Chapter 1

Introduction to Internet
Traditional Commerce and Electronic
Commerce
 E-commerce = shopping on line using Internet
 E-business and e-commerce used
interchangeably.
 B2B, B2C
 E-commerce involves business activities
conducted using electronic data transmission via
the Internet and World Wide Web.
 Other business processes that are not directly
involved in selling and purchasing of goods and
materials account for the majority of business
activities on the Internet.
 Eg. B2C = Amazon.com
 B2B transactions over computer network to
exchange data related to purchasing and
billing.
 Internet provides a medium for businesses to

exchange information about other processes.

Electronic Commerce
 Commerce is exchange of goods and services.
 commerce involves several interdependent
activities that can be viewed as business
processes.
 Advantage :
a) Increase profits by decreasing cost and increase
sales
 Disadvantage
a) Buyer is limited from inspecting the product first
hand.
b) Price and value (relates to location of seller and
buyer).
International Electronic Commerce
 Internet make is easy to exchange information
 Internet enables any business to be an

international operations.
 However, in reality need to take care of

 Currency conversion,
 tariffs,
 import and export restrictions
 local business customs
 law of each country.
Economic Forces and Electronic Commerce

 Transaction cost represents the sum of all

cost that buyer and seller incur as they gather
information and negotiate a purchase sales
agreement.
 Internet helps to reduce transaction cost

associated with finding the best product at

the best price.
 Internet also provides a common

communication infrastructure that companies

can use to share information.
Value Chains in Electronic Commerce
 Value chain involves the way that a business
unit organizes the primary activities of
identifying customers, designing products,
purchasing materials and suppliers, market
and sell products, deliver the products to the
customer and to provide on-going support
for the customers
 Collectively, the value chain reflects how the

business takes raw materials and labour and

creates a product of value to a customer
 Value change can be used in electronic
commerce as a technique for analyzing a
business or industry to identify opportunities
for leveraging electronic commerce. One
approach is to break up the value chain of a
specific business.
 E.g. It is possible to reduce transaction costs

by outsourcing components of the value

chain.
The Internet and the World Wide Web
 Internet 1960s a research project by the USA
Defense Department.
 The research discovered the benefits of

electronic mail for communicating which

became very popular communication
exchange medium (Internet).
 WWW also help to make Internet very popular.

Web was originally developed by the research

center CERN in Switzerland as a way to
publish technical documentation over the
Internet.
WWW
 Web was based on hypertext markup language
(HTML) that provide a simple way to create and
format document.
 Mosaic extended Web

 by allowing images to be included within a Web

page.
 Enable information from a HTML form to be

submitted to a server that can process the form

and creating dynamically responds with HTML
pages
 These allows, Web advertising ,marketing and

online ordering system