1 Overview of Electronic Commerce

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Page BIS Depar tment, 2010: BIS 312 E-Commerce

OVERVIEW OFELECTRONIC COMMERCE

Define electronic commerce (EC).

Describe and discuss the content and framework of EC.Describe the major types of EC transactions.Discuss e-commerce 2.0.Understand the elements of the digital world.Describe the drivers of EC.

Describe some EC business models.Describe the benefits and limitations of EC.

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Page BIS Depar tment, 2010: BIS 312 E-Commerce 2


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Electronic Commerce: Definitions and Concepts

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Defining electronic commerce

The process of buying, selling, or exchanging products, services, orinformation via computer.

a)From a business process perspective, EC is

Doing business electronically by implementing business process overelectronic networks.

b)From a service perspective, EC is a toolAddresses the desire of governments, firms, consumers, and management

Cuts service costs,

Improves the quality of customer service,

Increases the speed of service delivery.

c)From a learning perspective, EC is

An enabler of online training and education in schools, universities, andother organizations, including businesses.


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d)From a collaborative perspective, EC is

The framework for inter- and intraorganization collaboration.

e)From a community perspective, EC

Provides a gathering place for community members, to learn, transact, andcollaborate.

Social networks, e.g. MySpace, Facebook.

Defining e-businessA broader definition of EC that includes not just the buying and selling

of goods and services, but also servicing customers, collaborating with

business partners, and conducting electronic transactions within an

organization.


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Other EC concepts

Pure Vs partial EC1.Brick-and-mortar (old economy) organizations

Old-economy organizations (corporations) that perform their primarybusiness off-line, selling physical products by means of physical agents.

2.Virtual (pure-play) organizations

Organizations that conduct their business activities solely online.

3.Click-and-mortar organizations

Organizations that conduct some e-commerce activities, usually as anadditional marketing channel.


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Electronic market (e-market)

An online marketplace where buyers and sellers meet to exchangegoods, services, money, or information.

Interorganizational information systems (IOSs)Communications systems that allow routine transaction processing and

information flow between two or more organizations.

Intraorganizational information systemsCommunication systems that enable e-commerce activities to go on

within individual organizations.

Intranet

An internal corporate or government network that uses Internet tools,such as Web browsers, and Internet protocols.

ExtranetA network that uses the Internet to link multiple intranets.


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The Electronic Commerce Field: Classification

1.Business-to-business (B2B)

E-commerce model in which all of the participants are businesses orother organizations.

E.g. Dell sells its products to companies.

2.Business-to-consumer (B2C) (Or e-tailing)

E-commerce model in which businesses sell to individual shoppers.

E.g. Amazon.com.

3.Business-to-business-to-consumer (B2B2C)

E-commerce model in which a business provides some product or

service to a client business that maintains its own customers.

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4.Consumer-to-business (C2B)

E-commerce model in which individuals use the Internet to sellproducts or services to organizations or individuals who seek sellers tobid on products or services they need.

E.g. Priceline.com.

5.Intrabusiness EC

E-commerce category that includes all internal organizational activitiesthat involve the exchange of goods, services, or information amongvarious units and individuals in an organization.

E.g. Selling corporate products to ones employees, online training.

6.Business-to-employees (B2E)

E-commerce model in which an organization delivers services,

information, or products to its individual employees.

Business-to-mobile employees (B2ME): Support to mobile employees.

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7.Consumer-to-consumer (C2C)

E-commerce model in which consumers sell directly to otherconsumers.

8.Collaborative commerce (c-commerce)

E-commerce model in which individuals or groups communicate orcollaborate online.

E.g. Business partners in different locations design a product together, usingscreen-sharing; manage inventory online; or jointly forecast product demand.

9.E-learning (e-training)

The online delivery of information for purposes of training oreducation.

10.E-government

E-commerce model in which a government entity buys or providesgoods, services, or information from or to businesses (G2B) or individual

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The Electronic Commerce Field: History

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Year Development of EC

1969 The Internet began

By the U.S. government, government agencies, academic researchers, scientists1970s Electronic funds transfer (EFT)

EC applications: funds could be routed electronically from one organization toanother.

Disadv: Limited to large corporations, financial institutions, etc..

1980s Electronic data interchange (EDI)

A technology used to electronically transfer routine documents.

Participating companies from financial institutions to manufacturers, retailers,services, etc..

1990s Electronic commerce

World Wide Web introduction.dot-coms, Internet start-ups appeared.

1995 Innovative applications

Online direct sales, e-learning, etc..1999 B2C to B2B

2001 B2B to B2E, c-commerce, e-government, e-learning, m-commerce.

2005 Social networks, wireless applications


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The interdisciplinary nature of EC

Computer science, marketing, consuming behavior, finance, economics,management information systems, accounting, management, humanresource management, business law, robotics, public administration, and

engineering.

The Google revolution

Since 2001, Google has great impact on EC. Impacts both organizational activities and individual lives.

EC failuresStarting in 1999, a large number of EC companies began to fail.

62% of dot-coms lacked financial skills.50% had little experience with marketing.

Many failed to ensure they had the inventory and distribution setup tomeet the fluctuating demand for their products.

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EC successes

eBay, Google, Yahoo!, AOL, E-Trade.Click-and-mortar companies, e.g. Wal-Mart online, General Electric, IBM,

Intel.

The future of EC50% of all Internet users will shop online by 2010.

EC growth will come from B2C, B2B, e-government, e-learning, B2E, c-

commerce.

The total volume of EC has been growing by 15-25% every year.

Largely by social computing and networking.

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E-Commerce 2.0

Social computing

An approach aimed at making human-computer interface morenatural.

Tools: blogs, instant messaging, social network services, wikis, social

bookmarking, etc...

Improve collaboration and interaction among people and on user-

generated content.E.g. Travelers share information and warn others of bad experiences at sites

such as tripadvisor.com.

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E-Commerce 2.0

Web 2.0

The second-generation of Internet-based services that let peoplecollaborate and share information online in new ways, such as socialnetworking sites, wikis, communication tools, and folksonomies.

E.g.: eBay, Wikipedia, Skype; Flickr ; Google Docs, Spreadsheets, iTunes; Google

Maps.

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E-Commerce 2.0

Social network

A category of Internet applications that help connect friends, businesspartners, or individuals with specific interests by providing free servicessuch as photos presentation, e-mail, blogging, and so on using a variety of

tools.

Social network services (SNS)

A service that builds online communities by providing an online spacefor people to build free homepages and that provides basiccommunication and support tools for conducting different activities in

the social network.

E.g. MySpace, Facebook.

Social networkingThe creation or sponsoring of a social network service and any activity,

such as blogging, done in a social network (external or internal).

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E-Commerce 2.0

Capabilities and services provided by social network sites:

1. Construct a Web page to present themselves to the larger community.2. Create a circle of friends who are linked together.

3. Provides discussion forums (by group, by topic).

4. Supports photo, video, and document viewing and sharing (streamingvideos, user-supplied videos).

5. Uses wikis to jointly create documents.

6. Uses blogs for discussion, dissemination of information, etc..

7. Offers community e-mail and instant messaging (IM) capabilities.

8. Answered member queries by experts.

9. Rates and comments on products.10.Provides an e-newsletter.

11.Votes online to poll member opinions.

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E-Commerce 2.0

12.Supports conference (group) chatting, combined with photo sharing.

13.Uses message and bulletin board services for posting information to

groups and anyone on the Web site.

14.Provides storage for content, including photos, videos, and music.

15.Bookmarks self-created content.

16.Finds other networks, friends, or topics of interest.

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E-Commerce 2.0

Virtual worlds and second lifeVirtual world (metaverse)

A user-defined world in which people can interact, play, and do business.The most publicized virtual world is Second Life.

How students make money in a virtual world

Many young people are pursuing money-making opportunities in virtual

worlds.They hone their computer skills to capitalize on the growing demand for

virtual goods and services.

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The Digital World

The digital economyAn economy that

is based on digitaltechnologies,

including digital

communicationnetworks,

computers,software, and otherrelated information

technologies; also

called the Internet

economy, the neweconomy, or the

Web economy.

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The Digital World

The digital enterpriseA new business model that uses IT in a fundamental way to accomplish

one or more of three basic objectives: reach and engage customersmore effectively, boost employee productivity, and improve operating

efficiency. It uses converged communication and computing technology

in a way that improves business processes.

E.g. Dell, Amazon.com, Google.

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The Digital World

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The Digital World

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The Digital World

The digital societyE.g. Digital camera, digital TV, digital car, etc..

E.g.

Shopping online;

Using social smartphones to connect with Facebook and MySpace;

Having RFID to charge drinks;

Receiving e-mail alerts; swiping a student ID card;

Using blog site to do business;

Using online dating and matching services;

E.g. Barack Obama.

Obama purchased Internet ads featured in 18 videogames through MicrosoftsXbox Live Service.

His objective was to target young adult males, who are difficult to reachthrough traditional campaign advertising.

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Electronic Commerce Drivers

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The Changing Business Environment

Customers are becoming more powerful.

Organizations are operating under increasing pressures to producemore products, faster, and with fewer resources.

Impact on the manner in which companies operate, and many firmshave restructured themselves and their information systems.

The new business environment has the following characteristics:A more turbulent environment, with more business problems and

opportunities;

Stronger competition;

The need for organizations to make decisions more frequently;

A larger scope for decisions, because more factors (market,competition, political issues, and global environment) need to be

considered;

More information and/or knowledge is needed for making decisions.

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Performance, Business Pressures, and Organizational Responses

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Electronic Commerce Business Models

Revenue modelsOutlines how the

organization, or theEC project, will

generate revenue.

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5 Typical EC business modelsa)Online direct marketing

Sales may be from a manufacturer to a customer, eliminating intermediariesor physical stores; or from retailers to customers, making distribution moreefficient (e.g. Wal-Mart).

b)Electronic tendering systems

Large organizational buyers, private or public, usually make large-volume orlarge-value purchases through a tendering (bidding) system, also known asa reverse auction.

Tendering (bidding) system

Model in which a buyer requests would-be sellers to submit bids; the lowestbidder wins.

E.g. Government agencies.

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c)Electronic marketplaces and exchanges

E.g. Vertical marketplaces that concentrate on one industry such as retail

industry or chemical industry.

d)Viral marketing

An organization can increase brand awareness or even generate sales byinducing people to send influencing messages to other people or to recruitfriends to join certain programs.

e)Social networking and Web 2.0 tools

Many companies are deriving commercial benefits from social networkingand Web 2.0 tools.

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P BIS D 2010 BIS 312 E C

The Limitations and Barriers of EC

Major barriers:Resistance to new technology; implementation difficulties; security

concerns; lack of technology skills; lack of potential customers; cost;

Government, private sector, international organizations; lack of time and

resources;

Cultural differences; organizational differences; incompatible B2B

interfaces; international trade barriers; lack of standards.Ethical issuesEmployee e-mail monitoring;

Invasion of privacy of millions of customers whose data are stored in

private and public databases;

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1 Overview of Electronic Commerce

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