Chapter 1 Overview of Electronic Commerce. Chapter 1Prentice Hall1 Learning Objectives Define...

Chapter 1

Overview of Electronic Commerce

Chapter 1 Prentice Hall 2

Learning Objectives

Define electronic commerce (EC) and describe its various categories

Describe and discuss the content and framework of EC Describe the major types of EC transactions Describe some EC business models Describe the role of the digital revolution in EC and the

economic impact of EC Discuss the contribution of EC in helping organizations

respond to environmental pressures Discuss the benefits of EC to organizations, consumers,

and society Describe the limitations of EC


Electronic Commerce:Definitions and Concepts

electronic commerce (EC)

The process of buying, selling, transferring, or exchanging products, services, or information via computer networks.



e-business

E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but alsoServicing customersCollaborating with business partnersConducting electronic transactions

within an organization



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Traditional commerce: all dimensions are physicalBrick-and-mortar organizations

Old-economy organizations (corporations)

Perform all business off-lineSell physical products by means of

physical agents



PURE VERSUS PARTIAL ECPure EC: all dimensions are digital

virtual (pure-play) organizationsOrganizations that conduct their business activities solely online. (eBay, AOL –media services)

Partial EC: a mix of digital and physical dimensions

Click-and-mortar (click-and-brick) organizationsConduct EC activitiesDo their primary business in the physical worldExamples: GE, IBM, Intel



INTERNET VERSUS NON-INTERNET EC Non-Internet EC is the use of EC technologies

on private (as opposed to public) networks.intranet

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

extranet

A network that uses the Internet to link multiple intranets.



Interorganizational information systems (IOSs)Communications systems that allow routine transaction processing and information flow between two or more organizations.

intraorganizational information systemsCommunication systems that enablee-commerce activities to go on within individual organizations.



Internet EC is the use of EC technologies on public (as opposed to private) networks.electronic market (e-marketplace)

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


The EC Framework, Classification, and Content

An EC FrameworkEC applications supported by

infrastructure and 5 support areasPeoplePublic policyTechnical standards and protocolsBusiness partnersSupport services



CLASSIFICATION OF EC BY THE NATURE OF THE TRANSACTIONS OR INTERACTIONS

Business-to-business (B2B): EC model in which all of the participants are businesses or other organizations

Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers

Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided

e-tailingOnline retailing, usually B2C. E-tailors began to fail in 1999



consumer-to-business (C2B)

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

consumer-to-consumer (C2C)

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

mobile commerce (m-commerce)

E-commerce transactions and activities conducted in a wireless environment.



location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specific locations, at specific times.

intrabusiness ECE-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization.



business-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employees.

collaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate online.

peer-to-peerTechnology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce.



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 from or to businesses or individual citizens.



exchange

A public electronic market with many buyers and sellers.

exchange-to-exchange (E2E)

E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information.


Interdisciplinary Nature of EC

Marketing Computer sciences Consumer behavior and psychology Finance Economics Management information systems Accounting and auditing Management Business law and ethics Others


Brief History of EC

EC applications first developed in the early 1970s --- Electronic funds transfer (EFT)

Limited to: Large corporations Financial institutions A few other daring businesses

Electronic data interchange (EDI)—electronic transfer of documents: Purchase orders Invoices E-payments between firms doing business

Enlarged pool of participants to include: Manufacturers Retailers Service providers

Internet became more commercialized in the early 1990s Stock trading Travel reservation systems



social computingAn approach aimed at making the human–computer interface more natural.

Web 2.0The second-generation of Internet-based services that let people generate content, collaborate, and share information online in perceived new ways—such as social networking sites, wikis, and communication tools.


The Digital Revolution Drives E-Commerce

social networkA category of Internet applications (structure) that help connect friends, business partners, or individuals (nodes) with specific interests by providing free services such as photos presentation, e-mail, blogging, and so on using a variety of tools.


social network service (SNS)

A service that builds online communities by providing an online space for people to build free homepages and that provides basic communication and support tools for conducting different activities (called social networking) in the social network. social networking

The creation or sponsoring (execution) of a social network service and any activity, such as blogging, done in a social network (external or internal).

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business-oriented networks

Social networks whose primary objective is to facilitate business. Example of a Business-Oriented Social

Network: Xing.com – make contacts, advices, market yourself, organize meeting, job seeking, ….etc.

ENTERPRISE SOCIAL NETWORKS Example of an Enterprise Social Network:

- Carnivalconnections.com – cruise fans


The Digital Revolution Drives E-Commerce The digital revolution accelerates EC mainly by providing

competitive advantage to organizations. The digital revolution enables many innovations (Digital

products, financial transactions, Information as commodity) virtual world

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

digital economy

An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.



Digital enterpriseA new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives:

• reach and engage customers more effectively,• boost employee productivity, • and improve operating efficiency.

It uses converged communication and computing technology in a way that improves business processes

THE DIGITAL SOCIETY The final, and perhaps most important, element of the

digital world is people and the way they live and interact.

corporate portalA major gateway through which employees, business partners, and the public can enter a corporate Web site.


The Business Environment Drives E-Commerce

THE BUSINESS ENVIRONMENTThe Business Environment Impact Model

Business Pressures and OpportunitiesMarket, societal and technological.

Organizational Response StrategiesAgility, CRM, KMS, E-markets, …etc.


The Business Environment Drives E-Commerce


EC BUSINESS MODELS Business model A method of doing business by which a company can generate

revenue to sustain itself. (Elements include: customers, products, business process, competitors, ….. and revenue model)

Revenue sources Transaction fees (Stock trade fee) Subscription fees (AOL monthly fee) Advertisement fees (Ads on google as banners) Affiliate fees (Refering customers to other sites) Sales (Wal-Mart, Amazon)

Value proposition is the description of the benefits a company can derive from using EC

Search and transaction cost efficiency

Lock-in – switching costs

Novelty

Complementarities – bundling products with services


EC BUSINESS MODELS

TYPICAL EC BUSINESS MODELS Online direct marketing (Used in B2C and B2B,

Suitable for digitizable products)

Electronic tendering systems for procurement tendering (bidding) system (reverse auction)

Model in which a buyer requests would-be sellers to submit bids; the lowest cost or highest value bidder wins.

Electronic marketplaces and exchanges Chemconnect.com – virtical marketplace for the chemical industry

Viral marketing Inducing people to send influencing msgs to others Web-based word-of-mouth ads

Social networking and Web 2.0 tools


The Benefits of EC


Benefits of EC (cont.)

Chapter 1 Overview of Electronic Commerce. Chapter 1Prentice Hall1 Learning Objectives Define...

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