1. Course Overview & Introduction Lectures 1,2,3
E-Commerce
Course Overview & Introduction
Lectures 1,2,3

2. Electronic Commerce & E-Business
Overview of
Electronic Commerce & E-Business

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

4. E-Business Definitions & Concepts
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 Information)
Collaborating with business partners
Conducting electronic transactions within an organization (Intra-Business Activities)
Non-Profit Activities (Community Building)

5. Basic Definition & Concepts
E-Business & E-Commerce defined from these perspectives
Communications
Business process
Service
Online Collaborations
Community

6. E-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.”

7. Basic Concepts & Definition
So 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)
Electronic Business has often been defined as any business carried out in electronic form (p.4). This would include electronic data interchange (EDI). This means that E-Business can trace its roots back to the 1960’s, when a few LARGE companies established dedicated communications links to allow their suppliers to dial in and download orders from their computers.
Initially the term eCommerce was used for describing the sales of goods and services on the Internet. The term E-Business has now become more common, as it reflects the broader interaction of business processes, applications, and organizational structure (see Kalakota and Robinson definition). It includes strategy and the use of information technology to improve quality, reduce cost, speed delivery and achieve other organizational goals.
While definitions vary, the Internet remains central to any discussion of E-Business.
Not all e-business is carried out on the Internet, but it is undeniable that the rise in the use of the Internet is the single most important enabler of e-business of any type. (p.6) You’ll see later in the course how the costs of EDI have been dramatically lowered by the Internet.

8. Examples of E-Business
Yahoo
eBay
Amazon
Priceline
Sears
Virtual University of Pakistan
ATM machines???
Yahoo, eBay, Amazon and Priceline are all examples of “pure-play” Internet companies. They have no offline physical presence (except for advertising).
Sears is an example of an offline company that now does significant business online.
ATM machines represented a significant step in the banks’ process of moving customer service to an electronic format. Doing so dramatically reduced their costs, as represented by the graph on p.7, which shows the costs of banking for different delivery channels. The cost of doing business in a bank branch (personally seeing a teller) was over $1.00 (probably much higher than that). By using the telephone the cost drops to under 60 cents. An ATM cuts that in half, to about 30 cents. But the cost of an Internet transaction can be less than a penny.

10. EC Definitions & Concepts
Traditional commerce: all dimensions are physical
Brick-and-mortar organizations
Old-economy organizations (corporations)
Perform all business off-line
Sell physical products by means of physical agents

11. EC Definitions & Concepts
Pure EC: all dimensions are digital
Pure online (virtual) organizations
New-economy organization
Sell products or services only online
Partial EC: a mix of digital and physical dimensions
Click-and-mortar organizations
Conduct EC activities
Do their primary business in the physical world

12. The Dimensions of Electronic Commerce

13. Physical to Virtual Interfacing
Old-economy companies are extending their reach by offering on-line services (catalogs, commodities, and e-services),
Office Depot (Office supplies; #2 web retailer, after Amazon) ( & (
LL Bean (Catalog sales; Dogs are in at LL Bean) (
Barnes and Noble(Booksellers) (
Boeing Parts Network (24/7 parts for airlines) (
Outreach to customers.
Commodities sell well in e-space.

18. EC Definitions & Concepts
Internet vs. Non-Internet EC
Internet EC
Use of Websites to advertise, Buy & Sell
Much cheaper and highly accessible
Non-Internet EC
VANs—value-added networks
LANs—local area networks
Single computerized machines
Using a smart card in a vending machine
Using a cell phone to make an online purchase

19. The EC Framework and Field
An EC Framework
EC applications supported by infrastructure and 5 support areas
People
Public policy
Technical standards and protocols
Business partners (mutual collaboration)
Support services

20. A Framework for EC

21. Classification of EC by the Nature 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

22. Examples! Business-to-Consumer (B2C)
Yahoo! ( - (aggregator) leading portal and most visited e-space!
E-Trade ( On-line investing and banking; moving to click-and-mortar outposts.
McAfee ( Software subscription services for virus scanning.
Software purchase, delivery and update, example is: Copernic (
Digital Content Services; example is: Sony Music (

23. Classification of EC by the Nature of the Transaction 2
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

24. Examples! Consumer-to-Consumer (C2C)
Ebay ( - (facilitator) electronic auctions with consumers handling transaction and shipping.
Napster ( - (facilitator) peer-to-peer music exchange; courts not happy.
Groove Networks ( (facilitator) secure peer-to-peer collaboration services. Founded by Ray Ozzie, the creator of Lotus Notes.

25. Classification of EC by the Nature of the Transaction 3
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

26. Classification of EC by the Nature of the Transaction 4
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

27. Classification of EC by the Nature of the Transaction 5
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

28. Interdisciplinary Nature of EC
Management information systems
Accounting and auditing
Management
Business law and ethics
Others
Marketing
Computer sciences
Consumer behavior and psychology
Finance
Economics

29. Brief History of E-Commerce
Some major shifts from 70s till now
Brief History of E-Commerce

30. 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
EFT

31. Brief History of EC 2
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

32. Brief History of EC 3 Interorganizational systems (IOS)
Stock trading
Travel reservation systems
Internet became more commercialized in the early 1990s
Almost all medium-and large-sized organization in the world now has a Web site
Most large corporations have comprehensive portals

33. Brief History of EC 4 EC Successes Pure online eBay VeriSign AOL
Checkpoint
Click-and-mortar GE
IBM
Intel
Schwab
EC Failures
E-tailors began to fail in 1999
This does not mean that EC’s days are numbered
Large EC companies like Amazon.com are expanding but success or failure is not certain

34. The Benefits of EC Benefits to Organizations
Expands the marketplace to national and international markets
Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information
Allows reduced inventories and overhead by facilitating pull-type supply chain management

35. Benefits of EC
The pull-type processing allows for customization of products and services which provides competitive advantage to its implementers
Supports business processes reengineering (BPR) efforts
Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)

36. Benefits of EC 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

37. Benefits of EC
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
Facilitates competition, which results in substantial discounts

38. Benefits of EC 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

39. 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

40. The Concept of Digital Economy
An Introduction
The Concept of Digital Economy

41. The Digital Revolution and the Economic Impact of EC
In the Digital Revolution the economy is based on digital technologies including:
Digital communication networks
Computers
Software
Other related information technologies
Also called:
Internet economy
New economy
Web economy

42. The Digital Revolution and the Economic Impact of EC
Digital networking and communication infrastructures provide a global platform where people and organizations:
Interact
Communicate
Collaborate
Search for information

43. The Digital Revolution and the Economic Impact of EC 3
The global platform includes these characteristics
A vast array of digitizable products
Consumers and firms conduct financial transactions digitally
Microprocessors and networking capabilities embedded in physical goods

44. The Digital Revolution and the Economic Impact of 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

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

46. Contributions of EC towards modern Organizations
Types of Pressures and EC as a solution
Contributions of EC towards modern Organizations

47. Business 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)
Societal
Technological

48. Major Business Pressures & the Role of EC

49. Organizational Responses
Strategic Planning and Systems
Provide organizations with strategic advantages, enabling them to:
Increase their market share
Better negotiate with their suppliers
Prevent competitors from entering into their territory

50. Organizational Responses 2
Continuous improvement efforts
Many companies continuously conduct programs to improve:
Productivity
Quality
Customer service
Business process reengineering (BPR)
Strong business pressures may require a radical change
Such an effort is referred to as business process reengineering (BPR)

51. Organizational Responses 3
Business alliances
Alliances with other companies, even competitors, can be beneficial
Virtual corporation—electronically supported temporary joint venture
Special organization for a specific time-limited mission
Electronic markets
Optimize trading efficiency
Enable their members to compete globally
Require the collaboration of the different companies and competitors

52. Organizational Responses 4
Reduction in cycle time and time to market
Cycle time reduction—shortening the time it takes for a business to complete a productive activity from its beginning to end
Extremely important for increasing productivity and competitiveness
Extranet-based applications expedite steps in the process of product or service development, testing, and implementation

53. Organizational Responses 5
Empowerment of employees and collaborative work
Employees given the authority to act and make decisions on their own improves
Productivity
Customer relationship management (CRM)
Empowered sales people and customer service employees:
Make customers happy quickly
Help increase customer loyalty

54. Organizational Responses 6
Supply chain improvements
Help reduce supply chain delays, inventories and eliminate other inefficiencies
Mass customization—production of large quantities of customized items
Business problem is how to efficiently provide customization
EC is an ideal facilitator of mass customization by enabling electronic ordering to reach the production facility in minutes

55. Putting It All Together
The first step is to put in the right connective networks
The vast majority of EC is done on computers connected to:
Internet
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

56. Putting It All Together
Major concern of today’s companies—how to transform themselves to take part in digital economy
Example:Toys, Inc.
Uses intranet for internal communications, collaboration, dissemination of information
Networked to e-marketspaces and large corporations
Corporate portal for communication and collaboration with business partners