Introduction to E-Commerce
Electronic commerce (e-commerce)
E-commerce refers to the use of electronic means and technologies to conduct commerce (sale, purchase, transfer, or exchange of products, services, and/or information), including within business, business-tobusiness, and business-to-consumer interactions. Delivery of product or service may occur over or outside of the Internet.
Electronic business (e-business) Term used interchangeably with e-commerce E-business is defined as the transformation of key business processes (internal processes that companies use to support their buying, selling, hiring, planning, and other activities) through the use of Internet technologies
E-commerce and E-business share some common characteristics. Both E-commerce and E-business:
provides s higher payoff in the form of more efficient processes lowers costs and provide potentially greater profits utilize a technology infrastructure of databases, application servers, security tools, systems management and legacy systems involve the creation of new value chains between a company and its customers and suppliers, as well as within the company itself involve major and potentially disruptive organizational change
Categories of Electronic Commerce
E-commerce can be categorized by the types of entities participating in the transaction. Some general e-commerce categories:
Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Business-to-government (B2G)
The Development and Growth of Electronic Commerce
Electronic funds transfers (EFTs)
Also called wire transfers Electronic transmissions of account exchange information over private communications networks
Electronic data interchange (EDI)
Transmitting computer-readable data in a standard format to another business (e.g. purchase order, invoices, etc.)
The Development and Growth of Electronic Commerce (continued)
Trading partners
Businesses that engage in EDI with each other
Value-added network (VAN)
Independent firm that offers connection and transaction-forwarding services to buyers and sellers engaged in EDI
The Second Wave of Electronic Commerce
Defining characteristics of the first wave:
Dominant influence of U.S. businesses Extensive use of the English language Many new companies started with outside investor money Unstructured use of e-mail Over-reliance on advertising as a revenue source
9
The Second Wave of Electronic Commerce (continued)
Second wave:
Global enterprises in many countries are participating in electronic commerce Established companies fund electronic commerce initiatives with their own capital Customized e-mail strategies are now integral to customer contact
10
Comparison of E-commerce Waves
11
Product/Process Suitability to Electronic Commerce
Commodity item
Hard to distinguish from the same products or services provided by other sellers Features have become standardized and well known
12
Product/Process Suitability to Electronic Commerce (continued)
Shipping profile
Collection of attributes that affect how easily a product can be packaged and delivered
High value-to-weight ratio
Can make overall shipping cost a small fraction of the selling price
13
Advantages of Electronic Commerce
Electronic commerce can increase sales and decrease costs If advertising is done well on the Web, it can get a firms promotional message out to potential customers in every country Using e-commerce sales support and ordertaking processes, a business can:
Reduce costs of handling sales inquiries Provide price quotes
14
Advantages of Electronic Commerce (continued)
It increases purchasing opportunities for buyers Negotiating price and delivery terms is easier The following cost less to issue and arrive securely and quickly:
Electronic payments of tax refunds Public retirement Welfare support
15
Disadvantages of Electronic Commerce
Perishable grocery products are much harder to sell online It is difficult to:
Calculate return on investment Integrate existing databases and transactionprocessing software into software that enables ecommerce
Cultural and legal obstacles also exist
16
Strategic Business Unit Value Chains
Value chain
A way of organizing the activities that each strategic business unit undertakes
Primary activities include:
Designing, producing, promoting, marketing, delivering, and supporting the products or services it sells
Supporting activities include:
Human resource management and purchasing
17
Industry Value Chains
Value system
Larger stream of activities into which a particular business units value chain is embedded Also referred to as industry value chain
18
19
