OVERVIEW OF
ELECTRONIC COMMERCE
Define electronic commerce (EC).
Describe and discuss the content and framework of EC.
Describe the major types of EC transactions.
Discuss e-commerce 2.0.
Understand the elements of the digital world.
Describe the drivers of EC.
Describe some EC business models.
Describe the benefits and limitations of EC.
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Electronic Commerce: Definitions and Concepts
• Defining electronic commerce
★
“The process of buying, selling, or exchanging products, services, or
information via computer.”
a) From a business process perspective, EC is
✴
Doing business electronically by implementing business process
over electronic networks.
b) From a service perspective, EC is a tool
✴
Addresses the desire of governments, firms, consumers, and
management
➡
Cuts service costs,
➡
Improves the quality of customer service,
➡
Increases the speed of service delivery.
c) From a learning perspective, EC is
✴
An enabler of online training and education in schools, universities,
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and other organizations, including businesses.
Electronic Commerce: Definitions and Concepts
d)From a collaborative perspective, EC is
✴ The framework for inter- and intraorganization
collaboration.
e)From a community perspective, EC
✴ Provides a gathering place for community members,
to learn, transact, and collaborate.
✴ Social networks, e.g. MySpace, Facebook.
• Defining 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, and conducting electronic transactions within
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Electronic Commerce: Definitions and Concepts
• Other EC concepts
★ Pure
Vs partial EC
1.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.”
2.Virtual (pure-play) organizations
✴ “Organizations that conduct their business activities
solely online.”
3.Click-and-mortar organizations
✴ “Organizations that conduct some e-commerce activities,
usually as an additional marketing channel.”
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Electronic Commerce: Definitions and Concepts
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Electronic Commerce: Definitions and Concepts
• Electronic market (e-market)
★ “An online marketplace where buyers and
sellers meet to exchange goods, services,
money, or information.”
• Intranet
★ “An internal 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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The Electronic Commerce Field: Classification
1.Business-to-business (B2B)
★ “E-commerce model in which all of the participants are
businesses or other organizations.”
★ E.g. Dell sells its products to companies.
2.Business-to-consumer (B2C) (Or e-tailing)
★ “E-commerce model in which businesses sell to
individual shoppers.”
★ E.g. Amazon.com.
3.Business-to-business-to-consumer (B2B2C)
★ “E-commerce model in which a business provides
some product or service to a client business that
maintains its own customers.”
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The Electronic Commerce Field: Classification
4.Consumer-to-business (C2B)
★
“E-commerce model in which individuals use the Internet to sell
products or services to organizations or individuals who seek sellers
to bid on products or services they need.”
★
E.g. Priceline.com.
5.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.”
★
E.g. Selling corporate products to one’s employees, online training.
6.Business-to-employees (B2E)
★
“E-commerce model in which an organization delivers services,
information, or products to its individual employees.”
★
Business-to-mobile employees (B2ME): Support to mobile
employees.
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The Electronic Commerce Field: Classification
7.Consumer-to-consumer (C2C)
★
“E-commerce model in which consumers sell directly to other
consumers.”
8.Collaborative commerce (c-commerce)
★
“E-commerce model in which individuals or groups communicate or
collaborate online.”
★
E.g. Business partners in different locations design a product
together, using screen-sharing; manage inventory online; or jointly
forecast product demand.
9.E-learning (e-training)
★
“The online delivery of information for purposes of training or
education.”
10.E-government
“E-commerce model in which a government entity buys or provides
goods, services,
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E- information from or to businesses (G2B) or
★
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The Electronic Commerce Field: History
Year
1969
Development of EC
The Internet began
• By the U.S. government, government agencies, academic researchers, scientists
1970s Electronic funds transfer (EFT)
• EC applications: funds could be routed electronically from one organization to
another.
• Disadv: Limited to large corporations, financial institutions, etc..
1980s Electronic data interchange (EDI)
• A technology used to electronically transfer routine documents.
• Participating companies from financial institutions to manufacturers, retailers,
services, etc..
1990s Electronic commerce
• World Wide Web introduction.
• dot-coms, Internet start-ups appeared.
1995
Innovative applications
1999
B2C to B2B
2001
B2B to B2E, c-commerce, e-government, e-learning, m-commerce.
2005
Social networks, wireless applications
• Online direct sales, e-learning, etc..
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The Electronic Commerce Field: History
• The interdisciplinary nature of EC
★
Computer science, marketing, consuming behavior, finance,
economics, management information systems, accounting,
management, human resource management, business law, robotics,
public administration, and engineering.
• The Google revolution
★
Since 2001, Google has great impact on EC.
★
Impacts both organizational activities and individual lives.
• EC failures
★
Starting in 1999, a large number of EC companies began to fail.
★
62% of dot-coms lacked financial skills.
★
50% had little experience with marketing.
★
Many failed to ensure they had the inventory and distribution setup to
meet the fluctuating demand for their products.
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The Electronic Commerce Field: History
• EC successes
★ eBay,
Google, Yahoo!, E-Trade.
★ Click-and-mortar companies, e.g. Wal-Mart online,
General Electric, IBM, Intel.
• The future of EC
★ 50% of all Internet users will shop online by 2010.
★ EC growth will come from B2C, B2B, e-government, elearning, B2E, c-commerce.
★ The total volume of EC has been growing by 15-25%
every year.
★ Largely by social computing and networking.
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E-Commerce 2.0
• Social computing
★ “An approach aimed at making humancomputer interface more natural.”
★ Tools: blogs, instant messaging, social network
services, wikis, social bookmarking, etc...
➡Improve collaboration and interaction among
people and on user-generated content.
★ E.g. Travelers share information and warn
others of bad experiences at sites such as
tripadvisor.com.
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E-Commerce 2.0
• Web 2.0
★
“The second-generation of Internet-based services that let people collaborate
and share information online in new ways, such as social networking sites,
wikis, communication tools, and folksonomies.”
★
E.g.: eBay, Wikipedia, Skype; Flickr; Google Docs, Spreadsheets, iTunes;
Google Maps.
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E-Commerce 2.0
• Social network
★ “A category of Internet applications that help
connect friends, business partners, or
individuals with specific interests by providing
free services such as photos presentation, email, blogging, and so on using a variety of
tools.”
• Social network services (SNS)
★ E.g. MySpace, Facebook.
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E-Commerce 2.0
• Capabilities and services provided by social network sites:
1. Construct a Web page to present themselves to the larger community.
2. Create a circle of friends who are linked together.
3. Provides discussion forums (by group, by topic).
4. Supports photo, video, and document viewing and sharing (streaming
videos, user-supplied videos).
5. Uses wikis to jointly create documents.
6. Uses blogs for discussion, dissemination of information, etc..
7. Offers community e-mail and instant messaging (IM) capabilities.
8. Answered member queries by experts.
9. Rates and comments on products.
10.Provides an e-newsletter.
11.Votes online to poll member opinions.
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E-Commerce 2.0
12.Supports conference (group) chatting,
combined with photo sharing.
13.Uses message and bulletin board services for
posting information to groups and anyone on
the Web site.
14.Provides storage for content, including photos,
videos, and music.
15.Bookmarks self-created content.
16.Finds other networks, friends, or topics of
interest.
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E-Commerce 2.0
• Enterprise social networks
“Social networks whose primary objective is to facilitate
business.”
➡ Grow the circle of business contacts and promote themselves
online, by
1. Participating in existing public social networks, e.g. Facebook,
MySpace.
2. Creating private social networks for customers and business
partners (e.g. Starbucks).
3. Offering internal private social networks for employees and
alumni.
4. Enhancing existing applications, such as e-mail and customer
relationship management applications.
5. Developing
tools
or offering services for building and
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E-Commerce 2.0
• Virtual worlds and second life
★ Virtual world (metaverse)
✴ “A user-defined world in which people can
interact, play, and do business. The most
publicized virtual world is Second Life.”
★ How students make money in a virtual world
✴ Many young people are pursuing money-making
opportunities in virtual worlds.
✴ They hone their computer skills to capitalize on
the growing demand for virtual goods and
services.
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The Digital World
• The 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 World
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The Digital World
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The Digital World
• The digital society
★
E.g. Digital camera, digital TV, digital car, etc..
★
E.g.
★
✴
Shopping online;
✴
Using social smartphones to connect with Facebook and MySpace;
✴
Having RFID to charge drinks;
✴
Receiving e-mail alerts; swiping a student ID card;
✴
Using blog site to do business;
✴
Using online dating and matching services;
E.g. Barack Obama.
✴
Obama purchased Internet ads featured in 18 videogames through
Microsoft’s Xbox Live Service.
✴
His objective was to target young adult males, who are difficult to reach
through traditional campaign advertising.
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Electronic Commerce Drivers
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The Changing Business Environment
• Customers are becoming more powerful.
• Organizations are operating under increasing pressures to produce more
products, faster, and with fewer resources.
• Impact on the manner in which companies operate, and many firms have
restructured themselves and their information systems.
• The new business environment has the following characteristics:
➡
A more turbulent environment, with more business problems and
opportunities;
➡
Stronger competition;
➡
The need for organizations to make decisions more frequently;
➡
A larger scope for decisions, because more factors (market,
competition, political issues, and global environment) need to be
considered;
➡
More information and/or knowledge is needed for making decisions.
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Electronic Commerce Business Models
• 5 Typical EC business models
a) Online direct marketing
✴ Sales may be from a manufacturer to a customer, eliminating
intermediaries or physical stores; or from retailers to
customers, making distribution more efficient (e.g. Wal-Mart).
b) Electronic tendering systems
✴ Large organizational buyers, private or public, usually make
large-volume or large-value purchases through a tendering
(bidding) system, also known as a reverse auction.
✴ Tendering (bidding) system
✦ “Model in which a buyer requests would-be sellers to
submit bids; the lowest bidder wins”.
✴ E.g. Government agencies.
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Electronic Commerce Business Models
c)Electronic marketplaces and exchanges
✴ E.g. Vertical marketplaces that concentrate on one
industry such as retail industry or chemical industry.
d)Viral marketing
✴ An organization can increase brand awareness or
even generate sales by inducing people to send
influencing messages to other people or to recruit
friends to join certain programs.
e)Social networking and Web 2.0 tools
✴ Many companies are deriving commercial benefits
from social networking and Web 2.0 tools.
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The Limitations and Barriers of EC
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The Limitations and Barriers of EC
• Major barriers:
★ Resistance
to new technology; implementation difficulties;
security concerns; lack of technology skills; lack of
potential customers; cost;
★ Government, private sector, international organizations;
lack of time and resources;
★ Cultural differences; organizational differences;
incompatible B2B interfaces; international trade barriers;
lack of standards.
• Ethical issues
★ Employee e-mail monitoring;
★ Invasion of privacy of millions of customers whose data are
stored in private and public databases;
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