E-Commerce

Electronic Commerce(E-commerce)

Created by:Ailene L. Madato

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Introduction to E-commerce andE-Business

We are all aware on the effects of the fast changing technology on our lives: socially and economically aspects. We have been engaging to the new techniques and things that the technology offers such as new gadgets and applications.

In terms of business, the business community has realized that to be able to stay globally competitive, they must be able to cope up with the new trend of business competition, and that is to engage in e-business, which also offers e-commerce.

• E-commerceo Definition: refers to online transactions - buying and selling of

goods and/or services over the Internet.

• E-businesso Definition: covers online transactions, but also extends to all

Internet based interactions with business partners, suppliers and customers such as: selling direct to consumers, manufacturers and suppliers; monitoring and exchanging information; auctioning surplus inventory; and collaborative product design. These online interactions are aimed at improving or transforming business processes and efficiency.

Difference:• E-commerce covers outward-facing processes that touch customers,

suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies. It involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors. It's ambitious but relatively easy to implement because it involves only three types of integration: vertical integration of front-end Web site applications to existing transaction systems; cross-business integration of a company with Web sites of customers, suppliers or intermediaries such as Web-based marketplaces; and integration of technology with modestly redesigned processes for order handling, purchasing or customer service.

• E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings. An e-business strategy is also more difficult to execute, with four directions of integration: vertically, between Web front- and back-end systems; laterally, between a company and its customers, business partners, suppliers or intermediaries; horizontally, among e-commerce, enterprise resource planning (ERP), customer relationship management (CRM), knowledge management and supply-chain management systems; and downward through the enterprise, for integration of new technologies with radically redesigned business processes. But e-business has a higher payoff in the form of more efficient processes, lower costs and potentially greater profits.

Significance of E-commerce and E-Business

• Through e-commerce, consumers are given more choices on what product they will going to buy. Since e-commerce offers faster, easy, and more open process, consumers will be able to do transactions whenever they are and whatever they do as long as they have their gadgets with the and internet connections to go online.

• Electronic business techniques allows business, companies and organizations to link their external and internal data processing systems more efficiently and flexibly, to work more closely with the suppliers and partners, and to better cope up to the needs and expectations of their customers.

B2B and B2C• B2B (Business to Business)Definition: B2B deals primarily with other businesses, not the general

public– Relationship driven– Maximize the value of the relationship– Small, focused target market– Multi-step buying process, longer sales cycle– Brand identity created on personal relationship– Educational and awareness building activities– Rational buying decision based on business value

• B2C (Business to Consumer)Definition: B2C provides products and services directly to the end

user– Product driven– Maximize the value of the transaction– Large target market– Single step buying process, shorter sales cycle– Brand identity created through repetition and imagery– Merchandising and point of purchase activities– Emotional buying decision based on status, desire, or price

E-commerce Fundamentals

E-commerce Environment

• Highly competitive (due to economic, societal, legal and technological factors)• Quick and sometimes unpredictable change• The need for more production, faster and with fewer resources

E-commerce Market Place• A marketplace is a website which allows merchants

and individual traders to sell their wares through their system, for either a percentage of the sale or for a listing fee. The sale system that a marketplace uses varies from one to another, but they can generally be classified into the following,– Auction– fixed price– classified ad– store front

E-commerce Business Models

• Business model – set of planned activities designed to result in a profit in a marketplace

• Business plan – document that describes a firm’s business model• E-commerce business model – aims to use and leverage the

unique qualities of Internet and Web

E-commerce Infrastructure

Every business, whether the traditional business or online business, requires an infrastructure to support its customers and operations. This includes facilities, equipment, and processes to support all the functional areas of your business. Choosing the correct infrastructure to match your business strategies enables your operations to run efficiently.

Marketing• Of all the infrastructure elements, marketing may

be the most important. To succeed, your website must be found. Once visitors are on your site, you need to keep them there and compel them to buy from you. That’s the job of your marketing team. Whether it’s website design, social media, search marketing, merchandising, email, or other forms of advertising, it's all about marketing.

• To effectively manage marketing activities in-house is very challenging. Most small ecommerce businesses outsource some element of marketing.

Facilities• A key competitive advantage that ecommerce

businesses have over brick-and-mortar stores is the investment in their physical offices and warehouses. In many cases, you can host your business out of a home office and your basement or garage. If you drop ship or outsource fulfillment, you may be able to do that for a long period of time. Even when you grow to have many employees, you can set up your offices in class B or C space, as you have no need for a fancy store in the right location.

• A word of advice is to keep your options flexible. Try to find an office park that has a wide variety of spaces in different sizes. You may be able to start in a smaller space and move up to a larger one without penalty, as your needs change.

Customer Service• There are many choices today for delivering high-

quality customer service. You can manage those activities in-house or outsource to a third party. Basic customer service for sales and post-sales activities can be handled using email, and by providing an 800 number for more extensive phone support. A customer-management system will make those activities easier, but for smaller companies it is not a requirement.

• Live chat will impact your operations as someone needs to be available during specified hours of operation. Be sure to gauge the impact of that on your organization, if you decide to handle those activities in house

Information Technology• Choosing the right ecommerce platform is one of the most

important decisions you will make in your business. Do you want to build and host your own system, outsource the development and then manage the system going forward, or use a hosted, software-as-a-service platform that is more turnkey and externally managed?

• If you build and host your own system, you may need more cash upfront and skilled administrators and developers on your staff. By using a SaaS platform, you will not need to host or manage the system in-house, but you may still need web developers on staff. Choosing to outsource the development and hosting will reduce your staffing costs, but you will incur higher costs for any future enhancements or changes to your websites.

• There are pros and cons to any approach. Just be sure to think through the impacts on both your staffing and your cash flow and bottom line before you move forward.

Fulfillment• Another key decision is whether you will manage your own

inventory or outsource those activities to a fulfillment house or through drop shipping arrangements with your suppliers.

• Managing your own inventory will provide you with a high level of control, but you will tie up your cash in inventory, warehouse space, and your own fulfillment staff. In some industries — like the jewelry supply industry that my previous business was in — managing your own inventory was the most logical choice. We had no alternative for drop shipping, and most items were purchased in bulk and were very small. We did not trust preparation and fulfillment to an outside service.

• Select the best fulfillment option to meet your needs. Be sure to understand the costs involved and analyze the other options before moving forward.

Human Resource• Many small-business owners avoid the human

resources function. Recruiting, setting up compensation, maintaining compliance and other HR activities are specialized and time consuming. You may choose to bring the resources in-house to manage those activities, but also evaluate outsourcing them. There are many individuals and agencies well equipped to take on your HR activities.

Internet• refers to the global network of public computers

running Internet Protocol. • a worldwide system of computer networks that

allows users to send and receive information from other computers.

Internet on E-commerce• Internet plays a very prominent and important role

because it acts as guidance for different strategies involved in money marketing. In fact, behind the growth of the internet business, the success of these businesses is also largely dependent on the internet to a large extent. Right from the increase in the sales to the decrease in the costs and expansion of the size of the market are predetermined by the internet. This is the reason for the growing popularity of the online businesses in today’s date. Both buying and selling can be carried out through the internet.

E-environmentWith the advent of E-commerce, many in the world are able to compete

in global markets regardless of language, and cultural barriers, physical distance and national boundaries since products, services, and transaction processes can be re-engineered to adjust to changing business environments. E-commerce has evolved through the basic E-mail and electronic data interchange of the past few years to the sophisticated Web based interactive systems today. With the advent of E-commerce, many in the world are able to compete in global markets regardless of language, and cultural barriers, physical distance and national boundaries since products, services, and transaction processes can be re-engineered to adjust to changing business environments. E-commerce has evolved through the basic E-mail and electronic data interchange of the past few years to the sophisticated Web based interactive systems today.

E-governance• E-governance is more than just a government

website on the Internet. The strategic objective of e-governance is to support and simplify governance for all parties; government, citizens and businesses. E-governance electronic means support and stimulate good governance. Therefore, the objectives of e-governance are similar to the objectives of good governance. Good governance can be seen as an exercise of economic, political, and administrative authority to better manage affairs of a country at all levels.

Supply Chain ManagementSupply chain management, is the active management of supply

chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

E-procurementE-procurement is the business-to-business purchase and sale of supplies

and services over the Internet. An important part of many B2B sites, e-procurement is also sometimes referred to by other terms, such as supplier exchange. Typically, e-procurement Web sites allow qualified and registered users to look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify prices or invite bids. Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers.

E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computerized supply chain management.

E-marketingE-Marketing provides businesses and advertisers with an easily

customized, efficient form of marketing to complement existing advertising strategies and close in on the elusive and profitable interactive market. Email campaigns supply proven, measurable results and can take your current marketing campaign to the next level. For product promotion, event invitations, query responses and newsletters, Email provides an all-in-one solution.

The benefits of E-Marketing include:• Speed: messages are delivered straight to the recipients'

inboxes, instantly• Reach and Penetration: overcomes geographical parameters

that exist with other communication methods• Ease and Efficiency: messages can be distributed to multiple

recipients at the click of the mouse• Low Cost: requires minimal investment to set up an appropriate

technical system• Targeted: allows you to target specific recipient groups and

reach a defined, engaged audience

Customer Relationship ManagementCRM (customer relationship management) is an information industry

term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth.

• Key Tools and Elements of Customer Relationship Management

Change ManagementChange management is a systematic approach to dealing with change,

both from the perspective of an organization and on the individual level. A somewhat ambiguous term, change management has at least three different aspects, including: adapting to change, controlling change, and effecting change. A proactive approach to dealing with change is at the core of all three aspects. For an organization, change management means defining and implementing procedures and/or technologies to deal with changes in the business environment and to profit from changing opportunities.

In a computer system environment, change management refers to a systematic approach to keeping track of the details of the system (for example, what operating system release is running on each computer and which fixes have been applied).

Analysis and Design

Analysis for E-commerce• Understanding processes and information flows to improve service

delivery• “Information is an agent of coordination and controls and serves as

a glue that holds together organizations, franchises, supply chains and distribution channels. Along with material and other resource flows, information flows must also be handled effectively in any organizations.

Task Analysis and Task Decomposition• Before a process can be designed and implemented, a more

detailed breakdown is required known as Task Analysis.• Curtis, et. al. (1992) framework:

Level 1 – business process are decomposed into; Level 2 – activities which are further divided to; Level 3 – task

Level 4 – sub-task

Identify Entities• Entity is a group of similar or related data• Entities define the broad groupings of information such as

information about different people, transactions or products. When the design is implemented, each design will form a database table.

Identify Attributes• Attribute is a property or characteristic of an entity• Entities have different attributes that describes the

characteristics of any single instance of an entity. When the design is implemented, each attribute will form a field, and the collection of fields for one instance of the entity such as a particular customer will form a record

Identify Relationships• Relationship describes how different tables are linked• The relationships between entities requires identification of

which fields are used to link the tables. The fields that are used to link the tables are referred to as key fields. A primary key is used to uniquely identify each instance of an entity and a secondary key is used to link a primary key to another key

Analysis Consideration (Bevan)

Use Case Analysis

M-commerce

Mobile Commerce of m-commerce is the explosion of applications and services that are becoming accessible from Internet-enabled mobile devices. It involves new technologies, services and business models. It is quite different from traditional e-Commerce. Mobile phones impose very different constraints than desktop computers. But they also open the door to a slew of new applications and services. They follow you wherever you go, making it possible to look for a nearby restaurant, stay in touch with colleagues, or pay for items at a store.

Management of Mobile Commerce ServicesInternet has made available a wide range of applications and services over the

World Wide Web at a low cost. Millions of users enjoy the benefits accrued by Internet, by using their desktop computers or portables. At the same time, the number of users of mobile terminals (phones, PDAs, and communicators) is continuously increasing.

The miniature size of mobile terminals and the fact that they can easily fit in a pocket and carried everywhere makes them an ideal channel for offering personalized and localized services to the continuously increasing number of mobile users. We define Mobile electronic commerce (M-Commerce) as any type of transaction of an economic value having at least at one end a mobile terminal and thus using the mobile telecommunications network. This means, that E-Commerce transactions performed by a mobile customer via a fixed terminal (e.g. from a hotel room) or via a portable computer that is connected to the Internet via a modem and wired network are not included in our definition of M-Commerce

M-Commerce creates new business opportunities for players in the field, like content and service providers and especially for Mobile Network Operators who can play a more active role in a m-commerce transaction and become more profitable and competitive.

3G (3rd Generation) Mobile Telephony• The International Telecommunications Union (ITU) defined the

third generation (3G) of mobile telephony standards IMT-2000 to facilitate growth, increase bandwidth, and support more diverse applications. For example, GSM could deliver not only voice, but also circuit-switched data at speeds up to 14.4 Kbps. But to support mobile multimedia applications, 3G had to deliver packet-switched data with better spectral efficiency, at far greater speeds.

4G (4th Generation) Mobile Telephony• Carriers that use orthogonal frequency-division multiplexing

(OFDM) instead of time division multiple access (TDMA) or code division multiple access (CDMA) are increasingly marketing their services as being 4G, even when their data speeds are not as fast as the International Telecommunication Union (ITU) specifies. According to the ITU, a 4G network requires a mobile device to be able to exchange data at 100 Mbit/sec. A 3G network, on the other hand, can offer data speeds as slow as 3.84 Mbit/sec.

• From the consumer's point of view, 4G is more a marketing term than a technical specification, but carriers feel justified in using the 4G label because it lets the consumer know that he can expect significantly faster data speeds.

Mobile Commerce Issues

Mobile e-commerce technology issues can be categorized into those related to: • mobile clients, • communications infrastructure, and • other technology.

Mobile Client Issues

Mobile clients (sometimes called mobile commerce terminals) are those devices and their client software used by individuals to communicate with wireless communications networks. The issues related to mobile clients primarily center on hardware and software technology

Wireless Communications Infrastructure Issues

The communications infrastructure necessary for mobile e-commerce is complex. Its technologies can be roughly divided into those that primarily support wireless local area networks (LANs) and those that are used for wireless telecommunications purposes. This paper does not explore all wireless communications technologies, standards, and protocols, but only those most relevant to mobile commerce. Further details on these technologies and others can be found in Varshney [1999] and Varshney and Vetter [2000].

Other Wireless Technology Issues