COMP2113 Introduction to Electronic Commerce

1. COMP2113Introduction to Electronic Commerce Richard Henson University of Worcester February2008

2. Introduction to E-commerce • Objectives: • Describe the traditional supply chain • Define electronic commerce and explain new options for trading that have become available through e-commerce • Distinguish between B2C and B2B • Identify and explain design features of web pages that can be used by businesses • Categorise websites into one of several different types

3. What is Commerce? • Historically… • associated with the activities directly involved with trading • Other activities also involved in running a business!!! • e.g. marketing… management… • More recently, term used more broadly, to encompass all the activities in the “supply chain”

4. Activities involved in Commerce? • In groups of 3 or 4, compose a list of activities associated with businesses...

5. The Supply Chain Identify need for product Provide after-sales support Develop product Customer buys product Gives customer information on other/new products Make product Market product downstream upstream

6. Activities involved in E-commerce? • In the same group, compose a list of activities specifically associated with e-commerce... (i.e. buying online)

7. Activities involved in E-commerce • Some examples: • electronic activities that promote the organisation’s products • electronic distribution of information about those products • on-line ordering • on-line payment • “intelligence” collected electronically about customer buying behaviour

8. E-commerce and E-business • E-commerce is concerned with the storage, processing and communication of electronic information through the supply chain • E-business is concerned concerned with using software to replace manual procedures within a particular area of the supply chain • e.g. procurement (buying) • therefore actually part of e-commerce… • Neither of these are particularly new…

9. B2B, B2C, B2E • Broadly three types of online transaction that could be regarded as part of doing business: • Business sells to another business (B2B) • Business sells to the consumer (B2C) • Business communicates with its employees (B2E) • Many organisations will use B2B to get raw materials • And use B2C (direct sales, possibly cutting out the vendor) to market their products

10. E-commerce definitions • Almost as many definitions as there are e-commerce text books! • One popular definition or e-commerce: “doing business, making use of electronic communications media” • More accurate definition of e-commerce includes on-line marketing and after-sales support as well as buying and selling on-line • Communication of information relating to business transactions can occur through any digital media, not only via the Internet

11. Evolution of “doing business” • Pre-18th century: all products made individually by hand, sometimes to customer requirements, mostly taken to “market” • 18th/19th century: business transformed by inventions such as spinning jenny that allowed processes to be automated • 20th: Mass production revolutionised business • 20th: Distribution enabled products to be delivered to customers anywhere in the world • 21st: Internet Economy – products themselves customised to meet customer requirements

12. Is E-commerce that new? • Not for transactions between businesses… • Larger companies have used EDI (Electronic Data Exchange) and EFT (Electronic Funds Transfer) since the early 1980s, if not earlier… • But… many smaller companies continued to use traditional methods because of the high cost of using computers and telephone lines • Completely new for business to consumer transactions, because consumers have only quite recently been able to acquire the technology to participate

13. Telecoms link B2B e-commerce • One business (seller) communicates information relating to ordering and payment electronically with another business (buyer) • either by private telecoms link • Or via a secure Internet channel Business A - seller Business B - buyer

14. Secure Internet link B2C e-commerce • Business markets products via website and the Internet • Business communicates information relating to ordering and payment electronically directly to the customer via secure Internet line E-Business - seller Consumer - buyer

15. Activities involved in B2B e-commerce (1) • Business develops a good working relationship with its suppliers • Suppliers provide secure access to parts of their information systems to check on product availability, etc. Supplier Business

16. Activities involved in B2B e-commerce (2) • Business provides secure access to parts of its information systems to ease communication with suppliers • Suppliers send invoices • Business can make payment electronically business supplier

17. Internet E-commerce (B2C) the revolution! • Post 1995: direct business to consumer transactions (B2C e-commerce) • impossible before this date because consumers simply didn’t possess the technology • technology that makes B2C possible had been building for at least 10 years • Leapt into the public domain in 1996 (US), two years later (UK) • now sometimes (increasingly?) the case that consumers have more technology in their homes (including small networks) than the small business.

18. Differences in activities involved in B2B and B2C e-commerce • Over to you again…

19. Who should use e-commerce? • Anyone… • who has something to sell • Can benefit by having a potential world market, 24 hours a day, 365 days a year! • Must FIRST… be aware of the set up, running costs and implications of selling Internationally in this way… • Many UK businesses choose only to deal with UK customers… http://www.imrg.org

20. Technologies involved in the development of e-commerce • This is NOT a module about technology… • but e-commerce couldn’t have happened without it • fascinating to briefly focus on the gradual them earth shatteringly fast developments of the 1980s and 1990s • Technologies at the end of the 70s: • VERY large & expensive computers • Software to replace manual processing of paper documents: • Order processing systems • Stock control systems

21. Technologies involved in the development of e-commerce • Digital processing and storage technologies: • faster, more efficient, more powerful CPUs • faster, more compact, computer memory • result – the “home” computer • Development of digital communications technologies & secure digital networks • networks became digital • Internet provided connectivity

22. Technologies involved in the development of e-commerce • Network Software became standardised • communications protocols • Applications such as EDI, EFT • Development of secure analogue-digital computer-computer communications through public networks • digital Home computer could hook up to digital Internet via sound-based telephone network

23. Technologies involved in the development of e-commerce • Development of User-friendly human-computer interfaces • allowed non-computer professionals to use “home” computers effectively • Examples: • Windows & Windows applications • Internet browsers for viewing web pages

24. Technological Revolution • It just happened that all these technologies came to maturity at just the right time… • The Internet now became accessible through Tim Berners-Lee’s wonderful invention • The World Wide Web… • In Tim’s own words: http://www.bcs.org/server.php?show=nav.8997

25. Requirements for a Website offering B2C e-commerce • Provide access to company marketing 24 hours and day, 7 days a week, anywhere in the world • Need to: • look good (company/product image, etc.) • be quickly downloadable (downfall of boo.com?) • be up to date • provide useful product information • Should give the customer an opportunity to buy… [otherwise, not really e-commerce!]

26. How much do people use E-commerce Websites? • Recent UK figures for online sales: • “For 2005 as a whole, it calculated that spending over the internet in the UK totalled £19.2bn, 32% more than 2004 • Shoppers spent £4.98bn online during the 2005 Christmas period, compared with £3.3bn for the same time a year earlier, according to e-commerce trade body IMRG • Some 24 million UK consumers shopped online in 2005, spending on average £816 each during the year, and £208 in the run-up to Christmas. • IMRG now forecasts that e-commerce will grow by 36% in 2006, with sales worth £26bn” • Figures: http://news.bbc.co.uk/1/hi/business/4630472.stm

27. Producing Websites for B2C e-commerce • A Website “on the net” consists of a number of files held on an Internet server • Can use software that makes uploading files as easy as transferring files between folders • Web pages themselves not difficult to produce • don’t need to be a programmer • but you do need to have an eye for design…

28. Websites for B2C e-commerce • Plenty of development environments available that can: • work with business logic • use software to generate the code for you • even for sites that work with remote databases! • Navigation through the site is all important • pages must link together in a coherent way...

29. Shopping website categories • Several possibilities in order of increasing complexity/functionality: • “Small Ad” on a page on another website • “Billboard” web page • “Cyberbrochure” of linked pages • Detailed Product Information • Portal • “Virtual shopfront” • Each type can now be scrutinised...

30. E-Commerce website types: “small ad” • Most basic solution • Example website: • provides basic company information • should also include telephone number and address • can also be the basis for e-commerce by including an e-mail address that can be used to make orders

31. E-Commerce website types: “billboard” • Use of a whole web page allows more detailed information to be included • User can become interactive through use of a HTML form to send an email to a contact • Unique URL: • Emails and stationary (letters/faxes/business cards) can include the URL of the website in their “signatures” to advertise the existence of the web site to contacts/customers • The site can be made accessible to search engines in a focused way through use of keywords • Example: musicians site Rod Pooley - Organist

32. E-Commerce website types: “Cyber brochure” • Much larger undertaking than a billboard • Information sheets, brochures and general information about the business and its products/services • Includes items that point to other web-based sources and information • Gives businesses greater coverage and a higher profile • Example Web site: • Left Bank – riverside complex in Hereford

33. E-Commerce website types: “Local Portal” • Gateway to other sites • Can be used with cyberbrochure type • Provides a way into the web, and could be used as a user “home page” • Example website: • Chadds - department store in Hereford • links to related websites • local & community news/information

34. E-Commerce website types: “International portal” • Sells space for advertising goods and services - national or international • Has a facility to search the web • allows directed advertising • if user is searching on a keyword relating to a type of product or service, particular advertising banners may flash up on the screen • Example website: BBC web site

35. E-Commerce website types: Virtual Storefront • A full e-commerce implementation • Provides combinations of: • Full information about the company (cyber brochure approach) • Links to other local/international) sites and search engines (Portal approach) • On-line ordering of products and services • Secure on-line payment systems • Example website: • Amazon.co.uk

36. E-Commerce website types: “subscription only” • Members/customers only site • make money by offering service not products • Username/password only available by: • subscribing to an on-line magazine • filling in an on-line form • An increasing number of sites are requiring payment before subscription is allowed… • e.g. Information Finders like 192.com • e.g. Business Travel

37. Next Week • The technologies that drive e-commerce: • computers • networks & the Internet • Browsers & servers • web pages • web applications