This document defines electronic commerce and discusses its key components. It describes electronic commerce as business transactions conducted over telecommunications networks, especially the internet, involving the buying and selling of products, services, and information. It outlines the different types of electronic commerce transactions, including business-to-business, business-to-customer, and intra-organizational. The document also discusses the benefits and limitations of electronic commerce.

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Foundations of Electronic
Commerce

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Definitions and Content of Field
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.
The infrastructure for EC is a networked computing
environment in business, home, and government.
E-Business describes the broadest definition of EC. It
includes customer service and intrabusiness tasks. It
is frequently used interchangeably with EC.

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A global networked environment is known
as the Internet
A counterpart within organizations, is
called an intranet
An extranet extends intranets so that they
can be accessed by business partners.
Definitions and Content of Field (cont.)

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Pure Vs. Partial Electronic
Commerce
Three dimensions
the product (service) sold [physical / digital];
the process [physical / digital]
the delivery agent (or intermediary) [physical / digital]
Traditional commerce
all dimensions are physical
Pure EC
all dimensions are digital
Partial EC
all other possibilities include a mix of digital and
physical dimensions

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Implementation is dependent on four major areas
people, public policy, technical standards and
protocols, and other organizations.
The EC management coordinates the
applications, infrastructures, and pillars. It also
includes Internet marketing and advertisement.
The Electronic Commerce Field

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A market is a network of interactions and
relationships where information, products,
services, and payments are exchanged.
The market handles all the necessary
transactions.
An electronic market is a place where shoppers
and sellers meet electronically.
In electronic markets, sellers and buyers
negotiate, submit bids, agree on an order, and
finish the execution on- or off-line.
Electronic Markets

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An interorganizational information system (IOS)
involves information flow among two or more
organizations.
Its major objective is efficient routine transaction
processing, such as transmitting orders, bills, and
payments using EDI or extranets.
Scope: An IOS is a unified system
encompassing two or several business partners.
A typical IOS includes a company and its
suppliers and and/or customers.
Interorganization Information Systems

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Business-to-business
Business-to-customer
Intra business transactions
Others
Electronic
Commerce
Business to Business
Business to Customer
Intraorganizational
Other
Interorganizational
System
Business to Business
Classification of Electronic Commerce
Classification of EC by the Nature
of the Transactions
© Prentice Hall, 2000

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Marketing
Computer sciences
Consumer behavior
and psychology
Finance
Economic
Production/Logistic
Management
information systems
Accounting and
auditing
Management
Business law and
ethics
Electronic Commerce is
Interdisciplinary

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The Benefits of
Electronic Commerce
Expands the marketplace to national and
international markets
Decreases the cost of creating, processing,
distributing, storing and retrieving paper-based
information
Allows reduced inventories and overhead by
facilitating “pull” type supply chain management
The pull type processing allows for customization
of products and services which provides
competitive advantage to its implementers
Benefits to Organizations

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Benefits to Customers
Enables customers to shop or do other
transactions 24 hours a day, all year round from
almost any location
Provides customers with more choices
Provides customers with less expensive products
and services by allowing them to shop in many
places and conduct quick comparisons
Allows quick delivery of products and services in
some cases, especially with digitized products

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Benefits to Customers (cont.)
Customers can receive relevant and detailed
information in seconds, rather than in days or
weeks
Makes it possible to participate in virtual auctions
Allows customers to interact with other
customers in electronic communities and
exchange ideas as well as compare experiences
Electronic commerce facilitates competition,
which results in substantial discounts.

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Benefits to Society
Enables more individuals to work at home, and to
do less traveling for shopping, resulting in less
traffic on the roads, and lower air pollution
Allows some merchandise to be sold at lower
prices benefiting the poor ones
Enables people in Third World countries and
rural areas to enjoy products and services which
otherwise are not available to them
Facilitates delivery of public services at a
reduced cost,increases effectiveness, and/or
improves quality

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The Limitations of
Electronic Commerce
Lack of sufficient system’s security, reliability,
standards, and communication protocols
Insufficient telecommunication bandwidth
The software development tools are still evolving
and changing rapidly
Difficulties in integrating the Internet and electronic
commerce software with some existing
applications and databases
Technical Limitations of Electronic Commerce

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Technical Limitations of
Electronic Commerce (cont.)
The need for special Web servers and other
infrastructures, in addition to the network servers
(additional cost)
Possible problems of interoperability, meaning
that some EC software does not fit with some
hardware, or is incompatible with some operating
systems or other components

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Other limiting factors are:
Lack of touch and feel online
Many unresolved legal issues
Rapidly evolving and changing EC
Lack of support services
Insufficiently large enough number of sellers
and buyers
Breakdown of human relationships
Expensive and/or inconvenient accessibility to
the Internet
Non-Technical Limitations (cont.)

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Everything Will Be Changed
Product promotion
New sales channels
Direct savings
Time-to-market (reduced cycle time)
Customer service
Brand or corporate image
Improving Direct Marketing

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Transforming Organizations
Work will change
Technology learning
Organizational learning
Redefining Organization
New product capabilities
New business models
Other Changes in the Workplace