Electronic Commerce: background and prospects

1
Electronic Commerce background and prospects

• Lecture 11

2
Ecommerce general definition

• The use of electronic means of supporting sales
  and exchanges of goods and services.
• Often web-based but existed with other forms of
  IT before the WWW.
• Necessitates rethinking of business structures
  and strategies.

3
Categories of e-commerce

• Business-to-Consumer (B2C)
• Collapse of massive profit hopes but still
  changes in business models.
• Business-to-Business (B2B)
• Has existed for longer than the WWW (e.g.
  Electronic Data Interchange)
• Probably where the most money is to be made.
• Internal Business Processes
• Organisations reshaped as collections of business
  units.

4
Business-to-Consumer (B2C)

• Variety of strategies
• cost leadership (lowest price available)
• differentiation (offering added value services)
• Allows spread of business to new markets with
  minimal advertising.
• Specialist e-tailers not constrained by space
  restrictions (no stores).

5
Business-to-Business (B2B)

• Example supply chain management
• Using electronic means to keep track of orders
  and products.
• Aids just-in-time production.
• Allows businesses to buy in services and products
  rather than produce them themselves.
• Other examples electronic transactions between
  businesses and their suppliers.

6
E-commerce support for internal business processes

• Use of data collected on-line to support
• Marketing (what do our customers want?)
• Production (ensuring the right goods are
  available in the right quantities)
• Strategy development (how is the market changing?
  What are our competitors doing?)
• Use of intranets to support product and service
  development.

7
Why has the web expanded e-commerce?

• Customers homes (and workplaces!) become sales
  outlets.
• Web technology is
• Free (possible to look at the code).
• A worldwide standard.
• Less need for detailed negotiation and
  construction of technical standards

8
Potential Benefits of E-Commerce

• Wider spread of information about products and
  prices
• a more perfect market.
• Fewer barriers to entry
• development of new businesses in established
  industries.
• Constant pressure on firms to develop new
  products and services.

9
Issues surrounding e-commerce

• The Web was not developed for exchange of secure,
  private data.
• Consumers still tend to expect information to be
  costless.
• Real world infrastructure continues to be
  important (post electricity, etc).

10
Tax . . .
A Swedish consumer
buys a product from a German company
via its U.K. Web site
which is hosted in the Netherlands ...
for delivery from a French warehouse
to Italy.
Query Which country has legal jurisdiction?Where
are taxes assessed?How do you manage currency
exposure?