E commerece


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E commerece

  1. 1. Chapter # 1 Introduction to E-Commerce. Shaukat Ali
  2. 2. What is E-Commerce. <ul><li>E-Commerce has different definitions: </li></ul><ul><ul><li>The use of electronic transmission medium (telecommunications) to engage in the exchange including buying and selling of products and services requiring transportation either physically or digitally from location to location. </li></ul></ul><ul><ul><li>E-Commerce is the sharing of business information , maintaining business relationships & conducting business transactions by means of telecommunications networks. </li></ul></ul><ul><ul><li>E-Commerce is buying & selling activities over digital media. </li></ul></ul><ul><ul><li>In other words, E-Commerce is the buying and selling of goods and services via the Internet. </li></ul></ul>
  3. 3. Benefits of E-Commerce. <ul><li>Internet and web based E-Commerce is more affordable and allows more business partners to be reached. </li></ul><ul><li>Internet and web based E-Commerce can reach a more geographically dispersed customers. </li></ul><ul><li>Better customer service (convenience from shopping at home or office). </li></ul><ul><li>Increases choice of vendors and products. More increasing price comparison capabilities and thus can result in lowering the cost. </li></ul><ul><li>Greater amount of information can be accessed on demand. </li></ul><ul><li>Greater customization in the delivery of services. </li></ul><ul><li>Many many more. </li></ul>
  4. 4. What exactly is transaction. <ul><li>Transactions are exchanges that occurs when one economic entity sells a product or service to another entity. </li></ul><ul><li>A transaction occurs between a server and client. Server is the producer of services/products and client is the consumer of services/products. </li></ul><ul><li>While transactions are conducted via e-devices, they may be transported using either traditional physical shipping channels such as ground delivery services or digital mechanisms such as downloading a product from the Internet (such as electronic book etc). </li></ul>
  5. 5. Client-Server Model. Client B Client A Internet Server X Server Y file file
  6. 6. Element of E-Commerce. <ul><li>There are certain elements required to perform online business. </li></ul><ul><ul><li>Promote your Web site presence. </li></ul></ul><ul><ul><li>Have an online catalog or store. </li></ul></ul><ul><ul><li>Have the capability to receive payments. </li></ul></ul><ul><ul><li>Be able to deliver the item. </li></ul></ul><ul><ul><li>Provide after-the-sale support. </li></ul></ul>
  7. 7. Element of E-Commerce. <ul><li>Web site promotion. </li></ul><ul><ul><li>You need to advertise and promote your business, so that the customers will either come to your store, read your catalog or view your Web site. </li></ul></ul><ul><li>Online catalog or store. </li></ul><ul><ul><li>You need to have a store or catalog where customers can view and select goods or services. </li></ul></ul><ul><ul><li>Customers need to be able to easily get around your catalog to find things. </li></ul></ul><ul><ul><li>The customer should be able to easily browse the selection and mark products for later purchase. </li></ul></ul><ul><ul><li>They also need to be able to read information or see pictures of the items. </li></ul></ul>
  8. 8. Element of E-Commerce. <ul><li>Purchase. </li></ul><ul><ul><li>It should be easy for customers to purchase the items they want. </li></ul></ul><ul><ul><li>You must have a way to receive online payments, either using credit cards or other means of payment. </li></ul></ul><ul><ul><li>The purchase of the item can be complex, but it should be made as simple as possible for the customer. </li></ul></ul><ul><ul><ul><li>The customer must give certain information about himself. Usually this is name, address and e-mail </li></ul></ul></ul><ul><ul><ul><li>A mutually acceptable payment method must be chosen. </li></ul></ul></ul><ul><ul><ul><li>The merchant must process the customer’s payment information. </li></ul></ul></ul><ul><ul><ul><li>Finally, the customer must receive confirmation of the sale. </li></ul></ul></ul><ul><li>Security is a concern in credit card purchases and the ability to encrypt transfer of data. </li></ul>
  9. 9. Element of E-Commerce. <ul><li>Delivery. </li></ul><ul><ul><li>You must have a good means of fulfilling the order and delivering the material to customers. Different means of delivery depends on the type of item purchased. </li></ul></ul><ul><ul><li>The product may be access to special information on the Web site, it may be downloadable software, or it may be items that must be physically delivered to the customer. </li></ul></ul><ul><li>Support. </li></ul><ul><ul><li>The customer needs a way to voice problems. </li></ul></ul><ul><ul><li>You also need a customer service system, consisting of support to handle complaints or returns in the event of problems. </li></ul></ul>
  10. 10. Types of E-Commerce. <ul><li>The major different types of e-commerce are: </li></ul><ul><ul><li>Business-to-Business (B2B). </li></ul></ul><ul><ul><li>Business-to-consumer (B2C). </li></ul></ul><ul><ul><li>Business-to-Government (B2G). </li></ul></ul><ul><ul><li>Consumer-to-Consumer (C2C). </li></ul></ul><ul><ul><li>Mobile commerce (m-commerce). </li></ul></ul>
  11. 11. Types of E-Commerce. <ul><li>Business-to-Business (B2B). </li></ul><ul><ul><li>B2B e-commerce is simply defined as e-commerce between companies. </li></ul></ul><ul><ul><li>This is the type of e-commerce that deals with relationships between and among businesses. </li></ul></ul><ul><ul><ul><li>In this case both the buyers and seller are organizations. </li></ul></ul></ul><ul><ul><ul><li>In this system, a buyer submit a request to the system and seller respond to their request e.g. one company sells raw material and another organization buy raw material for manufacturing products. </li></ul></ul></ul><ul><ul><li>About 80% of e-commerce is of this type, and most experts predict that B2B ecommerce will continue to grow faster than the B2C segment. </li></ul></ul>
  12. 12. Types of E-Commerce. <ul><li>Business-to-Consumer (B2C). </li></ul><ul><ul><li>Business-to-Consumer E-Commerce involves customers gathering information; purchasing physical goods (tangibles such as books or consumer products) or information goods (goods of electronic material or digitized content such as software, or e-books) and receiving products over an electronic network. </li></ul></ul><ul><ul><li>In this case the seller is a business organization whereas the buyer is a consumer. </li></ul></ul><ul><ul><li>An example of a B2C transaction would be a person buying a pair of shoes from a retailer. </li></ul></ul><ul><ul><li>The more common B2C business models are the online retailing companies such as Drugstore.com, Beyond.com. </li></ul></ul>
  13. 13. Business-to-Consumer (B2C). <ul><li>B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer access to information and allowing consumers to find the most competitive price for a product or service. </li></ul><ul><li>B2C e-commerce also reduces market entry barriers since the cost of putting up and maintaining a Web site is much cheaper than installing a “brick-and-mortar” structure for a firm. In the case of information goods. </li></ul>
  14. 14. Types of E-Commerce. <ul><li>Business-to-Government (B2G). </li></ul><ul><ul><li>Business-to-government e-commerce or B2G is generally defined as commerce between companies and the public sector. </li></ul></ul><ul><ul><li>It refers to the use of the Internet for public procurement (buying, getting, hiring), licensing procedures, and other government-related operations. </li></ul></ul><ul><ul><li>To date, however, the size of the B2G e-commerce market as a component of total e-commerce is insignificant. </li></ul></ul><ul><ul><li>It is still a hot topic of research. </li></ul></ul>
  15. 15. Types of E-Commerce. <ul><li>Customer-to-Customer (C2C). </li></ul><ul><ul><li>Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. </li></ul></ul><ul><ul><li>In this type both the seller and buyer are the consumers. </li></ul></ul><ul><ul><li>Consumer-to-consumer e-commerce involves the electronically-facilitated transactions between consumers through some third party. </li></ul></ul><ul><ul><li>A common example is the online auction, in which a consumer posts an item for sale and other consumers bid to purchase it. </li></ul></ul><ul><ul><li>The third party generally charges a commission. The sites are only intermediaries, just there to match consumers. They do not have to check quality of the products being offered. </li></ul></ul><ul><ul><li>Common example Amazon.com. </li></ul></ul>
  16. 16. Types of E-Commerce. <ul><li>Mobile Commerce (m-commerce). </li></ul><ul><ul><li>M-commerce (mobile commerce) is the buying and selling of goods and services through wireless technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs). </li></ul></ul><ul><ul><li>Japan is seen as a global leader in m-commerce. </li></ul></ul><ul><ul><li>As content delivery over wireless devices becomes faster, more secure, and scalable, some believe that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions. </li></ul></ul>
  17. 17. Types of E-Commerce. <ul><li>Business-to-Business-to-Consumer (B2B2C). </li></ul><ul><ul><li>In B2B2C a business provides some products or services to a client business. The client business maintains its own customer and provides products or services to them. </li></ul></ul><ul><ul><li>For example: </li></ul></ul><ul><ul><ul><li>A company that pays to an ISP to provide its employees with Internet access ( rather than having each employee pay an access fee directly to the ISP). </li></ul></ul></ul><ul><ul><ul><li>A wholesaler-to-retailer-to-consumer merchandising. </li></ul></ul></ul><ul><ul><ul><ul><li>A company that provides services such as airline tickets and hotel rooms to business partners such as travel agents, who sell the services to customers. </li></ul></ul></ul></ul>
  18. 18. Types of E-Commerce. <ul><li>Intra-Business EC. </li></ul><ul><ul><li>The Intra-Business EC category includes all internal organizational activities that involve the exchange of goods, services and information among various units and individuals in that organization. </li></ul></ul><ul><ul><li>Intra-Business EC is usually performed on intranets or corporate portals. </li></ul></ul><ul><li>Business-to-Employee (B2E). </li></ul><ul><ul><li>The B2E category is a subset of the Intra-Business category in which the organization delivers services, information or products to individual employees. </li></ul></ul><ul><ul><li>A major category of employees are mobile employees such as field representatives. </li></ul></ul><ul><ul><li>EC support to such employees is called B2ME (business-to-mobile employees). </li></ul></ul>
  19. 19. Types of E-Commerce. <ul><li>Collaborative Commerce (c-commece). </li></ul><ul><ul><li>When individuals or group communicate or collaborate online, they may be engaged in collaborative commerce or c-commerce. </li></ul></ul><ul><ul><li>For example, business partners in different locations may design a product together using screen sharing or they may jointly forecast product demand. </li></ul></ul><ul><li>Non-business EC. </li></ul><ul><ul><li>An increased number of nonbusiness institutions such as academic institutions, not-for-profit organizations, religious organizations, social organizations and government agencies are using EC to reduce their expenses or to improve their general operations and customer services. </li></ul></ul>
  20. 20. Internet versus Non-Internet EC. <ul><li>Most EC is done over the Internet. </li></ul><ul><li>But, EC can also be conducted on private networks. </li></ul><ul><ul><li>Such Local Area Networks (intranets), a single computerized machine etc. </li></ul></ul><ul><ul><ul><li>For example, buying food from a vending machine that you pay with a smart card or a cell phone can be viewed as EC activity. </li></ul></ul></ul><ul><ul><li>Another example of non-Internet EC would be a field employees ( such as sale reps) who are equipped with mobile handwriting recognitions computers so they can write their notes in the field; for instance, immediately after a sales order etc. </li></ul></ul>
  21. 21. Benefits of E-Commerce. <ul><li>Benefits to Organizations. </li></ul><ul><ul><li>Global reach. </li></ul></ul><ul><ul><ul><li>EC expands the marketplace to national and international markets. </li></ul></ul></ul><ul><ul><ul><li>With minimal expenditure a company can easily and quickly locate the best suppliers, more customers and most suitable business partners worldwide. </li></ul></ul></ul><ul><ul><li>Cost reduction: </li></ul></ul><ul><ul><ul><li>EC decrease the cost of creating, processing, distributing, storing and retrieving paper-based information. </li></ul></ul></ul><ul><ul><ul><li>High printing and mailing costs are lowered and eliminated. </li></ul></ul></ul><ul><ul><li>Extended hours: 24/7/365: </li></ul></ul><ul><ul><ul><li>The business is always open on the web, with no overtime and other extra costs. </li></ul></ul></ul>
  22. 22. Benefits to Organizations. <ul><ul><li>Vendors specialization: </li></ul></ul><ul><ul><ul><li>EC allows for a high degree of specialization that is not economically feasible in the physical world. </li></ul></ul></ul><ul><ul><ul><li>For example, a store that sells only dog toys (Dogtoys.Com) can operate in cyberspace, but not in physical world such a store would not have enough customers. </li></ul></ul></ul><ul><ul><li>Rapid time-to-market: </li></ul></ul><ul><ul><ul><li>EC reduces the time between the beginning/conceiving of an idea and making use of it to get profit. </li></ul></ul></ul><ul><ul><li>Lower communication cost: </li></ul></ul><ul><ul><ul><li>EC lowers communication costs – the Internet is much cheaper than other modes of communication. </li></ul></ul></ul><ul><ul><li>Efficient procurement: </li></ul></ul><ul><ul><ul><li>EC enables efficient e-procurement that can reduce administrative costs by 80%, reducing purchasing price by 5 to 15% and reducing time by more than 50%. </li></ul></ul></ul>
  23. 23. Benefits to Organizations. <ul><ul><li>Improved customer relations: </li></ul></ul><ul><ul><ul><li>EC enables companies to interact more closely with customers even if through intermediaries. </li></ul></ul></ul><ul><ul><ul><li>Which promotes better customer relationship management (CRM) and increases customers loyalty. </li></ul></ul></ul><ul><ul><li>Up-to-date company material: </li></ul></ul><ul><ul><ul><li>Any material on the web, such as prices in catalog can be correct up to minute. All company information can be always current. </li></ul></ul></ul><ul><ul><li>No city business permits and fees: </li></ul></ul><ul><ul><ul><li>Online companies do not need any licenses to operate nor do they pay licenses fees. </li></ul></ul></ul>
  24. 24. Benefits of E-Commerce. <ul><li>Benefits to Consumer: </li></ul><ul><ul><li>Ubiquity (eveywhere): </li></ul></ul><ul><ul><ul><li>EC provides consumers to shop or perform other transactions year round, 24 hours a day, from almost any location. </li></ul></ul></ul><ul><ul><li>More products and services: </li></ul></ul><ul><ul><ul><li>EC provides with more choices; they can select from many vendors and from more products. </li></ul></ul></ul><ul><ul><li>Cheaper products and services: </li></ul></ul><ul><ul><ul><li>EC frequently provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons. </li></ul></ul></ul><ul><ul><li>Instant delivery: </li></ul></ul><ul><ul><ul><li>In the cases of digitized products, EC allows for quick delivery. </li></ul></ul></ul>
  25. 25. Benefits to Consumer: <ul><ul><li>Participation in auctions: </li></ul></ul><ul><ul><ul><li>EC makes is possible for customers to participate in auctions. </li></ul></ul></ul><ul><ul><ul><li>These allows sellers to sell things quickly and buyers to locate items and bargains. </li></ul></ul></ul><ul><ul><li>Electronic communities: </li></ul></ul><ul><ul><ul><li>EC allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences. </li></ul></ul></ul><ul><ul><li>No sales tax: </li></ul></ul><ul><ul><ul><li>In many countries, online business is exempted from sales tax. </li></ul></ul></ul>
  26. 26. Benefits of E-Commerce. <ul><li>Benefits to Society: </li></ul><ul><ul><li>Telecommuting: </li></ul></ul><ul><ul><ul><li>More individuals work/shopping at home and do less traveling for work or shopping, resulting in less traffic on the roads and reduced air pollution. </li></ul></ul></ul><ul><ul><li>Higher standard of living: </li></ul></ul><ul><ul><ul><li>Some products/services can be soled at lower prices, allowing less rich people to buy more and increase their standard of living. </li></ul></ul></ul><ul><ul><li>Hope for the people: </li></ul></ul><ul><ul><ul><li>People in Third World countries and rural areas are now able to enjoy products and services that were unavailable in the past. </li></ul></ul></ul><ul><ul><ul><li>These includes opportunities to learn skilled professions or earn a college degree. </li></ul></ul></ul>
  27. 27. Limitation and Barriers of EC. <ul><li>Technological Limitations: </li></ul><ul><ul><li>There is lack of universally accepted standards of quality, security and reliability. </li></ul></ul><ul><ul><li>The telecommunication bandwidth is insufficient especially for m-commerce. </li></ul></ul><ul><ul><li>Software development tools are still evolving. </li></ul></ul><ul><ul><li>There are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases. </li></ul></ul><ul><ul><li>Special web server are needed in additions to the network servers (added costs). </li></ul></ul><ul><ul><li>Internet accessibility is still expensive and/or inconvenient. </li></ul></ul>
  28. 28. Limitation and Barriers of EC. <ul><li>Nontechnological Limitations: </li></ul><ul><ul><li>Security and privacy concerns deter customers from buying. </li></ul></ul><ul><ul><li>Some customers like to feel and touch products. Also, customers are resistant to the change from a real to a virtual store. </li></ul></ul><ul><ul><li>People do not yet sufficiently trust paperless, faceless transactions. </li></ul></ul><ul><ul><li>Lack of trust in EC and in unknown sellers delays/stops buying. </li></ul></ul><ul><ul><li>There is an increase amount of fraud on the Internet. </li></ul></ul><ul><ul><li>National and International government regulations sometimes get the way. </li></ul></ul><ul><ul><li>It is difficult to obtain risky capital due to the dot-com disaster (failure of many dot-coms). </li></ul></ul>
  29. 29. Applications of E-Commerce. <ul><li>Online Shopping: </li></ul><ul><ul><li>Online shopping is the process consumers go through to purchase products or services over the Internet. </li></ul></ul><ul><ul><li>An online shop, e-shop, e-store, internet shop, webshop, webstore or online store is the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall. </li></ul></ul><ul><ul><li>Online shopping is a type of electronic commerce used for business-to-business (B2B) and business-to-consumer (B2C) transactions. </li></ul></ul><ul><ul><li>Online shoppers commonly use credit card to make payments </li></ul></ul>
  30. 30. Applications of E-Commerce. <ul><li>Online Banking: </li></ul><ul><ul><li>Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their bank. </li></ul></ul><ul><ul><li>The common features provided by online-baning fall broadly into several categories: </li></ul></ul><ul><ul><ul><li>Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, and applications... apply for a loan, new account, etc.) </li></ul></ul></ul><ul><ul><ul><ul><li>Funds transfer between a customer's own accounts, or to another customer's account. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investment: purchase or sale. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Loan applications and transactions, such as repayments. </li></ul></ul></ul></ul><ul><ul><li>Non-transactional (e.g., online statements, chat with banks representative etc.) </li></ul></ul><ul><ul><ul><ul><li>Bank statements </li></ul></ul></ul></ul>
  31. 31. Applications of E-Commerce. <ul><li>Shopping Cart Software: </li></ul><ul><ul><li>Shopping cart software is software used in e-commerce to assist people making purchases online, analogous to the American English term 'shopping cart'. </li></ul></ul><ul><ul><ul><li>In British English it is generally known as a shopping basket. </li></ul></ul></ul><ul><ul><li>The software allows online shopping customers to place items in the cart. Upon checkout, the software typically calculates a total for the order, including shipping and handling (i.e. postage and packing) charges and the associated taxes, as applicable. </li></ul></ul>
  32. 32. Applications of E-Commerce. <ul><li>Electronic Bill Presentment and Payment: </li></ul><ul><ul><li>There are a significant number of bills that consumers pay on a regular basis, which include: power bills, water, oil, internet, phone service, mortgages, car payments etc. </li></ul></ul><ul><ul><li>Electronic bill presentment and payment (EBPP) is a fairly new technique that allows consumers to view and pay bills electronically. </li></ul></ul><ul><ul><li>EBPP systems send bills from service providers to individual consumers via the internet. The systems also enable payments to be made by consumers, given that the amount that appears on the e-bill is correct. </li></ul></ul><ul><ul><li>The biggest difference between EBPP systems and the traditional method of bill payment, is that of technology. </li></ul></ul><ul><ul><ul><li>Rather than receiving a bill through the mail, writing out and sending a check, consumers receive their bills in an email, or are prompted to visit a website to view and pay their bills. </li></ul></ul></ul>
  33. 33. Applications of E-Commerce. <ul><li>Electronic ticketing: </li></ul><ul><ul><li>An electronic ticket or e-ticket is used to represent the purchase of a seat on a passenger airline, usually through a website or by telephone. </li></ul></ul><ul><ul><li>This form of airline ticket has rapidly replaced the old multi-layered paper tickets (from close zero to 100% in about 10 years) and became mandatory for IATA members as of June 1, 2008. </li></ul></ul><ul><ul><li>During the last few years, where paper tickets were still available, airlines frequently charged extra for issuing them. </li></ul></ul><ul><ul><li>Once a reservation is made, an e-ticket exists only as a digital record in the airline computers. Customers usually print out a copy of their receipt which contains the record locator or reservation number and the e-ticket number. </li></ul></ul>
  34. 34. Applications of E-Commerce. <ul><li>Supply Chain Management (SCM): </li></ul><ul><ul><li>Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. </li></ul></ul><ul><ul><li>Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption (supply chain). </li></ul></ul>