e.commerce

© Atif Hassan© Atif Hassan

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E-Commerce & E-Commerce & Computer Computer ApplicationsApplicationsBBA (Hons) 5BBA (Hons) 5thth Course Overview & Course Overview & IntroductionIntroductionLectures 1,2,3Lectures 1,2,3

Course Lecturer: Atif HassanCourse Lecturer: Atif Hassan


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Text & ReferencesText & References

Focus will be on topics rather Chapters of any textMany Text/books are available in market

Efraim Turban, Joe Lee, David King & Michael Chung. (2004). “Electronic Commerce: A Managerial Perspective”. Prentice Hall International

Mostly topics will be taught from the Text but students need to broaden their view and consult as many additional references as possible (Preferably available in local market and from the Internet)


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Overview of

Electronic Commerce & E-Business


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Learning ObjectivesLearning Objectives

Define electronic commerce (EC) and describe its various categories

Describe the content and frameworks of EC

Describe the major types of EC transactions

Discuss the benefits of EC to organizations, consumers, and society

Describe the limitations of EC


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Learning ObjectivesLearning Objectives

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 business pressures


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EC Definitions & ConceptsEC Definitions & Concepts

Electronic Commerce (EC) is the process of buying, selling, or exchanging products, services, and information via computer networks


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E-Business Definitions & E-Business Definitions & ConceptsConcepts

E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also

Servicing customers (Value Added Servicing customers (Value Added Information)Information)

Collaborating with business partnersCollaborating with business partners

Conducting electronic transactions Conducting electronic transactions within an organization (Intra-Business within an organization (Intra-Business Activities)Activities)

Non-Profit Activities (Community Non-Profit Activities (Community Building)Building)


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Basic Definition & Basic Definition & ConceptsConcepts

E-Business & E-Commerce defined from these perspectives

CommunicationsCommunications

Business processBusiness process

ServiceService

Online CollaborationsOnline Collaborations

CommunityCommunity


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E-BusinessE-Business

Quote for Lou Gerstner, IBM’s CEO:

“E-Business is all about speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage.”


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Basic Concepts & Basic Concepts & DefinitionDefinitionSo what is E-Business?

Simple definition: Any business carried out in electronic form.

“The complex fusion of business processes, enterprise applications, and organizational structure to create a high-performance business model.” (Kalakota and Robinson)


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Examples of E-BusinessExamples of E-Business

Yahoo

eBay

Amazon

Priceline

Sears

Virtual University of Pakistan

ATM machines???


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Traditional commerce: Traditional commerce: all dimensions are all dimensions are physicalphysical

Brick-and-mortar organizations

Old-economy Old-economy organizations organizations (corporations)(corporations)

Perform all Perform all business off-linebusiness off-line

Sell physical Sell physical products by means products by means of physical agentsof physical agents


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Pure EC: all dimensions Pure EC: all dimensions are digitalare digital

Pure online (virtual) organizations

New-economy organization

Sell products or services only online

Partial EC: a mix of digital Partial EC: a mix of digital and physical dimensionsand physical dimensions

Click-and-mortar organizations

Conduct EC activities

Do their primary business in the physical world


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The Dimensions of Electronic The Dimensions of Electronic CommerceCommerce


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Internet vs. Non-Internet ECInternet ECInternet EC

Use of Websites to advertise, Buy & Sell

Much cheaper and highly accessible

Non-Internet ECNon-Internet EC

VANs—value-added networks

LANs—local area networks

Single computerized machines

Using a smart card in a vending Using a smart card in a vending machinemachine

Using a cell phone to make an online Using a cell phone to make an online purchasepurchase


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The EC Framework and The EC Framework and FieldField

An EC FrameworkEC applications supported by EC applications supported by infrastructure and 5 support areasinfrastructure and 5 support areas

PeoplePublic policyTechnical standards and protocolsBusiness partners (mutual collaboration)Support services


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A Framework for ECA Framework for EC


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Classification of EC by the Classification of EC by the Nature of the TransactionNature of the Transaction

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


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Examples!Examples!

Business-to-Consumer (B2C)Yahoo!Yahoo! (www.yahoo.com) - (aggregator) leading (www.yahoo.com) - (aggregator) leading portalportal and most visited e-space! and most visited e-space!

E-Trade (www.etrade.com) On-line investing E-Trade (www.etrade.com) On-line investing and banking; moving to click-and-mortar and banking; moving to click-and-mortar outposts. outposts.

McAfee (www.mcafee.com) Software McAfee (www.mcafee.com) Software subscription services for virus scanning.subscription services for virus scanning.

Software purchase, delivery and update, Software purchase, delivery and update, example is: Copernic (www.copernic.com)example is: Copernic (www.copernic.com)

Digital Content Services; example is: Sony Music Digital Content Services; example is: Sony Music (www.sony.com) (www.sony.com)


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Classification of EC by the Classification of EC by the Nature of the Transaction Nature of the Transaction 22

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


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Examples!Examples!

Consumer-to-Consumer (C2C)EbayEbay (www.ebay.com) - (facilitator) electronic (www.ebay.com) - (facilitator) electronic auctions with consumers handling transaction auctions with consumers handling transaction and shipping.and shipping.

NapsterNapster (www.napster.com) - (facilitator) peer- (www.napster.com) - (facilitator) peer-to-peer music exchange; courts not happy.to-peer music exchange; courts not happy.

Groove NetworksGroove Networks (www.groove.com) (facilitator) (www.groove.com) (facilitator) secure peer-to-peer collaboration services. secure peer-to-peer collaboration services. Founded by Ray Ozzie, the creator of Lotus Founded by Ray Ozzie, the creator of Lotus Notes.Notes.


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Mobile commerce (m-commerce)—EC transactions and activities conducted in a wireless environment

Location-commerce—(l-commerce)

m-commerce transactions targeted to individuals in specific locations, at specific times


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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


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Business-to-employee (B2E): EC model in which an organization delivers services, information, or products to its individual employees

Collaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate online

E-government: Government-to-citizens (G2C): EC model in which a government entity buys or provides good, services, or information to businesses or individual citizens


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Brief History of E-Brief History of E-CommerceCommerce

Some major shifts from 70s till Some major shifts from 70s till nownow


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Brief History of ECBrief History of EC

EC applications first developed in the early 1970s

Electronic funds Electronic funds transfer (EFT)transfer (EFT)

Limited to:Large corporationsLarge corporations

Financial institutionsFinancial institutions

A few other daring A few other daring businessesbusinesses


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Brief History of EC Brief History of EC 22

Electronic data interchange (EDI)—electronic transfer of documents:

Purchase ordersPurchase orders

InvoicesInvoices

E-payments E-payments between firms doing between firms doing businessbusiness

Enlarged pool of participants to include:

ManufacturersManufacturers

RetailersRetailers

Service providersService providers


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Interorganizational systems (IOS)Stock tradingStock trading

Travel reservation systemsTravel reservation systems

Internet became more commercialized in the early 1990s

Almost all medium-and large-Almost all medium-and large-sized organization in the world sized organization in the world now has a Web sitenow has a Web site

Most large corporations have Most large corporations have comprehensive portalscomprehensive portals


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EC SuccessesPure onlinePure online

eBay

VeriSign

AOL

Checkpoint

Click-and-mortarClick-and-mortar

GE

IBM

Intel

Schwab

EC FailuresE-tailors began to E-tailors began to fail in 1999fail in 1999

This does not mean This does not mean that EC’s days are that EC’s days are numberednumbered

Large EC companies Large EC companies like Amazon.com like Amazon.com are expanding but are expanding but success or failure is success or failure is not certainnot certain


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The Benefits of ECThe Benefits of EC

Benefits to OrganizationsExpands the marketplace to national Expands the marketplace to national and international marketsand international markets

Decreases the cost of creating, Decreases the cost of creating, processing, distributing, storing and processing, distributing, storing and retrieving paper-based informationretrieving paper-based information

Allows reduced inventories and Allows reduced inventories and overhead by facilitating pull-type overhead by facilitating pull-type supply chain managementsupply chain management


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Benefits of ECBenefits of EC

The pull-type processing allows for The pull-type processing allows for customization of products and customization of products and services which provides services which provides competitive advantage to its competitive advantage to its implementersimplementers

Supports business processes Supports business processes reengineering (BPR) effortsreengineering (BPR) efforts

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


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Benefits of EC Benefits of EC

Benefits to consumersEnables consumers to shop or do Enables consumers to shop or do other transactions 24 hours a other transactions 24 hours a day, all year round from almost day, all year round from almost any locationany location

Provides consumers with more Provides consumers with more choiceschoices

Provides consumers with less Provides consumers with less expensive products and services expensive products and services by allowing them to shop in many by allowing them to shop in many places and conduct quick places and conduct quick comparisonscomparisons


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Benefits of ECBenefits of EC Allows quick delivery of products and Allows quick delivery of products and services (in some cases) especially services (in some cases) especially with digitized productswith digitized products

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

Makes it possible to participate in Makes it possible to participate in virtual auctionsvirtual auctions

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

Facilitates competition, which results Facilitates competition, which results in substantial discountsin substantial discounts


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Benefits of EC Benefits of EC

Benefits to societyEnables more individuals to work at Enables more individuals to work at home, and to do less traveling for home, and to do less traveling for shopping, resulting in less traffic on shopping, resulting in less traffic on the roads, and lower air pollutionthe roads, and lower air pollution

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

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

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


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The Limitations of ECThe Limitations of ECTechnical limitations

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

The telecommunications bandwidth is The telecommunications bandwidth is insufficientinsufficient

Software development tools are still evolvingSoftware development tools are still evolving

There are difficulties in integrating the There are difficulties in integrating the Internet and EC software with some existing Internet and EC software with some existing (especially legacy) applications and (especially legacy) applications and databases.databases.

Special Web servers in addition to the Special Web servers in addition to the network servers are needed (added cost).network servers are needed (added cost).

Internet accessibility is still expensive and/or Internet accessibility is still expensive and/or inconvenientinconvenient


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The Concept of Digital The Concept of Digital EconomyEconomy

An IntroductionAn Introduction


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The Digital Revolution and The Digital Revolution and

the Economic Impact of the Economic Impact of ECEC

In the Digital Revolution the economy is based on digital technologies including:

Digital communication networksDigital communication networks

ComputersComputers

SoftwareSoftware

Other related information Other related information technologiestechnologies

Also called:Internet economyInternet economy

New economyNew economy

Web economyWeb economy


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the Economic Impact of the Economic Impact of EC EC The term digital economy also

refers to the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating e-commerce and vast organizational changes


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the Economic Impact of the Economic Impact of EC EC

This convergence enables all types of information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwideWeb-based EC systems are accelerating the digital revolution by providing competitive advantage to organizations


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Contributions of EC Contributions of EC towards modern towards modern OrganizationsOrganizations

Types of Pressures and EC as a Types of Pressures and EC as a solutionsolution


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Business PressuresBusiness Pressures

The term business environment refers to the social, economic, legal, technological, and political actions that affect business activities

Business pressures are divided into the following categories:

Market (economic)Market (economic)

SocietalSocietal

TechnologicalTechnological


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Major Business Pressures & Major Business Pressures & the Role of ECthe Role of EC


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Organizational ResponsesOrganizational Responses

Strategic Planning and SystemsProvide organizations with Provide organizations with strategic advantages, enabling strategic advantages, enabling them to:them to:

Increase their market shareBetter negotiate with their suppliersPrevent competitors from entering into their territory


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Organizational Responses Organizational Responses 22

Continuous improvement effortsMany companies continuously Many companies continuously conduct programs to improve:conduct programs to improve:

Productivity

Quality

Customer service

Business process reengineering (BPR)Strong business pressures may Strong business pressures may require a radical changerequire a radical change

Such an effort is referred to as Such an effort is referred to as business process reengineering business process reengineering (BPR)(BPR)


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Business alliancesAlliances with other companies, even Alliances with other companies, even competitors, can be beneficialcompetitors, can be beneficial

Virtual corporation—Virtual corporation—electronically supported electronically supported temporary joint venturetemporary joint venture

Special organization for a specific time-limited mission

Electronic marketsOptimize trading efficiencyOptimize trading efficiency

Enable their members to compete globallyEnable their members to compete globally

Require the collaboration of the different Require the collaboration of the different companies and competitorscompanies and competitors


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Reduction in cycle time and time to market

Cycle time reduction—shortening the Cycle time reduction—shortening the time it takes for a business to time it takes for a business to complete a productive activity from complete a productive activity from its beginning to endits beginning to end

Extremely important for increasing Extremely important for increasing productivity and competitivenessproductivity and competitiveness

Extranet-based applications Extranet-based applications expedite steps in the process of expedite steps in the process of product or service development, product or service development, testing, and implementationtesting, and implementation


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Empowerment of employees and collaborative work

Employees given the authority to Employees given the authority to act and make decisions on their own act and make decisions on their own improves improves

Productivity Customer relationship management (CRM)

Empowered sales people and Empowered sales people and customer service employees:customer service employees:

Make customers happy quicklyHelp increase customer loyalty


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Supply chain improvementsHelp reduce supply chain delays, Help reduce supply chain delays, inventories and eliminate other inventories and eliminate other inefficienciesinefficiencies

Mass customization—production of large quantities of customized items

Business problem is how to Business problem is how to efficiently provide customizationefficiently provide customization

EC is an ideal facilitator of mass EC is an ideal facilitator of mass customization by enabling customization by enabling electronic ordering to reach the electronic ordering to reach the production facility in minutesproduction facility in minutes

e.commerce

Documents

ec model

organizations business

ec activities

frameworks of ec

benefits of ec

contribution of ec

partial ec

client business