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E-Commerce:

Fundamentals and Applications

Introduction

Prof. Ganesh S

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Outline

• Electronic commerce and physical commerce

• The DIGITAL phenomenon

• Looking at e-commerce from different perspectives

• Different types of e-commerce

• Examples of the types of e-commerce

• Some e-commerce scenarios

• Effect of e-commerce

• Advantages of e-commerce

• Myths about e-commerce development and implementation

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Types of Commerce

Commerce

Electronic

Commerce

Physical or Traditional Commerce

Internet

Commerce

Business

focused

e-commerce

Consumer focused

e-commerce

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Types of Commerce

From a communications perspective, EC is the delivery of information, products/services, or payments over telephone lines, computer networks, or any other electronic means.· From a business process perspective, EC is the application of technology to-ward the automation of business transactions and work flow.· From a service perspective, EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.· From an online perspective, EC provides the capability of buying and selling products and information on the Internet and other online services.

• Three layer models for e-commerce (e.g. Zwass’s model).

• E-business: a wider perspective than e-commerce.

• E-commerce improves the value chain.

• E-commerce provides an effective tool for building, managing and enhancing these relationships.

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Types of Commerce

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Explosive Growth in e-Commerce

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E-Commerce – Business Model

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E-Commerce – Platform components Over view

SEO – Search Engine Optimization; CMS – Content Management System; PIM – Product Information Management.

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E-Commerce – Scope

THE SCOPE OF ELECTRONIC COMMERCE - The mainstream of e-Commerce consists of these three areas;1. Electronic MarketsOffers to present a range of offerings available in a market segment so that the purchaser can compare the prices (and other attributes) of the offerings and make a purchase decision. Ex. Airline booking system.

2. Electronic Data Interchange (EDI)EDI provides a standardized system for coding trade transactions so that they can be communicated directly from one computer system to another without the need for printed orders and invoices. EDI is used by organizations that make a large number of regular transactions. One sector where EDI is extensively used is the large supermarket chains, which use EDI for transactions with their suppliers.

3. Internet CommerceInformation and communications technologies can also be used to advertise and make once-off sales of a wide range of goods and services. Example - purchase of books that are then delivered by post, or the booking of tickets that can be picked up by the clients when they arrive at the event, and many more

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Digital Phenomenon

• What do you think?

• What are the drivers of e-commerce?

Data networks

Intense competition

Globalization

Information age

Technologies

Automation

Low cost high quality products/services

DIGITAL

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Different types of E-Commerce

Business

(organization)

Customer

(individual)

Business

(organization)

Customer

(individual)

B2C

(e.g Amazon)

C2B

(e.g Priceline)

C2C

(e.g eBay)

B2B

(e.g TPN)

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Examples

• B2C: www.amazon.com

• C2C: www.eBay.com

• B2B: www.tpn.com

• C2B: www.priceline.com

Let’s visit these web sites in turn and discuss its features.

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E-commerce scenarios

• Retailing

• Servicing

• Publishing

• Supply chain management

Discussion: How are they changing?

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Discussion

• How should different departments participate in an e-commerce project?• Management

• Marketing

• Production

• Finance

• Procurement

• Customer support

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What are the advantages of e-commerce?A. Benefits to Organizations

• Electronic commerce expands the marketplace to national and international markets.

• Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information.

• Ability for creating highly specialized businesses.

• Electronic commerce allows reduced inventories and overhead by facilitating “pull”-type supply chain management.

• The pull-type processing enables expensive customization of products and services, which provides competitive advantage to its implementers.

• Electronic commerce reduces the time between the outlay of capital and the receipt of products and services.

• Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs.

• Other benefits include improved image, improved customer service, newfound business partners, simplified processes, compressed cycle and delivery time, increased productivity, eliminating paper, expediting access to information, reduced transportation costs, and increased flexibility.

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What are the advantages of e-commerce?B. Benefits to Consumers

• Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.

• Electronic commerce provides customers with more choices - less expensive products and services and conduct quick comparisons.

• In some cases, especially with digitized products, EC allows quick delivery.

• Customers can receive relevant and detailed information in seconds, rather than days or weeks.

• Electronic commerce makes it possible to participate in virtual auctions.

• Electronic commerce allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.

• Electronic commerce facilitates competition, which results in substantial discounts, and many more…..

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What are the advantages of e-commerce?C. Benefits to Society

• Electronic commerce enables more individuals to work at home and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution.

• Electronic commerce allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living.

• Electronic commerce enables people in Third World countries and rural areas to enjoy products and services that otherwise are not available to them.

• This includes opportunities to learn professions and earn college degrees.

• Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health- care services, for example, can reach patients in rural areas.

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The Limitations of ECA. Technical Limitations of EC

• There is a lack of system security, reliability, standards, and some communication protocols.

• There is insufficient telecommunication bandwidth.

• The software development tools are still evolving and changing rapidly.

• It is difficult to integrate the Internet and EC software with some existing applications and databases.

• Vendors may need special Web servers and other infrastructures, in addition to the network servers.

• Some EC software might not fit with some hardware, or may be incompatible with some operating systems or other components.

• As time passes, these limitations will lessen or be overcome; appropriate planning can minimize their impact.

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The Limitations of ECB. Non -Technical Limitations

• Cost and justification

• Security and privacy

• Lack of trust and user resistance Customers do not trust an unknown faceless seller

• Other limiting factors; say Lack of touch and feel online.

• Many legal issues are as yet unresolved, and government regulations and standards

• Electronic commerce, as a discipline, is still evolving and changing rapidly

• There are not enough support services

• In most applications there are not yet enough sellers and buyers for profitable EC operations

• Electronic commerce could result in a breakdown of human relationships

• Accessibility to the high speed Internet is still expensive and/or inconvenient for many potential customers

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Architecture of Web-based E-

Commerce System

Backend system

Firewall

Internet

Server side

Intranet

(Secure)

Web Server Application Server

Database

Service system

Client side

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Electronic Data Interchange

• What is EDI?• Exchange of standard business documents electronic data

using interorganizational information systems• Shipping data, payment data, production/inventory

requirements• Set of hardware, software, and standards that

accommodate the EDI process

• Forms of EDI• Earliest was through a VAN (since 80’s)• Newest is through the Web

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Electronic Data Interchange - How EDI works

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Electronic Data Exchange(How does it work?)

• Supplier ships the order.

• Buyer organization receives packages, scans bar code, and compares data to invoices actual items received.

• Payment approval transferred electronically from the buyer’s accounts payable dept. to buyer’s bank .

• Bank transfers funds from buyer to supplier’s account using electronic fund transfer (EFT).

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Electronic Data Interchange Standards

• EDI requires companies to agree on• Compatible hardware and software

• Electronic form format

• Established EDI standards• X.12 de facto umbrella standard in U.S. and Canada

• EDI for Administration, Commerce, and Trade (EDIFACT) umbrella of standards in Europe

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EDI Implementation

• VAN suppliers

• GE Information Services, Sprint, WorldCom, Sterling Commerce

• Majority of EDI transaction take place with VAN

• Web EDI

• Rapidly overtaking VAN EDI

• Use Web technologies

• Accessible to businesses of all sizes

• Success attributed to XML

• Complements HTML by allowing users to put tags around an element that tells the browsers about the data content of an element

• Businesses can create their own tags

• Web EDI demo• http://www.covalentworks.com/How-does-your-EDI-service-work.asp#

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RFID in SCM

• RFID tags permit recording information about products such as date of manufacture, plant location, expiration date, lot number, destination

• Many RFID tags use the Electronic product code that replaces the universal product code UPC with much more information

• Some tags are read only while others can be updated

• Other uses include detect ion of recalled items, expired items, counterfeit items, defective items

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ERP

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ERP

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ERP