What are you going to learn in this course

1
What are you going to learn in this course?

• Introduction Chapter 1, 2
• Business Strategies for Electronic Commerce
  Chapter 3 7
• Technologies for Electronic Commerce Chapter 8
  12

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Chapter 1

• Introduction To E-commerce

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What is Electronic Commerce?

• Technology plays an increasingly vital role in
  business. E-commerce changes the way business is
  done. In some cases, it replaces non-electronic
  ways of contracting, product and service
  delivery, and customer involvement in other
  cases, it supplements them.
• To many people, the term electronic commerce
  means shopping on the part of the Internet called
  the World Wide Web.
• In fact, electronic commerce, broadly defined,
  refers to all electronically conducted business
  activities, operations, and transaction
  processing.
• The term e-business has been used
  interchangeably with the term e-commerce.

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Examples of E-Commerce Activities

• online searches for information
• warehousing data, including inventory-stocking
  levels
• inventory management and distribution
• online publishing of company information, such as
  reports, analyses and documents
• corporate financial information
• order tracking
• shipment and delivery tracking
• instant updates of pricing changes
• production management
• advertising and promotion of goods

• accumulating demographic data about customers
• customer service and support
• payments
• subscription services
• data about goods or services, such as where to
  buy them, prices, warranties, quantities
  available, delivery terms, and laws that apply to
  the transaction
• email and messaging
• noncommercial functions as filing and paying
  taxes
• other personal financial matters

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Parties To Electronic Commerce

• manufactures, wholesalers, and retailers
• sellers of Internet commerce products like
  Oracle, Microsoft, and Netscape
• financial institutions, including banks and
  insurance companies
• government regulatory agencies
• standard-setting organization
• industry associations

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Benefits of EC to Organizations

• eliminates limitations of place and time
• improves information flow
• stimulates sales and improves the revenue base by
  providing
• new markets
• Web advertising can get even a small firms
  promotional message out to potential customers
  throughout the world
• Web creates virtual communities for specific
  products or services hence, firms can reach
  narrow market segments that are geographically
  scattered through the web
• new information-oriented products and services
• better channels of service delivery
• closer interaction with customers

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Benefits of EC to Organizations (cont.)

• reduces costs in its sales support and
  order-taking processes
• by allowing business to close stores
• stock less merchandise at existing stores
• minimize transaction costs by
• improving the linkage between vendors,
  purchasers, and intermediaries
• eliminating duplication
• sharing of information
• improves how business transactions are processed,
  resulting in
• better performance
• better customer satisfaction
• better management decisions
• higher quality
• enhanced efficiency
• better interaction

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Benefits of EC to Consumers

• more choices
• less expensive products
• quick delivery
• 24-hour availability
• quick access to information
• customized product at competitive prices
• virtual auctions
• interact with other EC customers

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Benefits of EC to Society

• increase standard of living
• enjoy products and services in third-world
• facilitate delivery of public services

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Limitations of EC -- Technical

• lack of security
• insufficient telecommunication bandwidth
• software tools still evolving
• integration of Internet and EC software
• special Web servers
• interoperability of software and hardware

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Limitations of EC Non-technical

• accessibility
• legal issues
• credit card fraud (affect both merchants
  customers)
• government regulations (political issues)
• cultural differences, taxation and privacy
  issues
• difficult to measure benefits
• EC still evolving

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Limitations of EC Non-technical

• Difficult to foster trust between business and
  consumers because there is no personal contact in
  accessing a website
• Some business processes are difficult to be
  implemented through electronic commerce

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Main Elements of E-Commerce

• The three main elements of e-commerce are
• Business-to-consumer (B2C) consumer shopping
  on the Web
• Business-to-business (B2B) transactions
  conducted between businesses on the Web
  inter-organizational e-commerce
• The transactions and business processes that
  support selling and purchasing activities on the
  Web, including intra-organizational e-commerce
• The fourth category is called consumer-to-consumer
  , e.g. Web auction. Some people consider this to
  be B2C as well.

People think exclusively of consumer shopping
(B2C) on the Web as e-commerce. In fact, B2B
transactions account for a much larger portion of
revenue generated directly by e-commerce.
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Main Elements of E-Commerce
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B2C

• an electronic-based marketplace through which a
  customer interacts with an organization
• relates to how customers become aware of goods
  and services through electronic publishing, buy
  with electronic cash, have goods delivered over
  the network
• trust in e-commerce may be brought about in
  various ways, such as digital signatures and
  digital certificates

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B2C Strategy to increase the chances of success

• develop a product for a niche market
• high-end products typically not found at most
  stores
• outcome broader market
• recognizable commodities or brand name products
• if already easily available in the marketplace,
  give additional and compelling reason to buy from
  a web site
• encryption of transmissions will result in
  increased sales

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B2C Strategy to increase the chances of success

• types of payment accepted
• shopping cart or product database features
• market your site through search engine,
  conducting banner and link exchanges, issuing
  press releases and mass electronic mail campaigns
  
• value-added features like pre- and post-sales
  support, testimonials, and personalized customer
  support are essential
• sites that have professional appearance and is
  easy to read and move through

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B2C Strategy to increase the chances of success

• multi-lingual capabilities, contests, multiple
  options for ordering (facsimile or 800 numbers)

Less than 5 of all e-commerce enterprises are
expected to actually generate a profit in their
first 12 to 18 months of operation. While this
may be a sobering thought, lower overhead,
decreased capital investment requirements, and
the ability to sell globally will continue to
make e-commerce attractive.
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B2B

• B2B e-commerce facilitates the following
  activities
• Supplier management reduce PO processing costs
  and cycle times, also increase the number of POs
  that can be processed by fewer people
• Inventory management shorten the
  order-ship-bill cycle
• Distribution management facilitate the
  transmission of shipping documents and allow for
  better resource management by ensuring that the
  data in the documents is more accurate

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B2B (cont.)

• Channel management quickly disseminate
  information to trading partners and share
  accurate information
• Payment management electronic payment reduces
  clerical error, increases the speed for computing
  invoices, and lowers transaction costs, usually
  through Electronic Funds Transfers (EFTs
  electronic transmission of account information
  over private communications networks, have been
  used by banks for over 30 years)

The above is mostly achieved due to a better and
more efficient flow of information.
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B2B Inter-Organizational System

• Types of Inter-organizational Systems
• Electronic data interchange (EDI)
• Electronic funds transfer (EFT)
• Extranets
• Integrated messaging
• Shared databases

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Example

• Consider a company that manufactures stereo
  speakers
• B2C sells finished product to consumers on the
  web
• B2B (inter-organizational) purchases materials
  needed to make speakers from other companies on
  the web
• Intra-organizational undertakes many other
  activities to convert the purchased materials
  into speakers, such as hiring and managing the
  people who make the speakers, shipping the
  speakers, maintaining accounting records, etc.

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Traditional Commerce

• Sellers
• Identify customer demand for a product
• Promote product to potential customers
• Accept orders
• Deliver products
• Bill and accept payment
• After sales support

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Traditional Commerce

• Buyers
• Examine needs
• Identify products that might meet those needs
• Evaluate those products
• Make orders
• Arrange for delivery
• Pay for the product
• Maintain contact with the seller for warranty and
  other maintenance on the product

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Electronic Commerce vs Traditional Commerce

• Work smarter, not harder
• Use Internet technologies to improve existing
  business processes and identify new business
  opportunities
• Use EFTs to move customers money around the
  world.
• Use EDI to place orders and send invoices.
• IBM defines electronic business as the
  transformation of key business processes through
  the use of Internet technologies.

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Business Process Suitability

• Commodity items

• Involve personal selling skills

Products or services looked the same, no matter
provided by which seller

• Products is difficult to determine without making
  a personal inspection

• Product with strong-brand identity (e.g.SONY
  CD-player)

Cisco conducts over 90 of its purchase and sales
transactions online.
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Case Study - Autobytel

• Launched an online car-buying service in 1995
• Purchasers a haggle-free experience
• Car dealers increase sales volumes and reduce
  selling costs
• Buyers need to register in order to use the
  service.
• Forwards buyers contact information to a local
  participating dealer.
• Dealers pay a subscription fee to receive
  exclusive rights to referrals from a particular
  geographic area for the brands of vehicles that
  they sell..

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Case Study - Autobytel

• Dealers do not have to pay a commission to a
  salesperson
• Besides subscription fee from dealers, can sell
  advertising to insurance and finance companies on
  its web site.
• Has contracts with about 9000 dealers.
• Has processed quotes for the 9 million registered
  users.
• Processed more than 800,000 transactions worth
  about 21 billion in revenue to car dealers every
  year.

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Case Study - Autobytel

• Revenue from fees paid by auto dealers is about
  85 million per year.
• Accounts for about 5 of all U.S. new vehicle
  sales in 2002.
• Average Internet car buyer pays between 2 and 4
  less for a car.
• Car dealers spend an average of 420 in marketing
  each new car they sell. With Autobytel, those
  costs are reduced to about 150 per car,
  including Autobytels referral fee.

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Case Study - Autobytel

• Has had much success handling new car
  transactions.
• Few people would be willing to buy a used car
  without driving that specific car and personally
  inspecting it.
• In the case of used cars, e-commerce provides a
  good way for buyers to obtain information about
  available models, options, reliability, prices,
  etc.

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Role of E-commerce

• Reduce costs
• Improve product quality
• Reach new customers or suppliers
• Create new ways of selling existing products

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3 Waves Of E-Commerce

• First Wave traditional EDI (1980s and early
  1990s)
• Place orders
• Shipment notification
• Invoicing
• Examine inventory availability
• Between re-established business partners

Mainly B2B
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3 Waves Of E-Commerce (cont.)

• Second Wave Electronic Commerce Elements in 1st
  wave plus
• Electronic Shopping
• Banking and financial institutions
• Increased information sharing
• Between virtual strangers
• Challenge provide the openness, while still
  protecting company information and encapsulating
  sensitive corporate data from unauthorized users

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3 Waves Of E-Commerce (cont.)

• Third Wave A new electronic society Elements in
  2nd wave plus
• Cashless transaction
• High transaction integrity
• Widespread use of intelligent agents

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Generations Of Web Sites For E-Commerce

• Generation one Initially companies created
  simple brochures-online web sites
• Generation two web sites that reflect corporate
  issues (investor relations, company mission
  statements, messages from the president) were
  built
• Generation three web sites became simpler,
  faster, and more focused on specific needs of the
  person visiting the site
• Generation four sites are dynamically created
  and tightly integrated into the operations of the
  company

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Learn from Failures

• Pets.com
• Launched in February 1999
• Went out of business in November 2000
• Products with a very low value-to-weight ratio
• Products come in al shapes, sizes and weights
• Lose money on shipping costs
• Could not develop any sustainable advantage over
  traditional pet stores.