CS5038 The Electronic Society

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CS5038 The Electronic Society

• 1. Overview of Electronic Commerce
• Definitions
• Perspectives
• Variations
• Business Models
• Pressures on businesses
• Responses of businesses
• The Networked Business
• Benefits
• Problems
• Also look at 2. Retailing (next) and then 3.
  Customers

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E-Commerce Definitions
E-commerce Any kind of transaction done partly
or completely over a network Business-to-business
(B2B) - online transactions (e.g. purchases) with
other businesses Interorganisational Information
System (IOS) information between organisations
used for collaborative commerce Business-to-consum
er (B2C) - online transactions between businesses
and consumers Business-to-employee (B2E) -
information and services made available to
employees online Consumer-to-consumer (C2C) -
online transactions between consumers Peer-to-Peer
(P2P) exchange games, DivX videos, MP3
music Consumer-to-Business (C2B) consumers seek
sellers (Priceline.com) or sell services to
organisations Intrabusiness (Organisational) EC
internal to organisation, intranet Business-to-Emp
loyees (B2E) subset of Intrabusiness
Government-to-Citizens (G2C) services and
information to citizens Exchange buyers and
sellers dynamic pricing matching
services Exchange-to-Exchange (E2E) system to
connect exchanges
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Electronic Commerce Terms

• EC defined from these perspectives
• Communications
• E-delivery Goods, services, information,
  payments
• Business process
• Automate business transactions and workflow
• Service
• Cut service costs, improve quality and speed
• Online
• Buying, selling and other services on internet
• Collaborations
• Inter- and intraorganisational
• Community
• Gather to learn, transact, communicate

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Variations

• Pure vs. Partial EC based on the degree of
  digitisation of
• Product
• Process
• Delivery agent
• Traditional commerce all dimensions are physical
• Pure EC all dimensions are digital
• Partial EC all other possibilities include a mix
  of digital and physical dimensions
• Internet vs. Non-Internet EC
• VANs value added network
• LANs local area network
• Vending Machine
• Click and Mortar

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Dimensions of E-Commerce
Prentice Hall, 2002
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Business Models
A method of doing business by which a company can
generate revenue to sustain itself.

• Name your price priceline.com
• Find the best price hotwire.com
• Dynamic brokering getthere.com
• Affiliate marketing amazon.com
• Electronic tendering systems gxs.com
• Online auctions ebay.com
• Customization and personalization dell.com
• Electronic marketplaces and exchanges
  e-steel.com
• Supply chain improvers productbank.com.au
• Collaborative commerce
• Where is the company positioned in the value
  chain?

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Rappas Business Models
http//www.digitalenterprise.org/models/models.htm
l

• Brokerage exchange, trading community,
  aggregator
• Advertising portals, sponsorship banners
• Infomediary
• Recommender - users provide recommendations on
  products, e.g. http//www.epinions.com
• Registration - session tracking of users, allows
  greater targeting of advertising, e.g.
  http//www.nytimes.com
• Merchant - retail
• Manufacturer eliminate middleman
• Affiliate online referrals for commission
• Community voluntary contributors, regular
  visitors
• Subscription high value content
• Many companies changed to subscription models in
  last two years
• Utility pay by byte

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Example ORBIS Corp.
TRANSFORM
Prentice Hall, 2002
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Major Business Pressures

• Market / Economy

Society / Environment

• Strong competition
• Global economy
• Regional trade agreements (NAFTA)
• Low labor cost in some countries
• Frequent changes in markets
• Increased power of consumers

Changing nature of workforce Deregulation of
services Shrinking subsidies Ethical and legal
issues Social responsibility of E-bus. Rapid
political changes
Technology
Rapid technological obsolescence Increase
innovations and new technologies Information
overload Rapid decline in technology cost vs.
performance ratio
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Organizational Responses

• Strategic systems (e.g. FedEx tracking system)
  strategic advantage
• Continuous improvement efforts
• Customer Relationship Management (CRM) maximum
  value proposition to customer online help,
  product information, tools
• Total Quality Management (TQM) - ongoing
  refinements in response to continuous feedback
• Business process reengineering (BPR) - major
  innovations
• Business Alliances
• Virtual Corporation - Joint Venture for
  time-limited mission
• Keiretsu - Long term alliance of manufacturers,
  suppliers and finance corporations
• Cooperation in E-markets purchasing consortia

IT Support
Reducing cycle time (business process time) and
time to market Empowerment of employees and
collaborative work Supply chain improvements
speed and efficiency Mass customization
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Intranet/Extranet

• Intranet
• Corporate LAN (Local Area Network) or WAN (Wide
  )
• Uses Internet technology
• Open, flexible connectivity
• Limited to authorised employees
• Secure behind firewall
• Extranet
• Links Intranets in different locations
• Uses Internet technology
• Security required Virtual Private Network (VPN)
• Information travels through encrypted tunnels
  between Intranets

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The Networked Business Internet, Intranet,
Extranet
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Benefits of E-Commerce

• To Organizations

To Consumers

• Expands the marketplace
• Decreases the cost (less paper)
• Pull-type supply chain management
• Customisation competitive advantage
• Less time between outlay of capital and receipt
  of products and services
• Supports BPR efforts

Open 24 hours a day More choices Better
prices Quick delivery Product information in
seconds Interact with other consumers
Facilitates competition
To Society
Work at home ? less traveling ? less traffic and
pollution Lower prices benefit less affluent
people Third world and rural areas access
products otherwise unavailable Public services at
a reduced cost and improved quality
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Problems With E-Commerce

• Technical Problems
• Insufficient telecommunication bandwidth
• Difficult to integrate Internet EC software with
  some existing applications and databases
• Additional cost of infrastructure
• Software development tools are still evolving
• Standards (security, reliability, communication)
  are still evolving
• Interoperability problems
• Cost Problems
• Developing EC in house can be expensive and may
  result in delays.
• Difficult to justify - intangible benefits are
  difficult to quantify.
• E.g. customer relationship management (CRM)
• Non-technical problems are more serious

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Problems With E-Commerce (contd.)

• Security and Privacy
• B2C - Hard to convince customers that online
  transactions are secure
• Customers do not trust
• Unknown sellers, Paperless transactions,
  Electronic money
• Other limiting factors
• Switching from a physical to a virtual store may
  be difficult
• Lack of touch and feel online
• Channel conflict
• Unresolved legal issues
• Rapidly evolving and changing EC
• Lack of support services
• Insufficiently large number of sellers and buyers
• Expensive and/or inconvenient accessibility to
  the Internet

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Summary

• Definitions B2C, B2B, B2E
• Perspectives communications, business process,
  services
• Variations Pure v. partial
• Business Models and Rappas models
• Pressures on businesses market, technology,
  society
• Responses of businesses BPR, alliances, IT
  support
• The Networked Business - Internet, Intranet,
  Extranet
• Benefits organisations, consumers, society
• Problems technical and non-technical