E-COMMERCE

Chapter 1
Introduction to Electronic Commerce

Objectives
Differences between e-commerce and traditional
commerce
Advantages and disadvantages of using e-commerce
to conduct business
International nature of e-commerce
Utilizing value chains
The Internet and WWW

What is Electronic Commerce?

Also known as e-commerce

More than on-line shopping
Encompasses other business activities
Sometimes used interchangeably with Electronic
Business but not the same.
the use of the internet and the Web to transact
business.
Digital enabled commercial transactions between
and among organizations and individuals.

Types of e-commerce :
EFT and EDI (early ecommerce)
Electronic Funds Transfers (EFT) 30yrs ago
Used by the banking industry to exchange account information over
secured networks

Electronic Data Interchange (EDI) 1960s

Used by businesses to transmit data from one business to another

E-commerce Categories:
(B2C) ?
Consumer shopping online
(B2B) ?
Transaction between business on the web
(B2G) ?
Transaction between business and the government done
on the web
(C2C) ?
Consumer shopping and selling online among other
consumers
Peer to peer (P2P)
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Traditional Commerce
The exchange of valuable objects or services
between at least two parties.
Includes all activities that each party undertakes to
complete the transaction.
Barter System eventually was the starting point for
the use of currency.

Element of Traditional Commerce:

The Buyer Side

Element of Traditional Commerce:

The Seller Side

Do survey to
fulfill market
needs

Creates
Products

Traditional Commerce Vs
Electronic Commerce

Paper Base

Electronic Base

Advantages of Electronic
Commerce
Increased sales
Reach narrow market segments in geographically dispersed
locations
Create virtual communities

Decreased costs
Handling of sales inquiries
Providing price quotes
Determining product availability

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Virtual Communities

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Price Quotes

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Disadvantages of Electronic
Commerce
Some business are difficult to implement via EC.
Ex: Art, Perishable foods and custom-designed jewelry.

Rapid developing pace of underlying technologies

Example: Programming language (HTML -> XML)
Hardwares (LAN -> Wireless)

Difficult to calculate return on investment (ROI)

Cultural and legal barriers

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International Electronic Commerce

issues:
Language barriers must be overcome
Culture
Political structures
Currency conversion
Tariffs and import/export restrictions

Legal, tax, and privacy concerns

Who has jurisdiction to levy taxes?
How is personal information handled?

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Value Chains in
Electronic Commerce
Value chain is a way of organizing the ACTIVITIES undertaken
to design, produce, promote, market, deliver, and support the
products or services a business sells.

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Value Chains in
Electronic Commerce

Organizing
Activities

Value chains of Primary Activities and Support Activities

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Value Chain in EC:

[Primary Activities]
Identify customers
Market research, customer satisfaction surveys

Design
Concept research, engineering, test marketing

Purchase materials and supplies

Vendor selection, quality and timeliness of delivery

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Value Chain in EC:

[Primary Activities] (Cont..)
Manufacture
Fabrication, assembly, testing, packaging

Market and sell

Advertising, promotion, pricing, monitoring sales and
distribution channels

Deliver
Warehousing, materials handling, monitoring timeliness of
delivery

Provide after-sale service and support

Installation, testing, maintenance, repair, warranty replacement,
replacement parts

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Value Chain in EC:

[Support Activities]
Finance and administration
Accounting, bill payment, borrowing, regulations, compliance with
laws

Human resources
Recruiting, hiring, training, compensation, benefits

Developing technology
Research, development, improvement studies, maintenance
procedures

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Role of Value Chains in Electronic

Commerce

Reducing costs
Improving product quality
Reaching new customers or suppliers
Creating new ways of selling existing products

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What is Internet?
Is the Internet and World Wide
Web the same?

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The Internet and World Wide Web

The Internet is a LARGE SYSTEM of interconnected networks
that spans the globe
The World Wide Web (WWW) is part of the Internet and
allows users to share information with an easy-to-use
interface

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The Internet

The Internet consists of many interconnected networks

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Origins of the Internet

Developed by the U.S. Department of Defense in the early
1960s with the goal to provide a network for messaging even
in war.
This communication method then became widely used until
researchers at universities developed internet application (ex:
emails, newsgroup and search utilites).
More Internet history in chapter 2 next week..

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New Uses for the Internet

E-mail
The ability to send messages to one or many across the Internet

File Transfer Protocol (FTP)

The ability to transfer data files from one computer to another

Telnet
The ability to remotely logon to another computer

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New Uses for the Internet

World Wide Web (WWW)
The ability to access information using a common interface

Videoconferencing
The ability to use video across the Internet for conferencing purposes

Multimedia
The ability to use video, audio, and animations across the Internet

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 THE END
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