Electronic Commerce
Definitions and Concepts
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Tujuan :
 Mahasiswa mampu mengetahui definisi dan konsep
dari E-Commerce
 Mahasiswa mampu mengetahui Dimensi dari ECommerce
 Mahasiswa mampu mengetahui Framework ECommerce
 Mahasiswa mampu mengetahui Klasifikasi dari ECommerce
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Reference
 William J. Buffan. E-Business and IS Solutions.
Addison-Wesley. 2000
 Harman, P., Rosen, M., Guttman, M., Developing
E-Business Systems & Architectures. Morgan
Kaufmann Publishing. 2001
 Harrington. Business Process Improvement.
McGraw-Hill. Inc., 1991
 Turban, et al., Electronic Commerce. Prentice Hall
International. 2001
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Electronic Commerce: Definitions and
Concepts (cont.)
 E-commerce defined from the following
perspectives:
 Communications: delivery of goods, services,
information, or payments over computer networks
or any other electronic means
 Commercial (trading): provides capability of
buying and selling products, services, and
information on the Internet and via other online
services
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Electronic Commerce: Definitions and
Concepts (cont.)
 Business process: doing business electronically by
completing business processes over electronic
networks, thereby substituting information for
physical business processes
 Service: a tool that addresses the desire of
governments, firms, consumers, and management to
cut service costs while improving the quality of
customer service and increasing the speed of service
delivery
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Electronic Commerce: Definitions and
Concepts (cont.)
 Learning: an enabler of online training and education in
schools, universities, and other organizations, including
businesses
 Collaborative: the framework for inter- and
intraorganizational collaboration
 Community: provides a gathering place for community
members to learn, transact, and collaborate
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Electronic Commerce: Definitions and
Concepts (cont.)
 e-business: a broader definition of EC, which
includes:
 buying and selling of goods and services
 servicing customers
 collaborating with business partners
 conducting electronic transactions within an
organization
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Electronic Commerce: Definitions and
Concepts (cont.)

Pure vs. Partial EC
depends upon the
degree of digitization
(the transformation
from physical to digital)
of:
1.
2.
3.
the product (service)
sold;
the process; and for
the delivery agent (or
digital intermediary)
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 Brick-and-Mortar
organizations are oldeconomy organizations
(corporations) that
perform most of their
business off-line, selling
physical products by
means of physical agents
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Electronic Commerce: Definitions and
Concepts (cont.)
 Virtual (pure-play)
organizations conduct
their business activities
solely online
 Click-and-mortar
organizations conduct
some EC activities, but do
their primary business in
the physical world
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 Electronic market (e-
marketplace) online
marketplace where
buyers and sellers meet
to exchange goods,
services, money, or
information
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Electronic Commerce: Definitions and
Concepts (cont.)
 Interorganizational
information systems
(IOSs) allow routine
transaction processing
and information flow
between two or more
organizations
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 Intraorganizatio
nal information
systems enable EC
activities to go on
within individual
organizations
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Exhibit 1.1: The Dimensions of
Electronic Commerce
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The EC Framework, Classification,
and Content
 Two major types of e-commerce:
 business-to-consumer (B2C) : online transactions are
made between businesses and individual consumers
 business-to-business (B2B): businesses make online
transactions with other businesses
intrabusiness EC: EC conducted inside an organization (e.g.,
business-to-employees B2E)
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The EC Framework, Classification, and
Content (cont.)
 Computer environments
 Internet: global networked environment
 Intranet: a corporate or government network that uses
Internet tools, such as Web browsers, and Internet
protocols
 Extranet: a network that uses the Internet to link
multiple intranets
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EC Framework
 EC applications are supported by infrastructure and by
five support areas:
 People
 Public policy
 Marketing and advertising
 Support services
 Business partnerships
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Exhibit 1.2: A Framework for
Electronic Commerce
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Classification of EC by
Transactions or Interactions
 business-to-consumer (B2C) : online transactions are
made between businesses and individual consumers
 business-to-business (B2B): businesses make online
transactions with other businesses
 e-tailing: online retailing, usually B2C
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Classification of EC by Transactions or
Interactions (cont.)
 business-to-business-to-consumer (B2B2C): ecommerce model in which a business provides
some product or service to a client business that
maintains its own customers
 consumer-to-business (C2B):
e-commerce model in which individuals use the
Internet to sell products or services to
organizations or individuals seek sellers to bid on
products or services they need
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Classification of EC by Transactions or
Interactions (cont.)
 consumer-to-consumer (C2C):
e-commerce model in which consumers sell
directly to other consumers
 peer-to-peer (P2P): technology that enables
networked peer computers to share data and
processing with each other directly; can be used in
C2C, B2B, and B2C e-commerce
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Classification of EC by Transactions or
Interactions (cont.)
 mobile commerce ((m-commerce):
e-commerce transactions and activities conducted
in a wireless environment
 location-based commerce (l-commerce): mcommerce transactions targeted to individuals in
specific locations, at specific times
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Classification of EC by Transactions or
Interactions (cont.)
 intrabusiness EC: e-commerce category that
includes all internal organizational activities that
involve the exchange of goods, services, or
information among various units and individuals
in an organization
 business-to-employees (B2E): e-commerce model
in which an organization delivers services,
information, or products to its individual
employees
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Classification of EC by Transactions or
Interactions (cont.)
 collaborative commerce (c-commerce):
e-commerce model in which individuals or groups
communicate or collaborate online
 e-learning: the online delivery of information for
purposes of training or education
 exchange (electronic): a public electronic market
with many buyers and sellers
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Classification of EC by Transactions or
Interactions (cont.)
 exchange-to-exchange (E2E): e-commerce model
in which electronic exchanges formally connect to
one another the purpose of exchanging
information
 e-government: e-commerce model in which a
government entity buys or provides goods,
services, or information to businesses or individual
citizens
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The Interdisciplinary
Nature of EC
 Major EC disciplines
 Computer science
 Marketing
 Consumer behavior
 Finance
 Economics
 Management information systems
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A Brief History of EC
 EC successes
 Virtual EC companies
eBay
 VeriSign
 AOL
 Checkpoint
 Click-and-mortar
 Cisco
 General Electric
 IBM
 Intel
 Schwab

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 EC failures
 1999, a large number of EC-
dedicated companies began to
fail
 EC’s days are not numbered!
 dot-com failure rate is
declining sharply
 EC field is experiencing
consolidation
 most pure EC companies, are
expanding operations and
generating increasing sales
(Amazon.com)
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The Success Story of
Campusfood.Com
 Provide interactive menus to college students,
using the power of the Internet to replace and/or
facilitate the traditional telephone ordering of
meals
 Built the company’s customer base
 expanding to other universities
 attracting students
 generating a list of restaurants from which students
could order food for delivery
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The Success Story of
Campusfood.Com (cont.)
 Now some of these activities are outsourced to
a marketing firm, enabling the addition of
dozens of schools nationwide
 Financed through private investors, friends,
and family members, the site was built on an
investment of less than $1 million
 Campusfood.com’s revenue is generated
through transaction fees—the site takes a 5 %
commission on each order from the sellers
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The Success Story of
Campusfood.Com (cont.)
 At campusfood.com you can:
 Navigate through a list of local restaurants, their hours
of operation, addresses, phone numbers, etc.
 Browse an interactive menu
 Bypass “busy” telephone signals to place an order
online
 Access special foods, promotions, and restaurant
giveaways
 Arrange electronic payment of your order
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The Future of EC
 2004—total online shopping and B2B transactions
in the US between $3 to $7 trillion by 2008:
 number of Internet users worldwide should reach 750
million
 50 percent of Internet users will shop
 EC growth will come from:
 B2C
 B2B
 e-government
 e-learning
 B2E
 c-commerce
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E-commerce
Business Models
 Business models—a method of doing business by
which a company can generate revenue to sustain itself
 Examples:




Name your price
Find the best price
Dynamic brokering
Affiliate marketing
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E-commerce
Business Plans and Cases
 Business plan: a written document that identifies
the business goals and outlines the plan of how to
achieve them
 Business case: a written document that is used by
managers to garner funding for specific
applications or projects; its major emphasis is the
justification for a specific investment
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Structure of Business Models
 Business model: A method of doing
business by which a company can
generate revenue to sustain itself
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Structure of
Business Models (cont.)
 Value proposition: The benefits a company can derive
from using EC
 search and transaction cost efficiency
 complementarities
 lock-in
 novelty
 aggregation and interfirm collaboration
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Exhibit 1.4: Common Revenue
Models
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Typical Business Models
in EC
1.
2.
3.
Online direct marketing
Electronic tendering systems
tendering (reverse auction): model in which a
buyer requests would-be sellers to submit
bids, and the lowest bidder wins
Name your own price: a model in which a
buyer sets the price he or she is willing to pay
and invites sellers to supply the good or
service at that price
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Typical Business
Models in EC (cont.)
4. Affiliate marketing: an arrangement whereby a
marketing partner (a business, an organization,
or even an individual) refers consumers to the
selling company’s Web site
5. Viral marketing: word-of-mouth marketing in
which customers promote a product or service to
friends or other people
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Typical Business
Models in EC (cont.)
6.
7.
8.
Group purchasing: quantity purchasing that enables
groups of purchasers to obtain a discount price on
the products purchased
SMEs: small to medium enterprises
Online auctions
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Typical Business
Models in EC (cont.)
Product and service customization
customization: creation of a product or service
according to the buyer’s specifications
8. Electronic marketplaces and exchanges
9. Value-chain integrators
10. Value-chain service providers
8.
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Typical Business
Models in EC (cont.)
12. Information brokers
13. Bartering
14. Deep discounting
15. Membership
16. Supply chain improvers
Business models can be independent or they can
be combined amongst themselves or with
traditional business models
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Example of
Supply Chain Improver
 Orbis Group changes a linear physical supply
chain to an electronic hub
 Traditional process in the B2B advertising field
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Example of
Supply Chain Improver (cont.)
 ProductBank
simplifies this
lengthy process
changing the
linear flow of
products and
information to a
digitized hub
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Benefits of EC
Benefits to organizations
 Global reach
 Cost reduction
 Supply chain




improvements
Extended hours: 24/7/365
Customization
New business models
Vendors’ specialization
 Rapid time-to-market
 Lower communication





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costs
Efficient procurement
Improved customer
relations
Up-to-date company
material
No city business permits
and fees
Other benefits
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Benefits of EC (cont.)
Benefits to consumers
 Ubiquity
 More products and
services
 Cheaper products
and services
 Instant delivery
 Information
availability
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 Participation in
auctions
 Electronic
communities
 “Get it your way”
 No sales tax
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Benefits of EC (cont.)
 Benefits to society
 Telecommuting
 Higher standard of
living
 Hope for the poor
 Availability of public
services
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Limitations of EC
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Barriers of EC
 Security
 User authentication and
 Trust and risk
lack of public key
infrastructure
 Organization
 Fraud
 Slow navigation on the
Internet
 Legal issues
 Lack of qualified
personnel
 Lack of business models
 Culture
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The Digital Revolution
 Digital economy: An economy that is based on digital
technologies, including digital communication
networks, computers, software, and other related
information technologies; also called the Internet
economy, the new economy, or the Web economy
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The Digital Revolution (cont.)
 A global platform over which people and
organizations interact, communicate, collaborate,
and search for information
 Includes the following characteristics:
 A vast array of digitizable products
 Consumers and firms conducting financial transactions
digitally
 Microprocessors and networking capabilities embedded
in physical goods
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New Business Environment
 Customers are becoming more powerful
 Created due to advances in science occurring at an
accelerated rate
 Results in more and more technology
 Rapid growth in technology results in a large variety of
more complex systems
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New Business
Environment (cont.)
 Characteristics in the business environment
 A more turbulent environment with more business




problems and opportunities
Stronger competition
Need for organizations to make decisions more
frequently
A larger scope for decisions because more factors
More information and/or knowledge needed for
making decisions
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Summary
1.
2.
3.
4.
Definition of EC and description of its various
categories.
The content and framework of EC.
The major types of EC transactions.
The major business models.
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Summary (cont.)
5.
6.
7.
8.
Benefits to organizations, consumers, and society.
Limitations of EC.
The role of the digital revolution.
The role of EC in combating pressures in the
business environment.
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The End
Discuss ?
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