Electronic Commerce Overview

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Electronic CommerceOverview

• Foothill College
• Electronic Commerce

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Electronic CommerceTopic overview

• Context
• Definitions
• History
• Statistics
• Demographics
• Requirements
• The big picture

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Phrasing the Context of Electronic Commerce

• Computer - network mediated financial and
  information transactions (esp. the Internet)
• The paperless world of electronic business
  transactions, including EDI, EFT and EDMS
• Global commerce - and its synergistic
  relationship with electronic commerce
• Vertical integration and supply chain management
• Business Process Re-engineering (BPR)

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Electronic Commerce - Definitions

• Purchasing goods on-line
• moving product
• Exchange of business information electronically -
  EDI and EDMS
• moving and managing digital information
• Information transactions that have value
• moving currency and capital (banking and
  insurance)
• Electronic funds transfer (EFT) and payments
• Electronic commerce is -
• commerce done electronically

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Electronic Commerce - History

• EFT - Electronic Funds Transfer
• EDI - Electronic Data Interchange
• Visa Net, MasterCard, and ACH
• ATMs, online banking, POS terminals
• Debit and smart cards - in all shapes and forms
• Internet, WWW, intranets, and extranets
• Distributed network computing architectures

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Electronic Commerce DriversCost and efficiency
of people vs. computers
People
Computers

• expensive
• slow
• errors

• cheap
• fast
• reliable

Networked business process
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Electronic Commerce - Statistics

• 1.5 billion spent on the Internet in 1996
• 320 billion was measured for the year 2001
• Most growth projections are exponential
• from 50 to 100 per year for the next 3 - 5
  years
• Projections of 1 trillion dollars by year 2003
• Most statistics are generated using a formula
• a rough estimate multiplied by an expectation
• rigorous forecasting requires good modeling and
  data
• trends are often more important than absolute
  numbers

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Internet Spending by Category
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Electronic CommerceComparisons 1996 and in 2001

• 500 billion in credit card transactions
  worldwide in 1995
• There were 4.5 trillion cash purchases lt 20
• 600 billion in Internet purchases in year 2001
  (10x annual growth) would only equal 1996 credit
  card purchases
• Electronic purchases replace cash purchases, and
  smart cards will be as significant as credit card
  purchases.
• Electronic commerce makes sense for buying
  information, scheduling services, and bill
  payment - not just goods

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Electronic CommerceDemographics

• 300 - 500 million people use the Internet today
• Its still mostly a North American experience
• Rapid growth in Europe, Asia, and Latin America
• New users will be less affluent than current
  users
• Shift from computer professionals to mainstream

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Closing the Gender GapWomen and Men on the WWW
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Home Access and Office Accesson the WWW (North
America)
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Percentage Spending on the Web
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ATM User Preference

• grew very slowly
• now 50 of users
• 12 billion transactions annually, 5,000 per month
  per ATM
• 1/3 cost of in branch
• over 1 trillion dollars in annual transactions

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Smart Cards

• big in Europe
• field trials in US
• Mondex / MasterCard
• replace cash transactions lt 20
• can be 2 or 3 party
• vertical industry use
• encryption is built in

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Point of Sale Terminal (PoS)

• inventory input
• transaction recording
• connects cash registers to legacy systems
• key to integration of database marketing, VMI and
  SRC
• can initiate an EC process
• not just credit / debit cards
• gas pumps are a EPoS

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Realistic Internet growth projections - on the
record

• Number of users with Internet access will
  continue to grow by about 20 to 30 annually
  through the year 2005
• The rate of growth may slow around the year 2003,
  but total growth continues well into 2005 ( 30
  to 50 annually)
• One billion people will have WWW access by 2005
• Half the planet could be connected by the year
  2010
• The Web is more than just websites, its a
  method of connecting business processes through
  internetworking

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People on the Internet Worldwide
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Ratio Data Bits to Voice Bits(North America
estimates)
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Electronic Commerce Requirements for Growth

• Trust (security)
• Rock solid encryption
• Secure digital payments
• Rock solid infrastructure
• Participation by major banks
• Protocols for microcommerce
• Uniform legal and commercial codes

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What are the security issues of users?
Other
Dont want any personal information on net
Lack of Security
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Access to Personal Information
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Theft
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Unauthorized Access
Duplication Forgery
Fraud
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IBMs E-business Vision
Customer Relationship Management
Supply Chain
Electronic Bill Presentment and Payment
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Electronic Commerce Business Solution Design
Future EC
Current
Business Process
User / Community
Integrated Information Business Processes
User
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Size of the Internet Commerce MarketSoftware,
Services, and Technology
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Looking for Parity

• People
• Phones
• Paper

• Computers
• Networks
• Electronic documents

• Human trust is established face to face
• Compare written signatures with digital
  certificates
• Documents exchange data from storage to
  processor
• Networks let computers and processes talk to
  each other

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Seeing the Bigger Picture

• Information storage and delivery has changed -
  from primarily paper to primarily electronic
• Production and consumption of new information is
  transitioning from people to computers
• Commerce and workgroups are becoming human -
  digital hybrids, and forcing BPR
• Computers have become an integral part of our
  business lives - and commerce naturally follows
• Electronic commerce is absolutely driving the
  growth of global commerce - and vice versa