WELCOMETOTHE WORLD OF

ELECTRONIC COMMERCE

Various Perspectives of Business

Consumers focus will be primarily on convenience, access to the global market, savings and bargains.

Small business focus will be on competition in industry, global reach and customer relations.

Large Business consideration will be for lean and efficient operations, integration of supply chain for cost management & operational efficiency.

Business ModelSUPPLIERREGULATORY AUTHORITYCOMPANYCHANNEL PARTNERSCUSTOMEREMPLOYEESSERVICE PROVIDER

WHAT IS ELECTRONIC COMMERCE?DefinitionThe process of Buying and Selling or Exchanging of products, services and information via computer network.In its broadest sense, electronic commerce encompasses any commercial activity that takes place directly between a business, its partners, or its customers through a combination of computing and communications technologies.

*EC Definitions & ConceptsElectronic Commerce (EC) is the process of buying, selling, or exchanging products, services, and information via computer networksEC defined from these perspectivesCommunicationsBusiness processServiceOnlineCollaborationsCommunity

*Exhibit 1.1The Dimensions of Electronic Commerce

*The EC Framework and FieldAn EC FrameworkEC applications supported by infrastructure and 5 support areasPeoplePublic policyTechnical standards and protocolsBusiness partnersSupport services

*Exhibit 1.2A Framework for EC

1.Buyer logs on the marketplace2.Buyer searches for products3.Buyer selects product4. Buyer orders the product5. Purchase order sent to seller6.Seller confirms the order7.Buyer pays for the product (Payment options)8.Payment information sent to bank9.Credit checkedBuyers Bank10.Credit approvedSellers Bank11. Product shipped

Customer Certification AuthorityPlaces the OrderBACK OFFICE PROCESSINGProcessing UnitChannel partnersService ProviderSupplierAuthenticates

Authenticates

Bank

*Brief History of ECEC applications first developed in the early 1970s Electronic funds transfer (EFT)Limited to:Large corporationsFinancial institutionsA few other daring businesses

*Brief History of EC (cont.)Electronic data interchange (EDI)electronic transfer of documents:Purchase ordersInvoicesE-payments between firms doing business

Enlarged pool of participants to include:ManufacturersRetailersService providers

*Brief History of EC (cont.)Interorganizational systems (IOS)Stock tradingTravel reservation systemsInternet became more commercialized in the early 1990sAlmost all medium-and large-sized organization in the world now has a Web siteMost large corporations have comprehensive portals

Types of E-CommerceBusiness to Business (B2B)Business to Consumer (B2C)Government to BusinessGovernment to Citizen

*Classification of EC by the Nature of the TransactionBusiness-to-business (B2B) : EC model in which all of the participants are businesses or other organizationsBusiness-to-consumer (B2C): EC model in which businesses sell to individual shoppersBusiness-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided

*Classification of EC by the Nature of the Transaction (cont.)Consumer-to-business(C2B): individuals who use the Internet to sell products or services to organizations and /or seek sellers to bid on products or services they need Consumer-to-consumer (C2C) : consumers sell directly to other consumers

*Classification of EC by the Nature of the Transaction (cont.)Mobile commerce (m-commerce)EC transactions and activities conducted in a wireless environmentLocation-commerce(l-commerce) m-commerce transactions targeted to individuals in specific locations, at specific times

*Classification of EC by the Nature of the Transaction (cont.)Intrabusiness (organizational) EC: EC category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization

*Classification of EC by the Nature of the Transaction (cont.)Business-to-employee (B2E): EC model in which an organization delivers services, information, or products to its individual employeesCollaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate onlineE-government: Government-to-citizens (G2C): EC model in which a government entity buys or provides good, services, or information to businesses or individual citizens

*Classification of EC by the Nature of the Transaction (cont.)Exchange (electronic): a public e-market with many buyers and sellersExchange-to-exchange (E2E): EC model in which electronic exchanges formally connect to one another for the purpose of exchanging information

Customer Research; Pre-Sales Enquiries; Information Publishing and Dissemination; Sales; Advertising & Promotions; Brand Management & AwarenessPurchasing;

Transactions; Funds Transfer; Inventory Management Delivery; After-Sales Service; Ongoing Relationship Management; and Customer Support.

Where Are Business Applying E-commerce Solutions?

*MarketingComputer sciencesConsumer behavior and psychologyFinanceEconomics

Management information systemsAccounting and auditingManagementBusiness law and ethicsOthers Interdisciplinary Nature of EC

*Success Story of Campusfood.comCampusfood.coms using power of ICT provided interactive menus to students and achieved success. Build customer base through Registering other Universities, attracting students, Generating a list of restaurants from which students could order food for delivery and some activities were outsourced to a marketing firm enabling the addition of dozens of schools nationwideRevenue is generated through transaction fees5 percent commission on each order

*Campusfood.com (cont.)At campusfood.com you can:Navigate through a list of local restaurants,Browse an interactive menu.Bypass busy telephone signals to place an order onlineGet access to special foods, promotions, and restaurant giveawaysArrange electronic payment of your order

E-Commerce in IndiaWorld business transactions on net: $3000 billion (Forrester research)Internet Usage in India: Around 13 crore 70 lakhs (11.4%) (5.7% world) on June 30, 2012E-business transactions in India: online retail industry to touch Rs 7,000 crore by 2015 (rising from the current Rs 2000 crore), with an annual growth rate of 35 per cent. (ASSOCHAM)Net usage growth rate: 130% (highest in the world)Advertising on the Net: Around 430 croresComputer penetration in India: 1 per 1000Major Internet Business in Books, Apparels, Flowers, Gifts, Cinema Tickets, cassettes and CDs. Typical E-Business Customer: Age 25-34 yrs, Graduate, MFI Rs. 10-15000Pioneers in E-Business in India: CHARAGHDIN (planets largest shirt store and 62% of the total business is on the net) and NAVNEET Publications (books, music and stationary)Worlds largest book store: Amazon.com (100% business on net)

E-Business by CategoryTotal Transactions: 3000 millions

BENEFITS OF E-COMMERCEShop is open for business 24hrs a day, 365 days a year Access to a huge potential market Increase in sales with little or no extra administration Give a competitive edge over the rivals Gain new customers and convince existing one to return Access your customers in the comfort of their own home Allows reduced inventories and overhead by facilitating pull type supply chain management.

*The Benefits of ECBenefits to OrganizationsExpands the marketplace to national and international marketsDecreases the cost of creating, processing, distributing, storing and retrieving paper-based informationAllows reduced inventories and overhead by facilitating pull-type supply chain management

*Benefits of EC (cont.)Benefits to consumersEnables consumers to shop or do other transactions 24 hours a day, all year round from almost any locationProvides consumers with more choicesProvides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons

*Benefits of EC (cont.)Allows quick delivery of products and services (in some cases) especially with digitized productsConsumers can receive relevant and detailed information in seconds, rather than in days or weeksMakes it possible to participate in virtual auctionsAllows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiencesFacilitates competition, which results in substantial discounts

*Benefits of EC (cont.)Benefits to societyEnables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollutionAllows some merchandise to be sold at lower prices, benefiting less affluent peopleEnables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to themFacilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality

*Interorganization and CollaborationOrbis Corporation changes linear physical supply chain to an electronic hub

*Orbis Corporation (cont.)

*Typical Business Models in ECOnline, direct marketingElectronic tendering systemsReverse auction is a tendering system sellers are invited to bid on the fulfillment of an order to produce a product or provide a service; the lowest bid winsName your own priceFind the best price

*Typical Business Models in EC (cont.)Affiliate marketing is an arrangement whereby a marketing partner (business, organization or individual) refers consumers to the selling companys Web siteViral marketing is word-or-mouth marketing in which customers promote a product or service to friends or other people by using the Internet

*The Digital Revolution and the Economic Impact of ECIn the Digital Revolution the economy is based on digital technologies including:Digital communication networksComputersSoftwareOther related information technologiesAlso called:Internet economyNew economyWeb economy

*The Digital Revolution and the Economic Impact of EC (cont.)Digital networking and communication infrastructures provide a global platform where people and organizations:InteractCommunicateCollaborateSearch for information

*Exhibit 1.5Cost Curve of Regular & Digital Products

*Exhibit 1.6The Economic Effects of EC

*

Networked Organizations

Myths About E-commerceMyth #1: It is cheap, Easy and LucrativeMyth #2: Everyones Doing ItMyth #3: Middlemen are EliminatedMyth #4: All products become Commodities and the Playing Field is LeveledMyth #5: Brand Building is Easy on the Web

E-commerce ObstaclesCostTechnology IssuesPrivacy & ConfidentialitySecurity Management of ChangeMulti Cultural implicationsCopyrightThreat to Human Relations

*The Limitations of ECTechnical limitationsThere is a lack of universally accepted standards for quality, security, and reliabilityThe telecommunications bandwidth is insufficientSoftware development tools are still evolvingThere are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases.Special Web servers in addition to the network servers are needed (added cost).Internet accessibility is still expensive and/or inconvenient

ReferencesEfraim Turban, Jae Lee, David King, H. Michel Chung; Electronic Commerce- A Managerial Perspective, Pearson Education Asia, 2001David Kosiur; Understanding Electronic Commerce, Prentice Hall, India, 2001Charles Trepper; E-Commerce Strategies, Prentice Hall, India, 2001.Agarwala N. Kamlesh, Lal Amit, Deeksha Agarwal; Business On The Net, Macmillan, 2000. Adam, N. and Yesha, Y., Electronic Commerce: Current Research Issues and Applications, Springer, New York, 1996.Callon, J.D., Competitive Advantage Through Information Technology, Mc-Graw Hill, New York, 1996. Gates, William H, III. Business @ The Speed of Thought, New York, Warner Books, 1999.Kalakota, R., and Whinston, A. B., Electronic Commerec: A Managers guide, Addison- Wesley Publishing, New York, 1997.Winkler, Agnieszka, Warp-Speed Branding: The Impact of technology on Marketing, John Wiley & Sons, New York, 1995.World Trade Organization, Electronic Commerce and the Role of the WTO, WTO Secretariat, March 1998. www.sympatico.ca.www.ibc.comWeb site of United Parcel Service of America, Inc.

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