Unit 2

E-Commerce Consumer applications

 People needs entertainment on demand including video, games, news

on-demand, electronic retailing via catalogs etc. (Tata Sky & others)
 Currently now we are taking the video on-demand.
 Why most companies betting heavily on this?

1. 93 million homes have television

2. Americans spend nearly half their free time watching television
3. Every evening, more than one-third of the population is in front of a
television
4. Sight, sound, and motion combine to make television a powerful
means of marketing
Consumer Applications and Social Interaction:
 Lessons from history indicate that the most successful technologies are
those that make their mark social
 In 1945, in U.S no one had TV. By 1960 about 86percent of households
did
 Now contrast with Telephone. Bell invented the telephone in 1876 and
by1940, 40% of U.S. households and by 1980 about 95-98 percent of
households connected
 Penetration was slower for Telephone than for TV because of the effort
needed to set up the wiring infrastructure
 The impact of both was good on business, social, consumer behavior and
entertainment habits
 Radio began in 1960, and by 1989, almost 3 decades later, just 319 radio
stations followed the news format
 In 1994, their number exceeded 1000

What do Consumers really want?

 They want quality and cost of service
 If a new system requires more steps to do essentially the same things,
consumers may resist it
 Some people fit that mold, but most of public prefers to lay back and just
watch television and let someone else do the work of figuring out the
sequence of television programming

What are Consumers willing to spend?

 According to the video on-demand, consumers get the cable bill at basic
charge they will buy
 If it is doubled they will not buy and at the service provider economics will
increased then network operators might look to advertises to fill the gap

Delivering products to Consumers

 Packing and distribution must be considered
 Blockbuster video collects the information and shows the typical consumer
 Spends $12 a month on home video expenditures
 Go to video store to select video on limited budget and has time to kill
 Only periodically expends a large sum of money
Consumer Research and E-Commerce
Consumer opinion about interactive television is
 46% be willing to pay
 39% want video phone calls
 63% would pay for movies on-demand
 57% would pay for Television shows on-demand
 78% said their worry about it is that they will pay for something that they
previously received free of charge
 64% think it make it harder for viewers to protect privacy
 41% tell that it is too confusing to use

E-Commerce Organization Applications

 Companies do not buy information and communication technology just
because of its simplicity and interesting write-ups about it.
 Companies adopt technology to save money and improve the bottom line.
 How can electronic markets be utilized?
o To achieve organizational goals
Better co-ordination
Faster problem solving
Improved decision making
o To serve the consumers in better way
o To better interact with suppliers and
distributors Changing business Environment
2. The traditional business environment is changing rapidly
3. Many companies are looking outside and within to shape business
strategies
4. These activities include private electronic connections to customers,
suppliers, distributors, industry groups etc
5. The I-superhighway will expand this trend so that it allows business to
exchange information.

E-Commerce and the retail Industry

1. Conditions are changing in the “new economy” with respect to the retail
industry
2. Consumers are demanding lower prices, better quality, a large selection
of in-season goods.
 3. Retailers are filling their order by slashing back-office costs, reducing
profit margins, reducing cycle times. buying more wisely and making
huge investments in technology
4. Retailers are in the immediate line of fire and were first to bear the brunt
of cost cutting
5. Retailers are putting that pressure on manufacturing and suppliers.
6. Electronic markets could provide a partial solution by promising
a. Convenience to the customers
b. Manages greater efficiency and interactivity with suppliers to
revitalize the troubled retailing sector.

Marketing and E-Commerce

1. E-commerce is forcing companies to rethink the existing ways of doing
a. target marketing (isolating and focusing on a segment
of population)
b. Relationship marketing (building and sustaining a long-
term relationship with existing and potential consumers)
c. event marketing (setting up a virtual booth where interested
people can come and visit)
2. Interactive marketing is in electronic markets via interactive
multimedia catalogs
3. Users find moving images more appealing than still image and
listening more appealing than reading text on a screen
4. Consumer information services are a new type of catalog business
5. conventional marketing devote 25% of revenues on printing and postage
costs for catalogs.
6. Interactive marketing could help cut expenses of conventional marketing.

Inventory Management and Organizational Applications

1. With borders opening up and companies facing stiff global competition
2. Adaptation would include moving to computerized, “paperless” operations
to reduce
3. Once targeted business process is inventory management, solutions for
these processes go by different names
4. In manufacturing industry they’re known as just-in-time inventory
systems, in the retail as quick response programs, and in transportation
industry as consignment tracking systems

JIT (Just-in-time) Manufacturing

1. Just-In-Time (JIT) manufacturing is a Japanese management philosophy

applied in manufacturing which involves having the right items of the right
quality and quantity in the right place and the right time.
 2. It has been widely reported that the proper use of JIT manufacturing has
resulted in increases in quality, productivity and efficiency, improved
communication and decreases in costs and wastes.
3. The first principle is elimination of all waste (time, material, labour &
equipment).
4. The potential of gaining these benefits has made many organizations
consider this approach to manufacturing. For these reasons, JIT has
become a very popular subject currently being investigated by many
worldwide organizations.
5. Just-In-Time management involves the application of old management
ideas; however, their adaptation to the modern manufacturing firm is a
relatively new practice.
6. Presently, many firms are studying and applying the JIT approach in
response to an ever more competitive environment.
7. The ability to achieve higher standards of productivity without sacrificing
quality is also an important goal of a manufacturing firm. Over the long
run, application of JIT manufacturing may assist these companies in
achieving these goals of manufacturing excellence.

INFORMATION SUPERHIGHWAY (I-Way)

 Any successful E-commerce application will require the I-Way

infrastructure in the same way that regular commerce needs the
interstate highway network to carry goods from point to point.
 An extremely large number of computers, communications networks, and
communication software forms the nascent Information Superhighway (I-
Way).
 The I-Way is not a U.S phenomenon but a global one, as reflected by its
various labels worldwide. For instance, it is also called the National
Information Infrastructure (NII) in the United States, Data-Dori in Japan
and Jaring, which is Malay for "net" in Malaysia.
 The I-Way and yet-to-be developed technologies will be key elements in
the business transformation. And while earlier resulted in small gains in
productivity and efficiency, integrating them into the I-Way will
fundamentally change the way business is done.
 These new ideas demand radical changes in the design of the entire
business process.
 I-Way is not a single data highway designed according to long-standing,
well-defined rules and regulations based on well-known needs.
 The I-Way will be a mesh of interconnected data highways of many
forms: telephone wires, cable TV wires, radio-based wireless-cellular and
satellite. The I-Way is quickly acquiring new on-ramps and even small
highway systems.

Network Infrastructure for E-commerce

1. Network interface card
a. A network interface card is more commonly referred to as NIC.
b. It is a device that allows computers to be joined together in a local
area network (LAN).
c. Network computers communicate with each other using a given
protocol or agreed- upon language for transmitting data packets
between the different machines, known as nodes.
 d. The network interface card acts as a liaison for the machine to
both send and receive data on the LAN.
e. It allows users to connect to each other either by using cables or
wireless technology.
f. A Network interface Controller (NIC) is a hardware interface that
handles and allows a network cable device to access a computer
network such as the Internet.
2. Hubs and Switches
a. Switch is a device in networks that filters and forwards packets
between Local Area Network (LAN) segments.
b. Switches operate at the data link layer and sometimes that
network layer of the Open system Interconnection (OSI) reference
model and therefore support any packet protocol.
c. LANs that use switches to join segments are called switched LANs
or in the case of Ethernet networks, switched Ethernet LANs.
d. A special type of network device called the hub can be found in
many small business networks.
e. In computer networking, hub is a small, simple, inexpensive device
that joins multiple computers together.
3. Gateways
a. Gateway is a node in a network that serves as an entrance to
another network’s web pages.
b. In homes, the gateway is the ISP that connects the user and fire
wall.
c. The gateway is also associated with both a router which use
headers and forwarding tables to determine where packets are
sent and a switch which provides the actual path for the packet in
an out of the gateway.
d. Gateways are also called as protocol converters and can operate
at any layer.
4. INTERNET INFRASTRUCTURE
a. Internet infrastructure comprises software and hardware both to
run the internet.
b. NETWORK ACCESS EQUIPMENT
i. Users today, are accessing enterprise networks from
anywhere in the world at any time with a myriad of access
technologies and devices running any number of operating
systems and applications.
ii. Hard ware tools are also called as network access
equipment with the help of the network access equipment,
internet is accessed. They can be classified in two forms.
1. Local-on-Ramps
a. Set Top Boxes
b. Computer based telephony
c. Hubs, Wiring, Clusters, Routers and
digital switches
d. Wired internet connection (Broadband)
2. Global Information Distribution Networks
a. Global information distribution networks are
the infrastructure, that are connecting
countries and continents.
EDI
 EDI (Electronic Data Interchange) is the computer-to-computer
exchange of structured business information (documents) in a standard
electronic format between business partners.
 Information stored on one computer is translated by software programs
into standard EDI format for transmission to one or more trading
partners. The trading partners’ computers, in turn, translate the
information using software programs into a form they can understand.
 By moving from a paper-based exchange of business document to
one that is electronic, businesses enjoy major benefits such as
a. reduced cost
b. increased processing speed
c. reduced errors
d. improved relationships with business partners.
 EDI replaces postal mail, fax and email. While email is also an electronic
approach, the documents exchanged via email must still be handled by
people rather than computers. Having people involved slows down the
processing of the documents and also introduces errors. Instead, EDI
documents can flow straight through to the appropriate application on the
receiver’s computer (e.g., the Order Management System) and
processing can begin immediately.
 The most common documents exchanged via EDI are purchase
orders, invoices and advance ship notices. There are infact so many
other documents which could be transferred using EDI.

Typical Manual Process EDI Process