Ecommerce and ERP

1. E-Commerece
CSCI:6303
Jarubula PraveenKumar
Based on Lectures by Dr. Abraham
University Of Texas-Pan American
11/24/2008

2. What is Commerce?
 Commerce is a division of trade or production which
deals with the exchange of goods and services from
producer to final consumer.
 It comprises the trading of something of economic value
such as goods, services, information or money between
two or more entities.
 Commerce primarily express the fairly abstract notions
of buying and selling.

3. What is E-Commerce?
 E-commerce is the use of electronic communications and digital
information processing technology in business transactions to
create, transform, and redefine relationships for value creation
between or among organizations, and between organizations and
individuals.
 E-commerce refers to aspects of online business involving
exchanges among customers, business partners and vendors. For
example, suppliers interact with manufacturers, customers interact
with sales representatives and shipment providers interact with
distributors.

4. Advantages of E-Commerce?
 Increased Access: Now, consumers can buy and get access to
goods all around the country even the world. Consumers can sit at
home and get all their products and services without even leaving
the house. Businesses can not have to worry about pickup and the
use of e-commerce has made it easier for businesses to run their
operation without the hassle of going to their supplier.
 Cost of doing business is reduced is minimized by e-commerce.
 Convenience: Businesses and consumers now don't have to go out
of their way to buy products and services. Businesses who buy
overseas are unable to physically go to buy their
services. Businesses can go to their supplier's website and order the
products they need.
 Expansion: Before e-commerce, businesses were restricted to
either their states or to certain areas because it was too costly to set
up offices in different areas. With the coming of e-commerce,
businesses have access to consumers and other business in all 50
states and even the entire world!

5. Disadvantages of E-
commerce?
 Security: Biggest problem of ecommerce, is the issue on
security. As cash is exchanged on the web across borders
and continents, many unscrupulous individuals are
enticed to target this activity to perform illegal means to
earn money. Identity theft and hacking of personal
information have become one of the serious problems in
the internet today.
 Tax to the government: As business can be done in the
internet just as easily as clicking a button, paying the
appropriate tax can be easily is evaded.

6. Comparison between E-commerce and Traditional Commerce
 Traditional
 Face to Face
 Printed & written documents
 Telephone communication
 Postal mail
 Payment by Cash, check or CC
 Ads: print med, radio, tv
 Merchandize deliver immediately.
 Customer takes merchandise home.
 E-Commerce
 No personal contact
 Documents on the web.
 Web pages personalized for a particular customer.
 E-mail or webmail communication.
 Ads on web, radio, tv
 Payment: credit card, direct withdrawal, fund transfer (paypal).
 Merchandise deliver home 2-5 days.

7. Business Models
 Brick-and-Mortar Businesses: Businesses that
have only a physical presence.
 Click-and-Mortar Businesses: Businesses that
have both an online and an offline presence.
 Combined Businesses: Businesses that have both
physical presence and online presence.
 Store Front Model Businesses: Enhance brick-and
mortar business through web presence.

8. Types of E-commerce
 The major different types of e-commerce are:
 Business-to-Business(B2B)
 Business-to-Consumer (B2C)
 Business-to-Government (B2G)
 Consumer-to-Consumer (C2C)
 Mobile commerce (m-commerce)

9. What is B2B e-commerce?
 B2B e-commerce is simply defined as
e-commerce between companies.

10. B2B E-commerce
 Logistics - transportation, warehousing and distribution (e.g.,
Procter and Gamble).
 Application service providers - deployment, hosting and
management of packaged software from a central facility
(e.g., Oracle and Linkshare).
 Outsourcing of functions in the process of e-commerce, such
as Web-hosting, security and customer care solutions (e.g.,
outsourcing providers such as eShare, NetSales, iXL
Enterprises and Universal Access).
 Auction solutions software for the operation and maintenance
of real-time auctions in the Internet (e.g., Moai Technologies
and OpenSite Technologies).
 Content management software for the facilitation of Web site
content management and delivery (e.g., Interwoven and
ProcureNet)
 Web-based commerce enablers (e.g., Commerce One, a
browser-based, XMLenabled purchasing automation
software).

11. Examples of B2B E-
Commerce
 Importers.com
 Alibaba.com
 EC21.com
 ECplaza.com
 GlobalSources.com
 TradeKey.com
 Made-in-China.com
 Busytrade.com
 DIYtrade.com
 TradeIndia.com
 India-Mart.com

12. What is B2C e-commerce?
 Business-to-consumer e-commerce, or commerce
between companies and consumers, involves customers
gathering information; purchasing physical goods (i.e.,
tangibles such as books or consumer products) or
information goods (or goods of electronic material or
digitized content, such as software, or e-books); and, for
information goods, receiving products over an electronic
network.

13. B2C e-commerce
 B2C e-commerce reduces transactions costs
 model the cost of the product is reduced as we can
eliminate the middle men
 major thing in B2c model is customer care

14. Pre-Cautions of B2C E-
commerce
 Check for digital certificates of the site
and it hacker free.
 Check for shipping price.
 See the previous service going
through the reviews of the old
customers
 Purchasing with the appropriate cards.

15. Some of the examples of the B2C model are:
 www.llbean.com
 www.landsend.com
 www.bestbuy.com
 www.sony.com
 www.dell.com
 www.amazon.com
 www.store.microsoft.com

16. What is 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.

17. Examples of B2G E-commerce are:
 www.fcw.com
 www.washingtontechnology.com
 www.Gcn.com
 www.signalmag.com
 www.governmnmentexecutive.com

18. What is C2C e-commerce?
 Consumer-to-consumer e-commerce or C2C is simply
commerce between private individuals or consumers.
 This type of e-commerce is characterized by the growth
of electronic marketplaces and online auctions,
particularly in vertical industries where firms/businesses
can bid for what they want from among multiple
suppliers.

19. C2C e-commerce
 This type of e-commerce comes in at least three forms:
 auctions facilitated at a portal, such as eBay, which
allows online real-time bidding on items being sold in
the Web.
 peer-to-peer systems, such as the Napster model (a
protocol for sharing files between users used by chat
forums similar to IRC) and other file exchange and later
money exchange models.
 classified ads at portal sites such as Excite Classifieds
and eWanted (an interactive, online marketplace where
buyers and sellers can negotiate and which features
“Buyer Leads & Want Ads”).

20. Examples of C2C E-commerce are:
 www.ebay.com
 www.napster.com

21. What is m-commerce?
 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).

22. Applications of M-commerce are:
 Mobile Ticketing
 Information Services
 Mobile Banking

23. Internet Advertising:
 Advertising is a form of communication whose purpose
is to inform potential customers about products and
services and how to obtain and use them.
 Advertising in the web pages
 Advertising before playing any videos
 Advertising in between the videos
 Advertising while the pages loads
 Advertising by search engines
 Advertising as a scroll bar while playing videos

24. Security:
 Most ecommerce merchants leave the mechanics to their
hosting company or IT staff, but it helps to understand
the basic principles. Any system has to meet four
requirements:
 privacy: information must be kept from unauthorized
parties.
 integrity: message must not be altered or tampered with.
 authentication: sender and recipient must prove their
identities to each other.
 non-repudiation: proof is needed that the message was
indeed received.

25. Management
 Business Plan
 Starting a business
 Requirements to start a Business
 Taxes
 Insurances

26. Business Plan
 Is a formal statement of a set of business goals, the
reasons why they are believed attainable, and the plan
for reaching those goals? It may also contain
background information about the organization or team
attempting to reach those goals.
 Though business plans have many different
presentation formats, business plans typically cover five
major content areas:
 Background information
 A marketing plan
 An operation plan
 A financial plan
 A discussing of the decision making criteria that should
be used to approve the plan.

27. Starting a business
 Time commitment
 Commitment to education
 Capital

28. Requirements to start a
business
 Step 1: Determine the legal structure of the business and
properly file the business name with the state and/or
county.
 Step 2: Determine the potential tax responsibilities of the
new business on the federal, state, and local levels.
 Step 3: Determine necessary licenses, permits,
certifications, registrations, and/or authorizations for a
specific business on the federal, state, and local levels.
 Step 4: Determine federal and state employer
requirements. There are various laws relating to
employment of personnel.

29. Taxes
 Methods of Accounting
 Accounting Period
 Type of Taxes

30. Methods of Accounting
 Each taxpayer must also use a consistent accounting
method, which is a set of rules for determining
when to report income and expenses.
 There are two types of accounting methods, which
dictate how the company’s transactions are recorded
in the company’s financial books: Cash-basis
accounting and Accrual accounting. The key
difference between the two types is how the
company records cash coming into and going out of
the business.

31. Accounting Period
 A “tax year” is an annual accounting
period for keeping records and reporting
income and expenses. An annual
accounting period does not include a
short tax year. The tax years you can
use are:
 Calendar year
 Fiscal year
◦ A fiscal year is 12 consecutive months ending
on the last day of any month except
December.
 52 – 53 – Week Tax Year you can elect
to use a 52 – 53 – week tax year

32. Types of taxes
 W-4 (Employee’s withholding allowance
certificate)
 SS – 6.2% employer and employee
◦ Base limit is $102,000 (for 2008)
 Medicare – 1.45% for employer and employee
 File 941 (forms)
 Federal Unemployment Tax Act (FUTA)
authorizes the IRS to collect a federal employer
tax used to fund state workforce agencies.

33. Insurances
 Building
◦ Fire, wind, etc. replacement cost
 Liability
◦ Comprehensive liablity: personal and advertising
injury, fire legal liability, medical expenses,
customer falling, etc.
 Workers Compensation:
◦ Employees’ injury related to work
 Life Insurance for partner, employees, etc.–
owned by who..beneficiary?
◦ Whole life
◦ Term
 Umbrella: coverage over comprehensive.

34. Maintain a business:
 Cash Flow Statement
 Balance Sheet:
 Income Statement:

35. Cash Flow Statement
 Company’s incoming and outgoing
money for one year.
 Visibility of company depends upon
cash flow
 Reconcile bank statements

36. Balance Sheet:
 List all of your assets
 All of your liabilities
 The difference is Owner’s Equity

37. Income Statement:
 An Income Statement, also called a
Profit and Loss Statement (P&L), is a
financial statement for companies that
indicates how Revenue (money received
from the sale of products and services
before expenses are taken out, also
known as the “top line”) is transformed
into net income .
 The purpose of the income statement is
to show mangers and investors whether
the company made or lost money during
the period being reported.

38. Employee benefits:
 Holidays
 Sick leave (8 hours per month)
 Vacation
 Medical insurance
 Retirement plan
 Profit sharing
 Bonus

39. Business Entities
 Sole proprietorship
 General partnership
 Corporation

40. Sole proprietorship:
 An Individual – also known as the owner
or self-employed person.
 Performs all functions required to
operate a business starting with
acquiring capital.
 Accepts all profits and losses and pays
all taxes.
 Fully responsible for all debts and
obligations
 Unlimited liability: a creditor can claim
against all of the owners assets whether
business or personal.

41. The advantages of a Sole proprietorship :
 It is easy to form and to dissolve
 All decision making power resides with
the sole proprietor.
 The profits of the proprietorship are
taxed only once.

42. The disadvantages of Sole
proprietorship:
 sole proprietorship faces unlimited
liability expansion.
 It has limited ability to raise funds for
business expansion.
 It usually ends with the death of the
proprietor.

43. General partnership:
 A partnership is a form of business
that is owned by two or more co-
owners (partners) who share any
profits the business earns and who
legally responsible for nay debts
incurred by the firm.

44. The advantages of a General
partnership :
 It is easy to organize
 It is an effective form of business
organization in situations where team
production involves skills that are
difficult to monitor
 The benefits of specializations can be
realized.
 The profits of the partnership are
taxed only once.

45. The disadvantages of General partnership
are:
 The partners have unlimited liability
 Decision making can be complicated
and frustrating.
 The voluntary withdrawal of a partner
from the firm or the death of a partner
can cause that partnership to be
dissolved or restructured.

46. Limited partnership:
 For the purpose of combining capital, not
to manage the business.
 General partners and limited partners.
 Limited partners not involved in
managing the business. Limited partners
are not liable for the actions of the
general partners. They are liable to the
extent of their investment. They can lose
the capital they invested.
 General partners are fully liable; may
take more profits.

47. Corporation:
 A corporation is a legal entity that can
conduct business in its own name.
 Corporations account for the vast
majority of total business revenues.
 The Corporation may become a public
corporation, with its shares being bought
and sold either through a stock market or
"over the counter".
 There is no limit on the number of
shareholders and shares may be held by
people who are neither citizens nor
residents of the United States.

48. Disadvantages of Corporation:
 The profits of the corporation are
taxed twice.
 There are problems associated with
separation of ownership from control

49. Advantages of Corporation:
 The owners (stock holders) of the
corporations are not personally liable
for the debts of the corporation; there
is limited (not unlimited) liability.
 The corporation continues to exist
even when an owner sells his or her
shares of stock or dies.
 Corporations are usually able to raise
large sums of financial capital for
investment purposes.

50. BiblioGraphy
 6314 E-commerce notes and slides by
Dr.John.P.Abraham
 http://en.wikipedia.org/wiki/Commerce
 http://www.iit.edu/~peacjen/cs485/ecommerce2.h
tm
 http://www.marketmyarticle.com/Article/Benefits-
and-Disadvantages-of-Ecommerce/3596
 http://www.importers.com/tradeblog/index.php?/a
rchives/10013-Choosing-the-Best-B2B-Site.html
 http://www.importers.com/tradeblog/index.php?/a
rchives/10013-Choosing-the-Best-B2B-Site.html
 http://en.wikipedia.org/wiki/Business-to-
government

51. Thank You

52. Clarifications?