01_Introduction to E-Commerce

8/4/2019 01_Introduction to E-Commerce

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Introduction to E-Commerce



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• Electronic commerce (e-commerce) – E-commerce refers to the use of electronic means and technologies to

conduct commerce (sale, purchase, transfer, or exchange of products,

services, and/or information), including within business, business-to-

business, and business-to-consumer interactions. Delivery of product or service may occur over or outside of the Internet.

• Electronic business (e-business)

– Term used interchangeably with e-commerce

– E-business is defined as the transformation of key business

processes (internal processes that companies use to

support their buying, selling, hiring, planning, and other

activities) through the use of Internet technologies



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• E-commerce and E-business share some common

characteristics. Both E-commerce and E-business: – provides s higher payoff in the form of more efficient processes

– lowers costs and provide potentially greater profits

– utilize a technology infrastructure of databases, application servers, security

tools, systems management and legacy systems

– involve the creation of new value chains between a company and its

customers and suppliers, as well as within the company itself

– involve major and potentially disruptive organizational change



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Categories of Electronic Commerce

• E-commerce can be categorized by the typesof entities participating in the transaction.

• Some general e-commerce categories: – Business-to-consumer (B2C)

– Business-to-business (B2B)

– Consumer-to-consumer (C2C)

– Business-to-government (B2G)



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The Development and Growth of

Electronic Commerce

• Electronic funds transfers (EFTs)

– Also called wire transfers

– Electronic transmissions of account exchangeinformation over private communications networks

• Electronic data interchange (EDI)

– Transmitting computer-readable data in a standardformat to another business (e.g. purchase order,

invoices, etc.)



The Development and Growth of

Electronic Commerce (continued)

• Trading partners

– Businesses that engage in EDI with each other

• Value-added network (VAN)

– Independent firm that offers connection andtransaction-forwarding services to buyers andsellers engaged in EDI



The Second Wave of Electronic

Commerce (continued)• Second wave:

– Global enterprises in many countries are

participating in electronic commerce – Established companies fund electronic commerce

initiatives with their own capital

– Customized e-mail strategies are now integral to

customer contact



Comparison of E-commerce Waves



Product/Process Suitability to

Electronic Commerce• Commodity item

– Hard to distinguish from the same products or

services provided by other sellers

– Features have become standardized and well

known



Product/Process Suitability to

Electronic Commerce (continued)

• Shipping profile

– Collection of attributes that affect how easily aproduct can be packaged and delivered

• High value-to-weight ratio

– Can make overall shipping cost a small fraction of the selling price



Advantages of Electronic

Commerce• Electronic commerce can increase sales anddecrease costs

• If advertising is done well on the Web, it canget a firm’s promotional message out topotential customers in every country

• Using e-commerce sales support and order-

taking processes, a business can: – Reduce costs of handling sales inquiries

– Provide price quotes



Advantages of Electronic

Commerce (continued)• It increases purchasing opportunities for

buyers

• Negotiating price and delivery terms is easier

• The following cost less to issue and arrivesecurely and quickly:

– Electronic payments of tax refunds

– Public retirement

– Welfare support



Disadvantages of Electronic

Commerce• Perishable grocery products are much harder

to sell online

• It is difficult to: – Calculate return on investment

– Integrate existing databases and transaction-

processing software into software that enables e-commerce

• Cultural and legal obstacles also exist



Strategic Business Unit Value

Chains• Value chain

– A way of organizing the activities that eachstrategic business unit undertakes

• Primary activities include:

– Designing, producing, promoting, marketing,delivering, and supporting the products or services

it sells• Supporting activities include:

– Human resource management and purchasing



Industry Value Chains

• Value system

– Larger stream of activities into which a particular business unit’s value chain is embedded

– Also referred to as industry value chain



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01_Introduction to E-Commerce

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