chapter 1 overview of electronic commerce e/arabic/index.jsp?site_no=2123

Chapter 1

Overview of Electronic Commerce

http://web2.aabu.edu.jo/staff_site/arabic/index.jsp?site_no=2123

Chapter 1 Prentice Hall 2

Learning Objectives

Define electronic commerce (EC) and describe its various categories

Describe and discuss the content and framework of EC Describe the major types of EC transactions Describe some EC business models Describe the role of the digital revolution in EC and the

economic impact of EC Discuss the contribution of EC in helping organizations

respond to environmental pressures Discuss the benefits of EC to organizations, consumers,

and society Describe the limitations of EC


Electronic Commerce:Definitions and Concepts

electronic commerce (EC)

The process of buying, selling, transferring, or exchanging products, services, or information via computer networks.



e-business

E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but alsoServicing customersCollaborating with business partnersConducting electronic transactions

within an organization



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Traditional commerce: all dimensions are physicalBrick-and-mortar organizations

Old-economy organizations (corporations)

Perform all business off-lineSell physical products by means of

physical agents



PURE VERSUS PARTIAL ECPure EC: all dimensions are digital

virtual (pure-play) organizationsOrganizations that conduct their business activities solely online. (eBay, AOL –media services)

Partial EC: a mix of digital and physical dimensions

Click-and-mortar (click-and-brick) organizationsConduct EC activitiesDo their primary business in the physical worldExamples: GE, IBM, Intel



INTERNET VERSUS NON-INTERNET EC Non-Internet EC is the use of EC technologies

on private (as opposed to public) networks.intranet

An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols.

extranet

A network that uses the Internet to link multiple intranets.



Interorganizational information systems (IOSs)Communications systems that allow routine transaction processing and information flow between two or more organizations.

intraorganizational information systemsCommunication systems that enablee-commerce activities to go on within individual organizations.



Internet EC is the use of EC technologies on public (as opposed to private) networks.electronic market (e-marketplace)

An online marketplace where buyers and sellers meet to exchange goods, services, money, or information.


The EC Framework, Classification, and Content

An EC FrameworkEC applications supported by

infrastructure and 5 support areasPeoplePublic policyTechnical standards and protocolsBusiness partnersSupport services


Thu 22-9 The EC Framework, Classification, and Content

CLASSIFICATION OF EC BY THE NATURE OF THE TRANSACTIONS OR INTERACTIONS

Business-to-business (B2B): EC model in which all of the participants are businesses or other organizations

Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers

Business-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

e-tailingOnline retailing, usually B2C. E-tailors began to fail in 1999



consumer-to-business (C2B)

E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need.

consumer-to-consumer (C2C)

E-commerce model in which consumers sell directly to other consumers.

mobile commerce (m-commerce)

E-commerce transactions and activities conducted in a wireless environment.



location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specific locations, at specific times.

intrabusiness ECE-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization.



business-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employees.

collaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate online.

peer-to-peerTechnology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce.



e-learning

The online delivery of information for purposes of training or education.

e-government

E-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens.


Thu 22-9 The EC Framework, Classification, and Content

exchange

A public electronic market with many buyers and sellers.

exchange-to-exchange (E2E)

E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information.


Sun 25-9 Interdisciplinary Nature of EC

Marketing Computer sciences Consumer behavior and psychology Finance Economics Management information systems Accounting and auditing Management Business law and ethics Others


Brief History of EC

EC applications first developed in the early 1970s --- Electronic funds transfer (EFT)

Limited to: Large corporations Financial institutions A few other daring businesses

Electronic data interchange (EDI)—electronic transfer of documents: Purchase orders Invoices E-payments between firms doing business

Enlarged pool of participants to include: Manufacturers Retailers Service providers

Internet became more commercialized in the early 1990s Stock trading Travel reservation systems



Web 2.0

The second-generation of Internet-based services that let people generate content, collaborate, and share information online in perceived new ways—such as social networking sites, wikis, and communication tools.


The Digital Revolution Drives E-Commerce

digital economy

An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.


The Digital Revolution Drives E-Commerce

The digital revolution accelerates EC mainly by providing competitive advantage to organizations.

The digital revolution enables many innovations (Digital products, financial transactions, Information as commodity)

virtual worldA user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second Life.


The Business Environment Drives E-Commerce

THE BUSINESS ENVIRONMENTThe Business Environment Impact ModelBusiness Pressures and Opportunities

Market, societal and technological.Organizational Response Strategies

Agility, CRM, KMS, E-markets, …etc.


The Business Environment Drives E-Commerce


Sun 25-9 EC BUSINESS MODELS

business model A method of doing business by which a company can generate revenue to

sustain itself.

Revenue sources are Transaction fees (Stock trade fee) Subscription fees (AOL monthly fee) Advertisement fees (Ads on google as banners) Affiliate fees (Refering customers to other sites) Sales (Wal-Mart, Amazon)

Value proposition is the description of the benefits a company can derive from using EC

Search and transaction cost efficiency

Lock-in – switching costs

Novelty

Complementarities – bundling products with services


Tue 27-9 (2) EC BUSINESS MODELS

TYPICAL EC BUSINESS MODELS Online direct marketing (Used in B2C and B2B,

Suitable for digitizable products)

Electronic tendering systems for procurement tendering (bidding) system (reverse auction)

Model in which a buyer requests would-be sellers to submit bids; the lowest cost or highest value bidder wins.

name-your-own-price model

Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price.


EC BUSINESS MODELS

Find the best price also known as a search engine model through intermediaries

affiliate marketing

An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site.

viral marketing

Word-of-mouth marketing in which customers promote a product or service to friends or others.


EC BUSINESS MODELS

group purchasing

Quantity (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased.

SMEs

Small-to-medium enterprises.e-co-ops

Another name for online group purchasing organizations.


EC BUSINESS MODELS

Supply chain improvers (Hub instead of linear) Information brokers (infomediaries) Online auctions Product customization and service

personalization customization

Creation of a product or service according to the buyer’s specifications.

personalization

The creation of a service or information according to specific customer specifications.


Thu 29-9 (3) The Digital Enterprise

digital enterpriseA new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: • reach and engage customers more effectively,• boost employee productivity, • and improve operating efficiency.

It uses converged communication and computing technology in a way that improves business processes.


The Digital Enterprise

corporate portal

A major gateway through which employees, business partners, and the public can enter a corporate Web site.


The Benefits of EC

Benefits to OrganizationsExpands the marketplace to national and

international marketsDecreases the cost of creating, processing,

distributing, storing and retrieving paper-based information

Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)


Benefits of EC (cont.)

Benefits to consumers Enables consumers to shop or do other

transactions 24 hours a day, all year round from almost any location

Provides consumers with more choices Provides consumers with less expensive

products and services by allowing them to shop in many places and conduct quick comparisons

Facilitates competition, which results in substantial discounts



Allows quick delivery of products and services (in some cases) especially with digitized products

Consumers can receive relevant and detailed information in seconds, rather than in days or weeks

Makes it possible to participate in virtual auctions

Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences



Benefits to society 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

Allows some merchandise to be sold at lower prices, benefiting less affluent people

Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them

Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality


The Limitations of EC Technical limitations

There is a lack of universally accepted standards for quality, security, and reliability

The telecommunications bandwidth is insufficient Software development tools are still evolving There 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

chapter 1 overview of electronic commerce e/arabic/index.jsp?site_no=2123

Documents

framework of ec

ec activities

partial ec pure ec

concepts internet ec

ec framework ec applications

benefits of ec

contribution of ec

limitations of ec slide