E-Commerce: Doing Business on the Internet

Commerce

The buying and selling of goods, especially on a large scale.

Commerce is done between businesses, individuals, countries, and so on.

E-Commerce

What is E-Commerce?

Doing business online, typically via the Web The use of the Internet and the web to transact business Digital enabled commercial transactions between and among organizations and individuals. It refers to business activities conducted using electronic data transmission via the Internet and the World Wide Web.

Although consumer shopping on the Web was running about $50 billion per year in 2001 and $350 billion by 2004,

The First E-Commerce?

In 1886, a telegraph operator was able to obtain a shipment of watches that was refused by the local jeweler. Using the telegraph, he sold all the watches to fellow operators and railroad employees. Within a few months, he made enough money to quit his job and start his own store. The young man's name was Richard Sears. His company later became Sears, Roebuck.

The Networked Organization

EC Definitions & Concepts

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

How eCommerce works

EC Definitions & Concepts (cont.)

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

E-Business is not just about eCommerce or exchanging information about goods and services between you and your customers and your and your suppliers. It is about using the Internet for the transfer of information between employees using your in-house systems, between branch offices, between remote users, and between business partners, customers, suppliers and the public . E-Business is also about automation. You can automate many of your in-house procedures using new sources of information. You are freed up so you can use information and technology to let you work AT your business rather that IN your business .

Why eCommerce is changing the Way Businesses Operate?

reduced costs lower product cycle times faster customer response improved service quality

7 Unique Key ideas in Ecommerce Ecommerce

Ubiquity

Internet/Web technology is available everywhere; at all time

Global Reach

The technology reaches across national boundaries, around the earth The total number of users or customers an eCommerce can obtain
There is one set of the technology standards, namely Internet standards Video, audio, text message are possible The complexity and content of a message The technology works through interaction with the user Two way communication between merchant and consumer The technology reduces information costs and raises quality The total quality and amount of information available to all market participates The technology allows personalized messages to be delivered to individuals as well as group

Universal standards

Richness

Interactivity

Information density

Personalization/Customization

Classification of EC by the Nature of the Transaction

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

Classification of EC by the Nature of the Transaction (cont.)

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

Classification of EC by the Nature of the Transaction (cont.)

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

Classification of EC by the Nature of the Transaction (cont.)

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

Classification of EC by the Nature of the Transaction (cont.)

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

Business to Government Internet commerce

This term refers to the use of the Internet by Government to reach its citizens for a variety of information dissemination purposes and transactions. What is Business-to-Government?

Definition: Business-to-government, meaning that the primary focus is toward government agencies at the national, state or local level. Also Known As: Business-to-Government, B2G, B-to-G

Classification of EC by the Nature of the Transaction (cont.)

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

Advantages of E-Commerce: Summary

Electronic commerce can increase sales and decrease costs.

Web advertising reaches a large amount of potential customers throughout the world. The Web creates virtual communities for specific products or services.

A business can reduce its costs by using electronic commerce in its sales support and ordertaking processes.

Electronic commerce increases sale opportunities for the seller. Electronic commerce increases purchasing opportunities for the buyer if an e-commerce site is implemented well, the web can significantly lower both order-taking costs up front and customer service costs after the sale by automating processes.

Lower transaction costs

24/7 -online shops do not close Larger purchases per transaction

Amazon offers a feature that no normal store offers. When you read the description of a book, you also can see "what other people who ordered this book also purchased". That is, you can see the related books that people are actually buying. Because of features like these it is common for people to buy more books that they might buy at a normal bookstore. A Web site that is well-integrated into the business cycle can offer customers more information than previously available. For example, if Dell tracks each computer through the manufacturing and shipping process, customers can see exactly where their order is at any time. This is what FedEx did when they introduced on-line package tracking - FedEx made far more information available to the customer. Traditional mail order companies introduced the concept of shopping from home in your pajamas, and ecommerce offers this same luxury. New features that web sites offer include:

Integration into the business cycle

People can shop in different ways.

Disadvantages of Electronic Commerce

Some business processes are difficult to be implemented through electronic commerce. Return-on-investment is difficult to apply to electronic commerce. Businesses face cultural and legal obstacles to conducting electronic commerce.

Brief History of EC

EC applications first developed in the early 1970s

Limited to:

Large corporations Financial institutions A few other daring businesses

Brief History of EC (cont.)

Electronic data interchange (EDI) electronic transfer of documents:

Enlarged pool of participants to include:

Purchase orders Invoices E-payments between firms doing business

Manufacturers Retailers Service providers

Brief History of EC (cont.)

Interorganizational systems (IOS)

Stock trading Travel reservation systems

Internet became more commercialized in the early 1990s

Almost all medium-and large-sized organization in the world now has a Web site Most large corporations have comprehensive portals

Brief History of EC (cont.)

EC Successes

EC Failures

Pure online

eBay VeriSign AOL Checkpoint GE IBM Intel Schwab

Click-and-mortar

E-tailors began to fail in 1999 This does not mean that ECs days are numbered Large EC companies like Amazon.com are expanding but success or failure is not certain