0. Chapter 1
Overview of Electronic Commerce

1. 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
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2. Electronic Commerce: Definitions and Concepts
electronic commerce (EC)
The process of buying, selling, transferring, or exchanging products, services, or information via computer networks.
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3. Electronic Commerce: Definitions and Concepts
e-business
E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also
Servicing customers
Collaborating with business partners
Conducting electronic transactions within an organization
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4. Electronic Commerce: Definitions and Concepts
1.1
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5. Electronic Commerce: Definitions and 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
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6. Electronic Commerce: Definitions and Concepts
PURE VERSUS PARTIAL EC
Pure EC: all dimensions are digital
virtual (pure-play) organizations
Organizations 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) organizations
Conduct EC activities
Do their primary business in the physical world
Examples: GE, IBM, Intel
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7. Electronic Commerce: Definitions and Concepts
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.
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8. Electronic Commerce: Definitions and Concepts
Interorganizational information systems (IOSs)
Communications systems that allow routine transaction processing and information flow between two or more organizations.
intraorganizational information systems
Communication systems that enable
e-commerce activities to go on within individual organizations.
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9. Electronic Commerce: Definitions and Concepts
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.
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10. The EC Framework, Classification, and Content
An EC Framework
EC applications supported by infrastructure and 5 support areas
People
Public policy
Technical standards and protocols
Business partners
Support services
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11. The EC Framework, Classification, and Content
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12. 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-tailing
Online retailing, usually B2C. E-tailors began to fail in 1999
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13. The EC Framework, Classification, and Content
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.
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14. The EC Framework, Classification, and Content
location-based commerce (l-commerce)
M-commerce transactions targeted to individuals in specific locations, at specific times.
intrabusiness EC
E-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.
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15. The EC Framework, Classification, and Content
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-peer
Technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce.
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16. The EC Framework, Classification, and Content
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.
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17. 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.
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18. 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
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19. 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
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20. The EC Framework, Classification, and Content
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.
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21. 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.
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22. 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 world
A user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second Life.
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23. The Business Environment Drives E-Commerce
The Business Environment Impact Model
Business Pressures and Opportunities
Market, societal and technological.
Organizational Response Strategies
Agility, CRM, KMS, E-markets, …etc.
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24. The Business Environment Drives E-Commerce
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25. Sun 25-9 EC BUSINESS MODELS
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
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26. 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.
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27. EC BUSINESS MODELS Find the best price affiliate marketing
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.
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28. 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.
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29. 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.
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30. Thu 29-9 (3) The Digital Enterprise
A 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.
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31. The Digital Enterprise
corporate portal
A major gateway through which employees, business partners, and the public can enter a corporate Web site.
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32. 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
Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)
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33. 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
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34. Benefits of EC (cont.)
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
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35. Benefits of EC (cont.) 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
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36. 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
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