Chapter1

BasicsBasics

Exploring E-CommerceExploring E-Commerce

What is e-Commerce and e-What is e-Commerce and e-business?business?

• Electronic commerce Electronic commerce (EC, or e- commerce) describes the (EC, or e- commerce) describes the process of process of buyingbuying,,sellingselling, , transferring, or transferring, or exchanging of products, servicesexchanging of products, services,, and/or and/or informationinformation via computer networks, via computer networks, including the including the Internet.Internet.

• E-business E-business refers to a broader definition of EC, refers to a broader definition of EC, not just the not just the buying and selling of goods and buying and selling of goods and services, but also servicing customers, services, but also servicing customers, collaborating with business partners, collaborating with business partners, conducting e-learning, and conducting conducting e-learning, and conducting electronic transactionselectronic transactions within an organization. within an organization.

Definitions by different Definitions by different means:-means:-• From a communication perspectiveFrom a communication perspective, e-, e-

commerce is the delivery of information, commerce is the delivery of information, products or payments via telephone lines, products or payments via telephone lines, computer networks or any other means.computer networks or any other means.

• From a business perspective ,From a business perspective ,e-commerce e-commerce is the application of technology toward the is the application of technology toward the automation of business transactions.automation of business transactions.

• From a online perspectiveFrom a online perspective, e-com provides , e-com provides capability of buying & selling products & capability of buying & selling products & information on the internet.information on the internet.

Commerce

E (Electronic)- Commerce

Traditional Commerce

Internet Commerce Mobile Commerce

Business Focused E-Commerce

Consumer focused E-Commerce

E-Commerce consists of:E-Commerce consists of:

• Electronic retailing (e-tailing)Electronic retailing (e-tailing)

• EDI (Electronic Data interchange)EDI (Electronic Data interchange)

• EFT (electronic Funds Transfer)EFT (electronic Funds Transfer)

Types of E-commerceTypes of E-commerce

• Four Major Domain on which E-Four Major Domain on which E-Commerce WorksCommerce Works

Business (Organization)

Business (Organization) Consumer (Individual)

B2BBrokering sites

B2Ce.g. Amazon

Consumer (Individual)

C2Be.g Priceline

C2Ce.g eBay

Types of E-CommerceTypes of E-Commerce

• Business-to-Business(B-to-B) site:Business-to-Business(B-to-B) site:is a website that is dedicated to is a website that is dedicated to exchange of information, goods and services to other business rather than exchange of information, goods and services to other business rather than final consumers.final consumers.

• Business-to-Customer(B-to-C) site: Business-to-Customer(B-to-C) site: is a website where all transections is a website where all transections take place between a business house and the final consumer.take place between a business house and the final consumer.

• Consumers-to-businesses (C2B): Consumers-to-businesses (C2B): In C2B, consumers make known a In C2B, consumers make known a particular need for a product or service, and suppliers compete to provide particular need for a product or service, and suppliers compete to provide the product or service to consumers. An example is Priceline.com, where the product or service to consumers. An example is Priceline.com, where the customer names a product and the desired price, and Priceline tries to the customer names a product and the desired price, and Priceline tries to find a supplier to fulfill the stated need.find a supplier to fulfill the stated need.

• Consumer-to-consumer (C2C): Consumer-to-consumer (C2C): is a website where all the transections is a website where all the transections take place between a consumer and the website acting asa a platform take place between a consumer and the website acting asa a platform that brings the buyer and the seller togther.that brings the buyer and the seller togther.

Other types of E-Commerce Other types of E-Commerce are:are:

• Government-to-Consumer(G-to-C) site: Government-to-Consumer(G-to-C) site: website is an attempt by the government website is an attempt by the government to reach out to people in general.to reach out to people in general.

• Business-to-Government(B-to-G) site: Business-to-Government(B-to-G) site: website is a variation of the B-to-B web website is a variation of the B-to-B web site. This web site used by the government site. This web site used by the government to exchange information with various to exchange information with various business houses across the world.business houses across the world.

Types of E-Commerce SitesTypes of E-Commerce Sites

• Educational sitesEducational sites

• Financial sitesFinancial sites

• Auction sitesAuction sites

• News sitesNews sites

• Entertainment sitesEntertainment sites

History of E-commerceHistory of E-commerceYear Year EventEvent

19841984 EDI, or electronic data interchange, was EDI, or electronic data interchange, was standardized through ASC X12. This standardized through ASC X12. This guaranteed that companies would be able to guaranteed that companies would be able to complete transactions with one another complete transactions with one another reliably. reliably.

19921992 Compuserve offers online retail products to Compuserve offers online retail products to its customers. This gives people the first its customers. This gives people the first chance to buy things off their computer. chance to buy things off their computer.

19941994 NetscapeNetscape arrived. Providing users a simple browser arrived. Providing users a simple browser to surf the Internet and a safe online transaction to surf the Internet and a safe online transaction technology called Secure Sockets Layer. technology called Secure Sockets Layer.

19951995 Two of the biggest names in e-commerce are Two of the biggest names in e-commerce are launched: launched: Amazon.comAmazon.com and and eBay.comeBay.com. .

19981998 DSL, or Digital Subscriber Line, provides DSL, or Digital Subscriber Line, provides fast, always-on Internet service to fast, always-on Internet service to subscribers across California. This prompts subscribers across California. This prompts people to spend more time, and money, people to spend more time, and money, online. online.

19991999 Retail spending over the Internet reaches Retail spending over the Internet reaches $20 billion, according to $20 billion, according to Business.comBusiness.com. .

20002000 The U.S government extended the The U.S government extended the moratorium on Internet taxes until at least moratorium on Internet taxes until at least 2005.2005.

http://www.netscape.com/

http://www.amazon.com/

http://www.amazon.com/

http://www.ebay.com/

http://www.business.com/

Advantages of E-CommerceAdvantages of E-Commerce

• Able to conduct business 24 x 7 x 365Able to conduct business 24 x 7 x 365

• Access the global marketplaceAccess the global marketplace

• SpeedSpeed

• Opportunity to reduce costOpportunity to reduce cost

• Platform independentPlatform independent

• Customer self serviceCustomer self service

• Large purchase per transactionLarge purchase per transaction

• People can shop in different waysPeople can shop in different ways

• Large catalogsLarge catalogs

• Improved customer relationImproved customer relation

Disadvantages of e-Disadvantages of e-commercecommerce• Time for delivery of physical productsTime for delivery of physical products

• Limited and selected sensory informationLimited and selected sensory information

• Returning goodsReturning goods

• Privacy, security, payment, identityPrivacy, security, payment, identity

• Personal servicePersonal service

Types of E-commerce Types of E-commerce

• Inter-organizational e-commerce(B-to-B)Inter-organizational e-commerce(B-to-B)1)1) Supplier managementSupplier management

2)2) Inventory managementInventory management

3)3) Distribution managementDistribution management

4)4) Payment managementPayment management

• Intra-organizational e-commerce(within business)Intra-organizational e-commerce(within business)1)1) Workgroup communicationWorkgroup communication

2)2) Electronic publishingElectronic publishing

• Customer-to-Business e-commerceCustomer-to-Business e-commerce

• Business-to-customer e-commerceBusiness-to-customer e-commerce

• Customer-to-customer e-commerceCustomer-to-customer e-commerce

Features of E-Commerce

UbiquityUbiquity

Technology Technology DimensionDimension Business SignificanceBusiness SignificanceInternet Technology Internet Technology is available is available everywhere, at work, everywhere, at work, at home, and at home, and elsewhere via mobile elsewhere via mobile device, anytimedevice, anytime

•Marketplace is created or extended beyond Marketplace is created or extended beyond traditional boundaries and removed from a traditional boundaries and removed from a geographic location. geographic location. •Shopping can take place anywhere. Shopping can take place anywhere. •Reduced shopping costs.Reduced shopping costs.•Customer convenience enhanced Customer convenience enhanced

Global ReachGlobal Reach

Technology Technology DimensionDimension

Business SignificanceBusiness Significance

Technology reaches Technology reaches beyond national beyond national boundariesboundaries

•Commerce is enabled across cultural and Commerce is enabled across cultural and national boundaries seamlessly and without national boundaries seamlessly and without modification. modification. •Marketplace includes potentially billions of Marketplace includes potentially billions of consumers and millions of businesses world consumers and millions of businesses world widewide

Universal StandardsUniversal Standards



There is one set There is one set of technology of technology standard, standard, namely Internet namely Internet StandardsStandards

•Lower market entry costs,Lower market entry costs,•Reduce product search cost and by creating a Reduce product search cost and by creating a single , one market place, price discovery becomes single , one market place, price discovery becomes simpler, faster and more accuratesimpler, faster and more accurate•Easily find all the suppliers, prices, and delivery Easily find all the suppliers, prices, and delivery terms of a specific product anywhere in the worldterms of a specific product anywhere in the world

RichnessRichness



Video, Audio Video, Audio and Text and Text Messages are Messages are possiblepossible

•E-Commerce technologies have changed the E-Commerce technologies have changed the traditional tradeoff between Richness and the traditional tradeoff between Richness and the Reach. Reach. •The Internet and web can deliver to an audience of The Internet and web can deliver to an audience of millions rich marketing messages in a way not millions rich marketing messages in a way not possible with traditional technologies like radio, TV possible with traditional technologies like radio, TV and magazines.and magazines.

InteractivityInteractivity



The technology The technology that allows two that allows two way way communication communication between between merchant and merchant and consumerconsumer

•Consumers are engaged in a dialogue that Consumers are engaged in a dialogue that dynamically adjusts the experience to the dynamically adjusts the experience to the individual, and make the consumer a co- individual, and make the consumer a co- participant in the process of delivering goods to participant in the process of delivering goods to the market.the market.•Similar to face-to-face experience but on a Similar to face-to-face experience but on a massive global scalemassive global scale

Information DensityInformation Density



The technology The technology reduces information reduces information cost and raises cost and raises qualityquality

•Information processing, storage and Information processing, storage and communication costs drop dramatically while communication costs drop dramatically while currency, accuracy and timeliness improve currency, accuracy and timeliness improve greatly. greatly. •Information becomes plentiful, cheap and Information becomes plentiful, cheap and accurateaccurate

CustomizationCustomization

Technology DimensionTechnology Dimension Business SignificanceBusiness Significance

Technology allows personalized Technology allows personalized messages to be delivered to messages to be delivered to individuals as well as groupsindividuals as well as groups

•Personalization of marketing Personalization of marketing messages and customization of messages and customization of products and services are based products and services are based on individual characteristics on individual characteristics

Need for E-CommerceNeed for E-Commerce

• Increased competitionIncreased competition

• Reduction time to marketReduction time to market

• Improvement in payment processImprovement in payment process

• Electronic data interchangeElectronic data interchange

• Popular with consumers and suppliersPopular with consumers and suppliers

• To improve productivity and to generate profitTo improve productivity and to generate profit

Interdisciplinary nature of e-commerceInterdisciplinary nature of e-commerce

• MarketingMarketing• Computer sciencesComputer sciences• Consumer behaviorConsumer behavior• FinanceFinance• EconomicsEconomics• MISMIS• Accounting and auditingAccounting and auditing• ManagementManagement• Business laws and ethicsBusiness laws and ethics

Forces fueling e-commerceForces fueling e-commerce

• Economic forcesEconomic forces

• Market forcesMarket forces

• Technology forcesTechnology forces

In FutureIn Future

• While E-Commerce may not completely While E-Commerce may not completely replace other forms of Commerce, it is replace other forms of Commerce, it is likely to be the likely to be the dominant modedominant mode of the of the commercial transactions commercial transactions in the futurein the future..

• Colleges and SchoolsColleges and Schools including including Business Schools should reflect this Business Schools should reflect this trend in the curriculum trend in the curriculum to train the to train the future generation of Managers.future generation of Managers.

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