You are on page 1of 40

The objective of the course is to make the student understand the latest trends in electronic business and the

information technology involved in running e-business

Unit 1
Introduction to E-Business Definitions Types of EBusiness, Benefits of Business Limitations of EBusiness Impact of E-Commerce Electronic Market Structure Business Model of Electronic Marketing Procedure for Internet Shopping: Consumer Perspective Aiding Comparison Shopping

The Cycle of Electronic Commerce

Electronic Business includes the tasks that support the buying and selling of goods and services, and interactions among these tasks

Definition of Electronic Commerce

Electronic Business is defined as the conducting of business transactions over electronic networks instead of paper, telephones, couriers, tracks, planes and other means of moving products and information.

Definitions of E-Commerce

According to Lou Gerster, IBMs CEO E Business is all about cycle time, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage.

Why E-Business
Lack of time at public or Consumers Flexibility in timings Easy delivery at door steps Planning for payment Safe Transactions

Introduction to Electronic Business

According to Albert Gore Jr. We are on the verge of a revolution that is just as profound as the change in the economy that came with the industrial revolution. Soon electronic networks will allow people to transcend the barriers of time and distance and take advantage of global markets and business opportunities not even imaginable today, opening up a new world of economic possibility and progress.

Introduction to Electronic Business


Electronic commerce describes the manner in which transactions take place over networks, mostly the Internet. It is the process of electronically buying and selling goods, services, and information. Certain Electronic commerce applications, such as buying and selling stocks or books on the internet, are growing at a rate of several hundred percent every year. Electronic Commerce could have an impact on significant portion of the world on businesses, professions, and of course on people.

However, the impact of Electronic Commerce is not just the creation of web-based corporations. It is the building of new Industrial order.

Components of Electronic Business


Electronic Business

Institutions Government Merchants Manufactures Suppliers Consumers Networks Corporate Internet Commercial

Processes Marketing Sales Payment Fulfillment Support

The cycle of Electronic Business

Follow on sales

Access Customer
Online Ads
Standard order

Online order

Distribution

Electronic customer Support

Disintermediation and Reintermediation by Electronic Business


Eliminations of traditional intermediation is called disintermediation. Incorporation of new electronic intermediaries (such as Electronic-malls,electroniccatalogues/directory, search engine services and product selection agents) are called reintermediation

Disintermediation and Reintermediation by Electronic Business

Manufacturer

Electronic Intermediaries On the Internet

Reintermediation

consumer

Elements of E-Business
Direct to Consumer from Manufacturer Electronic payment system Negotiation at online Flexibility in Delivery of the product Saving the time and cost

Disadvantages of E-Business
Can not test the product Disadvantage in Price and quality Legal Problems and jurisdiction

Disintermediation and Reintermediation by Electronic Business

Manufacture

Disintermediation

Consumer

Disintermediation and Reintermediation by Electronic Business

Manufactures

Wholesaler

Distributor

Traditional Intermediation

Retailer

Consumer

Components of Electronic Business

Electronic Business can facilitate Internal department interactions, improve customer relations and eliminate the constraints of time and place. A significant synergy has formed between the use of digital information, computerized business practices and the Internet. This synergy is what enables electronic commerce more efficient and effective

Types of E-Business
a common Classification of E-Commerce is by the nature of transaction.

Business-to-consumers (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Consumer to Business (C2B) Non-Business EC Intrabusiness (organizational) EC

Types of EB (Continued)

Mobile Commerce (m-commerce) refers to e-commerce that is conducted in a wireless environment. i.e. using cell phone to shop over the Internet Business model is the method by which a company generates revenue to sustain itself.

Classification of Electronic Business Applications

Types of interorganizational systems.


Electronic Data Interchange (EDI), which provides secured B2B connection over Valueadded-networks (VANs) Extranets, which provide secured B2B connection over the Internet Electronic funds transfer Electronic forms

Types of Interorganisational systems


Integrated messaging delivery of e-mail and fax documents through a single electronic transmission system that can combine EDI, e-mail, and electronic forms Shared databases information stored in repositories is shared between trading partners and is accessible to all. Supply Chain Management cooperation between a company and its suppliers and/or customers regarding demand forecasting, inventory management and orders fulfillment can reduce inventories, speed shipments, and enable just-in-time manufacturing.

Classification of Electronic Business Applications

Interorganizational Systems (IOS)


An IOS involves information flow among two or more organizations. Its major objective is efficient transaction processing. Such as transmitting orders, bills, and payments using Electronic Data Interchange (EDI) or extranets. Interorganizational systems are used exclusively for Business to Business (B2B) applications, whereas electronic markets exist in both the B2B and Business to Consumer (B2C) cases.

Interorganisational system
A typical IOS will include a company and its suppliers and/or customers. Through IOS, buyers and sellers arrange routine business transactions. Information is exchanged over communications networks using prearranged formats.

Classification of Electronic Business Applications


What is internet, intranet and extranet?

1. 1.

Computers connected to a global networked environment known as the Internet. Computers connected to a global networked environment and its counterpart within organizations, called an intranet. An intranet is a corporate network that functions with Internet technologies, such as browsers, using Internet protocols. An extranet, a network that links the intranets of business partners over the Internet.

1.

Classification of Electronic Commerce Applications

Electronic Markets
Electronic Market is a network-based location where business interactions occurs. Where information, products, services, and payments are exchanged. The Electronic Market is place where shoppers and sellers meet. The Electronic Market handles all the necessary transactions, including the transfer of money between banks. In Electronic Markets the principal participants are transaction handlers,

buyers, brokers, and sellers.

Classification of Electronic Business Applications

Application of EC are divided into 3 categories


1. 2. Buying and selling goods and services. These are usually referred to as Electronic Markets Facilitating Inter and Intra-organization flow of information. Communication and collaboration. These are sometimes referred to as Interorganizational Systems (IOS).

3.

Providing customer services.

These are retailing transactions with individual shopper. The typical shopper at Amazon.com is a consumer, or customer. Woolworths of Australia with home shopping site (www.woolworths.com.au) is designed with freshness in mind and all the fresh food is available for delivery.

Business-to-Consumers (B2C)

Business-to-Consumers (B2C) cont

Electronic Storefront has its own URL at which buyers can place orders.

Electronic Malls (Cybermall or e-mall) is a collection of individual shops under one Internet address. Referral malls in which you are transferred to a participating storefront Electronic shopping cart enables you to gather items from various vendors and pay for them in one transaction.

Business-to-business (B2B)

Most of Electronic Business today is of this type. It includes the IOS transactions

(An IOS involves information flow among two or more organizations.


Its major objective is efficient transaction processing, such as transmitting order, bills and payments using Electronic Data Interchange (EDI) and Electronic Market transactions between organizations

.)

Sell-side marketplaces are where organizations attempt to sell their products or services to other organizations electronically from their own private e-marketplace. Buy-side marketplaces are where organizations attempt to buy needed products or services from other organizations electronically.

Business-to-business (B2B) cont

E-Procurement is using electronic support to purchase goods and materials, sourcing, negotiating with suppliers, paying for goods and making delivery arrangements.

Group purchasing is when the orders of many buyers are combined so that they constitute a large volume.

Consumer-to-Consumer (C2C)

In this category consumer sells directly to consumers. Examples are individuals selling in classified ads (www.classified2000.com) and selling residential property, cars and so on. Advertising personal services on the Internet and selling knowledge and expertise is an other example of C2C

Consumer to Business (C2B)


This category includes individuals who sell products or services to organizations, as well as individuals who seek sellers, interact with them and conclude a transaction.

Non-business Electronic Business

An increased number of non-business institutions such as academic institutions, non-profit organizations, religious organizations, social organizations and government agencies are using various types of Electronic Commerce to reduce their expenses. e.g. improve purchasing or to improve their operations and customer services

Intrabusiness (organizational) EC

In this category we include all internal organizational activities, usually performed on intranets, that involve exchange of goods, services or information. Activities can range from selling corporate products to employees to online training and costreduction activities.

BENEFITS OF ELECTRONIC Business

The global nature of the Technology, low cost, opportunity to reach hundreds of millions of people, interactive nature, variety of possibilities, and resourcefulness and rapid growth of the supporting infrastructures (especially the web) result in many potential benefits to: 1) Organizations 2) Consumers 3) Society

BENEFITS OF ELECTRONIC Business

Benefits to organizations 1) Provide opportunity to expends the marketplace to national and international markets. With minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers and most suitable business partners worldwide. 1) Decreases the operating cost. EC decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 per cent.

BENEFITS OF ELECTRONIC BUSINESS Benefits to organizations Provide new platform for specialized business. For example, dog toys which can be purchased only in pet shops or discount stores in the physical world, are sold now in a specialized www.dogtoys.com

Reduces inventories and overhead by facilitating pull type Supply Chain Management (SCM). In this system the process starts from customer orders and uses Just-in-time manufacturing. The pull-type processing enables expensive customization of products and services which provides competitive advantage to its implementers. A class example is DELL Computer Corporation.

BENEFITS OF ELECTRONIC BUSINESS Benefits to organizations

Reduces the time between the outlay of capital and the receipt of products and services. Initiates business processes reengineering projects. By changing processes productivity of salespeople, knowledge workers and administrators can increase 100% or more. Improved image, customer services, new-found business partners, simplified processes, compressed cycle and delivery time, increased productivity, eliminating paper, expediting access to information, reduced transportation costs and increased flexibility.

BENEFITS OF ELECTRONIC BUSINESS Benefits to consumers 1. No restriction on shopping time. EC enables customers to shop or do other transactions 24 hours a day, thought-out the year and from almost any location.

2. Increased choices, EC provides customers with more choices: they can select from many vendors and from move products. 3. Easy to get less expensive product or services. EC frequently provides with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.

BENEFITS OF ELECTRONIC BUSINESS Benefits to consumers

4. EC

provides quick delivery of products ( in case of digitized products)

5. Transformation of information from manufacture or services provider to customers in seconds of time, rather than days or weeks.

Benefits to Consumer
6. Provides customers to participate in virtual auctions. 7. Customers can interact with other customers in electronic communities and exchange ideas as well as compare experiences.

8. Facilities competition, which results in substantial discounts.