Electronic CommerceSession-01

Skyline Business School

Content for session-01

• Course structure– Objective– Pedagogy– Content– Case studies

• Introduction to E-Commerce– Changing Global dimension– Evolution of commerce – towards “E” medium– E-Commerce categories– E-Commerce ‘fitment’ analysis– SWOT analysis– Benefits of e-commerce– Conclusion

Course Structure

• Objective: Develop a good understanding of E-commerce concepts. At the end of the course, the students will attain familiarity with:

– Evolution of e-commerce– The advantages and limitations of various e-commerce models – Role of e-commerce as a business enabler and transformer– Technologies components in e-commerce– Management, regulatory and security issues in e-commerce

• Pedagogy: – 12 sessions – having classroom lectures, quizzes and case study presentations. – The lectures will cover the concepts, developments, issues and principles of electronic

commerce. – The quizzes will test the understanding of class room discussions and reinforce the learning. – The case studies (group project - presentation and report) will analyze and discuss some real

life examples. – Class participation and discussion is strongly encouraged.

• Text Book:– Gary P. Schneider (Annual Edition) - Electronic Commerce. Thomson Learning.

Course syllabus

TOPICS Ch. 1 E-Commerce Fundamentals Introduction to E-Commerce 1 Internet and world wide web 2 Payment systems 12

2 Business strategies Selling on web – revenue models and strategies 3 Marketing on web 4 B2B strategies 5 Web Auctions, Virtual Communities, Web portals 6

3 Technology awareness Web Server hardware & Software 8 Electronic Commerce software 9

4 Regulatory and Security Issues Environment-international, legal, ethical and Tax issues 7 Security threats in e-commerce 10 Implementing e-commerce security 11

5 Management perspective-Planning for E-Commerce 13

Case studies

• Introduction :

– This is a group exercise. Each group will consist of about 4 students.– Every group will be assigned a case study from the text book / or, any other source as agreed with the instructor.– The cases are from well known global companies and will focus on e-commerce examples both success stories and

failures. (Success stories such as leveraging technology for value creation - increasing reach, cost rationalization, increasing profitability, expanding products and services, improving communication with stakeholders etc. Failures such as unrealistic business models, poor implementation, mismatch of strategy with market requirements etc. )

– The group should research, analyze and prepare a report of their assignment. The write up should be crisp and not exceed two pages.

• Report Format :

– The Header – Line-1 - “SBS-Case Study – E-Commerce Jan-May 2009” – Line-2 – “Title of the Case”– The Footer :– Group Id, Members name and roll number– Content – Background of the case, issues identified, outcome of analysis

• Presentation :– The group will also make a presentation of about 10-12 slides. The presentation will summarize the background of

case with issues analyzed and will be followed with a brief discussion. Each group will have about 15 minutes. – The case studies will be presented in class from sixth session onwards (about 30 minutes will be allocated to discuss

two cases per class, i.e. 15 minutes per group).

Introduction to E-Commerce

• Changing Global dimension• Evolution of commerce – towards “E” medium• E-Commerce categories• E-Commerce ‘fitment’ analysis• SWOT analysis• Benefits of e-commerce• Conclusion

International commerce

• With most of the economies opening up, Global commerce has become borderless and seamless. One can procure anything from anywhere in the world – with most of the transaction activities completed in a flash, irrespective of distance.

• Let us understand the changing trends…………

Changing Trends

Increased Competition, erosion of margins

Rapid response to industry changes

Evolving business models

Markets more contestable

Technology driven efficiency buildup

New Players

New cost structures

Client sophistication and switching

Regulatory changes

Explosion of Technology

Innovation in products and services

24X7 Any time anywhere

Increase consumer convenience

Reduce processing cost

Reduce turn around time

ENHANCING

WHOLESOME VALUE

TO CUSTOMERS

A New Competitive Landscape

Future business

Environment

DeregulationDeregulationphysical outlets replaced by retailers and new traders;

GlobalisationGlobalisationCustomers can reach out anywhere in the world to get the best value for money.

TTECHNOLOGYECHNOLOGY

ConsumerismConsumerismconsumer value providers with the best price, advice, brand and convenience win wallet share

What is Driving the Changes?

• Product Focused

• Location Centric

• Transaction Services Centric

• Consumer Focused

• Anytime, Anywhere

• Information Centric

Organizations of

YESTERDAY

Organization of TODAY

must transform

as

Age of the consumer

Guiding model of e-commerce

Business

TechnologyCustomer

Market

Businesses (organizations) have always used the prevailing and

emerging technologies to help fulfill their missions

Early days examples

Commerce (Traditional & E-Commerce)

• Commerce refers to all the activities around the purchase and sales of goods or services.– Marketing, sales, payment, fulfillment, customer service

• Electronic commerce is doing commerce – fully or partially - with the use of computers & networks.

• E-Commerce results in transformation of business processes through the use of technology.

Evolution

• 1970s: Electronic Funds Transfer (EFT)– Used by the banking industry to exchange account information over

secured networks, also called wire transfers

• Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e-commerce within companies– Used by businesses to transmit data from one business to another

• 1990s: the World Wide Web on the Internet provides easy-to-use technology for information publishing and dissemination– Cheaper to do business (economies of scale)

– Enable diverse business activities (economies of scope)

Fast Forward…to new age

• Networked computers, today’s prevailing technology, have become the most influential technology in civilization’s history.

• Negates the importance of the “boundaries” associated with time, space, and size.

• Facilitates instantaneous communications.

• Allows an organization of any size to exchange information at the speed of light, with anyone, anywhere, anytime.

Growth in E-Commerce

E-Commerce categories

• B2B Transactions conducted between businesses on the Web, (business to business) – Supplier, inventory, distribution, payment management,– Financial management, purchasing products and information

• B2C Consumer shopping on the Web,(business to consumer)

• C2C Auctions, matrimonial

• B2G Tax payments (Business to Government)• C2G Tax and Utility service payments (Customer to

Government)

E-Commerce categories

Integrating “E” in business

• All e-commerce categories are not appropriate in various environment and typ of business.

• Blind use of “E” can not ensure success – It needs to be properly mapped to create value.

• We need to identify business processes which needs to be integrated with E-Business

– Purchasing Raw materials– Raw materials – t0 – finished goods– Transportation & Logistics– Hiring and training manpower– Marketing of products and services– Sales order management

E-commerce applications

• Supply chain management• Video on demand• Remote banking• Procurement and purchasing• Online marketing and advertisement• Home shopping• Auctions

Business suitability

The first step of E-commerce

OrganizationStrategy

OrganizationMission

E-Strategy

How should an organization use e-commerce (strategic level)?

What resources does an organization need to implement e-commerce? What are the feasibility issues that must be considered?

The first step of E-commerce

Example:

Organization’s Mission Maximize long term value for all stakeholders (note- not shareholders)

Organization’s StrategyDevelop an effective and efficient global operation

IT StrategyUse e-commerce to create a global value chain (front and back office)

The stakeholders

Organization

Customers

Government

Competitors

Owners

Creditors

Suppliers

Managers

Employees

Community

Feasibility issues

3. Operational

5. Economic

4. Schedule

1. Technological

2. Legal

Mission

Culture & Politics!!

SWOT Analysis

Strength – Weakness – Opportunity – Threat

STRENGTH / WEAKNESS –

• We need to identify what we are good at, and, what our weak spots are.

OPPORTUNITY / THREAT –

• In the market, what opportunities we have, to leverage our strength.

• what threats we face in the market, that needs to be guarded against.

Dell - SWOT Analysis

STRENGTH -• Sells directly to customers• Cost below competitors

WEAKNESS – • Weak relationship with Retailers

OPPORTUNITY -• Consumers want one stop shopping• Consumers know what they want• Consumer’s growing comfort with internet

THREAT – • Competitors have stronger brand name• Competitors have better relation with retailers

Why e-commerce?

Incr

ease

Profit

s!!!

Efficiency Building & Effectiveness

Enhance Revenues (increase reach, market communication)

Reduce Costs(transactions, production, support – purchase & procurement, inventory management, Sales & marketing)

Improve Business Process(Turn around time, controls, tracking, Customer service)

Guard against Competition

Why e-commerce?

Growth

Value enhancement

Appropriate Products (Digital - software, music, ebooks, movies – instant delivery)

Improve established products – digital delivery (online gaming)

Develop new products (GIS, satellite navigation)

Advantages of Electronic Commerce

• Increased sales– Reach narrow market segments in geographically dispersed

locations– Create virtual communities

• Decreased costs– Handling of sales inquiries– Providing price quotes– Determining product availability

• Being in the space – from 19K websites in 1995, today we have more than 100M websites globally.

Disadvantages of Electronic Commerce

• Loss of ability to inspect products from remote locations

• Rapid developing pace of underlying technologies• Difficult to calculate return on investment• Cultural and legal impediments

The process of e-commerce

1. Attract customers– Advertising, marketing

2. Interact with customers– Catalog, negotiation

3. Handle and manage orders– Order capture– Payment– Transaction– Fulfillment (physical good, service good, digital good)

4. React to customer inquiries– Customer service– Order tracking

E-commerce Technologies

• Internet• Mobile technologies• Web architecture• Component programming • Data exchange• Multimedia• Search engines• Data mining• Intelligent agents

• Access security• Cryptographic security• Watermarking• Payment systems

Infrastructure for E-commerce

• The Internet – system of interconnected networks that spans the globe– routers, TCP/IP, firewalls, network infrastructure, network

protocols

• The World Wide Web (WWW) – part of the Internet and allows users to share information

with an easy-to-use interface– Web browsers, web servers, HTTP, HTML

• Web architecture– Client/server model– N-tier architecture; e.g., web servers, application servers,

database servers, scalability

Web-based E-commerce Architecture

Client

Tier 1

Web Server

Tier 3Tier 2 Tier N

Application Server

Database Server

DMS

System Design Issues

• Good architectural properties– Functional separation – Performance (load balancing, web caching)– Secure– Reliable– Available– Scalable

Payment Systems

• Role of payment• Cash

– properties: wide accept, convenient, anonymity, untraceability, no buyer transaction cost

• Online credit card payment, Smart Cards– Secure protocols: SSL, SET

• Internet payment systems– Electronic cash, digital wallets

• Micro-payments• Wireless devices

Summary

1. Changing global market dynamics

2. Commerce – negotiated exchange of goods and services.

3. Electronic commerce – using technology to do commerce and associated activities efficiently, increase profit, reduce cost, improve reach, improve customer service, reduce errors, improve cycle time.

4. Electronic commerce enables – anytime, anywhere global market participation.

5. While planning e-commerce implementation we must have proper analysis of all issues and nature of fit between business model and electronic medium.

6. Various analysis methods are – revenue model analysis, business process analysis, SWOT analysis – for initiating e-commerce.

7. In order to participate in cross border commerce, we must also be familiar with other legal and cultural issues.

Thank You

Skyline Business School