Page 384 - Introduction to Electronic Commerce and Social Commerce

Managerial Issues 371

from any channel, as well as fulfill orders from anywhere 5. Should we outsource our payment gateway service? It
(e.g., distribution centers, stores and branches, manufac- takes time, skill, money, software, and hardware to build
turers (drop-ships), 3PLs, and vending machines). For and maintain a comprehensive self-payment system. For
most retailers, this will obviously require substantial this reason, even a large online business usually out-
redesign of their payment and order fulfillment systems, sources its e-payment service. Many third-party vendors
as well as the redesign a number of processes and systems provide comprehensive payment gateways. Furthermore,
along their supply chains. if a website is hosted by a third party (e.g., Yahoo! Stores),
2. What payment methods should you support? Many an e-payment service will already be provided by the
EC merchants in the USA who are focused primarily on host.
domestic sales can get by supporting only payments made 6. Should we accept virtual currencies as a form of pay-
by card or PayPal. It’s the same way for many merchants ment? Even though there a variety of virtual currencies,
in other parts of the world, although the alternative to this question really translates into “should we accept
cards is likely to be some other digital payment system Bitcoin?” A number of merchants have answered in the
besides PayPal. However, there are a number of excep- affirmative because the transaction fees are minimal and
tions like China where cards are rarely used and other there are no charge backs. Yet, the lower cost does not
countries where cash payments (COD or direct withdraw- eliminate the facts that bitcoins are not backed by any
als) are widely used. The implication is that if you plan to government agency, that there are potential issues with
expand your EC business by encouraging cross-border determining the taxes assessed to bitcoin payments, and
purchases, then at a minimum you will need to accept a that the exchange rates can fluctuate substantially and
variety of payment methods. The studies also point out depend on the usage and country of payment. Bottomline,
that successful sites support multiple languages, curren- if you plan to accept bitcoins, then you need to carefully
cies, and access devices along with pages customized for determine the associated risks.
particular countries, simplified checkout processes, and 7. How secure are e-payments? Security and fraud con-
free shipping to name a few. tinue to be major concerns in different online e-payments.
3. What micropayment strategy should your e-market- This is true with regard to the use of credit cards for
place support? If your EC site sells items priced less online purchases, especially for cross-border purchases.
than $10, credit cards are not a viable solution. Many B2C merchants are employing a wide variety of tools
digital content products cost less than $1. For small-value (e.g., address verification and other authentication ser-
products, micropayments should be supported. Fees may vices) to combat fraudulent orders. These cannot be used
be taken from a prepaid account that is connected to the in isolation but need to be an integral part of a business
buyer’s bank account or credit card, or the fee may be security program (Chapter 10). For more on payment
charged to the buyer’s cell phone bill. The use of stored- security, see European Banking Authority (2014).
value smart cards on the Internet has emerged, but has not 8. If you are an EC vendor, what are the bottlenecks in
widely penetrated the market because buyers need to your order fulfillment process? Order fulfillment is an
install the card reader/writer. Companies should support important task, especially for e-tailers. Issues arise with
multiple options so that customers can choose their pre- order fulfillment along the entire supply chain, not just
ferred payment method. with the physical shipment of the order. To enhance the
4. Which mobile systems could influence your business? order fulfillment process, vendors need to identify the spe-
Over the next few years, the market for smartphones will cific bottlenecks impeding various steps in their process.
continue to grow and may eventually become the primary Potential issues are delayed delivery date, high return rate,
way that people pay for digital and physical goods, both high inventory cost, high shipping cost, and poor integra-
online and off. Mobile payments have the potential to tion along the supply and demand chains.
replace the direct use of credit and debit cards, as well as 9. How should we manage returns? Dealing with returns
cash. At the present time, mobile payment technologies is important for CRM, yet may not be simple. Reverse
and protocols are in a state of flux, making it difficult to logistics is very costly, and most companies will fail if
decide which systems to adopt. The key is to determine the return rate is too high. Use the CRM system to iden-
which forms of mobile payment are required for a tify the items with higher return rates and resolve the rea-
particular business—remote or proximate—and, in the son or stop the online sales of these items. A company
short term, rely on those vendors and organizations that should estimate its percentage of returns and plan a pro-
already have a strong presence in the online world (for cess for receiving and handling them. The logistics of
instance, PayPal or the protocols and systems supported returns may be executed through an external logistics
by major credit card vendors). service provider.