Electronic Commerce

Semester 1 Term 1 Lecture 1

Defining Electronic Commerce

• Depending on whom you ask, electronic commerce (often referred to as e-commerce) has a different definition

• Four perspectives are evident:– Communications perspective– Business process perspective– Service perspective– Online perspective

Communications Perspective

• From a communications perspective, electronic commerce is the delivery of information, products/services, or payments via telephone lines, computer networks, or any other means

Service Perspective

• From a service perspective, electronic commerce 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

Online Perspective

• From an online perspective, electronic commerce provides the capability of buying and selling products and information on the Internet and other online services

Aim of Electronic Commerce• Electronic commerce endeavours to improve the

execution of business transactions over various networks

• More specifically, e-commerce enables the execution of information-laden transactions between two or more parties using inter-connected networks

• These networks can be a combination of the traditional telephone system, cable TV, leased lines and wireless communications

Business Rationale for Using E-Commerce

• The business rationale for the use of e-commerce can be explained by the simple equation: Profit=Revenue-Costs

• Firms use technology to either lower operating costs or increase revenue

Potential Benefits of E-Commerce

• Depending on how it is applied, electronic commerce has the potential to increase revenue by creating new markets for old products, creating new information-based products, and establishing new service delivery channels to better serve and interact with customers

More Potential Benefits of E-Commerce

• The transaction management aspect of e-commerce can also enable firms to reduce operating costs by enabling better co-ordination in the sales, production and distribution processes and to consolidate operations and reduce overhead

History of E-Commerce

• The need for electronic commerce stems from the demand within business and government to make better use of computing and to better apply computer technology to improve customer interaction, business processes, and information exchange both within an enterprise and across enterprises

Milestones in E-Commerce Development

• During the 1970s, the introduction of electronic funds transfer (EFT) between banks over secure private networks changed financial markets

• During the late 1970s and early 1980s, electronic commerce became widespread within companies in the form of electronic messaging technologies: electronic data interchange (EDI) and electronic mail

Business Benefits of Electronic Messaging Technologies

• Electronic messaging technologies streamline business processes by reducing paperwork and increasing automation

• Business exchanges traditionally conducted with paper, are conducted electronically

• Electronic data interchange allows companies to send/receive business documents in a standardised format to/from their suppliers