COURSE TITLE: E COMMERCE

PAPER CODE: CIT 4203

LECTURER: MADAM MATILDA
TOPIC: FUNDAMENTALS OF ELECTRONIC COMMERCE (E-COMMERCE)

Objectives:
 Introduction, definition of terms
 Types/Models of E Commerce
 Features of E commerce
 E commerce challenges
 Advantages and Disadvantages

INTRODUCTION:

Definition:

E-commerce

Electronic commerce, commonly known as E-commerce is trading in products or services using

computer networks, such as the Internet.

It draws on technologies such as mobile commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic data interchange
(EDI), inventory management systems, and automated data collection systems.

In its broadest definition, e-commerce is digitally enabled commercial transactions between and
among organizations and individuals, where digitally enabled means, for the most part,
transactions that occur over the Internet and World Wide Web.

Some examples of ecommerce businesses are Amazon, eBay, Alibaba, and Walmart

Ecommerce can be defined from different dimensions as;

 From a communications perspective: EC is the delivery of information,

product/services, or payments over telephone lines, computer networks, or any other
electronic means.
 From a business process perspective: EC is the application of technology toward the
automation of business transactions and work flow.
  From a service perspective: EC is a tool that addresses the desire of firms, consumers,
and management to cut service costs while improving the quality of goods and
increasing the speed of service delivery.
 From an online perspective: EC provides the capability of buying and selling products
and information on the Internet and other online services.
 From a collaboration perspective: EC is the facilitator for inter- and intra-
organizational collaboration.
 From a community perspective: EC provides place for community members, to learn,
transact and collaborate.

E-commerce Vs. E-business

E-business is the use of Internet and digital technology to execute all the business processes in
the enterprise. It includes e-commerce as well as processes for the internal management of the
firm and for coordination with suppliers and other business partners. E-business includes
digital enabling of transactions and processes within a firm, involving information systems
under the control of the firm.

For example, a company’s online inventory control mechanisms are a component of e-business
and online selling of company product is e-commerce.

Types/Models of ecommerce

Classified by the nature of market relationship – who is selling to whom

 Business-to-Consumer (B2C)
o Businesses sell products or services to individual customers
o Example: Walmart.com sells merchandise to consumers through its Web site
 Business-to-Business (B2B)
o Businesses sell products or services to other businesses
o Types include inter-business exchanges, e-distributors, B2B service providers,
matchmakers and infomediaries.
o Examples: Grainger.com sells industrial supplies to large and small businesses
through its Web site, Intel sells products to other business rather than customers.
 Consumer-to-Consumer (C2C)
o Participants in an online marketplace can buy and sell goods with each other
o Example: Consumers and businesses trade with each other on eBay.com

 Consumer-to-Business (C2B)
Consumers and businesses trade with each other

Unique features of ecommerce

The features the set e-commerce Technology apart from others used in traditional

Commerce are:

1. Ubiquity – internet/web technology is available everywhere: at work, home and elsewhere

via mobile devices.

 Marketplace extended beyond traditional boundaries

 “Marketspace” is created, available 24/7/365
 Customer convenience increased, costs reduced.
 Ubiquity reduces transaction cost – the cost of participating in a market

2. Global Reach – the technology reaches across national boundaries, around the earth.

 The potential market size is roughly equal to the size of the world’s online population
 The total number of users or customers an e-commerce business can obtain is a measure
of its reach

3. Universal standards – there is one set of technology standards, namely internet standards
that is shared by all nations around the world.

 Promotes technology adoption

 Reduces costs of adoption
 Greatly lower market entry cost for merchants
 Reduce search cost for consumers

4. Richness – Refers to the complexity and content of a message

 Video, audio, and text messages are integrated into a single marketing message
 The Internet has the potential for offering considerably more information richness than
traditional media like printing press, radio, and television because it is interactive and
can adjust the message to individual users

5. Information Density - Internet and Web vastly increase the total amount and quality of
information available to all market participants

 Information processing, storage and communication costs drop dramatically.

 Accuracy and timeliness improve greatly.
 Information becomes plentiful, cheap and accurate.

6. Interactivity – the technology allows active user involvement.

 Enable two-way communication between merchant and consumer

 Traditional televisions cannot ask viewers any questions or enter into conversations, and
it cannot request that customer information be entered into a form
 Interactivity allows an online merchant to engage a consumer in ways similar to a face-
to-face experience on a global scale where consumers engage in dynamic dialog
7. Social Technology – the technology allows the persons to create communities of their own
interest.

 The Internet and e-commerce technologies have evolved to be much more social by
allowing users to create and share content in the form of text, videos, music, or photos
with a worldwide community.
 Using these forms of communication, users are able to create new social networks and
strengthen existing ones

8. Personalization/Customization – the technology reaches allows personalized messages to be

delivered to individuals as well as groups.

 E-commerce technologies permit personalization by targeting of marketing message to

specific individuals by adjusting the message to a person’s name, interests, and past
purchases
 The technology also permits by changing the delivered product or service based on
user’s preferences or prior behavior
 Potential customer reach extended.

Ecommerce Challenges

Although using e-commerce offers organization a wealth of new opportunities and ways of
doing business, it also presents managers with a number of serious challenges as given below

 Unproven Business Models - Many Internet business models are new and largely
unproven to prove enduring sources of profit
 Business Process Change Requirements - Web-enabled business processes for e-
commerce and e-business requires far-reaching organizational change
 Channel Conflicts - Using the Web for online sales and marketing may create channel
conflicts with the firm’s traditional channels
 Legal Issues - laws governing electronic commerce are still being written
 Trust, Security, and Privacy - Electronic commerce does not provide trust among
buyers, sellers, and other partners involved in online transactions

E-Commerce Categories:

1. Electronic Markets
Present a range of offerings available in a market segment so that the purchaser can compare
the prices of the offerings and make a purchase decision. Example: Airline Booking System
2. Electronic Data Interchange (EDI)
• It provides a standardized system
• Coding trade transactions
• Communicated from one computer to another without the need for printed orders and
invoices & delays & errors in paper handling
• It is used by organizations that a make a large no. of regular transactions
Example: EDI is used in the large market chains for transactions with their suppliers
3. Internet Commerce
• It is use to advertise & make sales of wide range of goods & services.
• This application is for both business to business & business to consumer transactions.
Example: The purchase of goods that are then delivered by post or the booking of tickets that
can be picked up by the clients when they arrive at the event.
Advantages of E-commerce:

 Buying/selling a variety of goods and services from one's home or business anywhere,
anytime transaction.

 Can look for lowest cost for specific goods or service

 Businesses can reach out to worldwide clients - can establish business partnerships

 Order processing cost reduced

 Electronic funds transfer faster

 Supply chain management is simpler, faster, and cheaper using ecommerce

- Can order from several vendors and monitor supplies.

- Production schedule and inventory of an organization can be inspected by cooperating

supplier who can in-turn schedule their work

Disadvantages of E-commerce:

 Electronic data interchange using EDI is expensive for small businesses

 Security of internet is not very good - viruses, hacker attacks can paralise e-commerce

 Privacy of e-transactions is not guaranteed