Unit 7 E-commerce Basic concepts of e-commerce Applications of e-commerce.

Unit 7 E-commerce

bull Basic concepts of e-commercebull Applications of e-commerce

Starting up

bull Do you buy over the Net What goods or services have you brought over the Net

bull Name the most popular e-business company in your mind

bull Translate the term ldquo 电子商务rdquo into English

Part I Basic concepts

Key conceptsbull E-commerce

ndash The process of buying selling or exchanging products services and information via computer networks

bull E-business

ndash Application of Internet technologies in the management of day-to-day business processes

ndash A broader definition of EC which includes not just the buying and selling of goods and services but also servicing customers collaborating with business partners and conducting electronic transactions within an organization

E-business vs E-commercebull The main difference between them is that e-

commerce defines interaction between organizations and their customers clients or constituents On the other hand e-business is a broader term that also encompasses an organizationrsquos internal operations

bull E-commerce describes the buying and selling of products services and information via computer networks including the Internet where e-Business describes the broadest definition of EC It includes buying and selling of products and services servicing customers collaborating with business partners and conducting other intra-business tasks

Components of e-commerce

To execute those applications companies need the right information infrastructure and support services As shown

bull People Sellers buyers intermediaries information systems specialists and other employees and any other participants

bull Public policy Legal and other policy and regulating issues such as privacy protection and taxation

bull Marketing and advertising Like any other business EC usually requires the support of marketing and advertising

bull Support services Many services are needed to support EC They range from payments to order delivery and content creation

bull Business partnerships Joint ventures e-marketplaces and partnerships are some frequently occurring relationships in e-business

Discussion

bull What are the advantages of e-commercebull What are the disadvantages of e-commerce

bull Business-to-business (B2B)

ndash Business that sells products or provides services to other businesses

ndash WalMart GE Oraclebull Business-to-consumer (B2C)

ndash Business that sells products or provides services to end-user consumers

ndash Amazon Bank of Americabull Consumer-to-consumer (C2C)

ndash Consumers sell directly to other consumers

ndash e-bay Taobao

E-commerce transaction types

bull Business-to-government (B2G)

ndash Government buys or provides goods services or information tofrom businesses or individual citizens

bull Business-to-employee (B2E)

ndash Information and services made available to employees online

bull Mobile commerce (m-commerce)

ndash E-commerce transactions and activities conducted in a wireless environment

bull Collaborative commerce (c-commerce)

ndash Individuals or groups communicate or collaborate online

E-commerce transaction types

bull Consumer-to-business (C2B)

ndash Consumers make known a particular need for a product or service and suppliers compete to provide it

bull Government-to-citizenconsumer (G2C)

ndash A government provides services to its citizens via EC technologies

bull Consumer to Government (C2G)bull Government to Business (G2B)bull Government to Government (G2G)

E-commerce transaction types

Internet termsbull p55 Vocabulary

More termsbull Businessrevenue model 商业 经营 盈利模式

ndash How does a firm make money (generate revenues)ndash Advertising transaction fee sales subscription affiliate

bull Electronic funds transfers (EFT) 电子资金转帐ndash Electronic exchange of account information over

communications networksndash Online bill payment

bull Electronic data interchange (EDI) 电子数据交换ndash Electronic exchange of computer-readable data in a

standard format between trading partnersndash Purchase orders sales invoice request for quotes etc

bull Value-added network (VAN) 增值网络ndash Third party provider of connection and transaction

services to businesses for EDI EFT etcndash 通过计算机服务网络 使不同企业不同的网络系统可以相互连接

从而使不同形式的数据交换成为可能

More terms

bull E-CRM

ndash Process of building sustaining and improving e-business relationships with existing and potential customers through digital media

bull SCM = Supply Chain Management

ndash Process of moving goods from customer order through the raw materials supply production and the distribution of products to the customer

Part II Applications

Examples of e-commerce

bull Internet Advertisementbull Internet Shop bull Internet Bankbull Internet Auctionbull Internet Gambling

Internet advertisement

bull The most common money making method in the Internet is to establish a popular web site where other parties are willing to advertise on the web site

bull For example you can provide an Internet search engine for Internet surfers to search some specific information in a fast manner

bull Your web site may then receive a number of hits per day and could therefore become an ideal place for advertising How much money you can make is dependent upon how popular your site is

bull This kind of money making methods may not require complex clientserver but you need to have bright marketing thinking to find a hot topic for your site

Internet shop

bull With the growth of the Internet there are more and more on-line shops available in the Internet

bull An Internet shop functions like a normal shop where you buy goods by cash cheque or credit card

bull Most Internet shops use credit card based payment systems That is you pay your goods by sending your credit card information to the vendor through a secure channel provided by the Internet shop

bull Of course the security and fairness are the key issues to enable a payment

Internet bankingbull More and more banks now consider the Internet banking as a

must go way to further reduce banking costbull However many people are still cautious about Internet banking

due to security fearsbull If security is reassured more people will start to use the Internet

as a faster and more convenient way of bankingbull An Internet banking system is a clientserver system The bank is

the server who provides the banking servicebull When a customer opens the client page on a banking site what

he or she can do is dependent on the service provided The services include

1048708 Checking your account balance

1048708 Transferring your money from one account to the other

1048708 Doing digital cash transaction

1048708 Withdraw digital cash

1048708 Deposit digital cash

Internet auction

bull The auction server provides the service for bidders to submit their bids A typical Internet bidding protocol looks like

bull 1 Auction Server provide auction information on the Web

bull 2 Bidder cast its bid to the server via a secure channel

bull 3 Auction Server open bids after the bidding time is over and announces the highest bid (seller-oriented auction)

bull 4 Bidder send its payment to the Server via a secure channel

Internet gambling

bull Internet gambling is very much dependent upon the electronic commerce

bull The most on-line gambling systems use the existing electronic commerce protocols

bull Therefore an Internet gambling server must provide two basic services ie game service and e-commerce service

How a transaction takes place

Consumer finds something she wants to buy at a ldquoshoprdquo on the Net

Consumer sends on enciphered request for payment to her bank

The electronic bank sends back a secure packet of e-cash

Consumer sends the e-cash to the shop

Verification and remittance of actual funds

Consumer Public Key

The shop sends the packet of cash to its bank

Merchant Bank

Merchant Server

Shop

Consumerrsquos Bank

Shop

1

3

6

2

5

4

Trading on the Internet

bull Listening p54

ldquoTrading on the Internetrdquo

Major players

Success stories amazoncom

bull Opened July 1995bull Employees gt 9000 worldwidebull Revenue $692 billion net sales in 2004bull Customers Nearly 49 million active accounts

Success stories Dell Computers

bull Dell Computers made waves in industry circles when they announced that they sold over a billion dollars worth of Personal Computers directly off the Web in 1997

ndash Moving routine interactions to the Web

ndash 50000 customers use Dellrsquos web site to check their order status each week

ndash 90000 SW files are downloaded (It costs $150000 a week)

ndash 200000 customers access Dellrsquos trouble-shooting tips online

Business model

Why Did the ldquocomrdquo Companies Fail

bull Flawed business modelndash Companies view the technology as their business

rather than having a businessndash Lose money on individual transactions

bull Amazoncom loses almost $3 per order on multi-product orders

ndash Lack of control over supply of what they sellbull Pricelinecom

ndash All the good ideas duplicated by established concerns with deep pockets and staying power

e Business rules

Five rules need follow if you want to be profitable network business

1 If you are interested in a market and no competitors yet but the potential market volume is not significant Try to be the biggest e Business player

2 If you prefer enter a e-market and the overall market is large enough Then you make a quick enter and create your own advantage

3 If the e-market large enough but has a very strong competitor inside Then you use the model to subvert their profitability

Five basic rules

4 If the e-market is not big but has a very strong competitor inside Well you just make your own personal website

5 If you donlsquot clear about the market think about that who would be your first clear customers

e Business rules Five basic rules

Homework

bull Reading pp56-57

ldquoUsing the Netrdquo