Arsi University

College of Business & Economics

Department of Logistics & Supply Chain Management

Course Title: E-Commerce and supply chain information system

Credit Hr: 3
Course: LSCM 3062

By Assefa B alda (Ph.D.)

Feb. 2022
 CHAPTER ONE:
AN OVERVIEW OF E-COMMERCE
E-Commerce is emerging as a new way of helping
business enterprises to compete in the market and
contributing to economic success.

Electronic commerce, is a business transaction that

occurs over an electronic network such as the Internet.

Anyone with access to a computer or mobile device, an

Internet connection, and a means to pay can
participate in e-commerce.

E-commerce is used everywhere in every day life.

 1.1 Definition of e-commerce
 E-Commerce involves the sale or purchase of goods and
services over computer networks by:
 businesses
 individuals
 governments or
 other organizations.
 By adding the flexibility and speed offered by electronic
communications it builds on traditional commerce.
 E-Commerce is the application of current and emerging
information and communication technologies (ICTs) to conduct
business. Such as:
 landline telephone and fax
 mobile phones
 electronic mail and
 other Internet-based services.
 1.2 Origin of e-commerce
It is difficult to pinpoint just when e-commerce
begins.
In the late 1970s, a pharmaceutical firm named
Baxter Healthcare initiated a primitive form of B2B
e-commerce by using a telephone-based modem that
permitted hospitals to reorder supplies from Baxter.
This system was later expanded during the 1980s into
a PC-based remote order entry system.
Electronic Data Interchange (EDI) standards were
developed in the 1980s that permitted firms to
exchange commercial documents and conduct digital
commercial transactions across private networks.
 CONT’D…
 In the B2C arena, the first truly large-scale digitally
enabled transaction system was deployed in France in
1981.
 Generally, when we think of e-commerce today, it is
inextricably linked to the Internet.
 For our purposes we will say e-commerce begins in
1995.
 It was happened following the appearance of the first
banner advertisements placed by ATT, Volvo, Sprint
and others on Hotwired.com in late October 1994.
 The first sales of banner advertisements space by
Netscape and Infoseek in early 1995.
 1.3 E-Business vs. E-commerce
 E-commerce is more specific than e-business.
 E-business includes all electronic–based information exchanges
within or between companies and customers.

 In contrast e-commerce involves buying and selling processes

supported by electronic means, primarily the Internet.

 E-markets are market spaces rather than physical marketplaces.

 E-market is the online transaction of business, featuring linked
computer systems of the vendor, host, and buyer.

 E-commerce includes e-marketing and e-purchasing/e-

procurement.
 The flip side of e-marketing is e-purchasing, the buying side of
e-commerce.
 1.4 Major Forces that Shape the Digital Era
 Many forces play a major role in reshaping the world economy
(digital era), among them:
 Technology,
 Globalization, and
 Market deregulations are few.

 The four specific drivers that underpin/ reinforce the new

economy are:

 Digitalization and connectivity

 Customization and customerization
 Explosion of Internet
 Disintermediation and reintermediation
1. Digitalization and Connectivity
 Today most appliance and systems operate with digital
information, which converts text, data, sound, an images into a
stream of zeros and ones that can be combined into bits and
transmitters from appliance to appliance.
 For bits to flow from one appliance and location to another, a
wired or wireless communications network is necessary.
 The Internet, the "information highway," can dispatch bits at
an incredible speed from one location to another.
 Much of today's business is carried over networks connecting people and
companies.
 These networks are called Intranets, where they connect people within a
company
 Extranets when they connect a company with its suppliers and distributors;
and
 Internet when they connect users to a large worldwide "information
repository."
 2. Customization and Customerization
 Customization means that the company is able to produce
individually differentiated goods whether ordered in person, on
the phone, or online.
 By going online, companies essentially enable consumers to
design their own goods; in effect, it enables them to be
prosumers.
 The company also acquired the capacity to interact with each
customer personally, namely to personalize messages, services,
and the relationship.
 The combination of operational customization and marketing
customization has been called customerization.
 Customization may be very difficult to implement for complex
products such as auto­mobiles.
 3. Explosion of Internet
 With the creation of World Wide Web and Web browsers in 1990s, the
Internet was transformed from a mere communication tool into a celebrity
revolutionary technology.

4. New forms of Intermediaries

 The new technological capabilities have led thousands of
entrepreneurs to launch a dot­com in the hope of striking gold.
 Established store-based retailers-notably bookstores, music
stores, travel agents, and car dealers-began to doubt their future
as more busi­nesses went into direct online marketing.
 They feared and rightly so, being dis-intermediated by the new e-
tailers.
 Re-intermediation took place on a grand scale.
 New online middlemen appeared such as mySimon.coffi,
Evenbetter.com, Buy.com, ShopBest.com, Bes.
 1.5 Perspectives of Electronic E-Commerce

There are numerous perspectives of electronic commerce

and these are:

1. Historical perspective: Seddon has suggested that "the

world has just entered a third new phase in the evolution
of IT capabilities.
 1955-1974; the Electronic Data Processing (EDP) Era,
 1975-1994: the management Information
System'(MIS) Era.
 '1995-2014: the Internet Era.
 CONT’D…

2. Interface perspective: E-commerce involves

various information and transaction exchanges:
 (B2B), (B2C), (C2C),(C2B), (G2B), (B2G), and
etc.,
3. Business process perspective: E-commerce
includes activities that directly support
commerce electronically by means of
networked connections.
4. Communications Perspective:
 CONT’D…
5. Online Perspective: E-commerce is an electronic
environment that makes it possible to buy and sell
products, services, and information on the Internet.

6. Structural Perspective: E-commerce involves various

media: data, text, Web pages, Internet telephony, and
Internet desktop video.

7. Market perspective: A local store can open a Web

storefront and find the world at its doorstep-customers,
suppliers, competitors, and payment services.
 1.6 Unique Features of E-Commerce

The fundamental unique features of E-commerce are:

1. Ubiqity: Internet /web technology is available everywhere at work, at home, and
elsewhere via mobile devises anytime.

2. Global Reach:
 E-commerce technologies enable a business to conduct commercial transactions
cross cultural and national boundaries -easily reach across geographic
boundaries.

3. Universal Standard:
 E-commerce is made possible through hardware (Internet) and software/content
(World Wide Web)
 Standards make it much easier to build business from existing technologies.
 CONT’D…
 Standardization  Low Entry Cost  More completion.
 Standardization Info integration more price discovery opportunities.
 More competition + price discovery opportunity = lower consumer prices

4. Richness:
 Advertising and branding are an important part of commerce.
 E-commerce can deliver video, audio, animation, etc. much better than other
technologies (billboards, signs, etc.)

5. Interactivity: This technology allows two-way communication between marketers and

consumers.

6. Information Density: The total amount and quality of information available to all
market participants, consumers and merchants alike.
 CONT’D…
7. Customerization: It seems like a contradiction that e-commerce
has more opportunities for personalization than going to a store
and buying an item face-to-face with a cleck.

1.7. Forms of E-Commerce

 Companies of all type are now engaged in e-commerce.
 Now days there are three possibilities of conducting business.
These are:
 Brick-and-mortal companies (brick only)
 Pure-click or click only companies
 Click and Mortal Marketers.
 CONT’D…

Figure 1.1 Brick and Mortal (Brick Only) Marketers

Figure 1.2 Pure-click or click only companies

Figure 1.3 Click and Mortal Marketers

 1.8 Advantages and Limitations of E-Commerce

a.E-commerce advantages:
Even if there are much benefits that could be realized through
implementation of E-commerce some of these advantages
include:
 Being able to conduct business 24 x 7 x 365: E-commerce
systems can operate all day every day.
 Access the global marketplace: The Internet spans the world,
and it is possible to do business with any business or person
who is connected to the Internet.

 Speed: Electronic communications allow messages to traverse

the world almost instantaneously.
 Market space: The market in which web-based businesses
operate is the global market.
 CONT’D…
 Opportunity to reduce costs: The Internet
makes it very easy to 'shop around' for products and services
that may be cheaper or more effective

 Computer platform-independent: 'Many,

if not most, computers have the ability to communicate via
the Internet independent of operating systems and hardware.

 Efficient applications development

environment: - 'In many respects, applications can
be more efficiently developed and distributed. etc
 CONT’D…

b. E-commerce disadvantages and constraints

Some of the disadvantages and constraints of e-commerce
includes:
 Time for delivery of physical products:
 Physical product, supplier & delivery uncertainty:
 Perishable goods: goods bought and sold via the Internet tend
to be durable and non-perishable:

 Limited and selected sensory information: for example, we

can see pictures of the flowers, but not smell their fragrance/
perfume
 Returning goods: Returning goods online can be an area of
difficulty.
 Privacy, security, payment, identity, contract: and etc.,
The end..of Ch 1
Thanks