4. Introduction
• Commerce, exchange of goods and services, usually for
money
• Example: when buy something from grocery store, we
are actually participating in the process of commerce
• For participating commerce in different ways, we have
different roles:
– Buyers
– Sellers
– Producers
5. Introduction
• Buyers are those people with money who want to
purchase a goods or services
• Sellers are those people who offers goods and services
to buyers. Sellers are generally recognized in two
different forms:
– Retailers, who sell directly to consumers
– Wholesalers or distributers, who sell to retailers and other
businesses
• Producers are those people who create the
products and
services that offers to buyers
The producer sells the products produced to
6. Elements of commerce
• You need a Product or service to sell
• You need a Place from which to sell the products
• You need to figure out a way to get people to come to
your place.
• You need a way to accept orders.
• You also need a way to accept money.
• You need a way to deliver the product or service, often
known as fulfillment.
• Sometimes customers do not like what they buy, so you
need a way to accept returns.
• You need a customer service and technical support
department to assist customers with products.
8. Introduction: E-commerce
• Electronic Commerce (EC) is where business
transactions take place via telecommunications
networks, especially the Internet
• Electronic commerce describes the buying and selling of
products, services, and information via computer
networks including the Internet
• Electronic commerce is about doing business
electronically
• E-commerce, ecommerce, or electronic commerce is
defined as the conduct of a financial transaction by
electronic means.
• Electronic commerce is doing commerce with the use of
computers, networks and commerce-enabled software
10. Emergence of E-commerce
With the advent of the Internet, the term e-commerce
began to
include:
• Electronic trading of physical goods and of intangibles
such as information.
• All the steps involved in trade, such as on-line
marketing, ordering payment and support for delivery.
• The electronic provision of services such as after sales
support or on-line legal advice.
• Electronic support for collaboration between companies
such as collaborative on-line design and engineering or
virtual business consultancy teams.
11. E-Business
• Process of using electronic technology to do business
• E-business is the conduct of business on the Internet,
not only buying and selling but also servicing customers
and collaborating with business partners.
• E-business includes customer service (e-service) and
intra-business tasks.
• E-business is the transformation of key business
processes through the use of Internet technologies.
• An e-business is a company that can adapt to constant
and continual change
13. E-Business
E-business covers online transactions, but also extends
to all Internet based interactions with business partners,
suppliers and customers such as: selling direct to
consumers, manufacturers and suppliers; monitoring
and exchanging information; auctioning surplus
inventory; and collaborative product design. These
online interactions are aimed at improving or
transforming business processes and efficiency.
14. E-business: benefits
• Improved accuracy, quality and time required for
updating and delivering information on products and/or
services.
• Access for customers to catalogues and prices - 24
hours x 7 days.
• Improved ease, speed and immediacy of customer
ordering.
• Enhanced market, industry or competitor intelligence
acquired through information gathering and research
activities.
15. E-business: benefits
• New distribution channels via the electronic delivery of
some products and services, for example, product
design collaboration, publications, software, translation
services, banking, etc.
• Expansion of customer base and growth in export
opportunities.
• Reduces routine administrative tasks (invoices and order
records) freeing staff to focus on more strategic
activities.
16. E-commerce vs. E-Business
• E-commerce subset of e-business
• Involvement of monetary transaction is e-commerce
• To sell online is e-commerce but to bring and retain
customers and educate about the product or service is
e-business
• E-commerce relates with macro-environment while e-
business relates more the micro-level of the firm
18. Key drivers of e-commerce
• Technical factors
• Political factors
• Social factors
• Economic factors
19. Technological factors
• Telecommunications infrastructure
– Backbone infrastructure and architecture
– Industry players and competition
– Pricing
– Internet service providers
– Range of services available (e.g. ADSL, ISDN)
– Ownership (private or public sector)
• Access to new technology developments
• Bandwidth
• Speed of development and implementation of new
technology by industry sector
20. Political factors
• Number and type of government incentives and
programmes to support the use and development of new
technology
• Legislation – number and type of supportive or restrictive
laws and policies that govern electronic data, contacts
and financial transactions. For example, laws that
recognise and enforce the validity of electronic
documentation, contracts and transactions in a court of
law; the validation of digital signatures; the legal usage
of electronic security measures such as encryption
• Public policies – whether government supports the
growth of electronic transactions and processes. For
example, filing tax returns to the Inland Revenue
electronically, the national education curriculum and
21. Social factors
• Skills of workforce
• Number of users on-line
• Penetration rate of PCs
• Level of education; computer literacy and IT skills
• Culture of technophilia – a willingness and ability to
adopt new technology and the speed at which
technology achieves critical mass as in Japan
22. Economic factors
• Economic growth – GDP
• Average income
• Cost of technology (hardware and software)
• Cost of access to telecommunications infrastructure –
pricing structures and rates
• Commercial infrastructure – advancement of banking
sector; payment systems
• Innovative business models
24. They are Related as
E-commerce provides the infrastructure and
environment that enables and facilitates e-business.
Within this, the implementation of e-business is solely
dependent on whether there is a demand by the
organisation and whether it can be supplied within the
organisation. Demand is created largely by the need to
cut costs, improve efficiency, maintain competitive
advantage and meet stakeholder requirements. These
business objectives can be met through the supply of a
technological infrastructure to improve organisational
processes, a willingness, ability and commitment to
integrate new technology and improve working practice
within the organisation, and crucial to all this is the
allocation of resources.
28. Categories of E-Commerce
Supplier Opportunity Customer Benefits
•Global Presence
•Improved Competitiveness
•Mass Customization &
“Customerization”
•Shorten & eradicate
supply chains
•Cost savings
•Novel business
opportunities
•Global Choice
•Quality of Service
•Personalized Products &
Services
•Rapid response to needs
•Price reductions
•New products & services
29. B2B e-commerce
• E-commerce that is conducted between businesses is
referred to as business-to-business e-commerce or B2B
• Such as between manufacturer and a wholesaler or
between a wholesaler and a retailer
• On the internet, B2B is the exchange of products,
services or information between businesses rather than
between businesses and consumers
31. B2B e-commerce
Example:-
Dell deals computers and other associated accessories
online but it does not make all those products. So, in
govern to deal those products, first step is to purchases
them from unlike businesses i.e. the producers of those
products.
– Intel selling microprocessor to Dell
Heinz selling ketchup to Mc Donalds’
Note: About 80% of e-commerce is of this type.
32. B2C e-commerce
• E-commerce that is conducted between businesses and
customers referred to as business-to consumer or B2C
e-commerce
• E.g., www.amazon.com, business selling to the general
public typically through catalogue utilizing shopping cart
software
• Dell selling me a laptop
34. C2B e-commerce
A consumer posts his project with a set budget online
and within hours companies review the consumer's
requirements and bid on the project. The consumer
reviews the bids and selects the company that will
complete the project
35. C2B e-commerce
Example:
A student wants to fly from London to New York, but
has only £200 ($320) in the bank to pay for this round
trip. They put up an ad in an Internet C2B site, seeking
airlines that are willing to offer the transatlantic round trip
for £200 or less. The beauty of the Internet is that it
brings together a large number of customers to create a
marketplace that a number of airlines (that will have to
otherwise fly with empty seats) will be interested in.
36. C2C e-commerce
Consumer-to-consumer e-commerce or C2C is simply
commerce between private individuals or consumers
Example:
– Online market dealer such as eBay, Marry buying an
iPod from John on eBay
– Me selling a car to my neighbour
38. Amazon orders
from publishers
Publishers order
paper supplies
from paper
companies
Consumers search
out sellers, offers
and initiate
purchases from
Amazon
Consumers buy
thousands of
Harry Potter
books from
Amazon
Consumers
resell copies on
eBay
Business Consumers
Business originating from…
Convergence of e-Commerce
Categories
39. B2G e-commerce
• Business-to-government e-commerce or B2G is
generally defined as commerce between companies and
the public sector. It refers to the use of the Internet for
public procurement, licensing procedures, and other
government-related operations
• Example:
– Business pay taxes, file reports, or sell goods and
services to Govt. agencies.
40. Other e-commerce
• G2G (Government-to-Government)
• G2E (Government-to-Employee)
• G2B (Government-to-Business)
• B2G (Business-to-Government)
• G2C (Government-to-Citizen)
• C2G (Citizen-to-Government)
Note:
• They involve transactions with the government--from
procurement to filing taxes to business registrations to
renewing licenses
41. E-commerce: Technology &
Prospects
• Internet, Intranet and Extranet
• Electronic Fund Transfer
• Components:
SSL certificates,
Payment gateways
Trust marks
• Electronic Data Interchange
• Supply Chain Management
42. Electronic Fund Transfer: EFT
Electronic exchange or transfer of money from one
account to another, either within a single financial
institution or across multiple institutions,
through computer-based systems
43. Electronic Fund Transfer: EFT
• Wire transfer or credit transfer is a method of electronic
funds transfer from one person or institution to another
• Wire transfer can be made from one bank account to
another bank account or through a transfer of cash at a
cash office
• Wire transfer systems are intended to provide more
individualized transactions than bulk payment systems
such as ACH
• ACH (Automated Clearing House) processes large
volumes of credit and debit transactions in batches
• ACH direct debit transfers include consumer payments
on insurance premiums, mortgage loans, and other
kinds of bills
44. SSL certificates
• Digital certificates for web servers
• To provide security authentication, privacy and data
integrity through encryption
• To ensure secure transactions between web servers and
browsers
45. Payment Gateways
• an e-commerce application service provider that
authorizes payments for e-businesses, online retailers
etc
• A secure online payment system to commerce web sites
• Payment gateways protect credit card details by
encrypting sensitive information, such as credit
card numbers, to ensure that information is passed
securely between the customer and the merchant and
also between merchant and the payment processor.
•
46. Trust marks
• Trust mark helps online businesses show customers
they are a member of a professional accreditation
organization
• Trust mark shows they have passed security and
privacy tests
• Also called “security seals”, allows merchants to
communicate to customers that information exchange
and transaction processing are secure and reliable
• Example: VeriSign seal for trust marks
47. Electronic Data Interchange:
EDI
• Computer-to-computer exchange of business data and
documents between companies using standard formats
• The information used in EDI is organized according to a
specified format set by both companies participating in
the data exchange
• This allows for computer transactions that require no
human involvement.
• Thus, it is the transfer of structured data, by agreed
message standards, from one computer system to
another without human intervention.
49. SCM: Definition
Management of a network of interconnected businesses
involved in the ultimate provision of product and service
pacakges required by end consumers
50. Supply Chain Management:
SCM
A set of approaches used to efficiently integrate
• Suppliers
• Manufacturers
• Warehouses
• Distribution centers
So that the product is produced and distributed
• In the right quantities
• To the right locations
• And at the right time
System-wide costs are minimized and service level
requirements are satisfied
52. Economic potential of e-
commerce
• E-commerce has the potential to drive sub-regional
trade and integration and improve global
competitiveness
• Potential benefits include online communication
integrated with information systems of business
partners, which may
lead to customized products and services, a more
diversified regional or global market; better
understanding of customer needs, accurate real-time
information exchange, and cost-efficient productivity
• E-commerce provides effective and efficient ways in
which customers can gather information rapidly about
available products and services, evaluate and negotiate
53. Economic potential of e-
commerce
• Suppliers can also easily access customer’s needs and
other market variables including prices applied by
competitors
Note: these benefits would not materialize unless there
exists an adequate infrastructure coupled with a sound
regulatory framework
54. Economic potential of e-
commerce
• http://www.creativewebsols.com/economic-potential.htm
• http://www.bizaims.com/articles/ecommerce/potential%20elec
• http://www.uneca.org/wa/documents/Reporte-commerce.pdf
– * for reference purpose
55. Forces behind e-commerce
Note: E-Commerce - The global marketplace called
Internet
Global customer
Global products
Global operations
Global resources
Global collaborations
56. Global Customers
• Global customers are those customers who buy goods
or services from any of the countries where they get
convenience and fast services
• To maintain the leadership in the market place, we must
provide customers what they want and when they want
with maximum flexibility
• So to make it perfect solution-oriented, we must listen,
explore and act quickly, organize in a way that enables
us to make decisions and act
57. Global Products
• product that has worldwide recognition
• a commercial product, such as Coca Cola, that is
marketed throughout the world under the same brand
name
• Global Products are standardized products with a
common brand name, with uniform features in all
countries
– Eg: Gillette, Benetton Sweaters
• Regional products & regional brands are unique to a
particular region
58. Global Operations
• the performance of business activities and operations
that introduce and promote the flow of a company's
goods and services to customers in more than one
nation for a profit
• an organization that provides its goods or services to
customers in all areas of the world
• Eg.: Swiss bank, that genuinely involve in global
operations with presence of more than 80 countries
59. Global Resources
• Resources that can be shared by all the users all over
the world wide web through internet
• Sourcing right product and ensuring required
quality drive the resources globally
• Resource providers should be specialize in providing
complete sourcing / quality / inspection solutions
60. Global Collaborations
• Global Collaboration: A new source of competitive
advantage
• Working together to achieve a common goal (profit)
• 3 C’s for global collaborations:
COSTCOST
CONTEXTCONTEXTCAPABILITYCAPABILITY
61. Incentives for engaging in e-commerce
•Transaction management
•Business efficiency
•New market development
62. Transaction Management
• In the transaction management, all transactions must be
accurately mapped at every level on every system
throughout the organization
• As online products and services are offered, an
increasing number of users turn to the Internet for their
day-to-day banking needs, additional investment is
necessary to ensure that complex applications remain
user-friendly in the process of transactions
• Maintaining reliability and functionality, proactively
managing transactions has become an absolute
requirement for competing in today's market place
• Providing a complete real-time record of all transaction
activity for minimizing costs
63. Business Efficiency
Business Efficiency requires
• Just-in-Time,
• Quick Response, and
• Concurrent Engineering
E-Commerce generates transaction information, so plan
and support changes designed to increase the
responsiveness, flexibility, efficiency and accountability
of business process
As in E-Commerce use of customer database increases,
new security, privacy and legal issues arises. For this
purpose business & government co-operation and
support is essential
64. New Market Development
• A standard business tool, moving beyond cost saving
and strategic objectives altogether
• An interactive tool widely used to develop world wide
customers
• Education and Training is an important area where E-
Commerce can build up the infrastructure of skills upon
which new generations of Electronic services markets
will develop
• Customers will gravitate to the medium that is easiest,
quickest and most convenient to use, and prefer to stay
with that medium until it is obvious to them that a
different medium is superior
65. E-commerce: Advantages
• Overcome geographical limitations
• Gain new customers with search engine visibility
• Lower costs
• Locate the product quicker
• Eliminate travel time and cost
• Provide comparison shopping
• Enable deals, bargains, coupons, and group buying
• Provide abundant information
• Create targeted communication
• Remain open all the time
• Create markets for niche products
66. E-commerce: Disadvantages
• E-commerce lacks that personal touch
• E-commerce delays goods
• Many goods cannot be purchased online
• E-commerce does not allow you to experience the
product before purchase
• Anyone can set up an e-commerce website
• Security
Conclusion: While we might be gung-ho about
ecommerce, we must acknowledge that there are
disadvantages too. Only when we accept our
shortcomings will we work towards overcoming them.
67. Architectural Framework
• Kalakota and Whinston offer a generic framework for e-
commerce
• This framework assumes that new technology will be
built on existing technology infrastructure
• It uses four key building blocks and two supporting
pillars
68. Architectural framework
E-commerce ApplicationsE-commerce Applications
Common business servicesCommon business services
Message and information distributionMessage and information distribution
Multimedia content & network publishingMultimedia content & network publishing
Network, the internet (infrastructure)Network, the internet (infrastructure)
70. Architectural Framework
Four key building blocks:
1. Common business services infrastructure
2. Message and information distribution
3. Multimedia content and network publishing
4. The Internet (infrastructure)
Two supporting pillars:
1. Public policy (“governance”)
2. Technical standards
71. Common Business Services
Infrastructure
The common business infrastructure for electronic
commerce
consists of four main elements:
• Security
• Authentication
• Encryption
• Electronic Payments
72. Messaging and Information Distribution
Infrastructure
• Second building block of supporting framework for e-
commerce
• Includes email, instant messaging, Voice over IP (VoIP),
point-to-point file transfers (FTP), and groupware
• E-mail is still largest use in this area.
– ISP (Internet Service Provider) connects the user to
the Internet.
73. Multimedia Content
Third building block of supporting framework for e-
commerce. Includes standards for various multimedia
file types. Examples of materials transported in this way
include:
• Video
• Audio
• Text/Electronic documents
• Graphics & Photos
• Real time/Non-real time applications
74. Internet Infrastructure
Fourth building block of supporting framework for e-
commerce. Includes data communications circuits over
which information travels. Includes:
• Packet-switched networking (telephony is circuit-
switched)
• Packets contain overhead information including
addressing
• They are also routed, like mail
• All of this flows across Internet backbones
• Newer Internet access technologies include wireless
access, cable access and DSL.
75. Public Policy
• Public policy is one of two supporting pillars for e-
commerce. Public policy issues include:
– universal access,
– privacy,
– information pricing,
– information access.
• Privacy issues include what information is private and/or
who should have the right to use/sell information about
Internet users:
– Requesting personal information on visiting a web
site
– Creating customer profiles
– Leaving electronic footprints when visiting a web site
76. Technical Standards
• Standardization is the second supporting pillar for e-
Commerce. Standards are critical for electronic
interaction
• Secure Electronic Transaction (SET) for secure
payments of online credit card transactions is one of the
most heavily promoted standards
• Other application standards include file transfer protocol
(FTP), hypertext transfer protocol (HTTP), simple
network management protocol (SNMP), post office
protocol (POP), and multimedia internet mail extensions
(MIME)
77. Impact of E- Commerce
• Improving Direct Marketing
• Transforming Organizations
• Impact on Manufacturing
• Impact on finance and accounting:
78. Impact of E- Commerce
Improving Direct Marketing
• Product Promotion
• New Sales Channels
• Direct Savings
• Reduced Cycle Time
• Customer Service
• Brand or Corporate Image
79. Impact of E- Commerce
Transforming Organizations
• Technology and Organizational Learning
• Changing Nature of Work
• New Product Capabilities
• New Business Models
80. Impact of E- Commerce
Impact on Manufacturing
• Manufacturing systems are changing from mass
production to demand-driven
• Just –In-time Manufacturing
• Web-based systems
• Flexible systems
81. Impact of E- Commerce
Impact on finance and accounting:
• Payment systems
• Online debit/credit card payments
• E-cash or e-cheque
Impact on education:
• Training and education
• Distance learning
• Two way video
• Application sharing
82. Network Infrastructure of e-commerce
• Network infrastructure is required for e-commerce to
transport content.
• Information superhighway, I-way
• I-way is a high-capacity, interactive electronic pipeline
used to transfer content in case of e-commerce.
• I-way can transfer any type of context like, text,
graphics, audio, video.
• In other words, multimedia contents are easily
transported through I-way.
83. Issues for I-way
• How I-way will change the way they advertise, market or
sell their products and services
• How it will change their relationship with customers
• What sort of new arrangements will be possible with
suppliers and collaborators
• How it will affect information sharing between various
parts of the organization
• How it will impact individual productivity and efficiency
84. Components of I-way
Network Local on-ramps Global Information
Access Distribution
Equipments Networks
Consumer/
Business
premises
equipment
Consumer/
Business
premises
equipment
Cable TV-based
Infrastructure
Cable TV-based
Infrastructure
Commercial
online
Infrastructure
Commercial
online
Infrastructure
Wireless
Infrastructure
Wireless
Infrastructure
Telecom-based
Infrastructure
Telecom-based
Infrastructure
Backbone
communication
& satellite
networks
Backbone
communication
& satellite
networks
85. Components of I-way
• Consumer access equipment
• Local on-ramps
• Global information distribution networks
86. Consumer access equipment
• Consumer access equipment are devices used by
consumers to access the multimedia interactive contents
of e-commerce. In this segment, hardware and software
vendors are also included
• Provide
• physical devices like routers & switches
• Access devices like computers & set-top boxes
• Software platforms like browsers & operating systems
87. Local or access road, or on-
ramps
• Local or access road, or on-ramps: This segment of I-
way simplify linkages between businesses, universities,
and homes to the communications backbone.
• There are four different types of provider of access
ramps:
• telecom-based
• cable TV-based
• wireless-based
• computer-based online information services
These providers link users and e-commerce application
providers
88. Global information distribution
networks
• Global information distribution networks are the
infrastructure that are connecting countries and
continents
• Includes
• long distance telephone lines
• satellite networks
• the internet
89. Seven major issues about I-
way:
• cost
• subsidies
• allocation of scarce resources
• regulation
• universal access
• privacy
• social issues
90. Seven major issues about I-
way:
• Cost: Who will pay for constructing the I-way?
• Subsidies: Who are to be given subsidies?
• Allocation of scarce resources: Investment of the
allocation of different scarce resources would be wasted
or not
• Regulation: Who will fund for the highway and who will
write and enforce the rules to use the highway?
• Universal access: who can access and at what cost?
• Privacy: Is using online activities secure?
• Social and religious barriers:
• In cyberspace, everybody has right to write anything or
publish.
92. Asynchronous Transfer Mode,
ATM
• A transfer mode in which information is organized into
cells; it is asynchronous in the sense that the recurrence
of cells containing information from an individual user is
not necessarily periodic
• A network technology based on transferring data
in cells or packets of a fixed size. The cell used with
ATM is relatively small compared to units used with
older technologies. The small, constant cell size allows
ATM equipment to transmit video, audio, and computer
data over the same network, and assure that no single
type of data hogs the line.
93. ATM: a view
• ATM creates a fixed channel, or route, between two
points whenever data transfer begins
• Low-level network layer—above physical layer, below
AAL (ATM adaptation layer)
• Single transport mechanism for different types of traffic
(voice, data, video, etc.)
• Streamlined protocol, minimal error and flow control
capabilities
• Fixed packet size = ATM cell
– Simplified processing, management
94. ATM: Advantages
• Universality
– Mixed traffic types, real-time and non-real-time
• Scalability
– LANs, MANs, WANs, WLANs
• Efficient use of network resources Bandwidth on
demand concept
• Simplified network infrastructure
95. ISDN
• Known as the Integrated Services Digital Network
– Data, audio, image and video transmission
• It is a switched digital telecommunication line that can be
delivered over regular copper wires
– Possible to provide end-to-end digital
communications
• ISDN supports data transfer rates of
64 Kbps (64,000 bits per second).
96. ISDN
• There are two types of ISDN:
1. Basic Rate Interface (BRI) -- consists of two 64-Kbps B-
channels and one D-channel for transmitting control
information.
2. Primary Rate Interface (PRI) -- consists of 23 B-
channels and one D-channel (U.S.) or 30 B-channels
and one D-channel (Europe).
• The original version of ISDN employs baseband
transmission. Another version, called B-ISDN,
uses broadband transmission and is able to support
transmission rates of 1.5 Mbps. B-ISDN requires fiber
optic cables and is not widely available.
97. Frame Relay
• Frame Relay is a standardized wide area
network technology that specifies the physical and
logical link layers of digital telecommunications channels
using a packet switching methodology
• A packet-switching protocol for connecting devices on
a Wide Area Network (WAN)
• Frame Relay networks in the U.S. support data transfer
rates at T-1 (1.544 Mbps) and T-3 (45 Mbps) speeds
• Most telephone companies now provide Frame Relay
service for customers who want connections at 56 Kbps
to T-1 speeds. (In Europe, Frame Relay speeds vary
from 64 Kbps to 2 Mbps.
98. Frame Relay
• Network providers commonly implement Frame Relay
for voice (VoFR) and data as
an encapsulation technique, used between local area
networks (LANs) over a wide area network (WAN)
99. I-way: a review
I-way is known by several terms which include:
• Electronic superhighway
• Interactive superhighway.
• Multimedia superhighway.
