E-COMMERCE

E-Commerce

• Electronic Commerce (EC) is where business transactions take place via telecommunications
networks, especially the Internet.

• Electronic commerce describes the buying and selling of products, services, and information via
computer networks including the Internet.
 E-Commerce
• Since transactions go through the internet and the Web, the terms I-commerce (Internet
commerce), icommerce and even Webcommerce have been suggested but are now very
rarely used

• Other terms that are used for online retail selling include e-tailing, virtual-stores or cyber
stores.

• A collection of these virtual stores is sometimes gathered into a ‘virtual mall’ or

‘cybermall’.
 ELECTRONIC-BUSINESS

• E-business is the conduct of business on the Internet, not only buying and selling but also
servicing customers and collaborating with business partners.

• E-business is the transformation of key business processes through the use of Internet
technologies. An e-business is a company that can adapt to constant and continual change.
 Brief
History
Of
E-Commerce
• 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 data from one business to
another
• 1990s: the World Wide Web on the Internet provided easy-
to-use technology for information publishing and
dissemination
• Cheaper to do business (economies of scale)
• Enable diverse business activities (economies of scope)
The Process
Of
E-Commerce
• A consumer uses Web browser to connect to the home page
of a merchant's Web site on the Internet.

• The consumer browses the catalog of products featured on

the site and selects items to purchase. The selected items are
placed in the electronic equivalent of a shopping cart or
electronic basket

• When the consumer is ready to complete the purchase of

selected items, she provides a bill-to and ship-to address for
purchase and delivery
• When the merchant's Web server receives this information, it
computes the total cost of the order--including tax, shipping,
and handling charges--and then displays the total to the
customer.

• The customer can now provide payment information, such as

a credit card number, and then submit the order.
• When the credit card number is validated and the order is
completed at the Commerce Server site, the merchant's site
displays a receipt confirming the customer's purchase.

• The Commerce Server site then forwards the order to a

Processing Network for payment processing and fulfillment.
DISTINCTION BETWEEN E-COMMERCE AND E-BUSINESS
• Electronic commerce can be broadly defined as the exchange of merchandise
(whether tangible or intangible) on a large scale sometimes between different
countries using an electronic medium – namely the Internet

• E-business can broadly be defined as the processes or areas involved in the

running and operation of an organisation that are electronic or digital in nature.
• These include direct business activities such as marketing, sales and human
resource management but also indirect activities such as business process re-
engineering and change management
 THE KEY DRIVERS

• It is important to identify the key drivers of e-commerce to allow a comparison between different
countries
• Technological factors – The degree of advancement of the telecommunications infrastructure which
provides access to the new technology for business and consumers.
• Political factors – including the role of government in creating government legislation,
initiatives and funding to support the use and development of e-commerce and information technology
• Social factors – incorporating the level and advancement in IT education and training
which will enable both potential buyers and the workforce to understand and use the new
technology
• Economic factors – including the general wealth and commercial health of the nation and
the elements that contribute to it.
LEVELS OF ELECTRONIC-COMMERCE
• E-Commerce is carried out primarily in five levels, and the main aspect of ecommerce is a merchant
selling products or service to the consumers

• The following are some popular ecommerce models used by companies engaged in e-commerce

1. Business to Business E-commerce (B2B)

2. Business to Consumers E-commerce (B2C)
3. Consumer-to-Consumer E-commerce (C2C)
4. Consumer-to-Business E-commerce (C2B)
5. Business to Employees E-commerce (B2E)
LEVELS OF ELECTRONIC-COMMERCE

• E-Commerce is carried out primarily in five levels, and the main aspect of ecommerce is a merchant selling
products or service to the consumers

• The following are some popular ecommerce models used by companies engaged in e-commerce

i. Business to Business E-commerce (B2B)

• Transactions between businesses conducted electronically over the

Internet, extranets, intranets, or private networks
• B2B is defined as the sales of goods or services between businesses via online
channels
LEVELS OF ELECTRONIC-COMMERCE

ii. Business to Consumers E-commerce (B2C)

• B2C is the most popular form of e-commerce.
• B2C (business-to-consumer) e-commerce is the online sale of products or services of a business to
consumers.
• B2C provides direct trade between the company and consumers.
 Difference between B2B and B2C E-Commerce
• B2C customers tend to make smaller orders and quicker buying decisions,
while B2B customers are willing to spend weeks researching vendors before
making a purchase.
• B2B businesses form long-lasting relationships with customers, and their
customers are less likely to impulse buy from the first company that sparks
their interest.

• In B2C e-commerce, the buying process is often driven by emotions: B2C

customers want products that improve their lives and make them happy.
LEVELS OF ELECTRONIC-COMMERCE

iii. Consumer-to-Consumer E-commerce (C2C)

• In this model, if anyone wants to sell anything, all one has
to do is post a message on the site, giving details of the
product and the expected price and wait for an interested
customer to turn up and buy it
LEVELS OF ELECTRONIC-COMMERCE
iv. Consumer-to-Business E-commerce (C2B)
• A consumer-to-business model, or C2B, is a type of commerce where a
consumer or end user provides a product or service to an organization.
• Consumer-to-business (C2B) is a business model where an end user or
consumer makes a product or service that an organization uses to complete a
business process or gain competitive advantage.

• An example of C2B model of e-commerce is the site Priceline.Com, which allows

prospective airline travellers, tourists in need of hotel reservations etc. to visit its
websites and indicate their preferred price for travel between any two cities
LEVELS OF ELECTRONIC-COMMERCE
v. Business to Employees E-commerce (B2E)
 With B2E, the target is not companies, but their own employees.

 A B2E strategy covers everything a business can do to attract, recruit, onboard, train,
empower and retain employees.
 In a broader and vaster sense, B2E tries to encompass all those aspects that
businesses do for attracting and retaining competent staff in a highly competitive
market.

 Flexible working hours, bonuses, opportunities for education, aggressive recruiting

are some strategies that a business incorporates as a part of the business-to-employee
strategy.
THE BENEFITS OF ELECTRONIC-COMMERCE TO ORGANIZATIONS

• Benefits of e-commerce to organizations

• International marketplace. By becoming e-commerce enabled, businesses now have access to people all
around the world.
• Operational cost savings. The cost of creating, processing, distributing, storing and retrieving paper
based information has decreased.

• Mass customisation. The pull-type processing allows for products and services to be customised to the
customer‘s requirements.

• Enables reduced inventories and overheads by facilitating ‘pull‘-type supply chain management - this is
based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing
• Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which
were based on leasing telephone lines for the sole use of the organisation and its authorised partners
 THE BENEFITS OF ELECTRONIC-COMMERCE TO
ORGANIZATIONS

• Digitisation of products and processes. Particularly in the case of

software and music/video products, which can be downloaded or e-
mailed directly to customers via the Internet in digital or electronic
format.

• No more 24-hour-time constraints. Businesses can be contacted by or

contact customers or suppliers at any time.
BENEFITS OF E-COMMERCE TO CONSUMERS

• 24/7 access. Enables customers to shop or conduct other transactions 24

hours a day, all year
round from almost any location

• More choices. Customers not only have a whole range of products that
they can choose from and
customise, but also an international selection of suppliers
 BENEFITS OF E-COMMERCE TO CONSUMERS

• Price comparisons. Customers can ‘shop‘ around the world and conduct
comparisons by visiting different sites, or by visiting a single site where prices are
aggregated from a number of providers and compared

• Improved delivery processes. This can range from the immediate delivery of
digitised or electronic good to the on-line tracking of the progress of packages being
delivered by mail or courier.

• An environment of competition where substantial discounts can be found or value

added, as different retailers vie for customers
 BENEFITS OF E-COMMERCE TO SOCIETY

• Enables more flexible working practices. which enhances the quality of life
for a whole host of people in society, enabling them to work from home

• Facilitates delivery of public services. For example, health services available

over the Internet
LIMITATIONS OF ELECTRONIC-COMMERCE TO ORGANIZATIONS

• Lack of sufficient system security, reliability, standards and communication protocols

• Rapidly evolving and changing technology, so there is always a feeling of trying to
‘catch up‘ and not be left behind
• Under pressure to innovate and develop business models to exploit the new
opportunities which sometimes leads to strategies detrimental to the organisation
• Facing increased competition from both national and international competitors
• Problems with compatibility of older and ‘newer’ technology. There are problems
where older
business systems cannot communicate with web-based and Internet infrastructures,
leading to
some organisations running almost two independent systems where data cannot be
shared.
 LIMITATIONS OF E-COMMERCE TO CONSUMERS

• Computing equipment is needed for individuals to participate in the new ‘digital‘ economy,
which means an initial capital cost to customers.
• A basic technical knowledge is required of both computing equipment and navigation of
the Internet and the World Wide Web.
• Cost of access to the Internet, whether dial-up or broadband tariffs.
• Cost of computing equipment. Not just the initial cost of buying equipment but making
sure that
the technology is updated regularly
• Lack of security and privacy of personal data.
• Physical contact and relationships are replaced by electronic processes.
• A lack of trust because they are interacting with faceless computers.
 Limitations of e-commerce to society

• Breakdown in human interaction.

• Social division. There is a potential danger that there will be an increase in the social
divide
between technical haves and have-nots
• Reliance on telecommunications infrastructure, power and IT skills, which in
developing countries nullifies the benefits when power, advanced
telecommunications infrastructures and IT skills are unavailable or scarce or
underdeveloped
• Wasted resources. As new technology dates quickly how do you dispose of all the
old computers, keyboards, monitors, speakers and other hardware or software?
• Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in
times of crisis as stocks are kept to a minimum and delivery patterns are based on
pre-set levels of stock which last for days rather than weeks
 BUSINESS TO BUSINESS E-COMMERCE (B2B)

• In a B2B transaction, the interaction is between businesses.

• Business to Business e-commerce provides small and medium enterprises

(SMES) with an excellent opportunity to access new markets, improve
customer service and reduce costs

• B2B transactions are however relatively high value in nature and

organisations are slow to change their traditional systems for the supply chain
management.
 B2B MODELS
• There are four different types of B2B models available which are as follows:

1. Direct Connection Model

• In the direct model your business connects directly to each of your trading partners for sending
and receiving electronic documents
• Your IT organization is responsible for all mapping, translation, technical support and tracking
documents.
• But, as the size of your community grows, you need more resources to implement and support
each new trading partner.

• You need to continually monitor communications, manage trading partner calls and resolve issues quickly

• Adding to the complexity, trading partners frequently insist on using different protocols, particularly if
they are also trading with other enterprises
 B2B MODELS
• The graphic below illustrates the direct B2B scenario.

• This model is sometimes called the ―spaghetti model, or the ―spider model‖ because of its
complexity
 B2B MODELS
2. Network Model
• To avoid the complexity of the direct model, many companies decide to work exclusively through a B2B
Service Provider, which, in the days prior to the internet, was referred to as a Value-Added Network (VAN).

• In this model, you have a single connection to the Service Provider using whatever protocol you prefer – e.g.
AS2, SFTP, FTPS, FTP over VPN, RosettaNet

• Likewise, your trading partners connect to the Service Provider, each selecting the connectivity protocol that
best meets its company‘s requirements.

• The Service Provider facilitates the exchange of electronic documents via its network.

• The graphic below illustrates the network model of B2B.

B2B MODELS
 B2B MODELS
3.Hybrid Model
• The hybrid approach to B2B is a combination of the direct and network models

• Businesses will connect directly via the internet to their trading partners with whom they do the highest
volume of transactions, using one or two preferred protocols, in order to save on Service Provider
transaction fees ‘

• For large communities, the hybrid model is much more commonly used today

• The graphic below illustrates the hybrid model of B2B

B2B MODELS
 B2B MODELS
4. Managed Model
• In the managed model, the business outsources the entire B2B process to an external Service
Provider.
• This greatly reduces resource requirements, expenses and complexity
• The Service Provider receives your business documents directly from your ERP system (SAP,
Oracle, etc.) and then assumes responsibility for all the mapping, translation, technical support,
data center operations and document tracking
• Once documents are ready for delivery to your trading partners, the service provider delivers them
either directly to the partners or via the network, depending on the individual trading partner
requirements.

• The graphic below illustrates the managed model.

B2B MODELS (Managed Model )
 Discussion

•What role does weather play in e-commerce

operations?
• https://www.linkedin.com/pulse/what-role-does-weather-play-e-commerce-operations-
ulrich-thonemann/