e-com
Content
Overview of Electronic Commerce 1
Define electronic commerce (EC) and describe its
various categories Describe and discuss the content and framework of EC Describe the major types of EC transactions Describe some EC business models Discuss the benefits of EC to organizations, consumers, and society
2
Describe the limitations of EC Describe the role of the digital revolution in EC and
the economic impact of EC Discuss the contribution of EC in helping organizations respond to environmental pressures Discuss some major managerial issues regarding EC
3
Electronic Commerce (EC) is the process of buying,
selling, or exchanging products, services, and information via computer networks EC defined from these perspectives Communications Business process Service Online Collaborations Community 4
The pioneer… Sir Richard Sears
A lay man
Worked as a telegraph operator
5
E-business is 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 Conducting electronic transactions within an
organization Pure vs. Partial EC: based on the degree of digitization of product, process, delivery agent
6
7
Traditional commerce: all dimensions are physical Brick-and-mortar organizations Old-economy organizations (corporations)
Perform all business off-line Sell physical products by means of physical agents
8
Pure EC: all dimensions are digital Pure online (virtual) organizations New-economy organization Sell products or services only online Partial EC: a mix of digital and physical dimensions Click-and-mortar organizations Conduct EC activities Do their primary business in the physical world
9
Internet vs. Non-Internet EC VANs—value-added networks LANs—local area networks Single computerized machines Using a smart card in a vending machine Using a cell phone to make an online purchase
10
E-markets Buyers and sellers meet to exchange Goods Services Money Information
Interorganizational
Information Systems (IOS) Between two or more organizations Routine transaction processing Information flow
11
An EC Framework EC applications supported by infrastructure and 5
support areas People Public policy
Technical standards and protocols Business partners Support services
12
13
Business-to-business (B2B) : EC model in which all
of the participants are businesses or other organizations Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided 14
Consumer-to-business(C2B): individuals who use
the Internet to sell products or services to organizations and /or seek sellers to bid on products or services they need Consumer-to-consumer (C2C) : consumers sell directly to other consumers
15
Mobile commerce (m-commerce)—EC transactions
and activities conducted in a wireless environment Location-commerce—(l-commerce) m-commerce transactions targeted to individuals in specific locations, at specific times
16
Intrabusiness (organizational) EC: EC category that
includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
17
Business-to-employee (B2E): EC model in which an
organization delivers services, information, or products to its individual employees Collaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate online E-government: Government-to-citizens (G2C): EC
model in which a government entity buys or provides good, services, or information to businesses or individual citizens 18
Exchange (electronic): a public e-market with many
buyers and sellers Exchange-to-exchange (E2E): EC model in which electronic exchanges formally connect to one another for the purpose of exchanging information
19
Marketing
Management
Computer sciences Consumer behavior and
psychology Finance Economics
information systems Accounting and auditing Management Business law and ethics Others
20
A method of doing business by which a company
can generate revenue to sustain itself Spells out where the company is positioned in the value chain Business models are a component of a business plan or a business case
21
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
22
Marketing and sales plan
Mission statement and
company description The management team The market and the customers The industry and competition The specifics of the products and/or services
Operations plan Financial projections and
plans Risk analysis Technology analysis
23
All business models must specify their revenue model (the description of how the company or an EC project will earn revenue) Revenue sources are Transaction fees
Affiliate fees
Subscription fees
Sales
Advertisement fees
Other models
Value proposition is the description of the benefits a company can derive from using EC 24
Online, direct marketing Electronic tendering systems Reverse auction is a tendering system sellers are invited
to bid on the fulfillment of an order to produce a product or provide a service; the lowest bid wins Name your own price
Find the best price
25
Affiliate marketing is an arrangement whereby a
marketing partner (business, organization or individual) refers consumers to the selling company’s Web site Viral marketing is word-or-mouth marketing in which customers promote a product or service to friends or other people by using the Internet
26
Group purchasing is getting many small buyers together
to by in large quantities Online auctions Product and service customization Customization is the creation of a product or service according to the buyer’s specifications
Electronic marketplaces and exchanges Vertical marketplace is a marketplace that concentrates on one industry; also called vertical portals or vortals Supply chain improvers 27
28
Benefits to Organizations Expands the marketplace to national and international
markets Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information Allows reduced inventories and overhead by facilitating pull-type supply chain management
29
The pull-type processing allows for customization of
products and services which provides competitive advantage to its implementers Reduces the time between the outlay of capital and the receipt of products and services Supports business processes reengineering (BPR) efforts Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)
30
Benefits to consumers Enables consumers to shop or do other transactions
24 hours a day, all year round from almost any location Provides consumers with more choices Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons
31
Allows quick delivery of products and services (in some
cases) especially with digitized products Consumers can receive relevant and detailed information in seconds, rather than in days or weeks Makes it possible to participate in virtual auctions Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences Facilitates competition, which results in substantial discounts 32
Benefits to society Enables more individuals to work at home, and to do less
traveling for shopping, resulting in less traffic on the roads, and lower air pollution Allows some merchandise to be sold at lower prices, benefiting less affluent people Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality 33
Orbis Corporation changes linear physical supply chain to an electronic hub
34
35
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 (especially legacy) applications and databases. Special Web servers in addition to the network servers are needed (added cost). Internet accessibility is still expensive and/or inconvenient 36
In the Digital Revolution the economy is based on
digital technologies including:
Digital communication networks Computers Software Other related information technologies
Also called: Internet economy New economy Web economy 37
Digital networking and communication
infrastructures provide a global platform where people and organizations: Interact Communicate Collaborate
Search for information
38
The global platform includes these characteristics A vast array of digitizable products Consumers and firms conduct financial transactions
digitally Microprocessors and networking capabilities embedded in physical goods
39
The term digital economy also refers to
the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating ecommerce and vast organizational changes 40
This convergence enables all types of
information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwide Web-based EC systems are accelerating the digital
revolution by providing competitive advantage to organizations
41
Reach vs. richness
Another economic impact of EC is the trade-off between the number of customers a company can reach (called “reach”) and the amount of interactions and information services they can provide to customers (called “richness”)
42
43
The New World of Business Business pressures Organizational responses The role of Information Technology (including
electronic commerce)
44
The term business environment refers to the
social, economic, legal, technological, and political actions that affect business activities Business pressures are divided into the following categories: Market (economic) Societal Technological
45
46
Strategic systems Provide organizations with strategic advantages,
enabling them to: Increase their market share Better negotiate with their suppliers Prevent competitors from entering into their territory
47
Continuous improvement efforts Many companies continuously conduct programs to
improve: Productivity Quality Customer service
Business process reengineering (BPR) Strong business pressures may require a radical change Such an effort is referred to as business process
reengineering (BPR) 48
Business alliances Alliances with other companies, even competitors, can be beneficial Virtual corporation—electronically supported temporary joint venture Special organization for a specific Time-limited mission
Electronic markets Optimize trading efficiency Enable their members to compete globally Require the collaboration of the different companies and competitors
49
Reduction in cycle time and time to market Cycle time reduction—shortening the time it takes for a
business to complete a productive activity from its beginning to end Extremely important for increasing productivity and competitiveness Extranet-based applications expedite steps in the process of product or service development, testing, and implementation
50
Empowerment of employees and collaborative work Employees given the authority to act and make decisions
on their own improves Productivity Customer relationship management (CRM)
Empowered sales people and customer service
employees: Make customers happy quickly Help increase customer loyalty
51
Supply chain improvements
Help reduce supply chain delays, inventories and eliminate other inefficiencies Mass customization—production of large
quantities of customized items Business problem is how to efficiently provide
customization EC is an ideal facilitator of mass customization by enabling electronic ordering to reach the production facility in minutes 52
The task facing each organization is how to put
together the components that will enable the organization to gain competitive advantage by using EC
53
The first step is to put in the right connective networks
The vast majority of EC is done on computers
connected to: Internet 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
54
Major concern of today’s companies—how to transform
themselves to take part in digital economy Example:Toys, Inc. Uses intranet for internal communications, collaboration,
dissemination of information Networked to e-marketspaces and large corporations Corporate portal for communication and collaboration with business partners
55
56
Definition of EC and description of its various categories The content and framework of EC The major types of EC transactions The major business models Benefits of EC to organizations, consumers, and society Limitations of EC The digital revolution and the economic impact of EC
The role of EC in combating pressures in the business
environment 57
Prentice Hall, 2003
58
59
Define electronic commerce (EC) and describe its
various categories Describe and discuss the content and framework of EC Describe the major types of EC transactions Describe some EC business models Discuss the benefits of EC to organizations, consumers, and society
2
Describe the limitations of EC Describe the role of the digital revolution in EC and
the economic impact of EC Discuss the contribution of EC in helping organizations respond to environmental pressures Discuss some major managerial issues regarding EC
3
Electronic Commerce (EC) is the process of buying,
selling, or exchanging products, services, and information via computer networks EC defined from these perspectives Communications Business process Service Online Collaborations Community 4
The pioneer… Sir Richard Sears
A lay man
Worked as a telegraph operator
5
E-business is 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 Conducting electronic transactions within an
organization Pure vs. Partial EC: based on the degree of digitization of product, process, delivery agent
6
7
Traditional commerce: all dimensions are physical Brick-and-mortar organizations Old-economy organizations (corporations)
Perform all business off-line Sell physical products by means of physical agents
8
Pure EC: all dimensions are digital Pure online (virtual) organizations New-economy organization Sell products or services only online Partial EC: a mix of digital and physical dimensions Click-and-mortar organizations Conduct EC activities Do their primary business in the physical world
9
Internet vs. Non-Internet EC VANs—value-added networks LANs—local area networks Single computerized machines Using a smart card in a vending machine Using a cell phone to make an online purchase
10
E-markets Buyers and sellers meet to exchange Goods Services Money Information
Interorganizational
Information Systems (IOS) Between two or more organizations Routine transaction processing Information flow
11
An EC Framework EC applications supported by infrastructure and 5
support areas People Public policy
Technical standards and protocols Business partners Support services
12
13
Business-to-business (B2B) : EC model in which all
of the participants are businesses or other organizations Business-to-consumer (B2C): EC model in which businesses sell to individual shoppers Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided 14
Consumer-to-business(C2B): individuals who use
the Internet to sell products or services to organizations and /or seek sellers to bid on products or services they need Consumer-to-consumer (C2C) : consumers sell directly to other consumers
15
Mobile commerce (m-commerce)—EC transactions
and activities conducted in a wireless environment Location-commerce—(l-commerce) m-commerce transactions targeted to individuals in specific locations, at specific times
16
Intrabusiness (organizational) EC: EC category that
includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
17
Business-to-employee (B2E): EC model in which an
organization delivers services, information, or products to its individual employees Collaborative commerce (c-commerce): EC model in which individual or groups communicate or collaborate online E-government: Government-to-citizens (G2C): EC
model in which a government entity buys or provides good, services, or information to businesses or individual citizens 18
Exchange (electronic): a public e-market with many
buyers and sellers Exchange-to-exchange (E2E): EC model in which electronic exchanges formally connect to one another for the purpose of exchanging information
19
Marketing
Management
Computer sciences Consumer behavior and
psychology Finance Economics
information systems Accounting and auditing Management Business law and ethics Others
20
A method of doing business by which a company
can generate revenue to sustain itself Spells out where the company is positioned in the value chain Business models are a component of a business plan or a business case
21
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
22
Marketing and sales plan
Mission statement and
company description The management team The market and the customers The industry and competition The specifics of the products and/or services
Operations plan Financial projections and
plans Risk analysis Technology analysis
23
All business models must specify their revenue model (the description of how the company or an EC project will earn revenue) Revenue sources are Transaction fees
Affiliate fees
Subscription fees
Sales
Advertisement fees
Other models
Value proposition is the description of the benefits a company can derive from using EC 24
Online, direct marketing Electronic tendering systems Reverse auction is a tendering system sellers are invited
to bid on the fulfillment of an order to produce a product or provide a service; the lowest bid wins Name your own price
Find the best price
25
Affiliate marketing is an arrangement whereby a
marketing partner (business, organization or individual) refers consumers to the selling company’s Web site Viral marketing is word-or-mouth marketing in which customers promote a product or service to friends or other people by using the Internet
26
Group purchasing is getting many small buyers together
to by in large quantities Online auctions Product and service customization Customization is the creation of a product or service according to the buyer’s specifications
Electronic marketplaces and exchanges Vertical marketplace is a marketplace that concentrates on one industry; also called vertical portals or vortals Supply chain improvers 27
28
Benefits to Organizations Expands the marketplace to national and international
markets Decreases the cost of creating, processing, distributing, storing and retrieving paper-based information Allows reduced inventories and overhead by facilitating pull-type supply chain management
29
The pull-type processing allows for customization of
products and services which provides competitive advantage to its implementers Reduces the time between the outlay of capital and the receipt of products and services Supports business processes reengineering (BPR) efforts Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)
30
Benefits to consumers Enables consumers to shop or do other transactions
24 hours a day, all year round from almost any location Provides consumers with more choices Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons
31
Allows quick delivery of products and services (in some
cases) especially with digitized products Consumers can receive relevant and detailed information in seconds, rather than in days or weeks Makes it possible to participate in virtual auctions Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences Facilitates competition, which results in substantial discounts 32
Benefits to society Enables more individuals to work at home, and to do less
traveling for shopping, resulting in less traffic on the roads, and lower air pollution Allows some merchandise to be sold at lower prices, benefiting less affluent people Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them Facilitates delivery of public services at a reduced cost, increases effectiveness, and/or improves quality 33
Orbis Corporation changes linear physical supply chain to an electronic hub
34
35
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 (especially legacy) applications and databases. Special Web servers in addition to the network servers are needed (added cost). Internet accessibility is still expensive and/or inconvenient 36
In the Digital Revolution the economy is based on
digital technologies including:
Digital communication networks Computers Software Other related information technologies
Also called: Internet economy New economy Web economy 37
Digital networking and communication
infrastructures provide a global platform where people and organizations: Interact Communicate Collaborate
Search for information
38
The global platform includes these characteristics A vast array of digitizable products Consumers and firms conduct financial transactions
digitally Microprocessors and networking capabilities embedded in physical goods
39
The term digital economy also refers to
the convergence of computing and communication technologies on the Internet and other networks and the resulting flow of information and technology that is stimulating ecommerce and vast organizational changes 40
This convergence enables all types of
information (data, audio, video, etc.) to be stored, processed, and transmitted over networks to many destinations worldwide Web-based EC systems are accelerating the digital
revolution by providing competitive advantage to organizations
41
Reach vs. richness
Another economic impact of EC is the trade-off between the number of customers a company can reach (called “reach”) and the amount of interactions and information services they can provide to customers (called “richness”)
42
43
The New World of Business Business pressures Organizational responses The role of Information Technology (including
electronic commerce)
44
The term business environment refers to the
social, economic, legal, technological, and political actions that affect business activities Business pressures are divided into the following categories: Market (economic) Societal Technological
45
46
Strategic systems Provide organizations with strategic advantages,
enabling them to: Increase their market share Better negotiate with their suppliers Prevent competitors from entering into their territory
47
Continuous improvement efforts Many companies continuously conduct programs to
improve: Productivity Quality Customer service
Business process reengineering (BPR) Strong business pressures may require a radical change Such an effort is referred to as business process
reengineering (BPR) 48
Business alliances Alliances with other companies, even competitors, can be beneficial Virtual corporation—electronically supported temporary joint venture Special organization for a specific Time-limited mission
Electronic markets Optimize trading efficiency Enable their members to compete globally Require the collaboration of the different companies and competitors
49
Reduction in cycle time and time to market Cycle time reduction—shortening the time it takes for a
business to complete a productive activity from its beginning to end Extremely important for increasing productivity and competitiveness Extranet-based applications expedite steps in the process of product or service development, testing, and implementation
50
Empowerment of employees and collaborative work Employees given the authority to act and make decisions
on their own improves Productivity Customer relationship management (CRM)
Empowered sales people and customer service
employees: Make customers happy quickly Help increase customer loyalty
51
Supply chain improvements
Help reduce supply chain delays, inventories and eliminate other inefficiencies Mass customization—production of large
quantities of customized items Business problem is how to efficiently provide
customization EC is an ideal facilitator of mass customization by enabling electronic ordering to reach the production facility in minutes 52
The task facing each organization is how to put
together the components that will enable the organization to gain competitive advantage by using EC
53
The first step is to put in the right connective networks
The vast majority of EC is done on computers
connected to: Internet 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
54
Major concern of today’s companies—how to transform
themselves to take part in digital economy Example:Toys, Inc. Uses intranet for internal communications, collaboration,
dissemination of information Networked to e-marketspaces and large corporations Corporate portal for communication and collaboration with business partners
55
56
Definition of EC and description of its various categories The content and framework of EC The major types of EC transactions The major business models Benefits of EC to organizations, consumers, and society Limitations of EC The digital revolution and the economic impact of EC
The role of EC in combating pressures in the business
environment 57
Prentice Hall, 2003
58
59
