E-commerce
Semester Genap 2009
Introduction to E-commerce
Semester Genap 2009
Learning Objectives
 Define the meaning and scope of e-business and
e-commerce and their different elements
 Describe the benefits of e-commerce to
organizations, consumers, and society
 Describe the limitations of e-commerce
E-business Opportunities
Three characteristics of information
 Reach
• Connect to millions of products
 Richness
•
•
•
•
Detailed product information
More interactivity and customization
Personalized messages for users
Limited by bandwith
 Affiliation
• Partnerships are key in the networked economy
The impact of the Internet on
Business
A lot of people purchase things from
internet
Closer relationships with customers and
suppliers online to help achieve customer
retention
What is E-commerce and E-business?
E-commerce
 The process of buying, selling or exchanging
products, services and information via
computer networks, including internet
E-business
 Not just buying and selling goods and
services via Internet but also servicig
customers, collaborating with business
partners and conducting electronic
transactions within an organization
Three Definitions of the Relationship
between E-commerce and E-business
E-commerce Terms
 E-commerce defined from these perspectives
 Communications
• Delivery of goods, services, information or
payments over computer networks
 Business process
• Application of technology toward the automation of
business transactions and workflow
 Service
• A tool that addresses the desire of firms,
consumers and management to cut service costs
while improving the quality of customer service and
increasing the speed of service delivery
E-commerce Terms [2]
 Online
• The capability of buying and selling products and
information over the Internet
 Collaborations
• Facilitator for inter- and intraorganizational
collaboration
 Community
• A gathering place for community members, to
learn, transact and collaborate
E-commerce Terms [3]
 Pure vs. Partial EC: based on the degree of
digitization of
 Product
 Process
 Delivery agent
 Traditional commerce: all dimensions are physical
 Pure EC: all dimensions are digital
 Partial EC: all other possibilities include a mix of
digital and physical dimensions
The Dimensions of E-commerce
A Framework for E-commerce
Classification of E-commerce
 By the nature of the transaction
 Business-to-business (B2B)
 Business-to-consumer (B2C)
 Business-to-business-to-consumer (B2B2C)
 Consumer-to-business (C2B)
 Consumer-to-consumer (C2C)
 Mobile commerce (m-commerce)
 Intrabusiness (organizational) e-commerce
 Business-to-employees (B2E)
 Collaborative commerce (c-commerce)
 Government-to-citizens (G2C)
 Exhange-to-exchange (E2E)
Revenue Model
 Transaction fees
 A company receives commission paid on the volume of transactions
made
 Subscription fees
 Customers pay a fixed amount to get some type of services
 Advertisement fees
 Companies charge others to place a banner on their sites
 Affiliate fees
 Companies receive commisions for reffering customers to other websites
 Sales
 Companies generate revenue from selling on their websites or from
providing a service
 Other models
 Some companies allow you to play games for a free or watch sports
competition in real time
The Digital Revolution
Drives E-Commerce
 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
 The digital revolution accelerates EC mainly
by providing competitive advantage to
organizations.
 The digital revolution enables many
innovations
The Business Environment
Drives E-Commerce
Business Models in E-commerce
 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
 Group purchasing
 Electronic tendering systems
 Online auctions
 Customization and personalization
 Electronic marketplaces and exchanges
 Supply chain improvers
 Collaborative commerce
E-markets
(E-marketplaces or E-marketspaces)
A market is a network of interactions and
relationships where information, products,
services, and payments are exchanged
 It handles all the necessary transactions
 It is a place where shoppers and sellers meet
electronically
 Sellers and buyers negotiate, submit bids,
agree on an order, and finish the execution
on- or off-line
Transactions in E-markets
E-exchanges
E-exchanges provide dynamic pricing by
matching real-time supply and demand
 Live auctions
 Stock exchanges
The Driving Forces of E-commerce
The New World of Business
 Business pressures
 Organizational responses
 The role of Information Technology (including
e-commerce)
Major Business Pressures
Market and economic pressures
 Strong competition
 Global economy
 Regional trade agreements (e.g. NAFTA)
 Low labor cost in some countries
 Frequent and significant changes in markets
 Increase power of consumers
Major Business Pressures [2]
Societal and environmental pressures
 Changing nature of workforce
 Government deregulation of banking and
other services
 Shrinking government subsidies
 Increased importance of ethical and legal
issues
 Increased social responsibility of
organizations
 Rapid political changes
Major Business Pressures [3]
Technological Pressures
 Rapid technological obsolescence
 Increase innovations and new technologies
 Information overload
 Rapid decline in technology cost vs.
performance ratio
IT Support and E-commerce
Reducing cycle time and time to market
Empowerment of employees and
collaborative work
Supply chain improvements
Mass customization
Change management
Benefits of E-commerce
Benefits to Organizations
 Expands the marketplace to national and
international markets
 Decreases the cost of creating, processing,
distributing, storing and retrieving paper-based
information
 Allows reduced inventories and overhead by
facilitating pull-type supply chain management
 The pull-type processing allows for customization
of products and services which provides
competitive advantage to its implementers
Benefits of E-commerce [2]
 Benefits to consumers
 Enables consumers to shop or do other transactions 24-hours a
day, all year round from almost any location
 Provides consumers with more choices
 Provides consumers with less expensive products and services
by allowing them to shop in many places and conduct quick
comparisons
 Allows quick delivery of products and services (in some cases)
especially with digitized products
 Consumers can receive relevant and detailed information in
seconds, rather than in days or weeks
 Makes it possible to participate in virtual auctions
Benefits of E-commerce [3]
Benefits to consumers [2]
 Allows consumers to interact with other
consumers n electronic communities and
exchange ideas as well as compare
experiences
 Facilitates competition, which results in
substantial discounts
Benefits of E-commerce [4]
Benefits to society
 Enables more individuals to work at home, and to do
less traveling for shopping, resulting in less traffic on
the roads, and lower air pollution
 Allows some merchandise to be sold at lower prices
benefiting less affluent people
 Enables people in Third World countries and rural
areas to enjoy products and services which otherwise
are not available to them
 Facilitates delivery of public services at a reduced
cost, increases effectiveness, and/or improves quality
The Limitations of E-commerce
 Technical limitations of e-commerce
 Lack of sufficient system’s security, reliability, standards, and
communication protocols
 Insufficient telecommunication bandwidth
 The software development tools are still evolving and changing
rapidly
 Difficulties in integrating the Internet and electronic commerce
software with some existing applications and databases
 The need for special Web servers and other infrastructures, in
addition to the network servers (additional cost)
 Possible problems of interoperability, meaning that some EC
software does not fit with some hardware, or is incompatible with
some operating systems or other components
Non-Technical Limitations
Cost and justification
 The cost of developing an EC in house can be very
high, and mistakes due to lack of experience may
result in delays.
 There are many opportunities for outsourcing, but
where and how to do it is not a simple issue
 In order to justify the system, one needs to deal with
some intangible benefits which are difficult to quantify
Non-Technical Limitations [2]
Security and Privacy
 These issues are especially important in the
B2C area, but security concerns are not so
serious from a technical standpoint
 Privacy measures are constantly improving
too
 The EC industry has a very long and difficult
task of convincing customers that online
transactions and privacy are, in fact, very
secure
Non-Technical Limitations [3]
Lack of trust and user resistance
 Customers do not trust:
• Unknown faceless sellers
• Paperless transactions
• Electronic money
 Switching from a physical to a virtual store
may be difficult
Non-Technical Limitations [4]
Other limiting factors are:
 Lack of touch and feel online
 Many unresolved legal issues
 Rapidly evolving and changing EC
 Lack of support services
 Insufficiently large enough number of sellers
and buyers
 Breakdown of human relationships
 Expensive and/or inconvenient accessibility to
the Internet
Summary
 E-commerce involves conducting transactions
electronically
 The major types of e-commerce transactions are
B2B, B2C, B2B2C, C2C, m-commerce,
intrabusiness e-commerce, B2E, c-commerce,
G2C and E2E
 E-commerce provides numerous benefits to
organizations, consumers and society
 In addition, e-commerce also has several
limitations which can be categorized as
technological and nontechnological
Exercise
 Find and visit several e-commerce websites
available in Internet
 List advantages and disadvantages that online
merchants/customer enjoy/suffer because of the
Internet
 How does those sites attempt to minimize those
disadvantages?
 What do you think about the behaviour of
Indonesian people in buying things online?