Introduction to E-Commerce

How the Internet has changed

the way we do business.
Introduction to E-Commerce

Four Benefits of Internet

Technology

Communication
Information
Entertainment
E-Commerce
Introduction to E-Commerce

Internet Technology Provides

Communication
Email
Chat rooms
Spam 
Introduction to E-Commerce

Internet Technology Provides

Information
Newsgroups
Portals – AOL, Yahoo
Specialized Search Sites
Academic Information
Introduction to E-Commerce

Internet Technology Provides

Entertainment
Webcasts
Gambling
Games
eBooks
 Introduction to E-Commerce

Internet Technology Provides the

Vehicle for E-Commerce

Electronic Commerce is the

buying, selling, and trading of
goods on the Internet.
Introduction to E-Commerce

Benefits of E-
Commerce
Introduction to E-Commerce

 Improved Customer Service

Shop-at-home convenience
Detailed product information
Customer controls transaction
Simplified ordering
Open 24/7/365
Introduction to E-Commerce

 Expanded Markets

Elimination of Boundaries
Direct to customer
(no middleman)
Introduction to E-Commerce

 Cost Cutting

Streamlined order processing

Fewer errors in order entry
Increased speed
Lower marketing costs
Introduction to E-Commerce

 Higher Profits

Additional sales channel

User fee income
Advertising Income
Lower marketing costs
Introduction to E-Commerce

E-Commerce Challenges

Security & privacy

Scams & Fraud
Down time & poor service
Awkward design & functionality
Lack of retail experience
Introduction to E-Commerce

Evolution of a
Merchandise Catalog
Introduction to E-Commerce
Introduction to E-Commerce

http://www.theintelstore.com
Introduction to E-Commerce

E-Commerce for Small

Business

Maris Taylor
Designs
Introduction to E-Commerce
Introduction to E-Commerce

http://www.maristaylor.com/
 Categories of Electronic Commerce

• Five general e-commerce categories

– Business-to-consumer (Nike
( )
– Business-to-business (Grainger
( BD&A)
– Business processes (Monster
( )
– Consumer-to-consumer (ebay
( )
– Business-to-government (Cal-buy
( )
• Supply management or procurement
– Departments devoted to negotiating
purchase transactions with suppliers (Intel
( )
Elements of Electronic Commerce
 Categories of Electronic Commerce
(Continued)
• Transaction
– An exchange of value
• Business processes
– The group of logical, related, and
sequential activities and transactions in
which businesses engage
• Telecommuting or telework
– Employee logs in to company computer
through Internet instead of traveling to
office
Electronic Commerce Categories
Actual and Estimated Online Sales in
B2C and B2B Categories
 The Second Wave of Electronic
Commerce
• Defining characteristics of first wave
– Dominant influence of U.S. businesses
– Extensive use of the English language
– Low bandwidth data transmission technologies
– Unstructured use of e-mail
– Over-reliance on advertising as a revenue source
 The Second Wave of Electronic
Commerce (Continued)
• As second wave begins
– Future of electronic commerce will be
international in scope

– Language translation and handling

currency conversion problem will need to
be solved

– E-mail will be used as an integral part of

marketing and customer contact strategies
Focus on Specific Business Processes

• Merchandising
– Combination of store design, layout, and
product display knowledge
• Commodity item
– Hard to distinguish from the same
products or services provided by other
sellers
– Features have become standardized and
well known
Focus on Specific Business Processes
(Continued)

• Shipping profile

– Collection of attributes that affect how

easily a product can be packaged and
delivered

• High value-to-weight ratio

– Can make overall shipping cost a small

fraction of the selling price
Value Chain for a Strategic Business
Unit
Industry Value Chain for a Wooden Chair
SWOT Analysis: Evaluating Business
Unit Opportunities

• SWOT analysis

– Analyst first looks into the business unit to

identify its strengths and weaknesses

– Analyst then reviews operating

environment and identifies opportunities
and threats
SWOT Analysis Questions
Results of Dell’s SWOT Analysis
 International Nature of Electronic
Commerce

• Companies with established reputations

– Often create trust by ensuring that
customers know who they are
– Can rely on their established brand names
to create trust on the Web
• Customers’ inherent lack of trust in
“strangers” on the Web
– Logical and to be expected
This Cartoon from The New Yorker
Illustrates Anonymity on the Web
 Language Issues
• To do business effectively in other
cultures
– Must adapt to culture
• Researchers have found that
– Customers are more likely to buy products
and services from Web sites in their own
language
• Localization
– Translation that considers multiple
elements of local environment
 Culture Issues

• Important element of business trust

– Anticipate how the other party to a
transaction will act in specific
circumstances

• Culture
– Combination of language and customs
– Varies across national boundaries
– Varies across regions within nations
 Infrastructure Issues

• Internet infrastructure includes

– Computers and software connected to
Internet
– Communications networks over which
message packets travel
• Organization for Economic Cooperation
and Development’s (OECD)
– Statements on Information and
Communications Policy
• Deal with telecommunications infrastructure
development issues
 Infrastructure Issues (Continued)
• Flat-rate access system
– Consumer or business pays one monthly
fee for unlimited telephone line usage
– Contributed to rapid rise of U.S. electronic
commerce

• Targets for technological solutions

– Paperwork and processes that accompany
international transactions
 Parties Involved in a Typical
International Trade Transaction