©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). All Rights Reserved. Page - 1...

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). All Rights Reserved. Page - 1

Introduction to E-commerce

Alexander NTOKO, Project Manager, ITU Electronic CommerceITU Telecommunication Development Bureau (BDT)Email: [email protected] Web: http://www.itu.int/ecdc

Basic E-Commerce Training For Pakistan

Pakistan Telecommunication Authority (PTA)

Islamabad, Pakistan

31 March – 5 April

International Telecommunication Union (ITU)


Agenda

History of e-commerceOverview of various models A very simple definitionRequirements for B2COverview of B2BBenefits of e-commerce


History (how it started)

Commerce over the net started almost 30 years ago with the use of private networks (VANs) by large US corporations to exchange business information using EDI. Online retailing gained enormous popularity (some 6 years ago) with companies like AMAZON selling to consumers world-wide. Today, electronic commerce covers a broad range of business activities with an estimated 50% of U.S businesses online.


Very simple Definition

Electronic Commerce: Can be simply defined as transactions conducted over public and private networks. It includes a broad range of activities such as: e-tailing, e-marketplaces

e-procurement, e-government, and e-banking, ERM, CRM and VCM services. In the simple and most common scenario a customer uses a Web browser to access a Web-based virtual store through the Internet and pays using a credit card.


E-Commerce is...

The the result of the convergence of financial, networking and business services.

The emergence of new intermediaries in business relationships.

The transition from bricks and mortar to bricks and clicks – enhancing traditional business processes using new ICTs.

The breakdown of geographical and time barriers and the increase in market access.


E-Commerce is...

The increased effectiveness of business relationships and the invention new ones.

The conduction of business transactions over public and private networks.

The emergence of a global electronic economy.

The opportunity for developing countries to leapfrog and compete in a global marketplace.

Models of e-commerce

GovernmentsBusinesses

Individuals


E-commerce models

o Business-to-businesso Business-to-governmento Business-to-consumero Consumer-to-consumero Government-to-citizen


Business-to-business

o Corporate Procurementso Customer Relationship Managemento Enhancing value chain (VCM)o Supply Chain Management (SCM)o Collaboration Serviceso Transportation and Logistics o Manufacturing and Distributiono E-commerce Marketplaceso Financial and Information Services


Business-to-consumer

o Direct sales (online retailing)o Marketing and advertisingo Customer serviceso Financial services o Product distribution


What is B2C E-commerce?

A simple definition:Includes the online marketing, distribution, sales and purchase of products and services: companies publish their catalogs online, and consumers order from the catalogs, make payments, and perhaps track the status of their orders online. In the typical scenario a customer uses a Web browser to access a Web-based virtual store through the Internet and pays using a credit card.


Requirements for B2C (e-tailing)

o Payment, Trust and Security infrastructureo Banking services to merchants (MOTO,SET)o Merchant Web site with online catalogueo Goods and services which can be sold onlineo Information technology (hardware, software)o Legal, policy and regulatory frameworko Services and logistics (shipping/delivery for

physical and digital content)


Payment, Trust and Security

o Confidentiality of transactions Encryptiono Who am I dealing with? Authenticationo Message integrity Message Digesto Non-repudiation Digital Signatureo Evidence of authenticity X.509 Certificateo Trusted third party Certification Authoritieso Secure communication SSL, IPseco Secure payment systems SSL-based, SET, o Interface to banks ISO8583, CyberCash


Everything … must be accessed in money; for this enables men to always exchange their services, and so makes society possible.

Aristotle (384-322 B.C.)


Banking Services

o Merchant local bank accounto Acquiring banks for desired card brands

(Visa, MasterCard, Amex, Diners)o Mail Order Phone Order (MOTO) or SET

contract with partner bankso Host/Network enabled vPOS terminal

services for connecting to processors


Merchant Web Site

Payment, Trust and Security technologies and services

MerchantBank account

Credit Card Acquiring

bank

MerchantBusiness

MOTO contract


Merchant Web Site

o Web site accessible via the Interneto Online catalogue containing items description, price,

store policy and payment and shipping optionso Order capture and completion services (tax,

shipping/handling,online delivery for digital content)o Shopping basket features, catalogue managemento Advice of order services (email, fax) transactionso Email contact for pre and post transactional services


Goods and Services

o Legal to export/import at source/destinationo Price range within limits for payment typeo Weight and volume to facilitate deliveryo Reasonable shipping and delivery cost o Of interest to potentially large consumer baseo Easy to package and preserve as final product


ICT requirements

o Local support services for hardware and softwareo Information technology support for customer

serviceso Environment for application development and

integration (middleware, application integrators)o Applications, systems and network monitoring,

management and supporto BackOffice systems for inventory, catalogue

management, billing and invoicingo System, host and network security serviceso Trust services for merchant and customer

authentication.


Legal Requirements

o Policies for the and use of digital signatureso Regulations for Certification Authoritieso Electronic contracts and notarizationo Privacy and confidentiality lawso Data and consumer protection policieso Procedures for parties in e-transactionso Intellectual property and trademark lawso Laws and regulations for settlement of

disputes


Potential benefits to DCs

o Enable businesses to trade at internationally acceptable prices by providing access to the global marketplace

o Provides a low-cost channel for the selling, marketing and distributing goods and services

o Provides 7 x 24 storefront availability (any hour of the day, any day of the year)

o Reduces the cost of processing transactions, orders and payments including credit and collection expenses


Potential benefits DCs

o Could provide the need to learn new technologies and build local capacity to maintain services and infrastructure

o Could act as a stimulus for the development of the information and communication technology (ICT) infrastructure

o Improvement in the ICT infrastructure could facilitate access to health and educational information available via the Internet

o Increase trade with developed countries and attract foreign investments


Potential benefits for customer

o From the comfort of home or officeo Any hour of the day, any day of the yearo Access to worldwide choiceso Reduced acquisition times and costo Access to extensive marketing

information on products of interesto Online test of digital products (e.g., CD)o Immediate download of digital productso Use of intelligent agents for correct order


B2C E-commerce sites

o Banking: www.ubs.como Books: www.amazon.como Cars: www.edmunds.como Clothes: www.eddiebauer.como Investment: www.etrade.como IT: www.dell.como Digital content: www.itu.into Travel: www.travelocity.como Wine: www.virtualvin.com


Business to Business E-Commerce

The Trading Community

BuyersBuyers

SellersSellers

MarketSiteMarketSite

3rd Party3rd PartyServicesServices

OtherOtherCommunitiesCommunities

Vision for B2B e-Maketplace

• Any company trading with any company

• Automation of the entire trading process

• Interoperable set of Global Marketplaces

Impact on FSPs

o Financial Service Providers (FSPs) are Buyers

o New Revenue Opportunities as Market Maker

o Route to Market for Electronic Financial Services

What is e-Procurement?

Automation of the Automation of the ENTIREENTIRE (indirect) supply chain from (indirect) supply chain from product selection through receipt.product selection through receipt.

select requisition approve status receive

Requires real-time interactivity with trading partners worldwideRequires real-time interactivity with trading partners worldwide

E-Procurement Opportunities

Reduced Cost of Goods…Reduced Cost of Goods…

Reduced Administration..Reduced Administration..

Shorter Cycle Times……..Shorter Cycle Times…….. Inventory Reduction….……Inventory Reduction….……

Automating the Entire Indirect Goods & Automating the Entire Indirect Goods & Services Supply Chain can Deliver:Services Supply Chain can Deliver:

3 - 5% or More3 - 5% or More

£50 to £4£50 to £4

From 7 Days to 2 Days From 7 Days to 2 Days Reduced or Zero-StockReduced or Zero-Stock

• A new sales channel

• More on-contract buying

Increased Revenue

• Lower inventory

• Less rework

• Fewer returns

More Accurate

• Order entry

• Customer service

• Invoicing, Accounts Receivable

Reduced Costs

• Content in existing form

• “Sharable” normalization

• One update for trading community

Efficient Operation

Supplier Return on Investment

Supplier ROIis Critical

Substantial ROI for both parties

Substantial ROI for both parties

Buyers Suppliers

Automate Process

Reduce Costs per Transaction

Increase Revenue per Customer

Eliminate Maverick Purchasing

Gain New Customers

Global economies

of scale

A Win—Win Solution

The Portal Modelo Single Point of Business

Integration For Buyer and Supplier

o Shared Content Mapped from multiple formats

o Real-Time Interactivityo Commerce Platform

Complex B to B process supporto Single “Plug In” for New Serviceso Totally Open

Applications, Trading Communities and Companies of All SizesBuyersBuyers

SellersSellers


Identify NeedsIdentify Needs

Find SourcesFind Sources

Build TrustBuild Trust

Configure SolutionConfigure Solution

Determine ValueDetermine Value

Negotiate TermsNegotiate Terms

Make TransactionMake Transaction

Fulfilment Fulfilment

Receive SupportReceive Support

Retire/UpgradeRetire/Upgrade

Identify Customers

Find Decision Makers

Build Trust

Offer Solution

Present Value

Negotiate Terms

Make Transaction

Fulfilment

Provide Support

Retire/Upgrade

A Portal Supports the Entire Breadth of “Trading Relationship” Process

The Buying Process The Selling Process

Portal Role

Business to Business to BusinessBusiness

Marketplace Marketplace


PortalPortal

Portals Drive the Network Effect

Maximum participation drives “network effect” and maximum value for everyone in the trading community:o Buyerso Supplierso Service Providers

Number of Number of UsersUsers

Eco

no

mic

E

con

om

ic

Val

ue

Val

ue

Rise of the Internet Market Maker

o Turn your supply chain into a revenue generation opportunity

o Proactive influence on power balance in electronic supply chain

o Leverage your industry domain expertise into strategic e-commerce value

o Examples: GM etc, Shell, Boeing etc, TD Bank, Banamex, Citigroup

Your Your PortalPortal

Traditional Lines of Business

o Cash management serviceso Credit insuranceo Physical insurance o Letters of credit and bills of exchangeo Payment guaranteeso Payment processingo Asset based financing e.g. factoring, invoice

discounting, forfeiting and financing based on bills of exchange

o Leasingo Loans

New Financial Services

o Identity serviceso Information services based on identity

• delivery address• credit rating

o Advice and guidance services

• tax• legal • jurisdiction

The Global Trading Web

Global Global TradingTrading

WebWeb

Connect once to trade with anyone,anytime, anywhere in the world.


Electronic commerce promises to be a major generator of new and skilled jobs and growth in the next century, through improvements in business productivity, growth in consumer transactions, and development of the supporting information technology infrastructure. Early adopters can quickly establish market dominance and help shape evolving rules as well as business and consumer behavior.

… But there are several challenges and pitfalls…

©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). All Rights Reserved. Page - 1...

Documents

Transcript of ©1998-2001 ITU Electronic Commerce for Developing Countries (EC-DC). All Rights Reserved. Page - 1...