E-Commerce:

Fundamentals and Applications

Introduction
Prof. Ganesh S
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Outline

Electronic commerce and physical commerce

The DIGITAL phenomenon
Looking at e-commerce from different perspectives
Different types of e-commerce
Examples of the types of e-commerce
Some e-commerce scenarios
Effect of e-commerce
Advantages of e-commerce
Myths about e-commerce development and implementation

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Types of Commerce

Commerce

Electronic
Commerce

Internet
Commerce

Business
focused
e-commerce

Physical or Traditional Commerce

Consumer focused
e-commerce

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Types of Commerce
From a communications perspective, EC is the delivery of information,
products/services, or payments over telephone lines, computer networks, or
any other electronic means.
From a business process perspective, EC is the application of technology toward the automation of business transactions and work flow.
From a service perspective, EC is a tool that addresses the desire of firms,
consumers, and management to cut service costs while improving the quality
of goods and increasing the speed of service delivery.
From an online perspective, EC provides the capability of buying and selling
products and information on the Internet and other online services.

Three layer models for e-commerce (e.g. Zwasss model).

E-business: a wider perspective than e-commerce.
E-commerce improves the value chain.
E-commerce provides an effective tool for building, managing and
enhancing these relationships.
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Types of Commerce

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Explosive Growth in e-Commerce

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E-Commerce Business Model

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E-Commerce

Platform components Over view

SEO Search Engine Optimization; CMS Content Management System; PIM Product Information Management.

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E-Commerce

Scope

THE SCOPE OF ELECTRONIC COMMERCE - The mainstream of e-Commerce consists of

these three areas;
1. Electronic Markets
Offers to present a range of offerings available in a market segment so that the purchaser
can compare the prices (and other attributes) of the offerings and make a purchase
decision. Ex. Airline booking system.
2. Electronic Data Interchange (EDI)
EDI provides a standardized system for coding trade transactions so that they can be
communicated directly from one computer system to another without the need for printed
orders and invoices. EDI is used by organizations that make a large number of regular
transactions. One sector where EDI is extensively used is the large supermarket chains,
which use EDI for transactions with their suppliers.
3. Internet Commerce
Information and communications technologies can also be used to advertise and make
once-off sales of a wide range of goods and services. Example - purchase of books that are
then delivered by post, or the booking of tickets that can be picked up by the clients when
they arrive at the event, and many more
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Digital Phenomenon
What do you think?
What are the drivers of e-commerce?
Data networks
Intense competition
Globalization
Information age
Technologies
Automation
Low cost high quality products/services

DIGITAL

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Different types of E-Commerce

Business
(organization)

Customer
(individual)

Business
(organization)

B2B
(e.g TPN)

B2C
(e.g Amazon)

Customer
(individual)

C2B
(e.g Priceline)

C2C
(e.g eBay)

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Examples
B2C: www.amazon.com
C2C: www.eBay.com
B2B: www.tpn.com
C2B: www.priceline.com
Lets visit these web sites in turn and discuss its features.

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E-commerce scenarios
Retailing
Servicing
Publishing
Supply chain management
Discussion: How are they changing?

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Discussion
How should different departments participate in an e-commerce
project?

Management
Marketing
Production
Finance
Procurement
Customer support

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What are the advantages of e-commerce?

A. Benefits to Organizations
Electronic commerce expands the marketplace to national and international
markets.
Electronic commerce decreases the cost of creating, processing, distributing,
storing, and retrieving paper-based information.
Ability for creating highly specialized businesses.
Electronic commerce allows reduced inventories and overhead by facilitating
pull-type supply chain management.
The pull-type processing enables expensive customization of products and
services, which provides competitive advantage to its implementers.
Electronic commerce reduces the time between the outlay of capital and the
receipt of products and services.
Electronic commerce lowers telecommunications cost-the Internet is much
cheaper than VANs.
Other benefits include improved image, improved customer service, newfound
business partners, simplified processes, compressed cycle and delivery time,
increased productivity, eliminating paper, expediting access to information,
reduced transportation costs, and increased flexibility.

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What are the advantages of e-commerce?

B. Benefits to Consumers
Electronic commerce enables customers to shop or do other transactions 24
hours a day, all year round, from almost any location.
Electronic commerce provides customers with more choices - less expensive
products and services and conduct quick comparisons.
In some cases, especially with digitized products, EC allows quick delivery.
Customers can receive relevant and detailed information in seconds, rather
than days or weeks.
Electronic commerce makes it possible to participate in virtual auctions.
Electronic commerce allows customers to interact with other customers in
electronic communities and exchange ideas as well as compare experiences.
Electronic commerce facilitates competition, which results in substantial
discounts, and many more..

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What are the advantages of e-commerce?

C. Benefits to Society
Electronic commerce 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.
Electronic commerce allows some merchandise to be sold at lower prices, so
less affluent people can buy more and increase their standard of living.
Electronic commerce enables people in Third World countries and rural
areas to enjoy products and services that otherwise are not available to
them.
This includes opportunities to learn professions and earn college degrees.
Electronic commerce facilitates delivery of public services, such as health
care, education, and distribution of government social services at a reduced
cost and/or improved quality. Health- care services, for example, can reach
patients in rural areas.

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The Limitations of EC
A. Technical Limitations of EC
There is a lack of system security, reliability, standards, and some
communication protocols.
There is insufficient telecommunication bandwidth.
The software development tools are still evolving and changing rapidly.
It is difficult to integrate the Internet and EC software with some existing
applications and databases.
Vendors may need special Web servers and other infrastructures, in addition
to the network servers.
Some EC software might not fit with some hardware, or may be
incompatible with some operating systems or other components.
As time passes, these limitations will lessen or be overcome; appropriate
planning can minimize their impact.

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The Limitations of EC
B. Non -Technical Limitations
Cost and justification
Security and privacy
Lack of trust and user resistance Customers do not trust an unknown faceless
seller
Other limiting factors; say Lack of touch and feel online.
Many legal issues are as yet unresolved, and government regulations and
standards
Electronic commerce, as a discipline, is still evolving and changing rapidly
There are not enough support services
In most applications there are not yet enough sellers and buyers for
profitable EC operations
Electronic commerce could result in a breakdown of human relationships
Accessibility to the high speed Internet is still expensive and/or inconvenient
for many potential customers
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Architecture of Web-based ECommerce System

Service system

Web Server

Backend system

Application Server

Database

Internet

Intranet
(Secure)

Firewall

Client side

Server side

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Electronic Data Interchange

What is EDI?
Exchange of standard business documents electronic data
using interorganizational information systems
Shipping data, payment data, production/inventory
requirements
Set of hardware, software, and standards that
accommodate the EDI process
Forms of EDI
Earliest was through a VAN (since 80s)
Newest is through the Web

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Electronic Data Interchange - How EDI works

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Electronic Data Exchange

(How does it work?)
Supplier ships the order.
Buyer organization receives packages, scans bar code,
and compares data to invoices actual items received.
Payment approval transferred electronically from the
buyers accounts payable dept. to buyers bank .
Bank transfers funds from buyer to suppliers account
using electronic fund transfer (EFT).

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Electronic Data Interchange Standards

EDI requires companies to agree on
Compatible hardware and software
Electronic form format

Established EDI standards

X.12 de facto umbrella standard in U.S. and Canada
EDI for Administration, Commerce, and Trade (EDIFACT) umbrella of
standards in Europe

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EDI Implementation
VAN suppliers
GE Information Services, Sprint, WorldCom, Sterling Commerce
Majority of EDI transaction take place with VAN
Web EDI
Rapidly overtaking VAN EDI
Use Web technologies
Accessible to businesses of all sizes
Success attributed to XML
Complements HTML by allowing users to put tags around an
element that tells the browsers about the data content of an
element
Businesses can create their own tags
Web EDI demo
http://www.covalentworks.com/How-does-your-EDI-service-work.asp#
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RFID in SCM
RFID tags permit recording information about products such
as date of manufacture, plant location, expiration date, lot
number, destination
Many RFID tags use the Electronic product code that replaces
the universal product code UPC with much more information
Some tags are read only while others can be updated
Other uses include detect ion of recalled items, expired items,
counterfeit items, defective items

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ERP

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ERP

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ERP

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