E-Commerce (CSC330)

Dr Muhammad Zeeshan Babar

Course Details

 Electronic Commerce
 Course Code: CSC330 (3,1)
Instructor Details

 Dr Muhammad Zeeshan Babar

 Email: [email protected]
 Office Hours: Before and after class
Course Objective

 Students will be able to develop the skills in the field of Electronic Commerce
 To keep students at the forefront of the Global Digital Economy via facilitating innovation,
creating values in the Electronic market place with the Cooperation of leading Edge
organizations
 To become familiar with state of the art Electronic Model, Payment Mechanisms
 To understand the basic principal of E-Government, Securities, Supply Chain Management
 To Evaluate and observe various online businesses
Course Contents

 Introduction to E-commerce
 Technology Infrastructure for E-commerce
 Business Concepts and Social Issues
 E-commerce in Action
The Revolution is Just the Beginning
Chapter 1

 Learning Objectives
 Understand why it is important to study e-commerce.
 Define e-commerce, understand how e-commerce differs from e-business, identify the primary
technological building blocks underlying e-commerce, and recognize major current themes in e-
commerce.
 Identify and describe the unique features of e-commerce technology and discuss their business
significance.
 Describe the major types of e-commerce.
 Understand the evolution of e-commerce from its early years to today.
 Describe the major themes underlying the study of e-commerce.
 Identify the major academic disciplines contributing to e-commerce.
Chapter Contents

 Computer and Computer Networks

 Introduction to Internet, web, & their Growth
 What is E-commerce
 Define E-commerce and describe how it is different from E-business
 Why study E-commerce
 Unique features of E-commerce
 Major types and dimensions of E-commerce
Computer and Computer Network

 An Electronic machine that performs operations millions time faster than a human being
 Group of computers connected with each others to forms a network
 Node is a connection point for transmitting data
 Networks can interconnect with other networks to form global network
Computer and Computer Network

 Benefits of Network
 Facilitates resource sharing
 Provide reliability
 Provide a powerful medium across geographical boundary
Computer and Computer Network

 Geographical Distance
 Local Area Network (LAN): Small are, share a single server
 Metropolitan Area Network (MAN): A wider network that can bridge several LAN’s
 Wide Area Network (WAN): A broader area covered means includes several MAN’s
Computer and Computer Network

 A network of network that covers the entire globe – Internet

 Connections across countries and continents made through dedicated fast lines
 A company may have one local network (LAN) in one city, which is connected to the
internet through a regional network
 Well established in North America, Europe and certain Asian countries.
Introduction to Internet, Web & their Growth

 A powerful service of internet that provides information – web

 Developed in 1990’s
 Information on the web is stored in a file – webpage
 Webpages are HTML documents that may include text, graphics, animations music and
videos
 People uses web browsers to access webpages from web
 Web content has grown rapidly
 30 Trillion unique URLs and google indexes at least 120 billion web pages
Introduction to Internet, Web & their Growth

 Web 2.0 developed in the late 2004 – Another evolution

 It is the second generation of the WWW that is focused on the ability for people to
collaborate and share the information online
 It is basically a transition from static HTML webpages to more dynamic web
 YouTube, PhotoBucket, Flicker, Google, Iphone, MySpace, Facebook, LinkedIn, Second
life and Wikipedia are some examples
Introduction to Internet, Web & their Growth
What is E-Commerce

 Use of Internet, web, and mobile apps for business transactions – Electronic Commerce
 More formally
 Digitally enabled commercial transactions between and among organizations and individuals
 Digitally enabled transactions – all transactions mediated by digital technology
 Commercial Transactions – involve the exchange of value (e.g Money)
What is E-Business

 Digital enablement of transactions and processes within a firm, involving information

system under firm’s control – Electronic Business
 Does not include commercial transactions involving an exchange of value across
organizational boundaries.
 E.g. a company online inventory control mechanism are a component of E-business but
such internal processes do not generate revenue for the firm outside the business or
consumer as E-commerce
The difference between E-Commerce and E-
Business
 E-commerce is not “anything digital” that a firm does. For purposes of this text, we will
use the term e‑business to refer primarily to the digital enabling of transactions and
processes within a firm, involving information systems under the control of the firm
 e-business does not include commercial transactions involving an exchange of value across
organizational boundaries
 It is true, however, that a firm’s e-business infrastructure provides support for online e-
commerce exchanges; the same infrastructure and skill sets are involved in both e-business
and e-commerce
 The difference between E-Commerce and E-
Business
 E-commerce and e-business systems blur together at the business firm boundary, at the
point where internal business systems link up with suppliers or customers (see Figure 1.1).

E-business applications turn into e-commerce precisely when an exchange of value occurs.
Major Trends in E-Commerce

The major trends in e-commerce in 2017–2018 from a business, technological, and societal
perspective, the three major organizing themes that we use to understand e-commerce

 BUSINESS
 Technology
 Society
Major Trends in E-Commerce - Business

 Retail e-commerce in the United States continues double-digit growth (over 15%), with global growth rates even higher in Europe
and emerging markets such as China, India, and Brazil.
 Mobile e-commerce (both retail and travel sales) explodes and is estimated to reach almost $230 billion in the United States in 2017.
 The mobile app ecosystem continues to grow, with around 200 million Americans using smartphone apps and 135 million using tablet
computer apps in 2017.
 Social e-commerce, based on social networks and supported by advertising, emerges and continues to grow, generating over $15
billion in revenue in the United States in 2016.
 Local e-commerce, the third dimension of the mobile, social, local e-commerce wave, also is growing in the United States, fueled by
an explosion of interest in on-demand services such as Uber, to around $80 billion in 2017.
 B2B e-commerce revenues in the United States are expected to reach $6.3 trillion.
 On-demand service firms like Uber and Airbnb attract billions in capital, garner multi-billion dollar valuations, and show explosive
growth.
 Mobile advertising continues growing at astronomical rates, accounting for almost 70% of all digital ad spending.
 Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the infrastructures created by
industry giants such as Apple, Facebook, Amazon, Google, and eBay.
Major Trends in E-Commerce - Technology

 A mobile computing and communications platform based on smartphones, tablet computers, wearable
devices, and mobile apps becomes a reality, creating an alternative platform for online transactions,
marketing, advertising, and media viewing. The use of mobile messaging services such as WhatsApp and
Snapchat continues to expand, and these services are now used by almost two-thirds of smartphone users.
 Cloud computing completes the transformation of the mobile platform by storing consumer content and
software on “cloud” (Internet-based) servers and making it available to any consumer-connected device from
the desktop to a smartphone.
 The Internet of Things, comprised of billions of Internet-connected devices, continues to grow exponentially.
 As firms track the trillions of online interactions that occur each day, a flood of data, typically referred to as
big data, is being produced.
 In order to make sense out of big data, firms turn to sophisticated software called business analytics (or web
analytics) that can identify purchase patterns as well as consumer interests and intentions in milliseconds.
Major Trends in E-Commerce - Society

 User-generated content, published online as social network posts, tweets, blogs, and pins, as well as video and photo-sharing,
continues to grow and provides a method of self-publishing that engages millions.
 The amount of data the average American consumes continues to increase, more than doubling from an average of about 34
gigabytes in 2008 to an estimated 74 gigabytes today.
 Social networks encourage self-revelation, while threatening privacy.
 Participation by adults in social networks increases; Facebook becomes ever more popular in all demographic categories.
 Conflicts over copyright management and control continue, but there is substantial agreement among online distributors and
copyright owners that they need one another.
 Taxation of online sales becomes more widespread.
 Surveillance of online communications by both repressive regimes and Western democracies grows.
 Concerns over commercial and governmental privacy invasion increase.
 Online security continues to decline as major sites are hacked and lose control over customer information.
 Spam remains a significant problem despite legislation and promised technology fixes.
 On-demand service e-commerce produces a flood of temporary, poorly paid jobs without benefits.
Why Study E-Commerce

 E-commerce technology is different, more powerful than previous technologies.

 E-commerce bringing fundamental changes to commerce
 Marketplace – a physical place where you o for business transactions
 Market Space – marketplace extended beyond traditional boundaries. Removed the temporal and
geographic limitations
 Information Asymmetry – Any difference in relevant market information among parties in a
transaction
Unique Features of E-commerce
Unique Features of E-commerce

 Figure 1.4 illustrates eight unique features of e-commerce technology that both challenge
traditional business thinking and help explain why we have so much interest in e-
commerce.
 These unique dimensions of e-commerce technologies suggest many new possibilities for
marketing and selling—a powerful set of interactive, personalized, and rich messages are
available for delivery to segmented, targeted audiences
 E-commerce technologies make it possible for merchants to know much more about
consumers and to be able to use this information more effectively than was ever true in the
past
Unique Features of E-commerce - Ubiquity

 In traditional commerce, a marketplace is a physical place you visit in order to transact.

For example, television and radio typically motivate the consumer to go someplace to
make a purchase.
 E-commerce, in contrast, is characterized by its ubiquity: it is available just about
everywhere, at all times.
 It liberates the market from being restricted to a physical space and makes it possible to
shop from your desktop, at home, at work, or even from your car, using mobile e-
commerce
 The result is called a marketspace—a marketplace extended beyond traditional
boundaries and removed from a temporal and geographic location.
Unique Features of E-commerce – Ubiquity:
Consumer point of view
 From a consumer point of view, ubiquity reduces transaction costs—the costs of
participating in a market
 To transact, it is no longer necessary that you spend time and money traveling to a market
 At a broader level, the ubiquity of e-commerce lowers the cognitive energy required to
transact in a marketspace
 Cognitive energy refers to the mental effort required to complete a task
Unique Features of E-commerce – Global
Reach
 E-commerce technology permits commercial transactions to cross cultural, regional, and
national boundaries far more conveniently and cost-effectively than is true in traditional
commerce.
 As a result, the potential market size for e-commerce merchants is roughly equal to the size
of the world’s online population
 More realistically, the Internet makes it much easier for startup e-commerce merchants
within a single country to achieve a national audience than was ever possible in the past.
The total number of users or customers an e-commerce business can obtain is a measure of
its reach
 In contrast, most traditional commerce is local or regional—it involves local merchants or
national merchants with local outlets.
Unique Features of E-commerce – Universal
Standards
 One strikingly unusual feature of e-commerce technologies is that the technical standards
of the Internet, and therefore the technical standards for conducting e-commerce, are
universal standards—they are shared by all nations around the world
 The universal technical standards of e-commerce greatly lower market entry costs— the
cost merchants must pay just to bring their goods to market.
 At the same time, for consumers, universal standards reduce search costs—the effort
required to find suitable products.
 With e-commerce technologies, it is possible for the first time in history to easily find
many of the suppliers, prices, and delivery terms of a specific product anywhere in the
world, and to view them in a coherent, comparative environment.
Unique Features of E-commerce – Richness

 Information richness refers to the complexity and content of a message.

 Traditional markets, national sales forces, and retail stores have great richness: they are
able to provide personal, face-to-face service using aural and visual cues when making a
sale.
 Prior to the development of the Web, there was a trade-off between richness and reach: the
larger the audience reached, the less rich the message.
 E-commerce technologies have the potential for offering considerably more information
richness than traditional media such as printing presses, radio, and television because they
are interactive and can adjust the message to individual users
 Chatting with an online sales person, for instance, comes very close to the customer
experience in a small retail shop.
Unique Features of E-commerce – Interactivity

 E-commerce technologies allow for interactivity, meaning they enable two-way

communication between merchant and consumer and among consumers
 Traditional television or radio, for instance, cannot ask viewers questions or enter into
conversations with them, or request that customer information be entered into a form.
 Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-
face experience. Comment features, community forums, and social networks with social
sharing functionality such as Like and Share buttons all enable consumers to actively
interact with merchants and other users.
Unique Features of E-commerce – Information
Density
 E-commerce technologies vastly increase information density—the total amount and
quality of information available to all market participants, consumers and merchants alike.
 E-commerce technologies reduce information collection, storage, processing, and
communication costs. At the same time, these technologies greatly increase the currency,
accuracy, and timeliness of information—making information more useful and important
than ever. As a result, information becomes more plentiful, less expensive, and of higher
quality
 A number of business consequences result from the growth in information density.
 One of the shifts that e-commerce is bringing about is a reduction in information
asymmetry among market participants (consumers and merchants). Prices and costs
become more transparent.
Unique Features of E-commerce –
Personalization and Customization
 E-commerce technologies permit personalization: merchants can target their marketing
messages to specific individuals by adjusting the message to a person’s name, interests,
and past purchases.
 The technology also permits customization — changing the delivered product or service
based on a user’s preferences or prior behaviour.
 With the increase in information density, a great deal of information about the consumer’s
past purchases and behaviour can be stored and used by online merchants
 The result is a level of personalization and customization unthinkable with traditional
commerce technologies.
Unique Features of E-commerce – Social
Technology
 In a way quite different from all previous technologies, e-commerce technologies have
evolved to be much more social by allowing users to create and share content with a
worldwide community.
 All previous mass media in modern history, including the printing press, used a broadcast
model (one-to-many): content is created in a central location by experts (professional
writers, editors, directors, actors, and producers) and audiences are concentrated in huge
aggregates to consume a standardized product
 E-commerce technologies have the potential to invert this standard media model by giving
users the power to create and distribute content on a large scale, and permit users to
program their own content consumption.
 E-commerce technologies provide a unique, many-to-many model of mass communication.
Types of E-Commerce

 There are a number of different types of e-commerce and many different ways to
characterize them. For the most part, we distinguish different types of e-commerce by the
nature of the market relationship—who is selling to whom.
 BUSINESS-TO-CONSUMER (B2C) E-COMMERCE
 BUSINESS-TO-BUSINESS (B2B) E-COMMERCE
 CONSUMER-TO-CONSUMER (C2C) E-COMMERCE
 MOBILE E-COMMERCE (M-COMMERCE)
 SOCIAL E-COMMERCE
 LOCAL E-COMMERCE