Transcript Introduction to E- Commerce - What is E-Commerce?

(BCA-3005)
E- COMMERCE AND APPLICATIONS
Dr. B. B. Sagar
BCA 3005 ELECTRONIC COMMERCE AND APPLICATIONS
SYLLABUS
Module -I
E-Commerce: Origin and Need of E-Commerce, Features of E-Commerce,
Advantages of E-Commerce, Electronic Commerce Models, Types of Electronic
Commerce, Value Chain in Electronic Commerce, Nature and Scope of Ecommerce, Applications of E-Commerce.
Module -II
Internet, World Wide Web, Internet Architecture, Composition of Internet,
Nature and Benefits of E.D.I, E.D.I Communication, Legal Issues in E.D.I,
Demerits of E.D.I.
Module -III
Security Overview, Electronic Commerce Threats, Encryption, Cryptography,
Public Key and Private Key Cryptography, Digital Signatures, Digital Certificates,
Firewall, Public Key Infrastructure for Security(PKI), Cryptographic Applications.
Module -IV
Overview of Electronic Payment Technology.
Module -V
Business Models and Revenue Models over Internet, e-Governance, Digital
Commerce, Mobile Commerce, Strategies for Business over Web.
Module -VI
Evolution of Cyber Laws in India, IT Act 2000.
Module -VI
Issues of Trademarks and Domain Names, Management Challenges in On-line
Retailing, Supply Chain Management Fundamentals, Online Auctions, ECommerce Portals, and Barriers to Growth of E-Commerce in India.
TEXT BOOK:
1. Kamalesh K Bajaj & Debjani Nag, E-Commerce , 2nd Edition,
Tata McGraw-Hill
REFERENCE BOOKS:
1.
Laudon, E-Commerce, 4th Edition, Pearson, 2008.
2.
D. Whiteley, E-Commerce, Tata McGraw-Hill
Module -I
E-Commerce: Origin and Need of E-Commerce, Features of E-
Commerce, Advantages of E-Commerce, Electronic Commerce
Models, Types of Electronic Commerce, Value Chain in Electronic
Commerce, Nature and Scope of E-commerce, Applications of ECommerce.
4/13/2015
Introduction to E- Commerce
→ What is E-Commerce?
→ Difference of E-Commerce and Traditional Commerce
→ Origin and needs of E-Commerce
→ Forces behind E-Commerce
→ Factors affecting E-Commerce
→ Generic Framework of E-Commerce
→ Types of E-Commerce
→ Value chains in E-Commerce
→ Characteristics of E-Commerce
→ Why E-Commerce over Internet?
→ Capabilities Required for E-Commerce
What is “E-Commerce”?
• E-commerce is a short version of the term Electronic Commerce
• Online business activities for products and services
•E-commerce is usually associated with buying and selling of products or services over
the Internet
•penetration and spread of the internet has fuelled e-commerce
•Examples of e-commerce are: Electronic Funds Transfer (EFT), Internet Marketing,
Electronic Data Interchange (EDI), Supply Chain Management, Online Transaction
Processing, Inventory Management Systems, and Automated Data Collection Systems
etc
Three classes of e-commerce applications:
- Customer-to-business
- Business-to business
- Intra-organzational
Difference between E-commerce and E-Business?
Commerce : The exchange of commodities, buying and selling, of products and services
requiring transportation, from location to location is known as commerce.
E-commerce is buying and selling of Information, Product and Services using an electronic
medium. It is accepting credit and payments over the net, doing banking transactions using the
Internet, selling commodities or information using the World Wide Web and so on.
E-Business in addition to encompassing E-commerce includes both front and back-office
applications that form the engine for modern E-commerce. E-business is not just about Ecommerce transactions; it's about re-defining old business models, with the aid of technology to
maximize customer value. E-Business is the overall strategy and E-commerce is an extremely
important facet of E-Business.
Why Study E-commerce?
• Technology is different and more powerful than other technologies
• Has challenged much traditional business thinking
• Has a number of unique features that help explain why we have so
much interest in e-commerce
Origins and Growth of E-commerce
•It is difficult to pinpoint just when e-commerce began. There were several pioneers to ecommerce.
•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.
•These technologies, which first appeared in the late 1970’s, allowed for the exchange of
information and the execution of electronic transactions between businesses, typically in the
form of electronic purchase orders and invoices.
•This system was later expanded during the 1980s into a PC-based remote order entry
system and was widely copied throughout the United States long before the Internet became
a commercial environment.
•The 1980s saw the development of Electronic Data Interchange (EDI).
•The term e-commerce was originally conceived to describe the process of conducting
business transactions electronically using technology from the Electronic Data Interchange
(EDI) and Electronic Funds Transfer ( EFT).
• EDI and EFT were the enabling technologies that laid the groundwork for what we now know as ecommerce.
•The Boston Computer Exchange, a marketplace for used computer equipment started in 1982, was one
of the first known examples of e-commerce.
•Throughout the 1980’s, the proliferation of credit cards, ATM machines and telephone banking was the
next step in the evolution of electronic commerce.
•The birth of companies such as eBay and Amazon (launched in 1994) really began to lead the way in ecommerce.
•1995: Beginning of e-commerce
• First sales of banner advertisements
•Both eBay and Amazon were among the first to establish prominent e-commerce brands.
•The most prominent e-commerce categories today are computers, books, office supplies, music, and a
variety of electronics. Dell.com,1997.
•Since then, e-commerce fastest growing form of commerce in the United States and the rest of the
world
The Growth of B2C
E-commerce
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The Growth of B2B
E-commerce
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Unique Features of E-commerce Technology
• Ubiquity
• Global reach
• Universal standards
• Information richness
• Interactivity
• Information density
• Personalization/customization
• Social technology
Definitions of E-Commerce
E-commerce is the use of electronic communications and digital information processing
technology in business transactions to create, transform, and redefine relationships for value
creation between or among organizations, and between organizations and individuals.
Zwass defines e-commerce as
“EC is the sharing of business information, maintaining business relationships, and the
conducting business transactions by means of telecommunications networks”
e-commerce includes not only buying and selling goods over Internet, but also various
business processes within individual organizations that support the goal.
Four different types of information technology are converging to create the discipline of
e-commerce:
- electronic messages, email and fax
- sharing a corporate digital library
- electronic document interchange utilizing EDI and electronic funds transfer
- electronic publishing to promote marketing, advertising, sales, and customer support
E-Commerce Definitions in different perspectives :
•From a communications perspective:
“e- commerce is the delivery of information, products/services or payments via
telephone”
•From Business process perspective;
“e-commerce is the application of technology to ward the automation of business
transaction and workflow”.
•From service perspective:
“ e- commerce is a tool that address the desire of firms, consumers and management
to cut service cost while improving the quality of goods and increasing the speed of
service delivery”.
•From an online perspective:
“e-commerce provides the capability of buying and selling products and information on
the internet and other online services”.
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Forces Behind E- Commerce
•Global Customer
•Global Product
•Global operations
•Global Resources
•Global Collaborations
Advantage of e – commerce
1. Facilitates the globalization of business:-e – commerce facilitates the
globalization of business by providing some economical access to distant
markets and by supporting new opportunities for firms to increase economies
by distributing their products internationally.
2. Provides increased purchasing opportunities for the buyer:-As e –
commerce increases sales opportunities for the seller, it also increases
purchasing opportunities for buyer.
3. Lowering staffing cost:- As in e – commerce, the selling & purchasing process
is outline, the amount of interaction with staff is minimized
4. Market based expansion:- An e – commerce is open to entirely new group of
users, which include employees, customers, suppliers & business partners.
Advantage of e – commerce cont…
5. Reduction of paper storage.
6. Increased customer service & loyalty:- e – commerce enables a
company to be open for business wherever a customer needs it.
7. Increase speed & accuracy:- E – commerce see the speed and accuracy
with which business can exchange information, which reduces cost on both
of E-com
sides of transactions. It is availableTypes
24 hours
a day & 7 days a week.
8. Increased profits:-With e – commerce, companies reach more & more
customers where physical commerce cannot reach, thus increasing profits.
9. Increased response times:- In e – commerce, the interaction with the
system take place in real time & therefore allows customer or bidder to
respond more Quickly & thus reduces the time of discussion between then
as in traditional commerce.
Types of E-commerce
• Classified by market relationship
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Classified by technology used
• Peer-to-Peer (P2P)
• Mobile commerce (M-commerce)
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Different types of E-Commerce
Business (organization)
Business
(organization)
Customer
(individual)
B2B
B2C
(e.g Amazon)
(e.g Amazon)
 B2b -Intel selling micro processors to
Dell
-Dell selling me alaptop
Mc Donalds selling me a Big Mac
Heinz selling ketchup to Mc Donalds
Customer
(individual)
C2B
(e.g Priceline)
Me selling my old schoolbooksto a
second handbook shop
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C2C
(e.g eBay)
Mary buying an iPod from Tom on
eBay
Me selling a car to my neighbour on
OLX
E-commerce Categories
• There are general e-commerce categories:
Business to Consumer (or B2C) e-commerce
Business to Business (or B2B) e-commerce (sometimes called e-procurement)
Business processes that support buying and selling activities
Consumer-to-consumer (or C2C) e-commerce
Peer-to-Peer (P2P) e-commerce
Business-to-government (or B2G) e-commerce
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B2C e-commerce
Description
• Businesses sell products or services to individual
customers (consumers)
• commerce between companies and consumers
• involves customers gathering information; purchasing
physical goods or information goods
• online retailing companies such as Amazon.com,
Drugstore.com, Beyond.com, Flipkart.com,
Lenskart.com
Example :Walmart.com sells merchandise to consumers through its
Web site
Web site : www.walmart.com
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B2B e-commerce
• Description
• Businesses sell products or services to other businesses
• (1) open to the entire public or (2) limited to a group of businesses who
have been part of the specific group
• Transaction cost reduced through reduction in search costs
• costs of processing transactions (e.g. invoices, purchase orders and
payment schemes)
• cost in trading processes
• eliminating intermediaries and distributors
• increase in price transparency
• creates supply-side cost-based economies of scale
Example:Grainger.com sells industrial supplies to large and small businesses
through its Web site
Web site: www.grainger.com
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Business Processes that Support Buy/Sell Activities
• Description
• Businesses and other organisations maintain and use information to identify
and evaluate customers, suppliers and employees (and to support buying,
selling hiring, planning and other activities). More and more of this
information is being shared
• Example
• Dell Computer uses secure internet connections to share current sales and
forecasts information with suppliers who use it to plan their production.
• As a result they deliver the right quantities of components at the right time
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C2C e-commerce
Description
• Participants in an online marketplace can buy and sell goods from
each other
• commerce between private individuals or consumers
• online auctions
• auctions facilitated at a portal, such as eBay, which allows online
real-time bidding on items being sold in the Web;
• There is little information on the relative size of global C2C ecommerce. However, C2C figures of popular C2C sites such as eBay
and Napster indicate that this market is quite large. These sites
produce millions of dollars in sales every day
Example: Consumers and businesses trade with each other on
eBay.com. Web site: www.ebay.com
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Peer-to-Peer (P2P) E-commerce
• Uses peer-to-peer technology, which enables Internet users to share files and
computer resources without having to go through a central Web server
• Napster most well-known example until put out of business for copyright
infringement
• Today, Kazaa is the leading P2P software network, although also under attack for
copyright infringement
• peer-to-peer systems, such as the Napster model (a protocol for
sharing files between users used by chat forums similar to IRC) and
other file exchange and later money exchange models; and
• classified ads at portal sites such as Excite Classifieds and eWanted
(an inter- active, online marketplace where buyers and sellers can
negotiate and which features “Buyer Leads & Want Ads”).
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M-Commerce
• buying and selling of goods and services through wireless technology
• handheld devices such as cellular telephones and personal digital assistants (PDAs)
are used
• m-commerce will become the choice for digital commerce transactions
• bill payment and account reviews can all be conducted from the handheld devices
• consumers are given the ability to place and pay for orders on-the-fly
• delivery of entertainment, financial news, sports figures and traffic updates to a
single mobile
• different server than that accessed by the regular online users
• allow users to book and cancel rail, flight, movie tickets through their mobile devices
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M-Commerce..contd..
• critical considerations for this strategy is the software solution that the
organization uses
• ‘all in one’ device strategy vs individual device based technology
• banks can use cost effective virtual distribution channel
• Financial inclusion
• Greater reach across the population
• convenience without compromising security
• benefits are in terms of usage, reach, cost of installation, efforts and money
for maintenance, upgradeability and sustainability
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M commerce..contd..
• address the needs of all the players (including regulatory
requirements)
• solution is adopted that can be deployed fast, and can be
scalable
• care of disparate systems, customized solutions and
maintenance cost
• a platform that easily integrates new services and allows banks
to be flexible
• allowing the bank to reap benefits from the full potential of
the mobile commerce
• M commerce strategy requires a clear vision and objectives
and not ‘one size fits all’ approach
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B2G e-commerce
• Description
• Business sell goods or services to governments and government agencies
• Example
• Cal-Buy portal for businesses that want to sell online to the State of
California
• Web site
• www.pd.dgs.ca.gov/calbuy/default.htm
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E-commerce Categories Example
• You are a computer manufacturing company who performs the
following activities on the Internet:
•
•
•
•
•
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Sells computers to individuals (B2C)
Purchases parts (e.g. hard drives, power supplies etc.) from a supplier (B2B)
Hires staff, manage customer accounts, advertise, etc. (Business processes)
Sells computers to the Government to be used in schools (B2G)
On eBay.com individuals buy and sell this brand of computers (C2C)
Relative Sizes of E-commerce Categories
Business processes
that support buy/sell
activities
B2B e-commerce
B2C e-commerce
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Websites that are engaged in B2B ecommerce
 commodityindia.com
 Indiaconstruction.com
 clickforsteel.com
 dell and sony
 etc.
Websites that are engaged in ( B2 C) e-commerce
 Amazon.com,
 llbean.com,
 CompUSA.com,
 Travelocity.doc,
 hotels.com,
 chow.net,
 rediff.com,
 jaldi.com,
 indiatimes.com,
 indiaballs.com,schwab.com
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Websites that are engaged in ( C2B) e-commerce
 razerfinish.com,
 ReverseAuction.com,
 priceline.com,
 Mercata.com,
 voxcap.com
Websites that are engaged in ( C2C) e-commerce
 baazee.com
 ICQ.com
 MSN.com
 ek.com.au
 careeron.com.au
 bidorbuy.com
 OLX.com
 Quiker.com
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What’s the Commerce Value Chain?
• Generally:
• Value added during the process of creating and delivering a product or
service
• Commonly used to describe manufacturing of things
• Consider Value-Added Tax (VAT) based systems
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Value Chains (in general)
• Way of organizing activities a business unit does to design, …,
support products or services
• At each stage, how can things be improved?
• And can the internet help?
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Chain for Internet Systems
•Four parts: Attract; Interact; Act; React
• Attract
• Get and keep customer interest
• Activities: advertising, marketing
• Interact
• Turn interest into orders
• Content/product driven: web pages, info, query results, etc.
• Activities: Filling form, detals
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Chain for Internet Systems..
• Act
• Process and manage orders
• Activities:
• Order processing -- shopping carts, taxation, shipping charges)
• Payment processing -- account, credit cards, third-party financial companies, etc.
• Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital
goods (file, software, license)
• React
• Service customers, order tracking, returns, warranties, rebates, help services
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Another View
• Of course it’s not linear
• Not necessarily even sequential now
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Attract
Interact
React
Act
Industry Value Chains
• Set of activities performed by suppliers, manufacturers,
transporters, distributors, and retailers that transform raw
inputs into final products and services
• Internet reduces cost of information and other transactional
costs
• Leads to greater operational efficiencies, lowering cost, prices,
adding value for customers
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Slide 2-43
E-commerce and Industry Value Chains
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Firm Value Chains
• Activities that a firm engages in to create final products from raw inputs
• Each step adds value
• Effect of Internet:
• Increases operational efficiency
• Enables product differentiation
• Enables precise coordination of steps in chain
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Slide 2-45
E-commerce and Firm Value Chains
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Slide 2-46
Firm Value Webs
• Networked business ecosystem
• Uses Internet technology to coordinate the value chains of
business partners
• Within an industry
• Within a group of firms
• Coordinates a firm’s suppliers with its own production needs
using an Internet-based supply chain management system
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Slide 2-47
Internet-Enabled Value Web
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The value chain.
Inbound
logistics
Production
processes
Outbound
logistics
Sales and
marketing
Customer
service
Information technology infrastructure
Upstream
Downstream
The key to intra-business e-commerce is improving value
chain efficiency.
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Inbound logistics
Purchase components
Purchase raw materials
Production
R&D
Engineering/product design
Order components
Order raw materials
Manufacture products
Figure 6.4 The value
chain for a
personal computer
manufacturer.
Outbound logistics
Inventory management
Order entry
Order fulfillment
Information technology infrastructure
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Sales &
marketing
Customer
service
Inbound
logistics
Production
R&D
Engineering/product design
Order components
Order raw materials
Manufacture products
Design/build/maintain production line
Manufacture components
Configure/setup production runs
Deliver materials to production line
Manufacture subassemblies
Configure/setup production runs
Deliver components to production line
Assemble final product
Configure/setup production runs
Deliver subassemblies to production line
Outbound
logistics
Information technology infrastructure
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Figure 6.5 Each value
chain process
consists of subprocesses.
Sales &
marketing
Customer
service
Efficiency and Effectiveness
• Objective: reduce operating costs
• Efficiency gains
• Within individual processes
• Across the value chain
• Efficiency-based competitive advantage
• Hidden from public view
• Relatively easy to sustain
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Factors affecting e-commerce
• Major forces fuelling e-commerce
•
•
•
•
•
•
•
•
•
economic forces,
marketing and customer interaction forces, and
Technology
communications costs,
low-cost technological infrastructure,
speedier and more economic electronic transactions with suppliers,
lower global information sharing and advertising costs, and
cheaper customer service cost
networking of corporations, suppliers, customers/clients, and independent
contractors into one community
• Networking of the various departments within a corporation, and of business
operations and processes
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Factors affecting e-commerce..contd..
• critical business information to be stored in a digital form
• retrieved instantly
• transmitted electronically
• connecting businesses (small, medium or large) to trading partners
• sourcing out supplies, buying and selling goods and services online in
real time
• center for management of content and the processing of business
transactions
• support services such as financial clearance and information services
• regional, vertical and industry-specific interoperable B2B e-markets
across the globe
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Factors affecting e-commerce..contd..
• provide their target consumers with more detailed
product and service information using e-commerce
• logistical and technological infrastructure to other
retailers
• expertise in credit analysis
• tracking orders
• product comparison systems
• digitizing content, compression and the promotion of
open systems technology
• convergence of telephone services, television
broadcast, cable television, and Internet access
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E-commerce components
• A corporate Web site with e-commerce capabilities
• A corporate intranet so that orders are processed in an
efficient manner
• IT-literate employees to manage the information flows and
maintain the e-commerce system
• Banking institutions that offer transaction clearing services
• National and international logistics
• cost-efficient transport of small and big packages
• critical mass of the population with access to the Internet and
disposable income
• Firms/Businesses with order fulfilling capability
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E-commerce components..contd..
• A legal framework governing e-commerce transactions
• Legal institutions that would enforce the legal
framework
• A robust and reliable Internet infrastructure;
• A pricing structure that doesn’t penalize consumers for
spending time on and buying goods over the Internet
• global collection of networks connected to share
information
• common set of protocols
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E-commerce components
• Important component of e-commerce based firm is
the website
• website should have technology that will make it easier for
its customers to navigate
• site should offer every single feature necessary
• fully-functional and sustainable ecommerce web site
• stable server for hosting
• provide customer specific services
• technology partners who constantly upgrade the features
as well as technology
• help business partners such as logistics partners and
suppliers to share and exchange business data
• Alternatively SaaS can be used for running these
services (reduce cost)
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Business transformation through e-commerce
• Linking stakeholders through e-commerce
• Supply chain management integration
• The product flow
• The information flow
• The finances flow
• Shared data in diverse database systems, data warehouse
• Sharing data “upstream” (with a company’s suppliers) and
“downstream” (with a company’s clients)
• shared digital business infrastructure
• including integrated value chains
• e-business management model
• business policies consistent with e-commerce laws,
teleworking/virtual work, distance learning, incentive schemes
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E-COMMERCE APPLICATIONS: ISSUES AND PROSPECTS
• e-banking, e-tailing and online publishing/online
retailing
• telephone banking, credit cards, ATMs
• E-commerce in developing countries
•
•
•
•
Cash-on-delivery
Bank payments
electronic payment system
Security issues in e-payment
• Factors the growth of e-banking in developing
countries
•
•
•
•
access to the Internet
Inclination for banking over the internet
access to high-quality products
Security over internet
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Future trend in e-banking in third world countries
• Lead users
• Followers
• Rejecters
• Interest in conducting complex activities over the Internet
• E-tailing (or electronic retailing)
• selling of retail goods on the Internet
• 1997 is considered the initial year
• Lower customer acquisition costs
• Online publishing
• newsletters, online magazines and databases, brochures
and other promotional materials, books
• Internet as a medium
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Future trend in e-banking in third world
countries..contd..
• Online publishing
• Advantages
•
•
•
•
low-cost universal access
independence of time and place
ease of distribution
effective marketing outreach medium
• Issues
•
•
•
•
•
•
what kind of business model would result in the most revenue
Pricing, mark up
fairness of charges to advertisers
inadequate copyright protection
encryption for paid subscribers
unsolicited commercial e-mail or “spam mail”
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•Electronic commerce or "e-Commerce" E-commerce covers online
processes that touch customers, suppliers and external partners, including
sales, marketing, order taking, delivery, customer service, purchasing of raw
materials and supplies for production. More sophisticated system such as
flight and hotel reservation system.
• e-Commerce breaks into two components:
•Online Shopping - the scope of information and activities that provides the
customer with the information they need to conduct business with you and
make an informed buying decision.
•Online Purchasing - the technology infrastructure for the exchange of data
and the purchase of a product over the Internet. Online purchasing is a
metaphor used in business-to- business e-Commerce for providing
customers with an online method of placing an order, submitting a purchase
order, or requesting a quotation.
e-Business:
E-Business is a super-set of e-Commerce.
E-business includes e-commerce but also covers internal processes such as
production, inventory management, product development, risk management,
finance, and human resources.
E-business includes electronic mechanism to distribute information not directly
related to buying and selling of goods.
Examples: Product specifications, customer testimonials, and product reviews.
Purchasing activities on your site, e.g., order forms, shopping carts, and credit
card processing.
Customers can’t interact directly with the firm. (territory barrier)
e-commerce and e-business
• E-commerce: information and communications
technology (ICT) is used in inter-business or interorganizational transactions
• E-business: ICT is used to enhance one’s business
• Three primary processes are enhanced in e-business
• 1. Production processes, which include procurement, ordering and
replenishment of stocks; processing of payments; electronic links with
suppliers; and production control processes, among others;
• 2. Customer-focused processes, which include promotional and marketing
efforts, selling over the Internet, processing of customers’ purchase orders and
payments, and customer support, among others; and
• 3. Internal management processes, which include employee services, training,
internal information-sharing, video-conferencing, and recruiting
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Internet economy
• includes e-commerce and e-business
• pertains to all economic activities using electronic
networks
• It is made up of three major segments
•
•
•
•
physical (ICT) infrastructure,
business infrastructure, and
Commerce
Intermediaries
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