CHAPTER 1 - Overview of Electronic Commerce

E-COMMERCE
BIT 10203
CHAPTER 1
OVERVIEW OF ELECTRONIC COMMERCE

DDT0013 DEFINITIONS
INTRODUCTION TO IT
SUB TOPIC
The process of buying, selling or exchanging

products, services or information via
computer.
A broader definition of EC that includes not just

the buying and selling of goods and services but
also servicing customers, collaborating with
business partners and conducting electronics
transaction within an organizations
LEARNING
DEFINITIONS CONCEPTS FRAMEWORK BENEFITS LIMITATIONS
OUTCOMES
DDT0013 CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Pure vs
Partial EC
EC
Concepts
EC
Organizations
LEARNING
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DDT0013 CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Pure vs
Partial EC
LEARNING
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DDT0013 CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Pure vs
Partial EC
EC
Concepts
EC
Organizations
LEARNING
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DDT0013 CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
EC
Organizations
Brick and mortar
(old economy organizations)
Click and mortar

(click and brick) Virtual (Pure-play)
organizations
LEARNING
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DDT0013
CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Old-economy
organizations Brick and mortar
(corporations) that (old economy organizations)
perform their primary

business offline, selling
physical products by
means of physical
agents.
LEARNING
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DDT0013
CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Organizations that
conduct their business
activities solely online
Virtual (Pure-play)
organizations
LEARNING
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DDT0013 CONCEPTS
INTRODUCTION TO IT
SUB TOPIC
Organizations that
conduct some e-
commerce activities,
usually as an additional
marketing channel
Click and mortar
(click and brick)
LEARNING
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DDT0013 FRAMEWORK
INTRODUCTION TO IT
SUB TOPIC
LEARNING
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DDT0013
EXAMPLE OF E-COMMERCCE WEBSITES
INTRODUCTION TO IT
SUB TOPIC
1
2 4
3
6
5
7
9 8
LEARNING
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DDT0013 ACTIVITY
INTRODUCTION TO IT
SUB TOPIC
Year of
establishment
Founder Another 7 things
Types of EC
Organizations
Describe 10 things
about the company
LEARNING
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Example: Fashionvallet.com
• The founder is Vivy Yusof and her husband
• Established date was in 2010
• This website is selling women, man and kids clothes, shoes, handbags, scarfs and
others
• The theme color of this website is white
• The main store of this business/organization was in Kuala Lumpur with a few
branches available in Malaysia and outside Malaysia such as Indonesia, Singapore
and etc.
• The medium of communication that available on this website to communicate
with customer is an email
• The customer is allowed to do direct transaction through visa, paypal, cimb clicks,
maybank2u and other
• The website always update their viewer with promotion on selected items
• People may register through this website to be the member and special
promotion offered to those register as the member
• The organization also conducted their business facebook,Instagram, twitter and
others.
• e
DDT0013
CATEGORIES OF ECOMMERCE
INTRODUCTION TO IT
CLASSIFICATION
E-commerce model in which all of the

participants are business or other
organizations.
LEARNING
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DDT0013 CATEGORIES OF ECOMMERCE
INTRODUCTION TO IT
CLASSIFICATION
E-commerce model in
which businesses sell
to individual
shoppers.
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
E-commerce model in which a business

provides some product or services to a client
business that maintains its own customers
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
E-commerce model in
which individuals use the
Internet to sell products
or services to
organizations or
individuals who seek
sellers to bid on products
or service they need.
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
E-commerce category that

includes all internal
organizational activities that
involves the exchange of
goods, services or
information among various
units and individuals in an
organization.
LEARNING
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DDT0013
INTRODUCTION TO IT
CLASSIFICATION
E-commerce
model in which
an organization
delivers services,
information or
products to its
individual
employees.
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
E-commerce model
in which consumers
sell directly to other
consumers.
LEARNING
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DDT0013
INTRODUCTION TO IT
CLASSIFICATION
E-commerce
model in which
individuals or
groups
communicate
or collaborate
online.
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
The online delivery of

information for
purposes of training
education.
LEARNING
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INTRODUCTION TO IT
CLASSIFICATION
LEARNING
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WHY E-COMMERCE?
DDT0013
INTRODUCTION TO IT
SUB TOPIC
 Reach new markets

 Make the use of existing and emerging
technologies
 Build customer loyalty
 Create new products and services
 Enrich human capital
LEARNING
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DDT0013 KEY DRIVEN
INTRODUCTION TO IT
SUB TOPIC
 Digital convergence
 Anytime, anywhere and anyone
 Widespread access to it
 Speed and time reduction
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DDT0013 BENEFITS AND LIMITATION OF E-COMMERCE
INTRODUCTION TO IT
Benefits to
Organizations Limitations to
Consumers
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DDT0013 BENEFITS
INTRODUCTION TO IT
Global reach
Locating customers and/ or suppliers worldwide at reasonable
cost and fast
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DDT0013
BENEFITS
INTRODUCTION TO IT
Cost Reduction
Lower cost of information processing, storage, distribution
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DDT0013 BENEFITS
INTRODUCTION TO IT
Facilitate problem solving

Solve complex problems that have remained unsolved
LEARNING
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DDT0013 BENEFITS
INTRODUCTION TO IT
Business always open

Open 24/7/365; no overtime or other cost
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DDT0013 BENEFITS
INTRODUCTION TO IT
Customization / personalization
Make it to consumers’ wish, fast and at reasonable cost
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DDT0013 BENEFITS
INTRODUCTION TO IT
organizations
consumer
society
LEARNING
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DDT0013 BENEFITS TO ORGANIZATIONS
INTRODUCTION TO IT
• Global Reach
• Cost Reduction
• Supply Chain Improvements
• Extended Hours
• Customization
• Vendors’ Specialization
• Lower Communication Costs
• Efficient Procurement
• Improved Customer Relations
organizations • Up-to-Date Company Material
LEARNING
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DDT0013 BENEFITS TO SOCIETY
INTRODUCTION TO IT
 Telecommuting
 Higher Standard of Living
 Homeland Security
 Hope for the Poor
 Availability of Public
Services
society
LEARNING
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DDT0013 BENEFITS TO CONSUMER
INTRODUCTION TO IT
• Ubiquity
• More Products and Services
• Customized Products and
Services
• Cheaper Products and
Services
• Instant Delivery
• Information Availability
• Participation in Auctions
consumer • Electronic Communities
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DDT0013
ADVANTAGES OF EC
INTRODUCTION TO IT
• Electronic commerce can increase sales and

decrease costs
• If advertising is done well on the Web, it can get a
firm’s promotional message out to potential
customers in every country
• Using e-commerce sales support and order-taking
processes, a business can:
– Reduce costs of handling sales inquiries
– Provide price quotes
LEARNING
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DDT0013 ADVANTAGES OF EC
INTRODUCTION TO IT
• It increases purchasing opportunities for buyers

• Negotiating price and delivery terms is easier
• The following cost less to issue and arrive securely
and quickly:
– Electronic payments of tax refunds
– Public retirement
– Welfare support
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DDT0013 DISADVANTAGES OF EC
INTRODUCTION TO IT
• Perishable grocery products are much harder to

sell online
• It is difficult to:
– Calculate return on investment
– Integrate existing databases and transaction-
processing software into software that enables e-
commerce
• Cultural and legal obstacles also exist
LEARNING
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DDT0013 LIMITATIONS
INTRODUCTION TO IT
Lack of universal standard for quality, security and reliability

Security and privacy concerns defer customers from buying.
LEARNING
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DDT0013 LIMITATIONS
INTRODUCTION TO IT
The telecommunication bandwidth is insufficient, especially for

m-commerce, video and graphics
Lack of trust in EC and in unknown sellers hinders buying.
LEARNING
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DDT0013
LIMITATIONS
INTRODUCTION TO IT
Software development tools are still evolving

People do not yet sufficiently trust paperless, faceless
transactions.
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DDT0013 LIMITATIONS
INTRODUCTION TO IT
It is difficult to integrate Internet and EC software with some

existing (especially legacy)
Many legal and public policy issues, including taxation, have not
yet been resolved or are not clear.
LEARNING
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DDT0013 LIMITATIONS
INTRODUCTION TO IT
Special web servers are needed in addition to the network

servers, which add to the cost of EC
National and international governments regulations sometimes
get in the way
LEARNING
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DDT0013 LIMITATIONS
INTRODUCTION TO IT
Internet accessibility is still expensive and/or inconvenient

It is difficult to measure some of the benefits of EC, such as
online advertising. Mature measurement methodologies are not
yet available
LEARNING
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FRAMEWORK
SUB TOPIC
Chapter 1.2
E-Commerce Framework
LEARNING
45 DEFINITIONS CONCEPTS FRAMEWORK BENEFITS LIMITATIONS
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FRAMEWORK
SUB TOPIC
The EC Framework
intranet
An internal corporate or government network
that uses Internet tools, such as Web
browsers, and Internet protocols
extranet
A network that uses the Internet to link
multiple intranets
LEARNING
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FRAMEWORK
SUB TOPIC
History of Internet development

– 30-year History since 1969
• Pentagon and Cold War
– Original Use:
• Military installations
• Universities
• Business firms with defense department contracts
– Initial Goal:
• Design a network that maintains the safe transition of data
between military computers
LEARNING
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FRAMEWORK
SUB TOPIC
INTERNET & WWW (CONT….)
Date Event (Internet)
1969 ARPAnet
1984 MILNET & ARPANET (Internet)
1980s National Science Foundation (NSF) controlled

Internet Access
1991 NSF eased restrictions on Internet Access
1995 U.S. government relaxed entry into Internet for

the public
LEARNING
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Internet & www
SUB TOPIC
• Internet was a communication and research tool used almost exclusively

for academic and military purposes. This changed radically with the
introduction of the World Wide Web (WWW) in 1989.
• The WWW is a set of programs, standards, and protocols governing the
way in which multimedia files (documents that contain a combination of
text, photographs, graphics, video, and audio) are created and displayed
on the Internet.
• Internet contains the WWW and also includes all the hardware
(computers, supercomputers, and connections) and non-WWW software
and protocols on which the WWW runs.
• The difference between the Internet and the WWW is similar to the
distinction between a computer and a multimedia program that runs on
the computer.
LEARNING
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Internet & www
SUB TOPIC
World Wide Web (WWW)

– An organization of files designed around a group
of services on Internet
– Programmed to handle requests from browser
software resided on users’ PCs
• Browser: a program that allows pictures and texts of a
document to be viewed. E.g. Netscape and IE
LEARNING
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Internet & www
SUB TOPIC
• Internet infrastructure includes:

– Computers and software connected to the Internet
– Communications networks over which message packets travel
• Computer network
– Any technology that allows people to connect computers to each other
• The Internet
– A large system of interconnected computer networks spanning the globe
• World Wide Web
– A subset of computers on the Internet
• The Web
– Software that runs on computers connected to the Internet
LEARNING
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Internet Illustration
52
INTRANET
SUB TOPIC
What is an Intranet?
– Interconnected network that does not extend beyond the
organization that created it
– An organization-wide software and information
distribution system applying Internet technology to a
closed network
– Intranet operation is a communication project designed by
technical staff
– A network of people, not wired machines
– Usually runs in a client/server environment and a local
area network configuration
LEARNING
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INTRANET
SUB TOPIC
• An intranet is a private network that is contained within an

enterprise.
• It may consist of many interlinked local area networks and
also use leased lines in the wide area network.
• Typically, an intranet includes connections through one or
more gateway computers to the outside Internet.
• The main purpose of an intranet is to share company
information and computing resources among employees. An
intranet can also be used to facilitate working in groups and
for teleconferences.
LEARNING
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INTRANET
SUB TOPIC
• Benefits:
– Links employees and managers together
– Prepares a wealth of Internet knowledge to employees
– Etc
• Applications
– Human Resources
– Sales and Marketing
– Accounting and Finance
– Manufacturing and Operations
LEARNING
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INTRANET
SUB TOPIC
• Why does a company need an Intranet?

– A company has a large pool of information to
share among hundreds of its employees
– Intranets are cheap, robust and fast
– Intranets operate across platforms
– 24/7 to employees
– Information in intranet can be updated quickly
LEARNING
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EXTRANET
SUB TOPIC
• An extranet is a private network that uses Internet technology

and the public telecommunication system to securely share
part of a business's information or operations with suppliers,
vendors, partners, customers, or other businesses.
• An extranet can be viewed as part of a company's intranet
that is extended to users outside the company. It has also
been described as a "state of mind" in which the Internet is
perceived as a way to do business with other companies as
well as to sell products to customers.
LEARNING
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EXTRANET
SUB TOPIC
• An extranet requires security and privacy.

These can include firewall server
management, the issuance and use of digital
certificates or similar means of user
authentication, encryption of messages, and
the use of virtual private networks (VPNs) that
tunnel through the public network.
LEARNING
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EXTRANET
SUB TOPIC
Companies can use an extranet to:

• Exchange large volumes of data using Electronic Data Interchange (EDI)
• Share product catalogs exclusively with wholesalers or those "in the trade"
• Collaborate with other companies on joint development efforts
• Jointly develop and use training programs with other companies
• Provide or access services provided by one company to a group of other
companies, such as an online banking application managed by one
company on behalf of affiliated banks
• Share news of common interest exclusively with partner companies
LEARNING
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EXTRANET
SUB TOPIC
• Lets limited, controlled business partners

interact with the firm for all kinds of
exchanges
• System designers must collaborate to make
sure there is a common interface with the
company they are dealing with
LEARNING
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EXTRANET
SUB TOPIC
• Advantages of an Extranet
– Ensures accountability for the organization
– Promotes more effective collaboration with
business partners which improves potential for
increased revenue
– Provides a long-term investment in competitive
advantage
LEARNING
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INTERNET SERVICE PROVIDER
SUB TOPIC
• Internet service provider

– An organization providing an entrance ramp to Internet
• ISPs offer:
– Linking consumers and businesses to Internet
– Payment system for online purchases
– Monitoring and maintaining a customer’s Web site
– Network management and system integration
– Backbone access services for other ISPs
LEARNING
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INTERNET CONNECTION
SUB TOPIC
• Bandwidth
– Amount of data that can travel through a
communication line per unit of time
• Net bandwidth
– Actual speed that information travels
• Symmetric connections
– Provide the same bandwidth in both directions
• Asymmetric connections
– Provide different bandwidths for each direction
LEARNING
OUTCOMES

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CHAPTER 1 - Overview of Electronic Commerce

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E-COMMERCE

OVERVIEW OF ELECTRONIC COMMERCE

The process of buying, selling or exchanging

A broader definition of EC that includes not just

Click and mortar

perform their primary

E-commerce model in which all of the

E-commerce model in which a business

E-commerce category that

The online delivery of

 Reach new markets

Facilitate problem solving

Business always open

• Electronic commerce can increase sales and

• It increases purchasing opportunities for buyers

• Perishable grocery products are much harder to

Lack of universal standard for quality, security and reliability

The telecommunication bandwidth is insufficient, especially for

Software development tools are still evolving

It is difficult to integrate Internet and EC software with some

Special web servers are needed in addition to the network

Internet accessibility is still expensive and/or inconvenient

History of Internet development

1984 MILNET & ARPANET (Internet)

1980s National Science Foundation (NSF) controlled

1995 U.S. government relaxed entry into Internet for

• Internet was a communication and research tool used almost exclusively

World Wide Web (WWW)

• Internet infrastructure includes:

• An intranet is a private network that is contained within an

• Why does a company need an Intranet?

• An extranet is a private network that uses Internet technology

• An extranet requires security and privacy.

Companies can use an extranet to:

• Lets limited, controlled business partners

• Internet service provider

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