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Unit 1

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E-Commerce

INTRODUCTION E-Commerce Anuj Shah Hardik Shah Harsh Shah Ankit Taparia Bhumin Shah

(374) (376) (377) (396) (407)

Evolution of e-Commerce

• Electronic commerce commonly known as E-Commerce • Buying/selling of product or service is conducted over Internet.

Evolution of e-Commerce

• Three stages of evolution: 1. Innovation 2. Consolidation 3. Reinvention

Transaction ( in $ millions)

History • 1979- A modified domestic TV to a real-time transaction processing computer. • 1982- Minitel was introduced in France. • 1994- Netscape releases the Navigator browser. Pizza Hut offers online ordering on its Web page and the first online bank opens. • 1998- PayPal comes into existence. • 2002- Ebay acquires PayPal for $1.5 billion and changes the scope of online shopping forever. • 2003- After eight years, Amazon posts its first yearly profit. • 2012- US Ecommerce and online retail sales are projected to reach $226 billion (an increase of 12% over 2011).

Applications

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Amazon.com (B2C)

ebay.in (C2C)

IndiaMart.com (B2B)

priceline.com (C2B)

Advantages of Electronic Commerce • E-commerce increases sales and decreases costs • Virtual community

• • • •

Increases purchasing opportunities Identifies new suppliers and business partners Efficiently obtains competitive bid information Increases speed, information exchange accuracy • Wider range of choices available 24 hours a day

Advantages of Electronic Commerce • E commerce provides buyer opportunities – Wider range of choices – Easy way to customize the level of the information – Reduces the time buyers must wait for the product

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Advantages of Electronic Commerce • Benefits extend to general society welfare – Lower costs to issue and secure: • Electronic payments of tax refunds • Public retirement • Welfare support

– Provides faster transmission – Provides fraud, theft loss protection • Electronic payments easier to audit and monitor

– Reduces commuter-caused traffic, pollution • Due to telecommuting

– Products and services available in remote areas

Disadvantages of Electronic Commerce • • • • • • •

Poor choices for electronic commerce Difficult to get return-on-investment numbers Technology and software issues Recruiting and retaining employees Cultural differences Consumers resistant to change Conflicting laws 14 14

1 Consumer finds

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something she wants to buy at a “shop” on the Net

Verification and remittance of actual funds Shop

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Ecommerce Trade and Cycle

Consumer sends on enciphered request for payment to her bank

The electronic bank sends back a secure packet of e-cash

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Consumer’s Bank

Merchant Server

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Consumer sends the ecash to the shop

Shop

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Consumer Public Key

The shop sends the packet of cash to its bank

Merchant Bank

Classification of e-commerce

CATEGORIES OF E-COMMERCE

  

The classification of ecommerce is based: who orders, the goods and services to be sold, who sold those goods and services and the nature of transactions.

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• Classification of e-commerce 

I. II. III. IV. V. VI.

Based on the above criteria, e-commerce are classified as; Business-to-Business (B2B) e-commerce Business-to-Consumer (B2C) e-commerce Consumer-to-Business (C2B) e-commerce Consumer-to-Consumer (C2C) e-commerce Peer to Peer e-commerce M-commerce

1. Business-to-Business (B2B) e-commerce (cont…)

   



Business-to-Business (B2B) e-commerce It is the largest form of ecommerce In this form the buyers and sellers are both business entities and do not involve and individual consumer. It is commonly known as EDI (Electronic Data Interchange). According to the European model EDI Agreement Article 2.1, EDI is the electronic transfer from computer to computer, of commercial and administrative data using an agreed standard to structure an EDI message. Examples: Intel selling microprocessor to Dell Heinz selling ketchup to Mc Donalds

Advantages of B2B e-commerce

The companies include in the B2B ecommerce are manufacturers, wholesalers rather than retailers only.  Pricing is based on quantity of orders and is often negotiable.  This type of ecommerce is privately held, since only business companies can qualify as potential buyers.



2.Business-to-Consumer (B2C) e-commerce

Business-to Consumer (B2C) e-commerce transaction process



  



In this e-commerce type, business and consumers are involved. Business sell to the public typically through catalogs utilizing shopping cart software. In Business-to Consumer (B2C) e commerce, business must develop attractive electronic market places to entice and sell products and services to the consumer. Example: Dell selling me a laptop

    

      

Some advantages of B2B ecommerce are; Direct interaction with customers. Focused on sales promotion. Building customer loyalty. Scalability Savings in distribution costs

Business-to Consumer (B2C) e commerce transaction process includes; Customer identifies a need. Searches for the product or services to satisfy the need. Selects a vendor and negotiates a price. Receives the product or services (delivery logistics, inspection and acceptance). Makes payment. Gets service and warranty claims.

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3. Consumer-to-Business (C2B) ecommerce  





Also called demand collection model. It enables buyers to name their own price, often binding, for a specific good or services generating demand A consumer posts his project with a set budget online and within outs; companies review the customers’ requirements and bids out the project. Then the customer will review the bids and selects the company that will complete the project.

C2C e-commerce (cont…)    



In the C2C e-commerce, the consumer lists items for sale with commercial auction site. The participants in C2C ecommerce are unknown, not trusted parties to sell goods and services to anther one. Example of C2C ecommerce web is eBay, where consumers sell their goods and services to other consumers; And PayPal (instead of purchasing goods and services directly from the unknown, untrusted seller, the buyer can send money to the PayPal. Then the PayPal notifies the seller that they will hold the money for them until the goods have been shipped and accepted by the buyer).

6. M-commerce    

It refers to the use of mobiles devices for conducting the transactions. The mobile device holder can connect each other and can conduct the business. This is not really a type of e commerce but a mechanism in transaction. Many M-Commerce applications involve internet enabled mobile devices. If such transactions are targeted to individual, to specific location, at specific times, they are referred as location base ecommerce (L- Ecommerce).

4. Consumer-to-Consumer (C2C) e-commerce  

It facilitates the online transaction of goods or services between two peoples. However, there is not visible intermediary involved, but the parties cannot carry out the transactions without the platform, which is provided by the online market such as eBay.

Examples: Advertisement of personal services over the internet.  Selling of knowledge and experts online. 

5. Peer-to-Peer (P2P) e-commerce 



It is a technology in itself that helps people to directly share computer files and computer resources without having a central web server. To use this, both the peers should have to install the software so that they can communicate on the common platform.

Examples:  Sharing of music’s, videos, and other digital files electronically

7. E-Government 

In E-Government a government departments buys or sells goods, services or information to business (G2B) or to the individual citizens (G2C) or to other government entity (G2G).

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EDI

Benefits of EDI

• Electronic Data Interchange • “the transfer of structured data ,by agreed message standards ,from one computer system to another ,by electronic means”.

• • • • • •

Direct advantages: Shortened ordering time Cost cutting Elimination of errors Fast response Accurate invoicing EDI payment

EDI Example Indirect advantages: • Reduced stock holding • Cash flow • Business opportunities

Elements of EDI • • • •

EDI standards EDI networks EDI implementation EDI agreements

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EDI Standards

EDI Networks

Data during interchange is: • Ready , formulated and available • Independent of hardware and software “ EDI standards provide a common language for the interchange of standard transactions”

Transmission can be done through: • Magnetic tapes • Direct data communications link • Value added data services(VADS)

EDI implementation Pens and things

Packaging soln.

Production control system

Order processing system

EDI software

VADS

EDI Agreements

EDI software

Trade Cycle • Conducting a commercial transaction involves the following steps:

Trade Cycle • Conducting a commercial transaction involves the following steps:

– Pre-Sale:

– Pre-Sale:

– Execution:

– Execution:

– Settlement:

– Settlement:

– After-sales, e.g. warrantee and service

• Search - finding a supplier • Negotiate – agreeing the terms of trade

– After-sales, e.g. warrantee and service

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Trade Cycle • Conducting a commercial transaction involves the following steps: – Pre-Sale: • Search - finding a supplier • Negotiate – agreeing the terms of trade

– Execution:

Trade Cycle • Conducting a commercial transaction involves the following steps: – Pre-Sale: • Search - finding a supplier • Negotiate – agreeing the terms of trade

– Execution:

• Order • Delivery

• Order • Delivery

– Settlement:

– Settlement:

– After-sales, e.g. warrantee and service

Generic trade cycles • The trade cycle varies depending on: – The nature of the parties to the transaction – The frequency of trade exchanges – The nature of the goods or services being exchanged.

• Three generic trade cycles can be identified: – Regular, repeat transactions between commercial trading partners (Repeat) – Irregular transactions between commercial trading partners (Credit) – Irregular transactions in once-off trading relationships (commercial or retail) (Cash)

• Invoice • Payment

– After-sales, e.g. warrantee and service

Generic trade cycles Trade Cycle: Repeat Credit

Cash

Search Pre-Sale Negotiate Order Execution Deliver Invoice Settlement Payment After Sales

After Sale

Future Scope

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