E-Commerce Applications

Development

Week 2
 Traditional commerce vs
Electronic commerce

 Some business processes use traditional commerce activities

very effectively and technology can not improve them.

For example: customers might be reluctant to buy items that

have an important element of condition such as high fashion
clothing, one can not feel the fabric online and there are many
colour variations that are hard to distinguish on computers.
Similarly in case of purchasing expensive jewellery, which
requires close inspection.
 Traditional commerce vs
Electronic commerce

 Role of Merchandising:
Retail merchants have years of traditional commerce
experience in creating store environments that help convince
customers to buy. This combination of store design, layout and
product display knowledge is called merchandising.
Many salespeople have developed skills that allow them to
identify customer needs and find products or services that meet
those needs.
 Traditional commerce vs
Electronic commerce

The skills of merchandising and personal selling can be

difficult to practice remotely.
However, companies must be able to transfer their
merchandising skills to the Web for their websites to
be successful.
Some products are easier to sell on internet than others because
the merchandising skills related to those products are easier to
transfer to the web.
 Traditional commerce vs
Electronic commerce

 Product suitability for traditional or electronic commerce:

Some products such as books or DVDs are good candidates for
electronic commerce because customers do not need to
experience the physical characteristics of the particular item
before they buy it.
Customers are usually willing to order a title without examining
the specific copy they will receive.

 Selling of Commodity items:

One business process that is especially well suited to electronic
commerce is the selling of commodity items. A commodity item
is a product or service that is hard to distinguish from the same
products or services provided by other sellers; its features have
become standardized and well known.
 Traditional commerce vs
Electronic commerce

The only difference a buyer perceives when shopping for

commodity item is its price. Gasoline, office supplies, soap, and
computers are all examples of commodity products or services,
as are the books, e-books and DVDs sold by Amazon.com.

Not all commodity items are good candidates for electronic

commerce. They must have an attractive shipping profile to be
sold online. A product’s shipping profile is the collection of
attributes that affect how easily that product can be packaged
and delivered.
Products that are consistent in size, shape, and weight can
make warehousing and shipping much simpler and less costly.
 Traditional commerce vs
Electronic commerce

Commodity items that have an attractive shipping profile include

books, clothing, shoes, kitchen accessories, and many other
small household items.

A product that has a strong brand reputation (such as a Sony

television) is easier to sell on the Web than an unbranded item,
because the brand’s reputation reduces the buyer’s concerns about
quality when buying that item sight unseen.

Expensive jewelry has a high value-to-weight ratio, but many

people are reluctant to buy it without examining it in person Other
items that are well suited to electronic commerce are those that
appeal to small, but geographically dispersed, groups of customers.
Collectible comic books are an example of this kind of product
 Traditional commerce vs
Electronic commerce

Traditional commerce, rather than electronic commerce, can be

a better way to sell items that rely on personal selling skills. For
example, sales of commercial real estate involve large amounts
of money and a high degree of interpersonal trust. Even if
commercial real estate is listed online, it will usually require
personal contact to negotiate the deal.

 Combination of traditional and electronic commerce:

This strategy works best when the business process
includes both commodity and personal inspection elements. For
example, most people find information on the Web about new
and used automobiles and do considerable research on specific
makes and models before they visit a dealership to buy.
Traditional commerce vs
Electronic commerce
 Primary activities in Ecommerce

Internet technologies can be used to improve a wide range of

business processes. One way to focus on specific business
processes as candidates for Ecommerce is to break the business
down into a series of value-adding activities that combine to
generate profits and meet other goals of the firm.

• Business unit value chains:

A value chain is a way of organizing the activities that
each strategic business unit undertakes to design, produce,
promote, market, deliver, and support the products or services it
sells. These value chain activities will occur in some form in any
strategic business unit.
Primary activities in Ecommerce
 Primary activities in Ecommerce
Each strategic business unit conducts the following primary
activities:
 Design: activities that take a product from concept to
manufacturing, including concept research, engineering, and test
marketing.
 Identify customers: activities that help the firm find new
customers and new ways to serve existing customers, including
market research and customer satisfaction surveys.
 Purchase materials and supplies: procurement activities,
including vendor selection, vendor qualification, negotiating long
term supply contracts, and monitoring quality and timeliness of
delivery.
 Manufacture product or create service: activities that transform
materials and labor into finished products, including fabricating,
assembling, finishing, testing, and packaging.
 Primary activities in Ecommerce

 Market and sell: activities that give buyers a way to

purchase and that provide inducements for them to do so,
including advertising, promoting, managing salespeople,
pricing, and identifying and monitoring sales and distribution
channels.
 Deliver: activities that store, distribute, and ship the final product
or provide the service, including warehousing, handling materials,
consolidating freight, selecting shippers, and monitoring
timeliness of delivery.
 Provide after-sales service and support: activities that promote a
continuing relationship with the customer, including installing,
testing, maintaining, repairing, fulfilling warranties, and replacing
parts.
Supporting activities in Ecommerce

There are some supporting activities that assist primary activities

in proper functioning:
 Finance and administration activities: providing the firm’s basic
infrastructure, including accounting, paying bills, borrowing funds,
reporting to government regulators, and ensuring compliance with
relevant laws.
 Human resource activities: coordinating the management of
employees, including recruiting, hiring, training, compensation,
and managing benefits.
 Technology development activities: improving the product or
service that the firm is selling and that helps improve the
business processes in every primary activity, including basic
research, applied research and development, process
improvement studies, and field tests of maintenance procedures.
Supporting activities in Ecommerce

The value chain concept is a useful way to think about business

strategy in general. When firms are considering electronic
commerce, the value chain can be an excellent way to organize
the examination of business processes within their business units
and in other parts of the product’s life cycle.

Using the value chain reinforces the idea that electronic

commerce should be a business solution, not a technology
implemented for its own sake.
 Internet and World Wide Web

A computer network is any technology that allows people to

connect computers to each other. Networks of computers and the
Internet that connects them to each other form the basic
technological structure that underlies virtually all electronic
commerce.

The part of the Internet known as the World Wide Web (WWW), or,
more simply, the Web, is a subset of the computers on the Internet
that are connected to one another in a specific way that makes them
and their contents easily accessible to each other.
The most important thing about the Web is that it includes an easy-
to-use standard interface. This interface makes it possible for people
who are not computer experts to use the Web to access a variety of
Internet resources.
 Internet and World Wide Web
• Internet of Things:
The most common perception of the Internet is that it connects
computers to one another and, by doing so, connects the users of
those computers to each other. In recent years, devices other than
computers have been connected to the Internet, such as mobile phones
and tablet devices.
The subset of Internet that includes computers and sensors
connected to each other for communication and automatic transaction
processing is often called the Internet of Things.

These devices such as optical scanners, sensors that detect changes

in temperature, light, moisture, or the existence of vibration or
movement, can be connected to the Internet and used by computers to
manage automatically environmental conditions (such as heating and
cooling or lighting levels) or security procedures. These interconnected
devices can be located in houses, offices, factories and so on.
 Internet and World Wide Web

• Computers can also be connected to each other using the

Internet to conduct business transactions without human
intervention.
For example, a computer that monitors inventory levels
using sensors connected to it over the Internet can use its
Internet connection to place inventory orders with a vendor’s
computer automatically.
 Internet and World Wide Web

• Web Page Request and Delivery:

The Web is software that runs on computers that are connected to
each other through the Internet. Web client computers run
software called Web client software or Web browser software.
Widely used Web browser software includes Google Chrome,
Microsoft Internet Explorer, Apple Safari, and Mozilla Firefox.

Web browser software sends requests for Web page files to other
computers, which are called Web servers. A Web server computer
runs software called Web server software.
Web server software receives requests from many different Web
clients and responds by sending files back to those Web client
computers. Each Web client computer’s Web client software renders
those files into a Web page.
 Internet and World Wide Web

• Development of Hypertext:
The set of rules for delivering Web page files over the Internet is in a
protocol called the Hypertext Transfer Protocol (HTTP), which was
developed by Tim Berners-Lee in 1991.
A hypertext server is a computer that stores files written in Hypertext
Markup Language (HTML), the language used for the creation of Web
pages.
The hypertext server is connected through the Internet to other
computers that can connect to the hypertext server and read
those HTML files.HTML includes tags that indicate which text is
part of a header element, which text is part of a paragraph
element. One important type of tag is the hypertext link tag.
A hypertext link, or hyperlink, points to another location in the
same or another HTML document.
 Internet and World Wide Web

• World Wide Web:

Tim Berners-Lee called his system of hyperlinked HTML documents the
World Wide Web.
• Hypertext Markup Language:
Web pages can include many elements, such as graphics,
photographs,
sound clips, and even small programs that run in the Web browser.
Each of these elements is stored on the Web server as a separate file.
The most important parts of a Web page, however, are the structure of
the page and the text that makes up the main part of the page.
The page structure and text are stored in a text file that is formatted,
or
marked up, using a text markup language.
A text markup language specifies a set of tags that are inserted
into the text. These markup tags, or tags, provide formatting
instructions that Web client software can understand.