Intro to E Commerce Oct 15

7/31/2019 Intro to E Commerce Oct 15

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chintechE- Commerce 1Nishith Anand

E- Commerce: An Overview

MBA First Semester

Information Technology for Managers


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Some Definitions...


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Commerce is viewed as transactions conducted between business

partners.

Electronic commerce (EC) is where business transactions take place via

telecommunications networks, especially the Internet.

Transactions carried out by means of EDI and other means of

electronic communications

Electronic commercedescribes the buying and selling of products, services,and information via computer networks including the Internet.

The infrastructure for EC is a networked computing environment inbusiness, home, and government.

Networked computing connects several computers & other electronic

devices by telecommunication networks

E-Businessdescribes the broadest definition of EC. It includes customerservice and collaborating with business partners & conducting electronic

transactions within an organization . It is frequently used interchangeably with

EC.


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E- Commerce Models

Business-to-business (B2B)

Businesses make online transactionspurchases with other business

Business-to-consumer (B2C)

Online transactions between businessesand consumers

Business-to-employee (B2E)

Information and services made availableto employees online


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E- Busines Terms

E-business

EC defined from these perspectives

Communications

Business process

Service

Online

Collaborations

Community


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Pure Vs. Partial EC

Pure vs. Partial EC: based on the degree ofdigitization of

Product

Process

Delivery agent Traditional commerce: all dimensions are physical

Pure EC: all dimensions are digital

Partial EC: all other possibilities include a mix ofdigital and physical dimensions


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E C Terms

Internet vs. Non-Internet EC

VANs

LANs

Click and Mortar


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Dimensions of E- Commerce


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Business Models

A method of doing business by which acompany can generate revenue to sustainitself.Examples:

Name your price

Find the best price

Dynamic brokering

Affiliate marketing


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Business Models...

Group purchasing

Electronic tendering systems

Online auctions Customization and personalization

Electronic marketplaces and exchanges

Supply chain improvers

Collaborative commerce


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Business Model- Obis Corp


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Business Model ( Cont...)


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Electronic Markets/ E- Marketspaces

A marketis a network of interactions andrelationships where information, products,services, and payments are exchanged.

It handles all the necessary transactions

It is a place where shoppers and sellersmeet electronically

Sellers and buyers negotiate, submit bids,agree on an order, and finish the

execution on- or off-line


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Electronic Markets

2 types of relations may exist

customer/seller linkage established at time of

transactions and may be for one transaction only.

customer/seller purchase agreement is established

whereby the sellers agree to deliver services for a

defined period of time.


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Electronic Markets ...

They are typically built around publicly accessible networks

When outside communication companies are involved they are typically

online service providers which function as market makers.

Sellers with the market makers determine what business transaction theywill provide.

Customers and sellers independently determine which communication

networks they will use in participating in the electronic market

No joint guidelines are drawn in advance.


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Transactions in EC...


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Electronic Exchanges

Electronic exchanges provide dynamic pricing

by matching real-time supply and demand

Live auctions

Stock exchanges


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Inter organisational Information Systems

Interorganizational information system (IOS)

involves information flow among two or more

organizations

Major objective is efficient routine transactionprocessing, such as transmitting orders, bills, and

payments using EDI or extranets

Scope: Unified system encompassing two or

several business partnersTypical IOS includes a company, its suppliers,

and and/or customers


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IOS

The customer/supplier relationship is decided inadvance with the anticipation that it will be an ongoing

relation based on multiple transactions.

They are usually built around private or publiclyaccessible networks

When outside communication companies are involved

they are typically value added carriers.


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IOS

Advance agreements result in agreements on the natureand format of business documents that will be

exchanged and payments.

Advance arrangements are made so both the partiesknow which communication networks will be integral to

the system

Joint guidelines and expectations of each party are

formulated so each know how the system is to be used

and when the transactions will be submitted and received

by each business partner.


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Types of IOS

EDI

Extranets

EFT

Electronic forms

integrated messaging-delivery of email and fax through a

single electronic transmission system that can combine edi,e

mail,electronic forms

shared databases

SCM


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A Framework for EC...


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EC is Interdisciplinary

Marketing

Computer sciences

Consumer behavior and

psychology

Finance

Economics

Marketing

Computer sciences

Consumer behavior and

psychology

Finance

Economics


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Driving Forces of EC...

The New World of Business

Business pressures

Organizational responses

The role of Information Technology (including

electronic commerce)


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Major Business Pressures

Strong competition

Global economy

Regional tradeagreements (e.g. NAFTA)

Extremely low labor cost

in some countries

Frequent and significantchanges in markets

Increased power ofconsumers

Market and

economic pressures


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Business Pressures...

Changing nature of workforce

Government deregulation of

banking and other services

Shrinking government subsidies

Increased importance of ethicaland legal issues

Increased social responsibility of

organizations

Rapid political changes

Societal and

environmentalpressures


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Business Pressures....

Rapid technologicalobsolescence

Increase innovationsand new technologies

Information overload

Rapid decline intechnology cost vs.performance ratio

Technological

pressures


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Organisational Responses

Strategic systems

Continuous improvement efforts

Business process reengineering (BPR)

Business Alliances

Electronic commerce


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IT Support and EC

Reducing cycle time and time tomarket

Empowerment of employees andcollaborative workSupply chain improvementsMass customization

Change management


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Benefits of EC

Benefits to Organizations

Expands the marketplace to national and

international markets

Decreases the cost of creating, processing,distributing, storing and retrieving paper-based

information


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Benefits of EC

Benefits to Organizations (cont.)

Allows reduced inventories and overhead byfacilitating pull-type supply chainmanagement

The pull-type processing allows forcustomization of products and services whichprovides competitive advantage to its

implementers


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Benefits of EC

Benefits to Organizations (cont.)

Reduces the time between the outlay of capitaland the receipt of products and services

Supports business processes reengineering(BPR) efforts

Lowers telecommunications cost - the Internetis much cheaper than value added networks(VANs)


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Benefits of EC

Benefits to consumers

Enables consumers to shop or do other

transactions 24 hours a day, all year round from

almost any location

Provides consumers with more choices

Provides consumers with less expensive

products and services by allowing them to shop

in many places and conduct quick comparisons


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Benefits of EC

Benefits to consumers (cont.)

Allows quick delivery of products and services

(in some cases) especially with digitized

products Consumers can receive relevant and detailed

information in seconds, rather than in days or

weeks

Makes it possible to participate in virtualauctions


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Benefits of EC

Benefits to consumers (cont.)

Allows consumers to interact with other

consumers n electronic communities andexchange ideas as well as compare

experiences

Facilitates competition, which results in

substantial discounts


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Benefits of EC

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 lowerair pollution

Allows some merchandise to be sold at lower

prices benefiting less affluent people


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Benefits of EC

Benefits to society (cont.)

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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chintechE- Commerce40

Nishith Anand

Limitations of EC

Technical limitations of electronic commerce

Lack of sufficient systems security, reliability, standards, and

communication protocols

Insufficient telecommunication bandwidthThe software development tools are still evolving and changing

rapidly

Difficulties in integrating the Internet and electronic commerce

software with some existing applications and databases

The need for special Web servers and other infrastructures,

in addition to the network servers (additional cost)


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Nishith Anand

Limitations of EC ...

Technical Limitations of EC (cont.)

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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Nishith Anand

Non- Technical Limitations

Cost and justification

The cost of developing an EC in house can be very

high, and mistakes due to lack of experience may

result in delays.

There are many opportunities for outsourcing, but

where and how to do it is not a simple issue

In order to justify the system, one needs to deal withsome intangible benefits which are difficult to

quantify.


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Nishith Anand

Non- Technical Limitations...

Security and Privacy

These issues are especially important in the B2C

area, but security concerns are not so serious from

a technical standpoint

Privacy measures are constantly improving too

The EC industry has a very long and difficult task

of convincing customers that online transactions

and privacy are, in fact, very secure


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Nishith Anand


Lack of trust and user resistance

Customers do not trust:

Unknown faceless sellersPaperless transactions

Electronic money

Switching from a physical to a virtual store may

be difficult


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Nishith Anand


Other limiting factors are:Lack of touch and feel online

Many unresolved legal issues

Rapidly evolving and changing ECLack of support services

Insufficiently large enough number of sellers and

buyers

Breakdown of human relationships

Expensive and/or inconvenient accessibility to

the Internet


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Nishith Anand

Putting it all Together....


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chintechE- Commerce

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Putting it all Together....

E T I


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chintechE- Commerce

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E.g: Toys, Inc.

Major concern of todays companieshow totransform themselves to take part in digital economy

Example:Toys, Inc.

Uses intranet for internal communications,

collaboration, dissemination of information

Networked to e-marketspaces and large

corporations

Corporate portal for communication and

collaboration with business partners


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chintechE- Commerce

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Documents

Intro to E Commerce Oct 15