Electronic Commerce

Introduction to E-Commerce & Business

Prepared by: LEL First Prepared on: 28-2-2005 Last Modified on: Quality checked by: Module Group Copyright 2004 Asia Pacific Institute of Information Technology

Learning Outcomes
At the end of the lecture, you should be able to: Explain the driving forces of Electronic Commerce (E-Commerce) Describe the benefits and limitations of ECommerce Identify the impact of E-Commerce on organisations and consumers Outline the evolution of technology enabled distance shopping methods, from teleshopping to E-Commerce to M-Commerce
Title of Slides

Module Code and Module Title

WHAT IS ELECTRONIC COMMERCE?

Business activities conducted using electronic data transmission technologies such as those used in the Internet and the World Wide Web. Thus, it is not necessarily confined to the use of Internet.

Module Code and Module Title

Title of Slides

OVERVIEW: The need for networks

Without communication and networking technologies there would be no E-Commerce Technology both facilitates and constrains the development of E-Commerce at this evolutionary point this is very much the case It is fair to say that there is concern about the capacity of the Internet Also concern whether Malaysia has the necessary infrastructure in place
Module Code and Module Title Title of Slides

SOME TECHNOLOGY TRENDS

Server side provision Parallel technologies

The digital TV armchair revolution Kiosks M-Commerce (mobiles/PDAs) - this will be dealt with later in the course

Module Code and Module Title

Title of Slides

SERVER SIDE PROVISION

Web Servers and ISPs Web servers are used to store, manage and supply the information on the World Wide

Workstation from which a user accesses a server is described as a client - the whole configuration is described as client-server architecture.
Module Code and Module Title Title of Slides

SERVER SIDE PROVISION

Internet Service Providers(ISPs)
telecommunications companies that provide home or business users with a connection to the Intemet.

Application Service Providers(ASPs)

Application Service providers (ASPs) offer a more complete service support than ISPs.

Module Code and Module Title

Title of Slides

A FIRM NEEDS TO BE AWARE OF:

The differences between the internet, an intranet and an extranet the communications infrastructure that supports E-Commerce
internet connections and Protocols client/server computing

Why?

Module Code and Module Title

Title of Slides

WHY?
Because you may be asked to be responsible for helping to procure technology and services - its your call ignorance is no excuse! Imagine yourself in this role - given a budget, asked to budget for an internet project within your firm So as to avoid horror stories like this one
e.g ASP Angst
Module Code and Module Title Title of Slides

HOSTING A SITE
Hosting options - verbally explained now
internal hosting - DIY - you become a node on the Internet co-locating hosting - very popular Other ISP hosting solutions ASP service

All have hosting implications

Module Code and Module Title

Title of Slides

CONNECTING TO THE INTERNET

A modem for small business connections or a gateway server for large organisations The connection to the Internet digital or analogue via phone lines; cable or WAN(Wide Area Network) Most popular choices are:
Dial-up; Dial-up ISDN ISDN ADSL Leased Line - pipes 64kbps, 256, 1mbps, 2mbps

How to choose
Module Code and Module Title Title of Slides

CONNECTION CHOICE

fees for access from network line provider, fee based on distance or traffic volume the nature of a companys business will dictate the usage of line - is the data frequent or occasional? What kind of secure access does the business need - immediate or less critical? What kind of speed of access is required?
Module Code and Module Title Title of Slides

NEWER NETWORK TECHNOLOGIES

State of the art technology can be expensive and so tend to be of interest to large firms
Optical networks Virtual private networks (VPNs) - usually for security reasons - see Security session later in the module Wireless networks

Issue of integration of networks convergence of parallel technologies an issue!

Module Code and Module Title

Title of Slides

ACCESS TECHNOLOGIES DIGITAL TV

There are a number of different proposals for the integration of Internet and television. One model for this is WebTV (www.webtv.net) being promoted by Microsoft.
allows the simultaneous display of a television channel and web pages. WebTV uses an existing television, a telephone line, and a set top box
Module Code and Module Title Title of Slides

WHAT IS ELECTRONIC COMMERCE?

...the enablement of a business vision supported by advanced information technology to improve efficiency and effectiveness within the trading process
(http://www.december.com/present/ecdef.html)

The buying and selling of products and services by businesses and consumers over the internet. Also called e-commerce. Subdivided into three categories: business to business or B2B (Cisco), business to consumer or B2C (Amazon), and consumer to consumer or C2C (eBay)
(http://www.investorwords.com/cgi-bin/getword.cgi?1678)

Conducting business on-line. This includes, for example, buying and selling products with digital cash and via Electronic Data Interchange (EDI).(http://www.pcwebopaedia.com/TERM/E/electronic_commerce.htm)
Module Code and Module Title Title of Slides

TRADITIONAL COMMERCE

Commerce: Doing Business Barter System The Buyer

Identify specific need Search for products/services that will satisfy the specific need Select a vendor Negotiate a purchase transaction, including delivery logistics & inspection, testing and acceptance Make Payment Perform regular maintenance and make warranty claims

The Seller
Conduct market research to identify customer needs Create products/services that meets customer needs Advertise/promote Negotiate a sale transaction, including delivery logistics & inspection, testing and acceptance Ship goods and invoice customer Receive and process customer payments Provide after-sale support, maintenance and warranty services
Module Code and Module Title Title of Slides

BUSINESS PROCESSES IN COMMERCE

Well Suited to ECommerce Suited to a combination of electronic & traditional commerce strategies Sale/purchase of automobiles Online banking Roommate-matching services Sale/purchase of investment and insurance products Well Suited to traditional commerce

Sale/purchase of books and CDs Online delivery of software Selling of travel services Online shipment tracking Selling of collectible comic books
Module Code and Module Title

Sale/purchase of high-fashion clothing Sale/purchase of perishable food products Small-denomination purchases and sales Sale of high-value jewelry and antiques

Title of Slides

BUSINESS PROCESSES IN COMMERCE

Well suited to E-commerce: Example in COMMODITY ITEMS A product or service that is hard to distinguish from the same products or services provided by other sellers. Features have become standardized and well-known.

SHIPPING PROFILE Collection of attributes that affect how easily a product can be packaged and delivered. High value-to-weight ratio can help by making the overall shipping cost a small fraction of the selling price.
Module Code and Module Title Title of Slides

E-COMMERCE ADVANTAGES

SUMMARY: INCREASE SALES & DECREASE COSTS

Module Code and Module Title

Small firm exposure Reach narrow market segments that are geographically scattered Creating virtual communities that become ideal target markets Reduce costs in handling sales inquiries, providing price quotes and product availability Price comparisons on suppliers Provide more choices for buyers Save time / time compression
Title of Slides

E-COMMERCE DISADVANTAGES

LIMITATIONS:
Module Code and Module Title

Not applicable to ALL products and services Critical Mass needed potential buyers be equipped and willing to buy through the Internet Changing technologies Retraining employees Difficulty in integrating existing databases and transaction-processing software Cultural and legal obstacles Time Compression Consequences on sociochanges
Title of Slides

ECONOMIC FORCES & E-COM

TRANSACTION COSTS: The total of all costs that a buyer and a seller incur as they gather information and negotiate a purchasesale transaction MARKETS & HIERARCHIES: When Transaction Costs are high, businesspersons would form organisations to replace marketnegotiated transactions Would be hierarchical, includes strong supervision and worker-monitoring elements Vertical Integration Exceptions commodities
Module Code and Module Title Title of Slides

ROLE OF E-COMMERCE

REDUCTION OF TRANSACTION COSTS: By improving the flow of information and increasing the coordination of actions. CREATION OF NEW OPPORTUNITIES: Strategic Alliances / Strategic Partnerships arise from long-term, stable relationships with other companies / individuals within the network economic structure (business network) Virtual Companies (coming together through Internet) These Network Organisations are suited to technology industries that are information intensive. E-Commerce make it much easier for the growth of these organisations
Module Code and Module Title Title of Slides

ROLE OF E-COMMERCE

REDUCTION OF TRANSACTION COSTS: By improving the flow of information and increasing the coordination of actions. CREATION OF NEW OPPORTUNITIES: Strategic Alliances / Strategic Partnerships arise from long-term, stable relationships with other companies / individuals within the network economic structure (business network) Virtual Companies (coming together through Internet) These Network Organisations are suited to technology industries that are information intensive. E-Commerce make it much easier for the growth of these organisations
Module Code and Module Title Title of Slides

HISTORY OF THE INTERNET

Originated in the 1960s from the U.S. Department of Defense Need for decentralised communications network for transferring files and control weapons systems

University born
File Transfer Protocol (FTP) Telnet

Usenet (giving rise to newsgroups)

1995, privatisation, Network Access Providers (NAPs), sell access rights to Internet Service Providers (ISPs)
Title of Slides

Module Code and Module Title

WORLD WIDE WEB

Emerged from the development of Hypertext 1989, improvement in the way of circulating data Hypertext Markup Language describes the relationships among text elements

And the development of Graphical User Interfaces Web Browser allows users to read / browse HTML documents Easy to read Microsoft vs. Netscape vs. Mozilla

Module Code and Module Title

Title of Slides

Summary of Main Teaching Points

E-Commerce is The buying and selling of products and services by businesses and consumers over the internet The evolution of business making The birth of the Internet and its implications Advantages and Limitations of ECommerce

Module Code and Module Title

Title of Slides

Key Terms you must be able to use

If you have mastered this topic, you should be able to use the following terms correctly in your assignments and exams:

E-Commerce Commodity Items

Module Code and Module Title

Title of Slides

Question and Answer Session

Questions?
Module Code and Module Title Title of Slides

Next Session
Topic and Structure of next session

NEXT LESSON:
ESSENTIAL COMPONENTS AND BUSINESS MODELS

Module Code and Module Title

Title of Slides