The Digital Firm: ECommerce and Telecommunications
What is Commerce
Traditional commerce may be defined as:
The exchange or buying and selling of commodities; esp. the exchange of merchandise, on a large scale, between different places or communities; extended trade or traffic.
E-Commerce
E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet. In practice, this term and e-business are often used interchangeably. For online retail selling, the term e-tailing is sometimes used. Aspects of e-commerce include: E-tailing or "virtual storefronts" on websites with online catalogs. The gathering and use of demographic data through Web contacts. Electronic Data Interchange (EDI), the business-tobusiness exchange of data. email, instant messaging and social networking as media for reaching prospects and established customers. Business-to-business buying and selling. The security of business transactions.
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What is E-Commerce
E-commerce is a general term for any type of business, or commercial transaction that involves the transfer of information across the Internet. This covers a range of different types of businesses from consumer-based retail sites, like Amazon.com, through auction and music sites like eBay or MP3.com, to business exchanges trading goods or services between corporations. E-commerce includes retail shopping, banking, stocks and bonds trading, auctions, real estate transactions, airline booking, movie rentalsnearly anything you can imagine in the real world. Even personal services such as hair and nail salons can benefit from e-commerce by providing a website for the sale of related health and beauty products, normally available to local customers exclusively.
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What is E-Commerce Contd.
In summary, e-commerce is the
use of electronic communication to do business
Specifically, the transfer of information (transactions), over the Internet
Some people use the term e-business to refer to all the categories of e-commerce
E.g. IBM defines e-business as:
The transformation of key business processes through the use of internet technologies
Advantages of E-commerce
Increases sales, decreases cost
Allows small businesses to have global customer base Reduced cost through electronic sales enquires, price quotes and order taking
Provides purchasing opportunities for buyers (businesses can identify new suppliers and partners) Increase speed and accuracy for exchanged information, thus reducing cost
Advantages of E-commerce Business can be transacted 24hrs a day Contd.
The level of detail of purchase information is selected by user Digital products can be delivered instantly Tax refunds, public retirement and welfare support costs less when distributed over the Internet Allows products and services to be available in remote areas, e.g. remote learning
Disadvantages of E-commerce
Inability to sell some products (e.g. high cost jewelry and perishable foods, although supermarkets like www.Tesco.com delivers to your home) The newness and evolution of the current technology Many products require a large number of people to purchase to be viable High capital investment
Disadvantages of E-commerce Contd.
Difficulty in integrating current databases and transaction processing systems into ecommerce solutions Cultural and legal obstacles
Transmission of credit card details Some consumers resistant to change Laws are unclear
Shipping profile: Products with a low value-toweight ratio that can not be efficiently packed and shipped are unsuitable (use traditional commerce)
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E-commerce Categories
There are five general e-commerce categories:
Business to Consumer (or B2C) e-commerce Business to Business (or B2B) e-commerce (sometimes called e-procurement) Business processes that support buying and selling activities Consumer-to-consumer (or C2C) e-commerce Business-to-government (or B2G) e-commerce
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B2C e-commerce
Description
Businesses sell products or services to individual customers (consumers) Walmart.com sells merchandise to consumers through its Web site www.walmart.com
Example
Web site
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B2B E-commerce
Description
Businesses sell products or services to other businesses Grainger.com sells industrial supplies to large and small businesses through its Web site www.grainger.com
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Example
Web site
Business Processes
Description
Businesses and other organisations maintain and use information to identify and evaluate customers, suppliers and employees (and to support buying, selling hiring, planning and other activities). More and more this information is being shared Dell Computer uses secure internet connections to share current sales and forecasts with suppliers who use it to plan their production, therefore they deliver the right quantities of components at the right time
Example
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C2C e-commerce
Description
Participants in an online marketplace can buy and sell goods with each other Consumers and businesses trade with each other on eBay.com www.ebay.com
Example
Web site
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B2G e-commerce
Description
Business sell goods or services to governments and government agencies Cal-Buy portal for businesses that want to sell online to the State of California www.pd.dgs.ca.gov/calbuy/default.htm
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Example
Web site
E-commerce Categories Example
You are a computer manufacturing company who performs the following activities on the Internet:
Sells computers to individuals (B2C ) Purchases parts (e.g. hard drives, power supplies etc.) from a supplier (B2B ) Hires staff, manage customer accounts, advertise, etc. (Business processes ) Sells computers to the Government to be used in schools (B2G ) On eBay.com individuals buy and sell this brand of computers (C2C )
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