E -business and E -commerce

By Ismael Kato
[email protected]
Phone: +256776510916

Makerere University Business School

Module 1
Learning Areas

1.0 Introduction to E-business

 Define e-business and e-Commerce
 Distinguish e-comm and e-buz
 A brief history of Internet Business
 Types of e-commerce
 Impact of e-commerce
 E -Commerce & E -Business
 E-commerce describes the process of buying, selling,
. transferring, or exchanging products, services, and/or
information via computer networks, including the Internet.

 E-business refers to a broader definition of e-commerce,

not just the buying and selling of goods and services, but
also servicing customers, collaborating with business
partners, conducting e-learning, and processing electronic
transactions
E -commerce
 Covers outward-facing processes that touch
customers, suppliers and external partners,
including;
 sales,
 marketing,
 order taking,
 delivery,
 customer service,
 purchasing of raw materials and
 supplies procurement
E -commerce
 Formulating commercial transactions at a site remote
from the trading partner (online) and then using electronic
communications to execute that transaction.

 Electronic commerce encompasses the entire

online process of developing, marketing, selling,
delivering, servicing, and paying for products and
services.
E -commerce and E -business
 Businesses integrate their Web-based e-
commerce systems with their e-business
systems for supply chain management,
customer relationship management, and
online transaction processing, as well as to
their traditional or legacy, computer-based
accounting and business information
systems.
E -Commerce Integration
 Vertical integration of front-end Web site applications
to company’s existing transaction systems;

 Cross-business integration of a company with Web

sites of customers, suppliers or intermediaries;

 Integration of technology with reasonably redesigned

processes for order handling, purchasing or customer
service.
E -business Integration
 E-commerce plus internal processes such as production,
inventory management, product development, risk
management, finance, knowledge management and
human resources.

 E-business strategy is more complex, more focused on

internal processes.
Aim of E -buz Integration
 Aimed at cost savings,
 Improvements in efficiency,
 Productivity.
4 directions of integration:
 Vertically, between web front- and back-end systems;

 Laterally, between a company and its customers, business

partners, suppliers or intermediaries;

 Horizontally, among e-commerce, enterprise resource

planning (ERP), customer relationship management (CRM),
knowledge management and supply-chain management
systems; and

 Downward through the enterprise, for integration of new

technologies with redesigned business processes
E -Business – Transaction Medium
Most e-busimess is done over the Internet. But EC can also be
conducted on private networks, such as value-added networks
(VANs, networks that add communication services to existing common
carriers), on local area networks (LANs) or wide area networks
(WANs)
The Internet

• A global network of computer networks

– It had its origins as a military project in 1969
(DAPRA);
– It was adopted by the research and academic
community;
– Has continuously become an engine of business and
commerce in both developed and emerging economies
• The web is a big marketplace, and tens of thousands of
people have put hundreds of thousands of hours into
making it a ‘mobile shopping mall’.
Internet Business: Brief History

 1970s: Electronic Funds Transfer (EFT)

 Used by the banking industry to exchange
account information over secured networks

 Late 1970s and early 1980s: Electronic Data Interchange

(EDI) for e-commerce within companies
 Used by businesses to transmit structured
data from one business to another

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Internet age systems
 1955–1974; The Electronic Data Processing
(EDP) era
 1975–1994; The Management Information
Systems (MIS) era
 1995–Todate (The Internet era)
 EDP – essentially batch – controlled by the DP
professionals – used at the ‘organisational level’
 MIS – utilises transaction processing (TP) and
databases – enabled access to business data
throughout the organisation
 The Internet era systems – enables BtoB and
BtoC systems
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E -Business – Transaction Types

 Business-to-business (B2B)

 Collaborative Commerce (C-Commerce)

 Business-to-Consumers (B2C)

 Consumers-to-Businesses (C2B)

 Consumer-to-Consumer (C2C)

 Intra-business (Intra-organizational) Commerce

 Government-to-Citizens (G2C)

 Mobile Commerce (M-Commerce)

 Why should organisations use the Internet in
Business?

 Access to a global market;

 Potential for widening consumer choice;

 Ease with which a business can interact with and solve

customer problems

 Potential cost savings;

 Transaction ease and convenience

 Opportunities for close alliances with stakeholders

(suppliers, clients,....)
Business-To-Consumer – B2C
 Also, Electronic retailing (e-tailing); is the direct
sale of products to customers through electronic
storefronts or electronic malls, usually designed
around an electronic catalogue format and/or
auctions.
 Electronic Storefronts. Hundreds of thousands of single
storefronts can be found on the Internet, each with its own
Internet name and EC portal, such as Home Depot, The
Sharper Image, or Wal-Mart.
 Electronic mall, also known as a cybermall or e-mall, is a
collection of individual shops under one Internet address.
E -tailing Issues – B2C

 The following are the major issues faced by e-tailers

that may be handled and supported by IT tools:
 Resolving channel conflict
 Resolving conflicts within click-and-mortar
organizations
 Organizing order fulfilment and logistics
 Determining viability and risk of online e-tailers
 Identifying appropriate revenue models
Service I ndustries – B2C
Delivery of services (buying an airline ticket or stocks) can
be done 100 percent electronically, with
considerable cost reduction potential. Therefore,
online services is growing very rapidly. E.g;
 Electronic banking
 International and Multiple-Currency Banking
 Online Securities Trading
 Online Job Market
 Travel Services
 Real Estate transactions
Qn: Describe the different online services provided on
the Ugandan market. (10 marks)
 Key Questions for E -tailers
 Does the Internet enable a company to significantly enhance
its value proposition to customers?
 Does Internet suit the nature of Company’s products?
 Can the company brand attract customers to the web site?
 What value-added services and techniques can be employed
to encourage customer ‘lock-in’?
 What is the relationship between online and offline business
activities?
 Where do we obtain the necessary online marketing and web
site capabilities?
E-Business & Web Design
Module 2
Knowledge Areas
 Developing a Web Store
 Managing a Web Store
 EDI: A closer look
 Comparison with EFT
A Web Store
 An online stall for a company’s products
 Its the primary focus of such e-tailers
 Are websites that become high-priority
destinations for consumers
 Buyers repeatedly choose to go there to buy
products and services
 Have to be attractive, secure, simple to use and
convenient for the buyers
Developing a Web Store
 Involves launching retail store on the Internet
 Building an e-commerce website.
 Use simple website design software tools and
predesigned templates
 Larger companies can use their own software
developers
 A firm can hire an outside website development
contractor to build a custom-designed e-commerce site
 Market your site in a variety of ways that attract visitors
to your site
 Transform them into loyal Web customers.
Serving Your Customers on a Web store
 Creating incentives to encourage visitors to register
 Develop Web cookie files to automatically identify returning
visitors
 Contracting with website tracking companies for software to
automatically record and;
 Analyze details of the website behaviour and preferences of
Web shoppers.
 Ensure that your website has the look and feel of an
attractive, friendly, and efficient Web store.
 Include a few graphics to enable quick connections
 Stay in touch with changing market needs
 [email protected]
Managing your Web Store
 Manage as both a business and a website
 Use management reports to record and analyze Web store
traffic, inventory, and sales results.
 Build customer lists for e-mail and Web page promotions,
 Provide customer relationship management features to help
retain Web customers.
 Use software links to download inventory and sales data
into accounting packages.
 Twenty-four hours a day and seven day a week operation all
year long.
Ensure Secure Transactions
 Password and encryption protection of Web
store transactions and customer records
 Monitor web activity to prevent access by
phising sites and suspicious intruders
 Employ firewalls and security monitors to repel
hacker attacks and other security threats.
 Provide clients twenty four hour tech support to
help them with technical and security problems.
EDI transactions
EDI trade exchanges

Customer Supplier
EDI
order

delivery note

invoice

payment

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EDI definition
 Summarised as:

A ‘Paperless Trading’

 Defined as:

‘The transfer of structured data,

by agreed message standards,
from one computer system to another,
by electronic means.’
International Data Exchange Association (IDEA)

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EDI definition
Structured data
 Standardised Document
 e.g. Order/Invoice
 Codes
 e.g. Product Code/Customer Code
 (preferably using a common standard
e.g. ANA/UPC)
 Values
 e.g. Quantity Ordered, Prices, Rates

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EDI definition
Agreed message standards
 Sectorial standards
e.g. The Odette File Transfer Protocol (OFTP) used for EDI
(Electronic Data Interchange) between two communications business
partners. It comes from the Odette-Organisation (Organization for data
exchange by Tele-transmission in Europe).

 National standards, e.g. ANSI X12, Tradercoms

 International standards
i.e. EDIFACT- United Nations/Electronic Data Interchange For
Administration, Commerce and Transport (UN/EDIFACT) is the
international EDI standard developed under the United Nations.
 ISO- International Standards Organisation
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EDI definition
From one computer system to another
 EDI messages are (properly) sent:

 From one computer’s application,

e.g. the customer’s Purchasing System.

 To a second computer’s application,

e.g. the supplier's Order Processing System.

 There is no need read or re-key the data into a computer

system.

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EDI definition
By electronic means

 Transmission by:

 data communications network (The Internet)

 or possibly physical transfer of:
 magnetic tape or
 Blu Ray, DVD, Memory Card......

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Benefits of EDI
1. Shortened ordering time
a posted order …

print  Customer
envelope 
post room 
 postal service
 supplier
 post room
key-into order processing system Supplier

… say 7 days between two large organisations

an EDI order …

Customer  EDI transmission  Supplier

… one day, one hour, as quick as you like

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Benefits of EDI
2. Cutting costs
 Stationery
 Postage
 Staff:
 order entry
 invoice matching
 payment checking

 the principle saving is staff costs

– staff savings can be very significant

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Benefits of EDI
3. Elimination of errors
 no keying errors
 (but no manual check for silly mistakes)

4. Fast response
 immediate acknowledgement and status report
 (available but not always implemented)

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Benefits of EDI
5. Accurate invoicing
 automatic matching to orders
 elimination of queries and delays

6. EDI payments
 rapid settlement
 automatic matching to invoices

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Benefits of EDI
7. Reduced stock holding
 Just-in-time for manufacture
 Quick response supply for retail (agile logistics)
 Less (or no) cost of stock in hand
 Less (or no) warehousing costs
 Elimination of double handling of goods
 Less damage / deterioration of stock

8. Accelerated Cash flow

 quicker settlement = improved cash flow

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Benefits of EDI
9. Business opportunities
 Access to Customers that require EDI, wider markets,
greater sales

10. Customer lock-in (retention)

 Switching costs – setting-up an EDI system with a new
supplier is costly for an existing customer

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EDI and Internet e-Commerce
 EDI and Internet e-Commerce complement each
other:
 Internet e-Commerce provides for searching for
products and for once-off purchases.
 EDI is an application to application interface for
repeated and standardised transactions.

EDI

Internet
e-Commerce

Materials Customer
Supplier Product Manufacturer /
Supplier Retailer
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Task????????????????????

1. List the transaction types that take place between trading

partners that are suitable for EDI implementation.
Suggest some communications that would not be suitable
for this technology.

3. List the four elements of an EDI system

4. Identify the advantages of EDI are in comparison to paper
orders
5. How is EDI and EFT related. How do the two contribute
to e-commerce and e-business?

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