E-Commerce

1. E-Commerce By Shah Muhammad Butt MS (Networks & Telecom) M.Sc Computer ScienceCCNA, JNCIA shahmuhammad@gmail.com

2. Lesson 1 Introduction Website http://sites.google.com/site/nistedchs http://sites.google.com/site/nisteisb DCHS Group http://groups.google.com.pk/group/niste-dchs

3. E-Commerce - Definition By definition, e-commerce means the buying or selling of goods and services over the Internet. According to the Pew Internet & American Life Project, 66 percent of the adults online have purchased something over the Internet, whether it's books, shoes, etc.

4. E-Commerce – classification… A common classification of EC is by the nature of transaction: Business-to-business (B2B): electronic market transactions that take place between organizations. E.g: hp.com Business-to-consumer (B2C): retailing transactions with individual shoppers – typical shopper at Amazon.com is a consumer Consumer-to-consumer (C2C): consumer sells directly to consumers, examples - individuals selling in classified ads, auction sites allowing individuals to put up items for auction – e.g, e-bay.com

5. Main Elements B2C – Business to Consumer Web Shopping B2B – Business to Business Transactions between businesses via Web e-Procurement Supporting Business Processes Currency Converter C2C – Customer to Customer Online auctions B2G – Business to Government Tax payment

6. Do we need e-Commerce? Where?

7. E-procurement applications Indirect goods e-procurement 4. Purchase order is electronically placed 3. Order approvation compliant to company standards and procedures 2. Purchase request is performed by employees via a Web interface 5. Order is fulfilled by the supplier 1. Product selection from available catalogues 6. Product delivery 8. Payment request electronically forwarded 7. Product receipt

10. Basics Web client- machine that initiates internet request Web server – machine that services internet request Brower - software at the client side to interact with web data Intranet – an internal network of computers confined to a single place Extranet – when two or more intranets are connected with each other, they form an Extranet – e.g, Virtual Private Network Internet – a global network of networks

11. Internet Popularity To get a market of 50 Million People Participating: Radio took 38 years TV took 13 years Once it was open to the General Public, The Internet made to the 50 million person audience mark in just 4 years!!! Google took 3 years Facebook took 2 years

12. Internet Growth Trends 1977: 111 hosts on Internet 1981: 213 hosts 1983: 562 hosts 1984: 1,000 hosts 1986: 5,000 hosts 1987: 10,000 hosts 1989: 100,000 hosts 1992: 1,000,000 hosts 2001: 150 – 175 million hosts 2002: over 200 million hosts By 2010, about 80% of the planet on the Internet

17. EMTM 553 Types of E-payments • E-cash • Electronic wallets • Smart card • Credit card

18. Credit Cards • Credit card • Used for the majority of Internet purchases • Has a preset spending limit • Currently most convenient method • Most expensive e-payment mechanism • MasterCard: $0.29 + 2% of transaction value • Disadvantages • Does not work for small amount (too expensive) • Does not work for large amount (too expensive) • Charge card • No spending limit • Entire amount charged due at end of billing period

19. Processing a Payment Card Order

20. The SET protocol The SET protocol coordinates the activities of the customer, merchant, merchant’s bank, and card issuer. [Source: Stein]

21. Smart Cards • Plastic card containing an embedded microchip • Available for over 10 years • So far not successful in U.S., but popular in Europe, Australia, and Japan • Unsuccessful in U.S. partly because few card readers available • Smart cards gradually reappearing in U.S.; success depends on: • Critical mass of smart cards that support applications • Compatibility between smart cards, card-reader devices, and applications

22. Smart Card Applications • Ticketless travel • Seoul bus system: 4M cards, 1B transactions since 1996 • Authentication, ID • Medical records • Ecash • Store loyalty programs • Personal profiles • Government • Licenses • Mall parking . . .

23. Elements of E-Commerce Electronic funds transfers (EFTs) Also called wire transfers System of transferring money from one bank account directly to another without any paper money changing hands Electronic transmissions of account exchange information over private communications networks Used since the 60s Electronic data interchange (EDI) Transmitting computer-readable data in a standard format to another business Developed by the Data Interchange Standards Association and uses ANSI X12

24. B2B? B2C? C2C? B2G? G2B? Supporting Services? What are the elements of E-Commerce?

25. * E-Business *Enterprise Application Integration

26. Online Sales

27. Elements of Traditional Commerce: the Buyer’s Side Identify specific need Search for products or services that will satisfy the specific need Select a vendor Negotiate a purchase transaction Make payment Perform regular maintenance and make warranty claims

28. Elements of Traditional Commerce: the Seller’s Side Conduct market research to identify customer needs Create product or service that will meet customers’ needs Advertise and promote product or service Negotiate a sale transaction Ship goods and invoice to customer Receive and process customer payments Provide after-sale support, maintenance, and warranty services

29. Activities as Business Processes Business Processes refer to activities in which businesses engage, as they accomplish a specific element of commerce, including: Transferring funds Placing orders Sending invoices Shipping goods to customers

30. Advantages of E-Commerce (1) Electronic commerce can Increase sales decrease costs Web advertising reaches to a large amount of potential customers throughout the world Web creates virtual communities for specific products or services

31. Advantages of E-Commerce (2) A business can reduce the costs by using electronic commerce in its sales support order-taking processes Electronic commerce increases sale opportunities for the seller Electronic commerce increases purchasing opportunities for the buyer

32. General Welfare of Society Electronic commerce benefits the general welfare of society because: electronic payments of tax refunds and welfare cost less to issue and arrive securely electronic payments can be audited easily electronic commerce enables people to work from home (teleworking) electronic commerce makes products and services available in remote areas

33. Disadvantages of E-Commerce Some business processes are difficult to be implemented through electronic commerce Furniture? Businesses face cultural and legal obstacles to conducting electronic commerce E-Commerce (in Pakistan) Return-on-investment is difficult to apply to electronic commerce

34. Myths of E-Commerce All I Have to Do is Create A Website, People will Come to My Website, Buy My Goods or Services, and I Can Sit Back and Collect the Money. Doing Business on the Internet Is a Waste of Time. No one is really making money or growing their business. Taking Credit Cards Over the Internet is Next to Impossible for A Small Start Up Business. If I Put a Site on the Information Super Highway, I will have Instant Access to Millions of Potential Customers. I Put Up a Site On the Net and Nobody Come. Only Huge Sites with Big Budgets Enjoy a Large Volume of Traffic.

35. Myth 1 • All I Have to Do is Create A Website, People will Come to My Website, Buy My Goods or Services, and I Can Sit Back and Collect the Money. • Net business is not so different from real one • You need • A good business plan • A good marketing strategy • Understand the demographics of your customers • Offer customers a reason to buy from you • Its only easier to setup + less startup costs & operating expenses

36. Myth 2 • Doing Business on the Internet Is a Waste of Time. No one is really making money or growing their business. • E-commerce growth rate is over 145% with sales topping 150 billion dollars • Offers benefits to consumers such as instant access, 24/7, immediate feedback, highly adaptable

37. Myth 3 • Taking Credit Cards Over the Internet is Next to Impossible for A Small Start Up Business. • Not that difficult but can be daunting • Banks don’t offer to small businesses (high risk) • Service can be expensive or complicated • Some “fly by night” operators only stay in business until they get your deposit • But packages exist such as Yahoo!Small Business

38. Myth 4 • If I Put a Site on the Information Super Highway, I will have Instant Access to Millions of Potential Customers. • Building a website and putting it on the World Wide Web is analogous to putting up a billboard on a highway covered with billboards as far as the eye can see.

39. Myth 5 • I Put Up a Site On the Net and Nobody Come. Only Huge Sites with Big Budgets Enjoy a Large Volume of Traffic. • True, many people do spend a lot of time building their website only to find that no one is looking at it. • But other smaller sites do manage …

40. International Electronic Commerce About 60 percent of all electronic commerce sites are in English, therefore many language barriers need to be overcome The political structures of the world presents some challenges China, etc. Legal, tax, and privacy are concerns of international electronic commerce VAT, Spam, Porn, Piracy, etc.

41. International Issues of e-Commerce Trust Language Culture Infrastructure

42. Trust?

43. Language Issues To do business effectively in other cultures Must adapt to those cultures Researchers have found that Customers are more likely to buy products and services from Web sites in their own language Localization Translation that considers multiple elements of the local environment

44. Culture Issues Important element of business trust Anticipate how the other party to a transaction will act in specific circumstances (China?) Culture Combination of language and customs Varies across national boundaries Varies across regions within nations

45. Infrastructure Issues Internet infrastructure includes Computers and software connected to the Internet Communications networks over which message packets travel Reliability? Connection type Always on Dial-up

46. Present & Future of e-Commerce

47. Review What is e-Commerce? Internet and WWW Economic forces and e-Commerce Value Chains in e-Commerce

48. Ponder about… Why is Amazon so successful? Are online supermarkets successful in Pakistan? Why? Name few successful E-commerce sites