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374 11 Electronic Commerce Payment Systems and Order Fulfillment
are delivered to the customer. These can include: check- Regardless of the type of EC or source of the prob-
ing inventory for availability; determining completeness lems, many companies rely on supply chain planning
and accuracy of order; locating a warehouse with the and execution software systems to help address the
inventory; picking the items at the warehouse; arranging problems—both structure and processes. Included
for shipment; loading and transporting items ordered; among the key systems are supply chain planning sys-
and receiving acknowledgement of receipt; as well as, tem of record (SCP SOR), warehouse management
handling returns (reverse logistics). These activities are (WMS), and transportation management (TMS). Given
part of a larger supply chain that also deals with demand the complexity of most supply chain problems (order
planning, procurement, manufacturing, and replenish- fulfillment included), it can be a multi-year undertaking
ment to name a few of the other major activities. Ensuring even with the aid of these systems.
that order fulfillment is well executed so that the right
products are delivered to the right person and place in a
timely and profitable manner is a complex task whose KEY TERMS
difficulty varies by the types of product, whether third
parties are involved, and on the company’s strategies and Address Verification System (AVS)
operations models (i.e., whether the company primarily Authorization
engineers-to-order, makes-to-order, assembles-to-order, Bitcoin address
or makes-to-stock). Bitcoin private key
10. Problems in order fulfillment. Survey results indicate Blockchain
customer satisfaction has declined as a direct result of Card verification number (CVN)
problematic order fulfillment. It is a challenge to com- Contact card
panies because customers expect very short delivery Contactless (proximity) card
times, as well as very accurate orders. They also want a Convertible virtual currency
seamless experience across all of a company’s sales Cross-border e-commerce
channels both online and off-line. In B2C retail most of Digital currency
these problems arise because of uncertainties in Discount rate
demand, lack of information sharing across all the com- Electronic money
panies supply chain, inadequate logistical infrastruc- Fiat currency
ture, and inefficient financial flows (invoicing, payment, Interchange rate
collection, etc.). Merge-in-transit
11. Solutions to order fulfillment problems. There are a Micropayments (e-micropayments)
large number of solutions that are aimed at addressing Mobile payment
the problems in order fulfillment. These involve major Mobile (digital) wallet
changes to the order-taking process, improvements to Non-convertible virtual currency
the warehousing and inventory systems, as well as major Order fulfillment
changes to the structure and process of the broader sup- Payment cards
ply chain. It also involves solutions targeted to specific Settlement
problems. A case in point is the changes designed to Smart card
enable much faster fulfillment including novel Smart card reader
approaches like Amazon Prime Air which envisions Stored-value card
small package delivery by drones, or faster warehouse Third-party logistics suppliers (3PL)
picking, packing, and delivery enabled by using robots Virtual currency
to assist in the process, or using mass customization in Warehouse management system (WMS)
make-to-order fulfillment, or even faster and more
efficient handling of EC returns (e.g., return to store or
special collection stations). DISCUSSION QUESTIONS
While some of these solutions apply equally well to
B2B EC, B2B tends to be more inefficient because it is 1. Five years from now do you think credit and debit cards
more complex—larger shipments, multiple distribution will still be the primary payment method for online pur-
channels, varied shipment frequency, more complicated chases? What about cash for off-line purchases? In both
transaction paths, to name a few. Often solutions to these instances explain why or why not.
complexities require major changes to business pro- 2. What type of payment service does Boku (boku.com)
cesses, as well as the incorporation of software systems provide? How does it work? What are some of the coun-
that can automate the processes. tries where it works? Who are some of the companies