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Electronic Commerce: Definitions and Concepts

Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet.

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Electronic Commerce: Definitions and Concepts

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  1. Electronic commerce (e-commerce, EC) describes the buying, selling, transferring or exchanging of products, services or information via computer networks, including the Internet. Electronic Commerce: Definitions and Concepts

  2. Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of: the product (service) sold; the process; and for the delivery agent (or digital intermediary) Brick-and-Mortar organizations areold-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents Electronic Commerce: Definitions and Concepts (cont.)

  3. Virtual (pure-play) organizations conduct their business activities solely online Click-and-mortar organizations conduct some EC activities, but do their primary business in the physical world Electronic Commerce: Definitions and Concepts (cont.)

  4. Lower Cost Economy (no rental of physical store space,insurance and infrastructure investment) Higher Margins (cost of processing a conventional ticket is $8 where as e-ticket is of 1$) Better Customer Service Quick Comparison Shopping Productivity Gains (letting customer find their answer to technical question – IBM) Teamwork Growth in Knowledge Markets (research on consumer behavior) Information Sharing, Convenience and Control Customization (DELL) Advantages of E-commerce

  5. A few technical challenges remain for organizations wishing to conduct EC: Lack of universally accepted standards for quality, security, and reliability Insufficient telecommunications bandwidth Still-evolving software development tools Difficulties in integrating the Internet and EC software with some existing applications and databases Need for special Web servers in addition to the network servers (added cost) Expensive and/or inconvenient Internet accessibility for many people Technical Limitations of EC

  6. Legal and economic concerns: Lack of national and international regulations and standards Difficulty in measuring benefits of EC and justifying EC Insufficient number (critical mass) of sellers and buyers exists for profitable EC operations Cultural resistance: Distrust of the new: Many sellers and buyers are waiting for EC to stabilize before they take part Customer resistance to the change from a physical to virtual stores Perception that electronic commerce is expensive and unsecured, so many do not want even to try it Non-Technical Limitations of EC

  7. Classification of EC • business-to-consumer (B2C) : online transactions are made between businesses and individual consumers • business-to-business (B2B): businesses make online transactions with other businesses • consumer-to-business (C2B): e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need

  8. Classification of EC • consumer-to-consumer (C2C):e-commerce model in which consumers sell directly to other consumers • business-to-employees (B2E):e-commerce model in which an organization delivers services, information, or products to its individual employeese • 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 to businesses or individual citizens

  9. E-Commerce Business Models • Store-front model • Provides with product information, shopping cart, and online ordering mechanism • Provides good like books, computer and pizzas • Merchant reaches customer directly • Click – And – Mortar model • Combination of a web site with a physical store. • Pre-establish brand name • Using web site to promote physical store • User and return defective items simply by going to store. • Service Provider Model • Recovering the cost of processing through advertisement on their website • Yahoo…

  10. Cont.. • Built to Order Merchant Model • Offering goods or services and the ability to order customized versions. • Products are assembled individually and shipped to customer • Subscription – Based Access Model • Visitor pays fixed fee per month for unlimited access to the service • Portal Site Model • A portal offers one-stop access to specific content and services like new, message broad and chat • Allow visitor to personalized the interface and contents • Broker Model • They bring buyers and sellers together and facilitate transaction between them

  11. Cont.. • Virtual Mall Model • A site that hosts many merchant, service provider, brokers and other businesses • Act as as an intermediary between customers and the business it hosts by facilitating payment and guaranteeing a full refund if a merchant does not deliver in time • Virtual Community Model • Website that attracts a group of user with a common interest who works together on the site • Sharing of information • Free Access Model • Users are given something for free but with advertisement • E-greeting

  12. Electronic Business: Definitions and Concepts (cont.) • E-Business is any commercial activity conducted over networks linking electronic devices (typically computers). Often includes: • Commercial transactions over the Internet, telephone, or fax; • Electronic banking and payment systems; • Trade in digitized goods or services; • Servicing customers and collaborating with business partners; and • Procurement and inventory control.

  13. Consumer to consumer Extranet Customer Business Business supplier or partner Business to consumer Business to business Intranet Bank E-business overview

  14. Intranet benefits • Improved Communications • Keeps every employee informed and up to date • Gives everyone (if they have permission) access to projects status, team discussions, project collaboration tools, video conferencing, etc. • Document Access • Provides easy access to documents employees need to perform their jobs. • Employee Training and Retention • Provides employees easy access to online training material, skill assessments, and other human resources content. This improves job satisfaction and employee retention. • Knowledge Retention • Prevents knowledge loss which could occur as a result of employees being unavailable for a while or leaving the company. New employees can get up to speed much easier.

  15. Extranet benefits • Sales Support Material • Provides business partners and customers online access to the latest sales support material from product manuals and data sheets to price lists and comparison charts. • Order Status Information • Provides customers direct yet controlled access to the status of their orders, freeing up the customer service staff to work on other issues. • Employee Directories • Keeps partners informed as to the current staff assignments and contact information. • Inventory Status • Gives business partners direct access to check inventory levels, back order status, and shipping information. • Knowledge Base Information • Provides easy access to frequently asked questions and customer support material. The information stored in this dynamic, knowledge base application could be made available to all partners/customers.

  16. Toshiba’s Extranet Keeps Dealers on Time • The Problem • dealers needed parts quickly • The Solution • created a Web-based ordering entry system using an extranet • The Results • reduces the cost per order • reduces the networking cost of the Electronic Imaging Division (EID) • increases customer satisfaction

  17. Intel Corporation Embracing the Web • The Problem • slow, expensive, and frequently not up to date distribution and communication process • The Solution • established an e-business program using an extranet • The Results • enhances competitive advantage by giving Intel’s customers better tools for managing transactions • brings substantial tangible savings

  18. E-Business – example Bank payment clearance Credit card Amazon.com sales Information systems coordination contents order Shipping transport tracking Distributor inventory deliver deliver returns sale order Customer buy content Affiliate sales sales critics Author marketing

  19. The Benefits of Electronic Business

  20. Benefits to Customers • 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 • The pull type processing allows for customization of products and services which provides competitive advantage to its implementers Reduces the time between the outlay of capital and the receipt of products and services • Supports business processes reengineering (BPR) efforts • Lowers telecommunications cost - the Internet is much cheaper than value-added networks (VANs)

  21. Benefits to Customers • Enables customers to shop or do other transactions 24 hours a day, all year round from almost any location • Provides customers with more choices • Provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons • Allows quick delivery of products and services in some cases, especially with digitized products • Customers can receive relevant and detailed information in seconds, rather than in days or weeks • Makes it possible to participate in virtual auctions • Allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences

  22. 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 the poor ones • 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

  23. Trends Driving e-Business • Customer • Faster Service • Self Service • More product choice • Product Knowledge • E-service • Integrated sales and service • Increases process visibility • Convenient service delivery • Organizational • Outsource • Virtual distribution • Technology • New wireless web application

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