-sellers business processes
    through which customers interact, including the
    sellers portal, electronic catalogs, a shopping
    cart, a search engine, and a payment gateway
  • Back end
  • The activities that support online order
    fulfillment, inventory management, purchasing
    from suppliers, payment processing, packaging,
    and delivery

56
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
57
Storefronts
  • Storefront
  • A single companys Web site where products or
    services are sold
  • E-mall (online mall)
  • An online shopping center where many online
    stores are located
  • Visualization and virtual realty in shopping
    malls
  • Types of Stores and Malls
  • General stores/malls
  • Specialized stores/malls
  • Regional versus global stores
  • Pure-play online organizations versus
    click-and-mortar stores

57
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
58
Types of E-Marketplaces
  • Private E-Marketplaces
  • Online markets owned by a single company may be
    either sell-side and/or buy-side e-marketplaces
  • Sell-side E-Marketplace
  • A private e-marketplace in which one company
    sells either standard and/or customized products
    to qualified companies
  • Buy-side E-Marketplace
  • A private e-marketplace in which one company
    makes purchases from invited suppliers

58
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
59
Types of E-Marketplaces
  • Public E-Marketplaces
  • B2B marketplaces, usually owned and/or managed
    by an independent third party, that include many
    sellers and many buyers also known as exchanges

59
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
60
Information Portals
  • Information Portal
  • A single point of access through a Web browser
    to business information inside and/or outside an
    organization
  • Portal Types
  • Commercial (public)
  • Corporate
  • Personal
  • Knowledge
  • Mobile
  • Publishing
  • Voice

60
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
61
Transactions Online Auction
  • Auction
  • A competitive process in which a seller solicits
    consecutive bids from buyers (forward auctions)
    or a buyer solicits bids from sellers (backward
    auctions). Prices are determined dynamically by
    the bids
  • Traditional vs. Online Auctions
  • rapid process gives potential buyers little time
    to make a decision
  • electronic auction (e-auction) conducted online
  • Types of Auction
  • One buyer, one seller
  • One seller, many potential buyers

61
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
62
Transactions Online Auction
  • Forward auction
  • An auction in which a seller entertains bids
    from buyers. Bidders increase price sequentially
  • Reverse auction (bidding or tendering system)
  • Auction in which the buyer places an item for
    bid (tender) on a request for quote (RFQ) system,
    potential suppliers bid on the job, with the
    price reducing sequentially, and the lowest bid
    wins primarily a B2B or G2B mechanism
  • name-your-own-price model
  • Auction model in which a would-be buyer
    specifies the price (and other terms) he or she
    is willing to pay to any willing and able seller.
    It is a C2B model that was pioneered by
    Priceline.com

62
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
63
Transactions Reverse Auction Process
63
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
64
Transactions Auction
  • Double Auction (many-to-many)
  • Auctions in which multiple buyers and their
    bidding prices are matched with multiple sellers
    and their asking prices, considering the
    quantities on both sides

64
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
65
Transactions Bartering
  • Bartering
  • The exchange of goods or services
  • E-bartering (electronic bartering)
  • Bartering conducted online, usually in a
    bartering exchange
  • Bartering exchange
  • A marketplace in which an intermediary arranges
    barter transactions

65
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
66
Transactions Online Negotiation
  • Negotiated pricing commonly is used for expensive
    or specialized products
  • Negotiated prices also are popular when large
    quantities are purchased
  • Much like auctions, negotiated prices result from
    interactions and bargaining among sellers and
    buyers

66
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
67
Intermediaries in E-Markets
  • The Roles and Value of infomediaries
  • Electronic intermediaries that provide and/or
    control information flow in cyberspace, often
    aggregating information and selling it to others
  • Broker
  • is a company that facilitates transactions
    between buyers and sellers
  • Types of brokers
  • Buy/sell fulfillment
  • Virtual mall
  • Metamediary
  • Bounty
  • Search agent
  • Shopping facilitator

67
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
68
Intermediaries in E-Markets
  • Intermediaries can address the following five
    important limitations of direct interaction
  • Search costs
  • Lack of privacy
  • Incomplete information
  • Contract risk
  • Pricing inefficiencies

68
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
69
Intermediaries in E-Markets
  • e-distributor
  • An e-commerce intermediary that connects
    manufacturers with business buyers (customers) by
    aggregating the catalogs of many manufacturers in
    one placethe intermediarys Web site

69
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
70
Intermediaries in E-Markets
  • disintermediation
  • Elimination of intermediaries between sellers
    and buyers

70
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
71
Buying Process in E-Markets
71
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
72
Electronic Catalogues
  • Electronic product presentation
  • The backbone of most e-selling sites
  • Three dimensions of electronic catalogs
  • The dynamics of the information presentation
  • The degree of customization
  • Integration with business processes

72
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
73
Electronic Shopping Cart
  • An order-processing technology that allows
    customers to accumulate items they wish to buy
    while they continue to shop

73
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
74
Competitive Factors of Online Transactions
  • Lower search costs for buyers
  • Speedy comparisons
  • Lower prices
  • Customer service
  • Barriers to entry are reduced
  • Virtual partnerships multiply
  • Market niches abound
  • Differentiation and personalization

74
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
75
Competitive Forces Model
  • Model devised by Porter that says that five major
    forces of competition determine industry
    structure and how economic value is divided among
    the industry players in an industry analysis of
    these forces helps companies develop their
    competitive strategy

75
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
76
The Analysis-of-Impact Framework
76
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
77
Impacts of E-Marketplaces on B2C
  • Product promotion
  • New sales channel
  • Direct savings
  • Reduced cycle time
  • Improved customer service
  • Brand or corporate image
  • Customization
  • Advertising
  • Ordering systems
  • Market operations
  • Accessibility

77
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
78
Impacts of EC on BP and Organisations
  • Impacts on manufacturing
  • Build-to-Order Manufacturing
  • build-to-order (pull system)
  • A manufacturing process that starts with an
    order (usually customized). Once the order is
    paid for, the vendor starts to fulfill it
  • Real-Time Demand-Driven Manufacturing
  • Virtual Manufacturing
  • Assembly Lines
  • Impacts on Finance and Accounting
  • Impact on Human Resources Management and Training

78
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
79
Summary
80
EC and E-Marketplaces
  • What is EC?
  • EC Framework
  • Types and Classification
  • Business Models
  • Drivers, Benefits and Limitations
  • E-Marketplaces
  • Transactions

80
Overview
Definition
Business Models
Summary
EC Framework
E-Marketplaces
81
??????
82
Related Literature
  • Efraim Turban, H. Michael Chung, Jae Kyu Lee,
    Michael Chung. Electronic Commerce 2010 A
    Managerial Perspective. 7th Edition, Pearson ,
    ISBN 0132145383, 2009.
  • Mehdi Khosrow-Pour. Cases on Electronic Commerce
    Technologies and Applications. Idea Group
    Publishing, ISBN 1599044021, 2006..
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