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

Electronic Commerce: Definitions and Concepts (cont.)Pure vs. Partial EC depends upon the degree of digitization (the transformation from physical to digital) of:the product (service) sold;the process; and forthe delivery agent (or digital intermediary)Brick-and-Mortar organizations are old-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.)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

Advantages of E-commerce 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 ServiceQuick Comparison ShoppingProductivity Gains (letting customer find their answer to technical question IBM)TeamworkGrowth in Knowledge Markets (research on consumer behavior)Information Sharing, Convenience and ControlCustomization (DELL)

Technical Limitations of ECA few technical challenges remain for organizations wishing to conduct EC:Lack of universally accepted standards for quality, security, and reliabilityInsufficient telecommunications bandwidthStill-evolving software development toolsDifficulties in integrating the Internet and EC software with some existing applications and databasesNeed for special Web servers in addition to the network servers (added cost)Expensive and/or inconvenient Internet accessibility for many people

Non-Technical Limitations of ECLegal 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 partCustomer resistance to the change from a physical to virtual storesPerception that electronic commerce is expensive and unsecured, so many do not want even to try it

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 businessesconsumer-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

Classification of EC consumer-to-consumer (C2C): e-commerce model in which consumers sell directly to other consumersbusiness-to-employees (B2E): e-commerce model in which an organization delivers services, information, or products to its individual employeesee-learning: the online delivery of information for purposes of training or educatione-government: e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

E-Commerce Business ModelsStore-front modelProvides with product information, shopping cart, and online ordering mechanismProvides good like books, computer and pizzasMerchant reaches customer directlyClick And Mortar modelCombination of a web site with a physical store.Pre-establish brand name Using web site to promote physical storeUser and return defective items simply by going to store.Service Provider ModelRecovering the cost of processing through advertisement on their websiteYahoo

Cont..Built to Order Merchant ModelOffering goods or services and the ability to order customized versions.Products are assembled individually and shipped to customerSubscription Based Access ModelVisitor pays fixed fee per month for unlimited access to the servicePortal Site ModelA portal offers one-stop access to specific content and services like new, message broad and chatAllow visitor to personalized the interface and contentsBroker ModelThey bring buyers and sellers together and facilitate transaction between them

Cont..Virtual Mall ModelA site that hosts many merchant, service provider, brokers and other businessesAct 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 timeVirtual Community ModelWebsite that attracts a group of user with a common interest who works together on the siteSharing of informationFree Access ModelUsers are given something for free but with advertisementE-greeting

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; andProcurement and inventory control.

E-business overview

Intranet benefitsImproved CommunicationsKeeps every employee informed and up to dateGives everyone (if they have permission) access to projects status, team discussions, project collaboration tools, video conferencing, etc.Document AccessProvides easy access to documents employees need to perform their jobs. Employee Training and RetentionProvides employees easy access to online training material, skill assessments, and other human resources content. This improves job satisfaction and employee retention.Knowledge RetentionPrevents 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.

Extranet benefitsSales Support MaterialProvides 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 InformationProvides customers direct yet controlled access to the status of their orders, freeing up the customer service staff to work on other issues. Employee DirectoriesKeeps partners informed as to the current staff assignments and contact information.Inventory StatusGives business partners direct access to check inventory levels, back order status, and shipping information. Knowledge Base InformationProvides 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.

Toshibas Extranet Keeps Dealers on TimeThe Problemdealers needed parts quicklyThe Solutioncreated a Web-based ordering entry system using an extranetThe Resultsreduces the cost per order reduces the networking cost of the Electronic Imaging Division (EID)increases customer satisfaction

Intel Corporation Embracing the WebThe Problemslow, expensive, and frequently not up to date distribution and communication processThe Solutionestablished an e-business program using an extranetThe Resultsenhances competitive advantage by giving Intels customers better tools for managing transactionsbrings substantial tangible savings

E-Business exampleAuthormarketingDistributorinventoryAmazon.comsalesInformation systemscoordinationcontentsShippingtransporttrackingAffiliatesalesCustomerbuycontentBankpaymentdeliverdeliverordersaleordersalescriticsCredit cardclearancereturns

The Benefits of Electronic Business

Benefits to Customers Expands the marketplace to national and international marketsDecreases the cost of creating, processing, distributing, storing and retrieving paper-based informationAllows reduced inventories and overhead by facilitating pull type supply chain managementThe 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 servicesSupports business processes reengineering (BPR) effortsLowers telecommunications cost - the Internet is much cheaper than value-added networks (VANs)

Benefits to CustomersEnables customers to shop or do other transactions 24 hours a day, all year round from almost any location Provides customers with more choicesProvides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisonsAllows 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 weeksMakes it possible to participate in virtual auctionsAllows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences

Benefits to SocietyEnables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollutionAllows some merchandise to be sold at lower prices benefiting the poor onesEnables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to themFacilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality

Trends Driving e-BusinessCustomerFaster ServiceSelf ServiceMore product choiceProduct Knowledge E-serviceIntegrated sales and serviceIncreases process visibilityConvenient service deliveryOrganizationalOutsourceVirtual distributionTechnologyNew wireless web application