AACS2733 INTRODUCTION TO
E-COMMERCE
Chapter 1:
Introduction to E-Commerce
UPON COMPLETION OF THIS CHAPTER, YOU WILL
BE ABLE TO:
•
Define e-commerce.
•
Explain the differences between traditional commerce and
e-commerce.
•
Distinguish pure versus partial e-commerce.
•
Discuss different categories of e-commerce.
•
Describe the benefits of e-commerce to organizations,
consumers, and society.
•
Describe the technological & non-technological limitations
of e-commerce.
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1.1.2 ELECTRONIC COMMERCE (EC):
DEFINITIONS AND CONCEPTS
• A general definition of Electronic Commerce (EC)
The process of buying, selling, or exchanging products,
services, or information via computer or any electronic
means.
Commerce refers to
activity of selling and
buying, especially on
large scale.
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1.1.2 ELECTRONIC COMMERCE (EC):
DEFINITIONS AND CONCEPTS
• e-Business
A broader definition of EC that includes not just the buying
and selling of goods and services, but also servicing
customers, collaborating with business partners, delivering
e-learning and conducting electronic transactions within an
organization
Technology is always a business-enabler
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THREE DEFINITIONS OF THE RELATIONSHIP BETWEEN E-COMMERCE AND E-BUSINESS
We are referring to (b) as definition of the relationship between
e-commerce and e-business
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E-BUSINESS VS. E-COMMERCE
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E-BUSINESS VS. E-COMMERCE
• In its narrow definitions, EC can be viewed as a subset of
e-business.
• In the textbook, these two terms are used interchangeably
to represent the broadest meaning, which is equivalent to
the definition of e-business.
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1.1.2.1 PURE VS. PARTIAL EC
• EC can be either pure or partial depending on the nature
of its three major activities: ordering and payments,
order fulfillment, and delivery to customers.
• Each activity can be physical and digital.
• If all activities are digital, we have pure EC, in none are
digital we have non EC, otherwise we have partial EC.
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1.1.2.1 PURE VS. PARTIAL EC:
CLASSIFICATIONS OF E-COMMERCE
Activity
Ordering, Payment
Order fulfillment
(processing)
Delivery (shipment)
1
P
P
2
D
D
3 4 5 6 7 8
D D D P P P
D P P D P D
P
D
P P D D D D
Type of EC
Non EC Pure EC Partial EC
Legend: P physical, D digital
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1.1.2.1 PURE VS. PARTIAL EC:
CLASSIFICATIONS OF E-COMMERCE
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2
3
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Example: Partial E-Commerce (www.adidas.com.my)
First Dimension: Ordering and payment
Online customer views the e-catalogue and place order through the
website. Then, payment via electronic payments such as credit card/
debit card/ e-wallet. Hence, this dimension is DIGITAL.
Second Dimension: Order fulfilment
After received the order, Adidas staff will packs the ordered items
manually with the help of computerized system. Happen in physical
and digital.
Third Dimension: Delivery
Delivery man sends the order item to the customer shipping address.
Customer use the item physically.
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1.1.2.1 PURE VS. PARTIAL EC (CONT.):
TYPES OF EC ORGANIZATION
• Brick-and-mortar (old economy) organizations:
Purely physical organizations, conduct all the business
activities in the physical world.
• Virtual (pure-play) organizations: Companies that
conduct their business activities solely online.
• Click-and-mortar (click-and-brick) organizations:
Organizations that conduct some EC activities, usually
as an additional marketing channel.
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• brick-and-mortar (old economy) organizations
Old-economy organizations (corporations) that perform
their primary business off-line, selling physical products
by means of physical agents
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• virtual (pure-play) organizations
Organizations that conduct their business activities solely
online e.g. Spotify, Netflix and Steam.
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• click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, usually as
an additional marketing channel.
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1.1.2.1 Pure vs. Partial EC (cont.)
Example Of Business That Suite To Various EC Organizations
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1.1.3 COMPARISON OF TRADITIONAL COMMERCE
AND E-COMMERCE
Traditional Commerce
E-Commerce
Business
Organization
Hierarchical management and Flat management and
communication
communication
Consumer
Walk in customer
Electronic/virtual
Business
Process
Labor-intensive, require
manual intervention, time
consuming, costly, etc..
Automated e-transaction,
instant, efficient, etc..
Marketing
Conventional marketing
Online marketing tools
media such as postal, phone, such as banner, e-mail,
newspaper, radio, TV etc.
bulletin board.
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1.2 CATEGORIES OF E-COMMERCE
A common classification of EC is by the “Nature of the
transactions” or “The relationship among participants”.
1)
B2B (Business-to-Business)
• Businesses sell products or services to other businesses.
Manufacturer + Wholesaler
Wholesaler + Retailer
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1.2 CATEGORIES OF E-COMMERCE
2) B2C (Business-to-Consumer)
• Businesses sell products or services to individual
shopper/consumers.
• E.g. most likely ALL the shopping websites that you
(students) have encountered.
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1.2 CATEGORIES OF E-COMMERCE (CONT.)
3)
B2B2C (Business-to-Business-to-Consumer)
• Business sell products or services to a client business. The client
business maintains its own customers, who may be its own employees,
to whom the product/service is provided without adding any value to it.
• E.g. Startbucks sells branded stored value cards to companies to give
as gifts to their employees or customers.
4)
C2C (Consumer-to-Consumer)
• Consumers transact directly with other consumers.
• E.g. eBay.com allows consumers trade with each other through its web
site.
• In addition, many auction sites allow individuals to place items up for
auction.
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1.2 CATEGORIES OF E-COMMERCE (CONT.)
5)
C2B (Consumer-to-Business)
•
Individuals use the Internet to sell products or services to
organizations. Alternatively, individuals use C2B to bid on products
or services.
•
E.g. Priceline.com is a well-known organizer of C2B travel service
transactions.
A customer can utilize their blog to links back to a product sold on the
company's ecommerce website
6)
Collaborative Commerce (c-commerce)
•
C-commerce refers to online activities and communication done by
parties working to attain the same goal.
•
When E.g. Business partners in different locations may design a
product together using screen sharing.
Business interactions among an enterprise's internal personnel, business
partners and customers throughout a trading community. The trading community
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could be an industry, industry segment, supply chain or supply chain segment.
1.2 CATEGORIES OF E-COMMERCE (CONT.)
7) E-learning
• Training or formal education that is provided online.
• E.g. A lots of distance learning program and virtual universities are
conducted online.
8) E-Government
• In e-government EC, a government agency buys or provides goods,
services, and information from or to businesses (G2B) or from or to
individual citizens(G2C).
• E.g. Citizens above 21 years old can check their voter registration
status and related particulars through the Web.
• Governments can deals also with other governments (G2G).
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1.3 BENEFITS OF E-COMMERCE
• From three(3) aspects:
• To Organization/company/merchant/seller
• To Consumer/customer/buyer/client
• To Society/general public
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BENEFITS TO ORGANIZATIONS
• Global reach: Quickly locating customers and/or suppliers at
reasonable cost worldwide
• Cost reduction: Lower cost of information processing, storage and
distribution
• Supply chain improvements: Reduce delays, inventories and cost
• Business always open: Open 24/7/365; no overtime or other costs
• Improved customer service and relationship: Direct interaction
with customers, using eCRM
• Lower cost of distributing digitizable product: Delivery online
can be 90% cheaper (FOR Pure-e-commerce ONLY)
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BENEFITS TO CONSUMERS
• Inventory: Provide huge selection to choose from various
vendor, products, styles
• Ubiquity: Can shop any time from any place
• Real time delivery: Download digital products
• Find unique items: Using online auctions, collectible items
can be found
• Comfortable shopping: Shop at customer leisure without
pushy sales clerks
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BENEFITS TO SOCIETY
• Enable telecommuting: Facilitate work at home; less traffic and
pollution.
• More public services: Provided by e-government.
• Improved homeland security: Facilitate domestic security.
• Increased standard of living: Can buy more and cheaper
goods/services.
• Close the digital divide: Allow people in rural areas and
developing countries to use more services and purchase what they
really like.
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1.4
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LIMITATION TO ELECTRONIC COMMERCE
Technical limitation
• Lack of universal standards for quality, security and
reliability.
• Telecommunication bandwidth (Internet speed)
• Software development tools are still evolving.
• Special Web servers are needed in addition to the
network accessibility, add to the cost of EC.
• Internet accessibility is still expensive and/or
inconvenience.
• Order fulfilment of large scare B2C requires special
automated warehouse.
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LIMITATION TO ELECTRONIC COMMERCE
Nontechnical limitation
• Security and privacy concerns.
• Legal and public policy issues.
• Taxation
• National and international government regulation.
• It is difficult to measure some of the benefits of EC.
• Some customer like to feel and touch.
• Resistant to the change from shopping at brickand-mortar store to virtual store.
• Online fraud is increasing.
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CHAPTER 1 RECAPITULATION
1.1 Definition and Comparison of Traditional Commerce and E-Commerce
1.1.1 E-commerce in Malaysia-Commerce getting more popular?
1.1.2 Definition of E-Commerce
1.1.2.1 Pure vs. Partial E-Commerce
1.1.3 Comparison of Traditional E-Commerce and E-Commerce
1.2 Categories of E-Commerce
B2B, B2C, B2B2C, C2C, C2B, B2E, Collaborative Commerce, E-Learning, EGovernment
1.3 Benefits of E-Commerce
1.3.1 To Organization
1.3.2 To Consumer
1.3.3 To Society
1.4 Limitations to E-Commerce
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