E-commerce vs.

E-business
• E-commerce is about doing business electronically
• E-commerce conducting financial transactions
electronically

• E-business is conducting business on the Internet

not only buying and selling but also servicing
customers and collaborating with business partners
• E-business is the transformation of business
processes through the Internet
 Three main processes enhanced
in e-Business
• Production processes, which include:
(a) Procurement
(b) Ordering and replenishment of stocks
(c) Processing of payments
(d) Electronic links with suppliers
(e) Production control processes
• Customer-focused processes, which include:
(a) Promotional and marketing efforts
(b) Selling over the Internet
(c) Processing of customers’ purchase orders and
payments
(d) Customer support
• Internal management processes, which
include:
(a) Employee services
(b) Employee training
(c) Internal information-sharing
(d) Video conferencing
(e) Recruiting
 E-commerce Today
• The Internet is the perfect vehicle for e-commerce
because of its open standards and structure.
• No other methodology or technology has proven
to work as well as the Internet for distributing
information and bringing people together.
• It’s cheap and relatively easy to use it as a
medium for connecting customers, suppliers, and
employees of a firm.
• No other mechanism has been created that allow
organizations to reach out to anyone and
everyone like the Internet.
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 E-commerce Today
• The Internet allows big businesses to act like small
ones and small businesses to act big.
• The challenge to businesses is to make
transactions not just cheaper and easier for
themselves but also easier and more convenient
for customers and suppliers.
• It’s more than just posting a nice looking Web site
with lots of cute animations and expecting
customers and suppliers to figure it out
• Web-based solutions must be easier to use and
more convenient than traditional methods if a
company hopes to attract and keep customers.
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 Four Categories of E-Commerce
Business originating from...

Business Consumers

Business B2B C2B

And selling
to...

Consumers B2C C2C

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 Business to Business (B2B)
 It refers to the full spectrum of e-commerce that can occur
between two organizations.
This includes purchasing and procurement, supplier
management, inventory management, channel
management, sales activities, payment management
&service and support.
Examples: FreeMarkets, Dell and General Electric
As an example, a wholesaler places an order from a
company's website and after receiving the
consignment, sells the end product to final customer
who comes to buy the product at wholesaler's retail
outlet.
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 Business to Consumer (B2C)
It refers to exchanges between business and
consumers, activities tracked are consumer search,
frequently asked questions and service and support.
Examples: Amazon, Flipkart, Alibaba
• A customer can view products shown on the
website of business organization. The customer can
choose a product and order the same. Website will
send a notification to the business organization via
email and organization will dispatch the
product/goods to the customer.
 Peer to Peer (C2C)
 It exchanges involve transactions between and among
consumers. These can include third party involvement,
as in the case of the auction website Ebay.
Examples: Owners.com, Monster, Quicker
 Website following C2C business model helps
consumer to sell their assets like residential
property, cars, motorcycles etc. or rent a room by
publishing their information on the website.
Website may or may not charge the consumer for
its services. Another consumer may opt to buy the
product of the first customer by viewing the
post/advertisement on the website

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 Consumer to Business (C2B)
 It involves when consumers band together to present
themselves as a buyer in group.
Example: www.planetfeedback.com
 a consumer approaches website showing multiple
business organizations for a particular service.
Consumer places an estimate of amount he/she
wants to spend for a particular service.
 For example, comparison of interest rates of
personal loan/ car loan provided by various banks
via website. Business organization who fulfills the
consumer's requirement within specified budget
approaches the customer and provides its services.

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 Convergence of e-Commerce Categories
Business originating from…

Business Consumers
Publishers order
paper supplies from
And Selling to…

Consumers search
Business

paper companies out sellers, offers

and initiate
Amazon orders purchases from
from publishers Amazon
Consumers

Consumers buy
Consumers resell
thousands of Harry
copies on eBay
Potter books from
Amazon

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 What is a web-based business
• Business that uses the WWW to fulfill it’s business
process
• Four basic business processes:
- information dissemination(i.e. distributing)
- data capture
- promotions and marketing
- transacting with stakeholders (Customers, Suppliers,
Partners)
• Business objectives interact with web based applications

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 Key Drivers of E-commerce
• Technological – degree of advancement of
telecommunications infrastructure (pricing, range of
service available, speed of development)
• Political – role of government, creating legislation,
funding and support (gov’t incentive to use and support
technology, laws supporting or restricting use)
• Social – IT skills, education and training of users (number
of users, accessibility to computers, level of education,
computer literacy)
• Economic – general wealth and commercial health of the
nation (GDP, average income, cost of technology, cost of
access)
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 Key Drivers of E-business
• Organizational culture- attitudes to R&D, willingness
to innovate and use technology
• Commercial benefits- impact on financial
performance of the firm (in terms of cost savings
and improved efficiency)
• Skilled/committed workforce- willing and able to
implement and use new technology
• Requirements of customers/suppliers- in terms of
product and service
• Competition- stay ahead of or keep up with
competitors
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 Appeal of E-commerce
• Lower transaction costs - if an e-commerce site is
implemented well, the web can significantly lower
both order-taking costs up front and customer
service costs
• Larger purchases per transaction - Amazon offers
a feature that no normal store offers
• Integration into the business cycle
• People can shop in different ways. The ability to
build an order over several days
– The ability to configure products and see actual prices
– The ability to easily build complicated custom orders
– The ability to compare prices between multiple
vendors easily
– The ability to search large catalogs easily
• Larger catalogs
• Improved customer interactions - company.
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 Limitations of E-commerce
• To organizations: lack of security, reliability,
standards, changing technology, pressure to
innovate, competition, old vs. new technology
• To consumers: equipment costs, access costs,
knowledge, lack of privacy for personal data,
relationship replacement
• To society: less human interaction, social
division, reliance on technology, wasted
resources.

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 Technical limitations
• There is a lack of universally accepted
standards for quality, security, and reliability
• The telecommunications bandwidth is
insufficient
• Software development tools are still evolving
• There are difficulties in integrating the Internet
and EC software with some existing
applications and databases.
• Special Web servers in addition to the network
servers are needed (added cost).
• Internet accessibility is still expensive and/or
inconvenient
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 Benefits of E-commerce
Persistent connection with customers

New value for customers

Access to new customers

Scalability
 Comparison of E-Commerce and Traditional
Commerce Based on Business Processes
Electronic commerce Traditional commerce

1. Sale/purchase of books or 1. Sale/purchase of high

CDs fashion clothing
2. Online delivery of software 2. Sale/purchase of perishable
3. Advertising and promotion food products
of travel services 3. Small denomination
4. Online tracking of transactions
shipments 4. Sale of expensive jewelry
and antiques
 Comparison of Traditional Commerce and E-
Commerce Based on Activity
Activity Traditional E- commerce
commerce
Product information Magazines Web sites, online catalogs

Business communications Regular mail, phone E-mail

Check product availability Phone, fax and letter E-mail, Web sites, and
extranets
Order generation Printed forms E-mail, Web sites

Product acknowledgements Phone, fax E-mail, Web sites, and EDI

Invoice generation Printed forms Web sites