Electronic Commerce

GURVINDER SINGH
500902015
Traditional Commerce
One member of society creates something of value that
another member of society desires.

Commerce is a negotiated exchange of valuable objects
or services between at least two parties and includes all
activities that each of the parties undertakes to complete
the transaction.
Views of Commerce
Commerce can be viewed from two different perspectives:
1. The buyers viewpoint
2. The sellers viewpoint

Both perspectives will illustrate that commerce involves a
number of distinct activities.
The Buyers Perspective
From the buyers perspective, commerce involves
the following activities:
1. Identify a specific need
2. Search for products or services that will satisfy
the specific need
3. Select a vendor
4. Negotiate a purchase transaction including
delivery logistics, inspection, testing, and
acceptance
5. Make payment
6. Perform/obtain maintenance if necessary
The Sellers Perspective
From the sellers perspective, commerce involves
the following activities:
1. Conduct market research to identify customer
needs
2. Create a product or service to meet those needs
3. Advertise and promote the product or service
4. Negotiate a sales transaction including delivery
logistics, inspection, testing, and acceptance
5. Ship goods and invoice to the customer
6. Receive and process customer payments
7. Provide after sales support and maintenance
Electronic Commerce
Distributing, buying, selling, marketing and Servicing of
products or services over electronic systems such as
computer and other networks.

It is an electronic business application aimed at
commercial transactions.
Electronic Commerce
The seamless application of information and
communication technology from its point of origin to
its end point along the entire value chain of business
processes conducted electronically and designed to
enable the accomplishment of a business goal
1945 1995
WWW
Created
1989
A
Mathematical
Theory of
Communication
1948
Packet
Switching
Invented
1964
Silicon
Chip
1958
First Vast
Computer
Network
Envisioned
1962
ARPANET
1969
TCP/IP
Created
1972
Internet
Named
and
Goes
TCP/IP
1984
Hypertext
Invented
1965
Age of
eCommerce
Begins
1995
A Brief Summary of the
Evolution of the Internet
Internet Growth Trends
1977: 111 hosts on Internet
1981: 213 hosts
1983: 562 hosts
1984: 1,000 hosts
1986: 5,000 hosts
1987: 10,000 hosts
1989: 100,000 hosts
1992: 1,000,000 hosts
2001: 150 175 million hosts
2002: over 200 million hosts
By 2012, about 80% of the planet will be on the Internet

Classifications of E-Commerce
Applications
Types of E-Commerce
B C

B

C
C2B B2B
B2C C2C / (P2P)
B2B



E-commerce has been in use for quite a few years and is
more commonly known as EDI (electronic data
interchange). In the past EDI was conducted on a direct
link of some form between the two businesses where as
today the most popular connection is the internet. The
two businesses pass information electronically to each
other. B2B e-commerce currently makes up about 94%
of all e-commerce transactions.
Typically in the B2B environment, E-Commerce can
be used in the following processes:
Procurement;
order fulfilment;
Managing trading-partner relationships
B2C
Business-to-consumer (B2C, sometimes also called
Business-to-Customer) describes activities of businesses
serving end consumers with products and/or services.
B2C stands for "business-to-consumer" and applies to
any business or organization that sells its products or
services to consumers over the Internet for its own use.
Ex: Amazon.com
Shopping.Sify.com

B2C
Advantages of B2C e-commerce
B2C e-commerce has the following advantages:
Shopping can be faster and more convenient.
Offerings and prices can change instantaneously.
Call centers can be integrated with the website.
Broadband telecommunications will enhance the buying
experience.

Challenges faced by B2C e-commerce
The two main challenges faced by B2C e-commerce are building
traffic and sustaining customer loyalty. Due to the winner-take-all
nature of the B2C structure, many smaller firms find it difficult to
enter a market and remain competitive.
In addition, online shoppers are very price-sensitive and are easily
lured away, so acquiring and keeping new customers is difficult.

C2B
Consumer to Business is a growing arena where the
consumer requests a specific service from the business.

Example: Harry is planning a holiday in Darwin. He requires
a flight in the first week of December and is only willing to
pay Rs. 250. Harry places a submission with in a web based
C2B facility. Dodgy Brothers Airways accesses the facility
and sees Harrys submission. Due to it being a slow period,
the airline offers Harry a return fare for Rs. 250.
C2C
These sites are usually some form of an auction site.
The consumer lists items for sale with a commercial
auction site. Other consumers access the site and place
bids on the items. The site then provides a connection
between the seller and buyer to complete the
transaction. The site provider usually charges a
transaction cost. In reality this site should be call
C2B2C.
Example: Ebay.com is an online auctioning site .
CareerOne.com.au. These websites provide a valuable
service to consumers looking for jobs.


Other Miscellaneous commerce
G2G (Government-to-Government), G2E
(Government-to-Employee), G2B (Government-to-
Business), B2G (Business-to-Government), G2C
(Government-to-Citizen), C2G (Citizen-to-
Government) are other forms of ecommerce that
involve transactions with the government--from
procurement to filing taxes to business registrations to
renewing licenses.
Is e-Commerce the Same as
e-Business?


While some use e-commerce and e-business interchangeably,
they are distinct concepts. In e commerce, information and
communications technology (ICT) is used in inter-business or
inter-organizational transactions (transactions between and
among firms/ organizations) and in business-to-consumer
transactions (transactions between firms/ organizations and
individuals
Cont
In e-business, on the other hand, ICT is used to enhance
ones business. It includes any process that a business
organization (either a for-profit, governmental or non-
profit entity) conducts over a computer-mediated
network. A more comprehensive definition of e-business
is: The transformation of an organizations processes to
deliver additional customer value through the application
of technologies, philosophies and computing paradigm of
the new economy.
ECONOMICS OF E-BUSINESS
1. Shift From An Economy of Scarcity to One of
Abundance.
2. Both Businesses and Consumers Have a Glut of
Marketplace Choices.
3. Transaction and Coordination Costs are Disappearing.
4. It is Possible to Calculate Demand With Precision.
5. Switching Costs Approaches Zero.
6. High Fixed Costs and Virtually No Variable Cost.
Amazon is a Good Example of Information
Becoming More Valuable As It Is Shared
Broad and Deep Assortment of
Products
Much Content Provided by Visitors
Use of Data to Provide Personalized
Purchase Recommendations
Customer Behavior on Site
Behavior of Similar Customers
SHIFT FROM AN ECONOMY OF
SCARCITY TO ONE OF ABUNDANCE
Used with permission of HotHotHot.com
BOTH BUSINESSES AND CONSUMERS
HAVE A GLUT OF CHOICES
IN THE MARKETPLACE
IT IS POSSIBLE TO CALCULATE
DEMAND WITH PRECISION
Information Flows
Quickly
Freely
Up and Down the Value Chain

Winners and Losers Can be
Spotted Quickly
The Common TCP/IP
Platform Makes It Easy to
Move From One Site to
Another

Retention/Relationship
Marketing Key
SWITCHING COSTS APPROACH
ZERO IN THE ABSENCE OF
ACTIONS BY MARKETERS
High Up-Front Costs for
Necessary Technology
Serving An Incremental
Customer Almost Cost-Free
Except for Distribution
COSTS FOR MANY PRODUCTS FOLLOW A
MODEL OF HIGH FIXED DEVELOPMENT
COSTS AND VIRTUALLY NO VARIABLE
COST OF PRODUCTION
Characteristics of e-commerce
Exchange of Digitized Information between
Parties
communication, coordination for the transmission
of goods/ services
It is technology enabled (web browsers, ATM
interfaces)
Technology mediated transactions more than
human contact.
Intra and inter organizational activities that
exchange in Business environment.
Characteristics of e-commerce
Universal Standards shared by all nations.
Information density with technology reducing the
cost of Information and raising the quality of
information.
Richness of the data: Text, graphic, Audio, and
Video
Customization and interactivity; sense and
respond listening to customers in a new way.


E-Commerce Advantages
Buyers
Wider product availability
Customized/personalized info
and buying options
Shop 24-7
Easy comparison shopping and
one-stop shopping
Access to global markets
Quick delivery of digital
products and of info
Participate in auctions, reverse
auctions, knowledge exchanges
Sellers
Increased sales
opportunities
Decreased transaction costs
Operate 24-7
Reach narrow market
segments that may be
widely distributed
geographically
Access to global markets
Increased speed and
accuracy of info exchange
Bring multiple buyers and
sellers together

E-Commerce Disadvantages
Sellers
Rapidly changing technology
Difficulty integrating existing
systems with e-business software
Problems maintaining system
security and reliability
Global market issues: language,
political environment, currency
conversions
Conflicted legal environment
Shortage of skilled technical
employees
Buyers
Concern over transaction
security and privacy
Lack of trust when dealing
with unfamiliar sellers
Desire to touch and feel
products before purchase
Resistance to unfamiliar
buying processes, paperless
transactions, and electronic
money
Challenges for e-Commerce
One world, the web world may expect one
price; entrepreneurs must find ways to show
differentiation in product and service.
Nearly 65% of transactions stop at shopping cart
level because of customer uncertainties.
Constantly changing prices not realistic.
Security concerns among people
Internet yet to reach third world beyond US and
other developing countries.


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