E-Commerce

Subject code: 06.405.1

Text Books: Frontiers of Electronic Commerce - Kalakota & Winston (Pearson education) Creating a winning E-Business- Napier, Judd, Rivers & Wagner (Vikas publishing house) Reference: Electronic Commerce course Technology- Gary & James

What is Commerce
Traditional commerce may be defined as:
The exchange or buying and selling of commodities; esp. the exchange of merchandise, on a large scale, between different places or communities; extended

trade or traffic.

What is E-Commerce
E-commerce is a general term for any type of business, or commercial transaction that involves the transfer of information across the Internet. This covers a range of different types of businesses from consumer-based retail sites, like Amazon.com, through auction and music sites

like eBay or MP3.com, to business exchanges

trading goods or services between corporations. - Gordon Whyte

 E-commerce is the
use of electronic communication to do business
Specifically, the transfer of information (transactions), over the Internet

OR E-commerce Process of buying or selling goods or services across a telecommunications network

Some people use the term e-business to refer to all the categories of e-commerce E-business Widest spectrum of business activities using Internet and Web technologies

The Internet
What is the Internet? The history of the Internet The growth of the Internet

Internet
A worldwide computer network ( the network of

networks ) is called Internet.

The Internet is a worldwide collection of computer networks connecting academic, governmental, commercial, organizational, and individuals sites. It provides access to communication services and

information resources to millions of users around

the globe.

 Web, also called World Wide Web (WWW) is a collection of resources that one can access, from anywhere in the world, over the Internet. The services available on the Internet other than Web are : E-mail, Chat sessions, etc.

The WWW is a vast library of information, art, science, engineering, commerce and so on.
Each computer on the Internet has an address (IP address) which is universally recognized throughout the network.

IP Address An IP address is a unique numeric identifier used to specify a particular host computer on a particular network, and is part of a global, standardized scheme for identifying machines that are connected to the Internet. IP addresses consist of four numbers between 0 and 255, separated by periods, which represent both the network and the host machine. Eg: 192.168.1.150

Internet Service Provider (ISP)

An ISP or Internet Access Provider is a company that provides the Internet access.
Customers can be businesses, individuals and

organizations.
Domain Name A domain name is a way to identify and locate computers connected to the Internet. A domain name must lie unique; no two organizations on the Internet can have the same domain name.

The domain name is the Internet name of the server which serves information.

URL (Uniform Resource Locator) Each web page has its own address called URL that identifies its location on the internet. Eg: is http://www.intel.com/Pentium/tutor/main.html

A simple URL for a Web page includes

(i) the name of the Web protocol (ie.http) (ii) a colon

(iii) two forward slashes

(iv) host computer name (i.e www) (v) a domain name (i.e intel)

(vi) domain type (i.e com)

(vii) a forward slash. (if there is path; i.e /pentium/tutor) (viii) file name (i.e main.html)

 On Internet, exchange of information takes place on client/server model. A client is a computer which receives information

from the server.

A server is a computer which gives information to other computers on Internet. Servers and clients communicate through a protocol, HTTP (Hyper Text Transfer Protocol).

The set of rules for information exchange between

server and client is called protocol.

Web Page It is an information written in HTML, which can be

put on a Web server.

It may give information about a person, a company, a group of people, an organization, a product, and so on. Web pages provide easy and efficient method for distributing information, files and softwares.

Web Site
Web server is known as Web site.

Web Browser
A browser is a software program that acts as an interface between the user and the World Wide Web.
The browser sends requests for information that is available on the internet and displays the information for the user. The client software package called Web browser accesses the Web and contacts a server computer on the Internet, and exchanges information with the server. These Web browsers use graphical user interface. (GUI) It understands how to communicate to a Web server through HTTP protocol The two most popular Web browsers are: Microsofts Internet Explorer (IE) and Netscapes Navigator, Mozilla Firefox

Internet Explorer Web Browser

Mozilla Firefox Web Browser

Web Browsing/Net Surfing

Internet browsing or net surfing as it is often called is the process of visiting the different web sites on the

internet hosted by the various companies, organizations,

educational institutions, magazines, individuals, etc.

E-mail
Electronic mail, or e-mail as popularly known, is a system that allows users to send and receive messages

and data through the Internet.

Search Engine
A web search engine is an interactive tool that enables users to locate information available via the World Wide Web. Eg: Google

HTML (Hyper Text Markup Language)

It is a computer language to prepare Web pages. Each symbol which is used in HTML has its own syntax, slang, and rules.

It is not a programming language. It is a markup language.

 Hyper text refers to the text that connects to other documents A hyper link is used to jump from one part to another of the same page or to load a different page. It is method of instant cross-referencing Download and upload:

Download is the activity of moving or copying a document (any data) from the internet to the local computer Upload is just the opposite of download. The user moves or copies a document (any data) from the local computer to the internet.

Online/ Offline
Online is referred to as connected to the world wide web via internet.

Offline is the opposite of online. It refers to the actions performed when the user is not connected to any network
Offline means the user is no longer connected to a remote computer. If any device is not connected, it is also referred to as offline. (eg: if printer is not connected to the computer it is said as offline.

Intranet- these are corporate networks that hold documents such as internal memos, corporate handbooks, expense account worksheets, budgets and newsletters A corporate or organizational network which uses the same protocols, (namely TCP/IP) as used on the Internet to share files and send E-mail, is called Intranet. An Intranet is cut off from the outside world. It permits its users to access the Internet, but it prevents outside access to internal files by hiding behind a security system known as a firewall. In many large organization intranet is a wide area network. Extranet- which allow external entities.

When computers of many organization are connected through TCP/IP protocol, such as network is called Extranet. e.g. suppliers and strategic partners to access a subset of the information on the Intranet

Computer security
The protection given to computers and the information contained in them from unauthorized access. For effective computer security we need: Confidentiality: ensures that information is available only to those persons who are authorized to access it. Integrity: ensures that the information cannot be modified in unexpected ways Availability: prevents resources from being deleted or becoming inaccessible

Architecture
The two main types of architecture are Peer-to-Peer (P2P) Client/Server

http://www.rebri.org.nz/images/builder-big.jpg

Client/Server Networks
In a Client/Sever network each node is either a client or server Client computers run applications, but rely on servers for resources such as files and printing capabilities Servers are powerful computers that manage files, printers or network traffic This architecture is sometimes called the twotier architecture

The Internet &World Wide Web

Network
Group of two or more computers Linked by communication media
Cable Telephone lines Wireless connections

Networks servers
Give users access to shared network resources Printers, files, telecommunication lines

The Internet and World Wide Web (continued)

The Internet and World Wide Web (continued)

Internet-History A worldwide public network that connects private networks Originated in the late 1960s as ARPANET by the US defense department

During the 1970s and 1980s the academic community contributed to this network
In the late 1980s this network became the Internet

Managed by the National Science Foundation in the 1980s and early 1990s as NSFnet
Commercial activity was prohibited until 1991. Tim Berners-Lee inventor of the World Wide Web in 1991.

The Internet and World Wide Web (continued)

Internet (continued) Replaced by commercial high-speed telecommunications backbones in 1995 Individuals and SMBs (Server Message Block) connect via an Internet Service Provider (ISP)

Large businesses, colleges, and universities and research centers was direct connected

The Internet and World Wide Web (continued)

The Internet and World Wide Web (continued)

The Internet and World Wide Web (continued)

Commercial use of Internet The Internet allows:

communication by e-mail the reading of on-line newspapers, academic journals and books the joining of discussion groups, participation in simulations and games downloading of software, electronic books, movies and music businesses to market and sell products and services (e-commerce)

Internet Growth
In 1969 ARPANET (the Internet) connected 4 computers In 1990 the Internet connected 300,000 In 1995 the intranet was privatised
The structure was based on four Network Access Points (NAPs) operated by different telecom companies in the US As the Intranet grew, more NAPs were added

Internet Growth Contd

The NAPs began selling Internet access rights to large customers
Internet service providers (ISPs) sold on the service to small businesses and individuals

Growth in Internet hosts rose from under 10 million in 1995 to over 180 millio33n in 2004 Millions of people now use the Internet Billions of dollars are exchanged from the sales of products and services Estimated number of Web sites is 40 million and billions of web pages

Economic Forces Transaction Cost & Vertical Integration

Market
Economists use a formal definition of market that includes 2 conditions
the potential sellers of a good come into contact with potential buyers. ( potential = possible or probable ) the medium of exchange is available (usually currency; earlier days barter system)

Transaction Cost
It is the total of all costs that a buyer and seller incur
(acquire or gain ) as they gather information and negotiate a purchase-sale transaction. It includes:
Information search Raw materials Employees salary Marketing Supply of product Service to buyer Brokerage fees Sales commissions Etc etc ..

 The practice of an existing firm replacing

one or more of its suppliers markets with

its own hierarchical structure for creating

supplied product is called Vertical

Integration.

Matching a Business Process to a Type of Commerce

Some business processes are better suited for electronic commerce, while others are better suited for traditional commerce

In some cases a combination of electronic

commerce and traditional commerce is more appropriate for the given business process Examples for each of these combinations are listed below

 Business Processes better suited to E-commerce

Sale/purchase of books and CDs, travel services, investments and insurance services Online delivery of software Online shipment tracking

 Business Processes better suited to E-commerce and traditional commerce

Sale/purchase of automobiles and residential real estate (e.g. do research online then buy from a dealer or real estate agent) Online banking Roommate matching service

 Business Processes better suited to traditional commerce

Sale/purchase of impulse items for immediate use, high fashion jewelry and antiques (personal inspection required; consumers prefer to touch, smell or examine closely)
Small denomination purchases and sales (since there is not yet a standard for transferring small amounts of money)

E-Business & the Global Economy

Value chain or value network
Activities involved in the production of goods or services Internet and Web technologies facilitate value chains and networks Improve communication Improve transaction speed

Internet and Web access allows businesses to rethink their value chains

E-Business and the Global Economy (continued)

E-Business Models
Business models
How a company conducts business in order to generate revenue Widespread access to the Internet and Web allows companies to adapt old models and create new ones

E-business models are often categorized by type of customer

E-commerce Categories
There are five general e-commerce categories:
Business to Consumer (or B2C) e-commerce Business to Business (or B2B) e-commerce (sometimes called e-procurement) Business processes that support buying and selling activities Consumer-to-consumer (or C2C) e-commerce Business-to-government (or B2G) e-commerce

E-Business Models

 Business-to-consumer (B2C)
Businesses sell products or services to individual customers (consumers)

Retail sales (e-retail) including airline tickets, entertainment venue tickets, hotel rooms, stock purchases, diet and fitness programs

 Business-to-business (B2B)
Businesses sell products or services to other businesses Online trading communities for vertical markets; Online stores Exchanges, aggregators, auctions
Virtual marketspaces for buyers and sellers Elance, ATLA Exchange, Business.com, HedgeHog (Web hosting, Web design, Hardware and software, Consulting)

 Business-to-government (B2G)
Businesses sell goods or services to governments and government agencies Businesses provide a marketspace for other businesses and government agencies Bidmain, B2GMarkets

 Consumer-toconsumer (C2C)
Participants in an online marketplace can buy and sell goods from each other Consumers sell or exchange products and services directly with other consumers Auctions, online classified ads, expert information exchanges
eBay, American Boat Listing, TraderOnline.com, AllExperts

 Consumer-to-business (C2B)
Reverse auctions in which a single consumer names his or her own price for products or services Consumers offer made to multiple businesses, which can accept or decline offer Priceline.com

E-commerce Categories: An Example

You are a computer manufacturing company who performs the following activities on the Internet:
Sells computers to individuals (B2C) Purchases parts (e.g. hard drives, power supplies etc.) from a supplier (B2B) Sells computers to the Government to be used in schools (B2G) Provides a Web site (like eBay.com) which allows individuals to buy and sell used computers (C2C)

Advantages of E-commerce
Increases sales and decreases cost
Allows small businesses to have access to a global customer base Reduced cost through electronic sales enquires, price quotes and order taking

Provides purchasing opportunities for buyers (businesses can identify new suppliers and partners) Increase speed and accuracy for exchanged information, thus reducing cost

 Business can be transacted 24hrs a day The level of detail of purchase information is selected by the user Digital products can be delivered instantly Tax refunds, public retirement and welfare support costs less when distributed over the Internet Allows products and services to be available in remote areas, e.g. remote learning

Advantages of E-commerce Contd

Disadvantages of E-commerce
Inability to sell some products (e.g. high cost jewelry and perishable foods The newness and (fast) evolution of the current technology Many products require a large number of people to purchase to be viable High capital investment

Disadvantages of E-commerce Difficulty in integrating current databases and Contd

Transmission of credit card details Some consumers resistant to change Laws are unclear

transaction processing systems into ecommerce solutions Cultural and legal obstacles

Shipping profile: Products with a low value-toweight ratio that can not be efficiently packed and shipped are unsuitable (use traditional commerce)

Web server & Web client:

Web server is a computer program that is responsible for accepting http request. Some clients which are known as web browsers, and serving them http responses along with optional data contents, which usually are web pages such as html documents and linked objects (images etc)

There are several Web servers. Most popular web servers are: Apache HTTP Server

Tomcat
Microsoft Internet Information Server (IIS)

Sun Java System Web Server (JSWS) (former names are Sun One, iPlanet Enterprise Server and Netscape Enterprise Server)

XML Markup Language

XML or Extensible Markup Language is a markup language that is similar to HTML HTML and XML, however have different purposes:
HTML is primarily used to present (display) data, while XML is used to describe data

XML Example the XML document by Begin

specifying the XML version
<?xml version="1.0"?> <!-- The syntax for comments is the same as in HTML --> <degree> <course name="COMP1130" year="2004-2005"> The user defines tag <test1 maximumMark = "10">8.2</test1> names <test2 maximumMark ="10">5.6</test2> <project maximumMark="10">10</project> <lab maximumMark ="10">9</lab> A tag can have zero, one or <exam maximumMark = "60">45</exam> more attributes </course> <course name="COMP3210" year="2005-2006"> <test1 maximumMark = "10">9</test1> <test2 maximumMark ="10">9.5</test2> <project maximumMark="10">10</project> <lab maximumMark ="10">10</lab> <exam maximumMark = "60">50</exam> </course> </degree>

Every XML document must have a root node

Every opening tag must have a closing tag.

HyperText Markup Language

HTML is a markup language that includes a set of tags attached to text These tags describe the relationship between text elements A hypertext link (or hyperlink) points to another location in the same or another HTML document (that might be stored on the same or another computer) Given below is an example of a simple HTML document.

HTML Example
Begins the HTML document
<html> <!-- An HTML document typically contains a head and a body --> <head> <title>Hypertext Markup Language (HTML) Example</title> </head> HTML docs contain both <!-- This is the body part of the document --> a head and body section <body bgcolor="#0000AA"> <font color="#FFFFFF"> <h1><u>Hypertext Markup Language</u></h1> Hypertext Markup Language (HTML) allows users to: <ol> <li>format and display text</li> Sets browsers background colour <li>display images </li> to blue and font colour to white <li>and so much more </li> </ol> Creates a bulleted list of items <img src="HTMLexample.jpg"> <a href="#top">Go to top of page</a> Inserts an image </font> </body> </html> Creates a hyperlink back to the top of the page