Ch. 13 E-Business
Rev: May, 2015
Prof. Euiho Suh
POSTECH Strategic Management of Information and Technology Laboratory
(POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management Engineering
POSTECH
Contents
1
Overview
2
E-Business vs. E-Commerce
3
Benefits of E-Commerce
4
E-Commerce Categories
5
Impacts of E-commerce
6
Business Applications
7
Online Shopping
8
Interesting Facts and Statistics
9
Summary and Conclusion
Overview (1/2)
■ Definition of E-Commerce
– E-Commerce or Electronic commerce is a process of buying, selling, transferring, or
exchanging products, services, and/or information via electronic networks and computers
3
Overview (2/2)
■ Brief History of E-Commerce

E-commerce meant the facilitation of commercial transactions electronically, using
technology such as Electronic Data Interchange (EDI) and Electronic Funds
Transfer (EFT), allowing businesses to send commercial documents like purchase
orders or invoices electronically.
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The growth and acceptance of credit cards
Automated teller machines (ATM)
Telephone banking
Airline reservation system
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The Internet commercialized and users flocked to participate in the form of
dot-coms, or Internet start-ups
Innovative applications ranging from online direct sales to e-learning experiences
1970s
1980s
1990s

2000s
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Many European and American business companies offered their services through
the World Wide Web.
Since then, People began to associate a word “e-commerce”
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E-Business vs. E-Commerce
E-business
E-commerce
We use the term e-business to
refer primarily to the digital
enablement of transactions and
processes within a firm, involving
information systems under the
control of the firm.
E-commerce include commercial
transactions involving an
exchange of value across
organizational boundaries.
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E-commerce vs. E-business
• E-commerce – the buying and selling of goods and
services over the Internet
• E-business – the conducting of business on the
Internet, not only buying and selling, but also
serving customers and collaborating with business
partners
Most people use these
terms interchangeably,
which is usually OK
Benefits of E-Commerce
■ Benefits to organizations
–
–
–
–
–
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Global reach
Cost reduction
Supply chain improvements
Extended hours: 24/7/365
Customization
Improved customer relations
■ Benefits to consumers
–
–
–
–
–
More products and services
Cheaper products and services
Instant delivery
Information availability
Participation in auctions
7
E-Commerce Categories (1/6)
■ B2B E-commerce
– B2B e-commerce is simply defined as ecommerce between companies.
– About 80% of e-commerce is of this type.
– Example
• Intel selling microprocessor to Dell
• Heinz selling ketchup to McDonalds
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E-Commerce Categories (2/6)
■ B2C E-commerce
– Business-to-consumer e-commerce, or commerce between companies and consumers, involves
customers gathering information; purchasing physical goods or receiving products over an
electronic network.
– Example
• Dell selling me a laptop
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E-Commerce Categories (3/6)
■ B2G E-commerce
– Business-to-government e-commerce or B2G is generally defined as commerce between
companies and the public sector.
– It refers to the use of the Internet for public procurement, licensing procedures, and other
government-related operations
– Example
• Business pay taxes, file reports, or sell goods and services to Govt. agencies.
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E-Commerce Categories (4/6)
■ C2C E-commerce
– Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals
or consumers.
– Example)
• Mary buying an iPod from Tom on eBay
• Me selling a car to my neighbor
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E-Commerce Categories (5/6)
■ G2C E-commerce
– This Model is also a part of e-governance.
– The objective of this model is to provide good and effective services to each citizen.
– The Government provides the following facilities to the citizens through website.
• Information of all government departments
• Different welfare schemes
• Different application forms to be used by the citizens
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E-Commerce Categories (6/6)
■ G2B E-commerce
– Government-to-business (G2B) is a business model that refers to government providing
services or information to business organisation.
– Government uses B2G model website to approach business organizations. Such websites
support auctions, tenders and application submission functionalities.
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Impacts of E-commerce (1/4)
■ Economic Efficiency
– Reduces cost of carrying out transactions
– But, substitutes costs of building and maintaining the system
– Can you point to examples of e-business increasing efficiency??
■ Network Effects
– Email is more valuable if more people are using it
– Growth can be explosive
2 nodes, 1 connection
4 nodes, 6 connections
How many connections with:
5 nodes?
6 nodes?
7 nodes?
3 nodes 3 connections
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Impacts of E-commerce (2/4)
■ Operational Efficiency
– Extension of Electronic Data Interchange (EDI)
– Supply chain management
•
•
•
•
•
•
Raw materials
Parts
Assembly, manufacturing, packaging
Distribution
Retail
Customer
– How is this different for intangible goods?
■ Effects of Operational Efficiency
– Disintermediation
• Cutting out some of the steps in the supply chain
• There’s also “reintermediation” (new middlemen)
 Payment processing; product delivery; trust providers; etc.
– Lowering communication costs
• May also lower inventories with “just in time” deliveries
– Enterprise resource planning (ERP) systems
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Impacts of E-commerce (3/4)
■ Disintermediation
1st Tier
Suppliers
2nd Tier
Suppliers
Assembly,
Manufacturing,
Packaging
Distributor
Retailer
Customer
Are there dangers to cutting out
these links?
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Impacts of E-commerce (4/4)
■ Changing Market Structure
– Created “day trading”
– Travel industry
– Created MP3 enabled music players
• What other impacts have e-business technologies had on the music industry?
■ Other Organizational Impacts
– Channel conflict
• Retailers challenged by manufacturers
– New markets
– New products
– New competition
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Business Applications
■ Business Applications
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Email
Instant messaging
Online shopping and order tracking
Online banking
Shopping cart software
Teleconferencing
Electronic tickets
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Online Shopping (1/2)
■ Definition
– Online shopping is the process of buying goods and services from merchants who sell on the
Internet
■ Online Consumers
– Online consumers are evenly split between men and women and tend to be better educated,
younger, and more affluent than the general population
■ Advantages
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24-hour access
Ability to comparison shop
The in-home privacy
Variety
■ Favourite websites for shopping include those featuring:
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Event tickets
Online periodicals subscription
Flowers and gifts
Consumer electronics
Travel
19
Online Shopping (2/2)
■ How do you buy something
20
Interesting Facts and Statistics
■ PayPal
– Every 1.2 seconds, a Canadian makes a purchase with their PayPal account
– Almost 20 per cent of Canadians make three or more online purchases per month
(comScore 2009)
– Ninety per cent of Canadians do their online shopping exclusively from home and
only one percent of Canadians shop online exclusively from work (comScore 2009)
– Experts predict that online sales will reach US$328 billion by 2010
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Summary and Conclusion
■ Summary
– The Internet has lead to the birth and evolution E-commerce.
– E-commerce has now become a key component of many organizations in the daily running of
their business.
■ Conclusion
– As the Internet and in turn E-commerce has developed, and continues to evolve and grow, it is
vital that any organization, in any particular industry, must base its strategic planning around
such a rapidly growing medium.
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