You are on page 1of 32

Chapter 1

Introduction
E-Commerce and E-Business

Learning Objectives
Define electronic commerce (EC) and describe its
various categories.
Describe and discuss the content and framework of EC.
Define the meaning and scope of e-business and the
relationship it shares with e-commerce.
Describe the major types of EC transactions.
Describe some EC business models.
Describe the benefits of EC to organizations,
consumers, and society. consumers, and society.
Describe the limitations of EC

Electronic Commerce : Definitions and Concepts

Transformation of economic activity into


digital media
Exchange information, content, agreements, and
services among parties that are connected to
through the Internet.

Business Operations Environment

Electronic Commerce : Definitions and Concepts


E-commerce defined from the following
perspectives:
Communications: delivery of goods, services,
information, or payments over computer
networks or any other electronic means
Commercial (trading): provides capability of
buying and selling products, services, and
information on the Internet and via other online
services

Electronic Commerce : Definitions and Concepts


Business process: doing business electronically
by completing business processes over
electronic networks, thereby substituting
information for physical business processes

Service: a tool that addresses the desire of


governments, firms, consumers, and
management to cut service costs while improving
the quality of customer service and increasing
the speed of service delivery

Electronic Commerce : Definitions and Concepts


Pure vs. Partial EC
Electronic commerce can take many forms
depending upon the degree of digitization (the
transformation from physical to digital) of:
the product (service) sold;
the process; and for
the delivery agent (or digital intermediary)

The Dimensions of E-Commerce

Electronic Commerce : Definitions and Concepts


Virtual (pure-play)
Organizations conduct their business activities
solely online
Click-and-mortar
organizations conduct some EC activities, but do
their primary business in the physical world
Electronic market (e-marketplace)
online marketplace where buyers and sellers meet
to exchange goods, services, money, or
information

Electronic Commerce : Definitions and Concepts


Inter-organizational information systems (IOSs )
allow routine transaction processing and information
flow more between two or more organizations
Intra-organizational Information systems
enable EC activities to go on within Individual
organizations

e-business
e-business : a broader definition of EC, which
includes:

buying and selling of goods and services


servicing customers
collaborating with business partners
conducting electronic transactions within an organization

E-business opportunities
Reach:
Over 1 billion users
Connect to millions of products

Richness
Detailed product information on 20 billion + pages
indexed by Google, Blogs, videos, feeds
Personalised messages for users

Affiliation
Partnerships are key in the networked economy

The EC Framework, Classification, and Content

Three definitions of the relationship between e-commerce and e-business

The EC Framework, Classification, and Content


Two major types of e-commerce:
business-to-consumer (B2C) : online transactions
are made between businesses and individual
consumers

business-to-business (B2B) : businesses make online


transactions with other businesses
Intra-business EC: EC conducted inside an (e.g., businessto-employees B2E)

Computer environments
Internet : global networked environment
Intranet : a corporate or government network that
uses Internet tools, such as Web browsers, and
Internet protocols browsers
Extranet : a network that uses the
Internet to link multiple intranets

EC Framework
EC applications are supported by infrastructure and
by five support areas:

People
Public policy
Marketing and advertising
Support services
Business partnerships

A Framework for Electronic Commerce

Classification of EC by Transactions or Interactions

business-to-consumer (B2C) : online


transactions are made between businesses
and individual consumers
e-tailing : online retailing, usually B2C

business-to-business (B2B) : businesses


make online transactions with businesses

Classification of EC by Transactions or Interactions


business-to-business-to-consumer (B2B2C):
e-commerce model in which a business provides some
product or service to a client business that some maintains
its own

consumer-to-business (C2B):
e-commerce model in which individuals use the Internet to
sell products or services organizations or individuals seek
sellers to bid on products or services they need

Classification of EC by Transactions or Interactions

consumer-to-consumer (C2C):
e-commerce model in which consumers sell directly to
other

peer-to-peer (P2P):
technology that enables technology that enables
networked peer computers to share data and processing
with each other directly; can be used in C2C, B2B, and
B2C e-commerce

Classification of EC by Transactions or Interactions

mobile commerce (m-commerce):


e-commerce transactions and conducted in a
wireless environment

location-based commerce (l-commerce):


m-commerce transactions targeted to individuals
in specific locations, at specific times

mobile commerce

Classification of EC by Transactions or Interactions

Intra-business EC:
e-commerce category that includes all internal
organizational activities involve the exchange of
goods, services, or information among various
units and individuals in an organization

business-to-employees (B2E):
e-commerce model in which an organization
delivers services, information, or products to its
individual employees

Classification of EC by Transactions or Interactions

collaborative commerce (c-commerce):


e-commerce model in which individuals or groups
communicate or collaborate online, between
business partners and between organizational
employees.

e-learning:
the online delivery of information for he online
purposes of training or education

exchange (electronic):
a public electronic market with many buyers and
sellers

Classification of EC by Transactions or Interactions

exchange-to-exchange (E2E):
e-commerce model in which electronic exchanges
formally connect to one another for the purpose

e-government:
e-commerce model in which a government entity
buys or provides goods, services, or information to
businesses or individual citizens

The Interdisciplinary Nature of EC


Major EC disciplines

Computer science
Marketing
Consumer behaviour
Finance
Economics
Management information systems

E-commerce Business Models


Business modelsa method of doing
business by which a company can generate
revenue to sustain itself Examples:

Name your price


Find the best price
Dynamic brokering
Affiliate marketing

E-commerce Business Plans and Cases


Business plan:
a written document that identifies the business
goals and outlines the plan of how to achieve them

Business case:
a written document that is used by managers to
garner funding for specific applications or projects;
its major emphasis is the justification for a specific
investment

Benefits of EC

Ubiquity
More products services
Cheaper products and services
Instant delivery Information
availability
Participation in auctions
Electronic communities
Get it your way
No sales tax
Benefits to consumers

Benefits to society

Telecommuting
Higher standard of living
Hope for the poor
Availability of public services

Barriers of EC

Security
Trust and risk
Lack of qualified
Personnel
Lack of business models
Culture
User authentication and lack of public key
infrastructure
Organization
Fraud
Slow navigation on Internet
Legal issues