E-Business and E-Commerce

1. Course Name: Electronic
Business
Course Code: FB 504
Chapter 01
Introduction to
E-Business and E-Commerce
Department of Finance and Banking, Faculty of Business
Administration
Jatiya Kabi Kazi Nazrul Islam University, Trishal, Mymensingh-2224,
Bangladesh.
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2. Contents
 The E-Commerce and E-Business
 Unique Features of E-commerce
 Define E-Commerce Types of EC Transactions
 Define E-Business Models
 Elements of E-Business Models
 Internet Marketing and E-Tailing
 Explain the benefits and limitations of E-
Commerce
 Overview of E-Commerce business in
Bangladesh
 Challenges to E-Commerce in Bangladesh
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3. Management Issues
1. Electronic Commerce, is it real?
2. What are the unique features of e-commerce?
3. Why is B2B e-commerce so essential?
4. What should be my business model?
5. How do we transform our organization into a
digital one?
6. How should we evaluate the magnitude of
business pressures and technological
advancement?
7. How can we exploit social/business networking?
8. What should be my company’s strategy toward
EC?
9. What are the top challenges of EC?
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4. E-Commerce and E-Business
Defining Electronic Commerce (E-Commerce)
The process of buying, selling or exchanging
products, services or information via computer.
Defining Electronic Business (E-Business)
A 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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5. The Growth off E--commerce
5
Retail e-commerce revenues grew 15–25 percent per year until the
recession of 2008–2009, when they slowed measurably. In 2014, e-
commerce revenues are growing again at an estimated 12 percent
annually.

6. Unique Features of E-
commerce
6
Ubiquity
Global reach
Universal standards
Richness
Interactivity
Information density
Personalization/customization
Social technology

7. Unique Features of E-
commerce
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 Ubiquity
 Internet/Web technology available
everywhere: work, home, and so on, anytime
 Effect:
– Marketplace removed from temporal,
geographic locations to become
“marketspace”
– Enhanced customer convenience and
reduced shopping costs
 Reduces transaction costs
– Costs of participating in market

8. Unique Features of E-
commerce
8
 Global reach
 The technology reaches across national
boundaries, around Earth
 Effect:
o Commerce enabled across cultural
and national boundaries seamlessly
and without modification.
o Marketspace includes, potentially,
billions of consumers and millions of
businesses worldwide.

9. Unique Features of E-
commerce
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 Universal standards
 One set of technology standards:
Internet standards
 Effect:
o Disparate computer systems easily
communicate with one another
o Lower market entry costs—costs
merchants must pay to bring goods to
market
o Lower consumers’ search costs—effort
required to find suitable products

10. Unique Features of E-
commerce
10
 Richness
 Supports video, audio, and text
messages
 Effect:
o Possible to deliver rich messages with
text, audio, and video simultaneously to
large numbers of people.
o Video, audio, and text marketing
messages can be integrated into single
marketing message and consumer
experience.

11. Unique Features of E-
commerce
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 Interactivity
 The technology works through
interaction with the user.
 Effect:
o • Consumers engaged in dialog that
dynamically adjusts experience to the
individual.
o • Consumer becomes co-participant in
process of delivering goods to market.

12. Unique Features of E-
commerce
12
 Information density
 Large increases in information density—
the total amount and quality of
information available to all market
participants
 Effect:
o Greater price transparency
o Greater cost transparency
o Enables merchants to engage in price
discrimination

13. Unique Features of E-
commerce
13
 Personalization/Customization
 Technology permits modification of
messages, goods
 Effect:
o • Personalized messages can be sent to
individuals as well as groups.
o • Products and services can be
customized to individual preferences.

14. Unique Features of E-
commerce
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 Social technology
 The technology promotes user content
generation and social networking
 Effect:
o New Internet social and business models
enable user content creation and
distribution, support social networks
o Many-to-many model

15. Effect of the Internet on the
marketplace
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 Reduces information asymmetry
 Offers greater flexibility and efficiency because
of:
 Reduced search costs and transaction costs
 Lower menu costs
 Greater price discrimination
 Dynamic pricing
 May reduce or increase switching costs
 May delay gratification: effects dependent on
product
 Increased market segmentation
 Stronger network effects
 More disintermediation

16. The Benefits of Disintermediation
to the Consumer
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The typical distribution channel has several intermediary layers,
each of which adds to the final cost of a product, such as a
sweater. Removing layers lowers the final cost to the consumer.

17. The major types of EC
transactions
 Business-to-Business (B2B)
 Example: ChemConnect
 Business-to- Consumer (B2C)
 Example: BarnesandNoble.com
 Consumer-to-Consumer (C2C)
 Example: eBay
 Business-to-Business-to-Consumer (B2B2C)
 Consumer-to- Business (C2B)
 Business-to-Employees (B2E)
 Intra-Business Electronic Commerce
 Collaborative Commerce
 E-Learning
 E-Government
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18. EC Business Models
 Online Direct Marketing
 Electronic Tendering
Systems
 Name-your-own-price
 Affiliate Marketing
 Viral Marketing
 Group Purchasing
 Online Auctions
 Mass Customization
(Make-to-Order)
• Electronic Exchanges
• Supply Chain
Improvers
• Finding the best price
• Value-Chain Integration
• Value-Chain Providers
• Information Brokers
• Bartering
• Deep Discounting and
• Membership
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19. Elements of E-Business
Models
 Revenue Models
 Sales
 Transaction fees
 Subscription fees
 Advertising fees
 Affiliate fees
 Other revenue sources
 Value Proposition
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20. Internet Marketing and E-
Tailing
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 A retailer is a sales intermediary, a seller that operates
between manufacturers and customers.
 Electronic retailing means retailing conducted online, over
the internet.
 E-tailers means retailers who sell over the internet.
 For example, Amazon.com sells books mostly to
individuals (B2C), but it also sells to corporations (B2B).
 Barnes & Noble (barnesandnoble.com), has a special
division that caters only to business customers.
 Wal-Mart (walmart.com) sells to both individuals and
businesses (via Sam’s Club).
 Dell sells its computers to both consumers and businesses
from dell.com
 Staples sells to both markets at staples.com and insurance
sites sell to both individuals and corporations.

21. Benefits of E-Commerce
 Benefits to
Organizations
 Global reach
 Cost reduction
 Facilitate problem solving
 Supply chain improvements
 Business always open
 Customization/Personalization
 Seller’s Specialization (Niche
Market)
 Ability to innovate, use new
business models
 Rapid time-to-market and
• Lower communication costs
• Efficient procurement
• Improved Customer service
and relationship
• Fewer permits and less tax
• Up-to-date company material
• Help SME to compete
• Lower inventories
• Lower cost of distributing
digitizable product
• Provide competitive
advantage
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22. Benefits of E-Commerce
 Benefits to Customers
 Ubiquity
 More products/Services
 Customized products/services
 Cheaper products/services
 Instant delivery
 Information availability
 Convenient auction
participation
 No sales tax
 Enable telecommuting
 Electronic socialization
 Find unique items
• Benefits to Society
– Enable telecommuting
– More public services
– Improved homeland security
– Increased standard of living
– Close the digital divide
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23. Limitations of Electronic
Commerce
 Technological Limitations
 Lack of universal standards for quality, security and
reliability.
 The telecommunications bandwidth is insufficient,
especially for m-commerce, videos and graphics.
 Software development tools are still evolving.
 It is difficult to integrate Internet and EC software with
some existing(especially legacy) applications and
databases.
 Special Web servers are needed in addition to the
network servers, which add to the cost of EC.
 Internet accessibility is still expensive and/or
inconvenient.
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24. Limitations of Electronic
Commerce
 Non-technological Limitations
 Security and privacy concerns deter customers from
buying.
 Lack of trust in EC and in unknown sellers hinders
buying.
 People do not yet sufficiently trust paperless, faceless
transactions.
 Many legal and public policy issues, including taxation,
have not yet been resolved or are not clear.
 National and international government regulations
sometimes get in the way.
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25. Limitations of Electronic
Commerce
 Non-technological Limitations
 It is difficult to measure some of the benefits of EC,
such as online advertising. Mature measurement
methodologies are not yet available.
 Some customers like to feel and touch products. Also,
customers are resistant to the change from shopping at
a brick-and-mortar store to a virtual store.
 In many cases, the number of sellers and buyers that
are needed for profitable EC operations is insufficient.
 Online fraud is increasing.
 It is difficult to obtain venture capital due to the failure
of many dot-coms.
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26. E-commerce Presence Map
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An e-commerce presence requires firms to consider the four different types of
presence,
with specific platforms and activities associated with each.

27. E-commerce Presence
Timeline
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28. Overview of E-commerce business
in Bangladesh
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29. Challenges to eCommerce in
Bangladesh
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 Inadequate delivery mechanisms;
 A relatively low internet penetration rate;
 The lack of a robust online transaction system;
 Prevalence of online fraud;
 Undeveloped online marketing practices; and
 The lack of a robust privacy policy.