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INTRODUCTION
What is meant by electronic commerce or more commonly known as
e-commerce? Have you ever heard of this term?
Figure 1.1: Online shopping
Source: http://www.cartoonstock.com
TTooppiicc
11 Introduction
to E-commerce
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Differentiate the activities between e-commerce and
traditionalcommerce;
2. Explain the attributes of e-commerce;
3. Explain the elements of e-commerce;
4. Discuss the advantages and disadvantages of e-commerce;
5. Identify categories of e-commerce business models;
6. Describe the success and failure of e-commerce in different
eras; and
7. Identify major themes underlying the study of e-commerce.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 2
To many people, e-commerce means shopping on the Internet or
online as illustrated in Figure 1.1. However, e-commerce is much
broader and encompasses many business activities than just online
shopping. This topic will provide a comprehensive description and
definition of e-commerce. We will see the unique features of
e-commerce and its differences from traditional commerce as well as
describe the categories of e-commerce business models. Then, the
origin and growth of e-commerce will be explained and followed by
the discussion of the three broad interrelated themes in
e-commerce.
TRADITIONAL COMMERCE AND E-COMMERCE
Before we venture into e-commerce, it is good to learn about the
activities that companies undertake manually when they do any kind
of business, and then learn how these firms might undertake these
activities electronically. Therefore, in the following sections, we
will look into two types of commerce: traditional and
electronic.
1.1.1 Traditional Commerce
Commerce or doing business is a negotiated exchange of valuable
objects or services between two or more parties and includes all
activities that each party undertakes to complete the transaction.
We can examine any commerce transaction from either the buyer or
the sellers viewpoint. Let us look at the activities involved in
traditional commerce for buyers as shown in Table 1.1.
Table 1.1: Activities of Traditional Commerce for Buyers
Activities Description
Identify specific need A buyer begins by identifying a need.
This may be a simple need, such as when an individual decides to
buy a sandwich as he feels hungry, or it could be a very complex
need such as looking for the most suitable school.
Search for products or services that will satisfy the specific
need
Once the buyers have identified their specific needs, they must
find the products or services that will satisfy those needs. In
traditional commerce, buyers use a variety of search techniques.
They may refer to catalogues, ask friends, read advertisements, or
examine directories. Buyers may consult salespersons to gather
information about specific features and capabilities of the
products they are considering.
1.1
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TOPIC 1 INTRODUCTION TO E-COMMERCE 3
Select a vendor After t he buyers ha ve selected a product or
service that will meet their identified need, they must select a
vendor that can supply that product or service. Buyers in
traditional commerce contact vendors in a variety of ways, for
instance, by telephone, by mail and by meeting face-to-face at
trade shows.
Negotiate a purchase transaction
After choosing a vendor, the buyer negotiates a purchase
transaction. This transaction might have many elements, including
delivery date, logistic information, method of shipment, price,
warranty, payment terms and will often include detailed
specification to be confirmed by inspection when the product is
delivered or the service is performed.
Make payment When the buyer is satisfied that the purchased
product or service meets the terms and conditions agreed by the
buyer and seller, the buyer pays for the purchase.
Perform regular maintenance and make warranty claims
After the sale is completed, the buyer may have further contact
with the seller regarding warranty claims, upgrades and regular
maintenance.
Do you know that each action taken by a buyer engaging in
commerce will trigger a corresponding action by the seller? The
activities involved in traditional commerce from a sellers
viewpoint are as shown in Table 1.2.
Table 1.2: Activities of Traditional Commerce for Sellers
Activities DDescription
Conduct market research to identify customer needs
Sellers often undertake market research to identify potential
customers needs. Even businesses that have been selling the same
product or service for many years look for ways to improve and
expand their offerings. Firms conduct surveys, have salespeople
talk with the customers, run focus groups and hire outside
consultants to help them in this identification process.
Create product or service that will meet customers needs
Once customer needs are identified, sellers create the products
and services that they believe will meet those needs. This includes
design, testing and production activities.
Advertise and promote product or service
The next step for the sellers, is to make potential customers
aware of the new products or services. T o communicate information
about their products and services, sellers engage in many different
kinds of advertising and promotional activities to the existing and
potential customers.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 4
Negotiate a sale transactions, including delivery logistic,
inspection, testing and acceptance
Once a customer responds to the sellers promotional activities,
the two parties must negotiate the details of the purchase
transaction. In some cases, this is simple; for example, many
retail transactions involve nothing more than a buyer entering a
sellers store, selecting and inspecting items to purchase and
paying for them. In other cases, purchase transactions require
prolonged negotiations to settle the terms of delivery, inspection,
testing and acceptance.
Ship goods and invoice customer
After the seller and buyer resolve the delivery logistics, the
seller ships the goods or provides the service and sends an invoice
to the buyer.
Receive and process customer payments
In some cases, the seller requires payment before or at the time
of shipment. However, most businesses sell to each other on credit,
so the seller must keep a record of the sale and wait for the
customer to pay. Most businesses maintain sophisticated systems for
receiving and processing customer payments. They need to track the
outstanding amounts and ensure that payments they received are
credited to the proper customers accounts and invoiced.
1.1.2 E-commerce
For decades, firms have used various electronic communication
tools to conduct different kinds of business transaction. Banks
have used EElectronic Fund Transfers (EFT) to move customers money
around the world. All kinds of businesses have used EElectronic
Data Interchange (EDI) to place orders and send invoices. Retailers
have used television advertising to generate telephone orders from
the general public for various types of merchandise. Are you aware
that some people use the term e-commerce for activities that
specifically uses the Internet to conduct business? In essence,
e-commerce is characterised by several attributes as shown in
Figure 1.2.
What are the similarities between the activities of commerce
from the viewpoints of a buyer and a seller ?
SELF-CHECK 1.1
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TOPIC 1 INTRODUCTION TO E-COMMERCE 5
Figure 1.2: E-commerce attributes
Let us look at the detailed explanation for each attribute as
depicted in Table 1.3.
Table 1.3: E-commerce Attributes
E-commerce Attribute DDescription
Exchange of digitised information between parties
This information exchange can represent communication between
two parties, coordination of the flow of goods and services, or
transmission of electronic orders. These exchanges can be between
organisations, individuals or both.
Technology-enabled E-commerce uses technology-enabled
transactions such as Internet browsers in the World Wide Web (WWW),
Automated Teller Machine (ATM), and EElectronic Data Interchange
(EDI) between business-to-business partners, and electronic
banking. Businesses used to manage such transactions with customers
and markets strictly through face-to-face interaction; in
e-commerce, such transactions can be managed by using
technology.
1. In your own words, describe what you understand of
e-commerce.
2. Give some examples of e-commerce activities. You can search
the Internet or any related books to find out.
ACTIVITY 1.1
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TOPIC 1 INTRODUCTION TO E-COMMERCE 6
Technology-mediated Gradually, from technology-enabled
transactions, e-commerce is moving into technology-mediated
relationship. Buyers and sellers no longer meet to transact in the
physical worlds marketplace but meet in the virtual worlds
market-space. Business transactions and relationship with the
customers in the market-space are largely managed by technology.
Hence, the success of a business rests on how well the screens and
machines manage customers and their expectations.
Based on Table 1.3, e-commerce can be summarised as follows:
1.1.3 Differences between E-commerce and Traditional
Commerce
How to distinguish e-commerce from traditional commerce? The
following are the elements that make e-commerce unique or different
from traditional commerce as shown in Figure 1.3:
Figure 1.3: Elements of e-commerce
E-commerce involves digitally enabled commercial transactions
between and among organisations and individuals.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 7
There are eight elements of e-commerce. Each will be elaborated
in Table 1.4.
Table 1.4: Elements of E-commerce
Elements Description
Core Strategic Decisions are Technology-Based
The strategic decisions about the virtual storefront, customer
service, and customer experience, the content of site are
co-mingled with the technological decisions. These decisions are
related to the following:
(i) Selection of service providers; (ii) Common business
systems; and (iii) Approaches to web design. In contrast to the
traditional commerce, digital business cannot extract technological
choices from the strategic decision-making process. This does not
mean that technology is unimportant to traditional commerce; but
rather their technological decisions are not as tightly linked to
strategy.
Ubiquitousness E-commerce is ubiquitous, meaning that it is
available just about everywhere and at all times. The Web
storefront is expected to be open seven days a week, 24 hours a
day, and 365 days a year. This level of access has significant
implications for the following parties: (a) CCustomers
The customers are always able to do the following: (i) Gather
information;
(ii) Conduct product searches; (iii) Compare prices across
multiple websites; (iv) Order products; and Customers are also able
to shop at home, at work, or even from the car by using mobile
commerce or wireless digital devices such as hand phones, laptops
and Personal Digital Assistants (PDA) to enable transactions on the
Web (refer to Figure 1.4).
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TOPIC 1 INTRODUCTION TO E-COMMERCE 8
Figure 1.4: Wireless digital devices
Source: http://www.topnews.in
(b) Firms For the firm, the level of access has forced
businesses to adjust both tactical responsiveness to competitive
moves and strategic responsiveness. It also reduces transaction
costs and the cost of participating in a market. To transact, it is
no longer necessary to spend time and money travelling to the
market.
Real-Time Competitive Responsiveness
E-commerce storefronts are frequently engaged in dynamic
dialogues on the public platform on the Web. Hence, it is easier
for companies to duplicate their competitors success. In e-commerce
markets, prices and costs become more transparent. Price
transparency refers to the ease with which consumers can find out
the variety of prices in the market. This does not mean that the
e-commerce marketplace will eventually evolve to commodity-like
status, with price being the only consideration. Quite the
contrary, speed of innovation, branding, ease of use, operational
effectiveness, product assortment and affiliate agreements can be
used by companies to maintain or increase differentiation.
Technology-Based Customer Interface
In traditional commerce, customers conduct transactions either
by face-to-face or over the phone with store clerks, account
managers, or other individuals. In contrast, the e-commerce
customers interface is in a screen-to-face interaction. This
includes computer-based monitors, ATM machines, PDAs, or other
electronics devices.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 9
These types of interfaces place enormous responsibility on the
organisation to capture and represent the customer experience
because there are often no opportunity for direct human
intervention during the encounter. If the interface is designed
correctly, the customer will have no need for simultaneous or
follow-up phone conversation.
Customer Controlled Interaction
In most websites, the customer is in control during
screen-to-face interactions. The customer controls the following
elements:
(a) Search process;
(b) Time spent on various sites;
(c) Degree of price or product comparison;
(d) People with whom the customers comes into contact; and
(e) Decision to buy. In a face-to-face interchange, the control
can rest with the buyer, seller or community member. The virtual
store can attempt to shape the customer experience with
uniquely-targeted promotions, reconfiguration of storefronts to
reflect past search behaviour, recommendations based on previous
behaviour of other similar users, and access to proprietary
information. However, the seller has much less power in the online
environment due to the control and information flow that the online
world puts into customers hands.
Knowledge of Customer Behaviour
While the customer controls the interaction, the firm has
unprecedented access to observe and track individual consumer
behaviour. Companies, through third-party measurement firms, can
track a host of behaviours such as:
(a) Websites visited;
(b) Length of stay on a site;
(c) Content of wish lists and shopping carts;
(d) Amount purchased;
(e) Repeat purchase behaviour; and
(f) Other metrics. This level of customer behaviour tracking as
compared with tracking consumers attitude, knowledge, or
behavioural intentions is not possible in traditional commerce.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 10
Permit Personalisation and Customisation
E-commerce technologies permit the following:
(a) Personalisation Merchants can target their marketing
messages to specific individuals by adjusting the message to a
persons name, interests and past purchases.
(b) Customisation Changing the delivered product or service
based on a users preferences or prior behaviour.
In sum, each of these differences from traditional commerce
makes e-commerce business unique. The combination of
screen-to-customer interfaces, real-time competitive responses, and
one-to-one customisation lead to value increases for both customer
and firm.
Global Reach E-commerce technology permits commercial
transactions to cross cultural and national boundaries far more
conveniently and cost-effectively than traditional commerce. As a
result, the potential market size for e-commerce merchants is
roughly equal to the size of the worlds online population. The
total number of customers that can be obtained by an e-commerce
business is a measure of its reach.
In contrast, most traditional commerce is local or regional and
it involves local merchants or national merchants with local
outlets. Television, radio stations and newspapers, for instance,
are primarily local and regional institutions with limited but
powerful national networks that can attract a national audience. In
contrast to e-commerce technology, these older commerce
technologies do not easily cross national boundaries to a global
audience.
1.1.4 Business Processes in Commerce
Do you know that since the introduction of e-commerce, many new
terms have evolved to describe the various types of business? For
example, look at the following terms: (a) BBrick and Mortar
Business
A business that has a physical location, such as a store, which
we can walk into and purchase merchandise; and
(b) CClicks and Brick Business A business that has a physical
location and an online presence.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 11
However, in this section, we will look into the common business
processes involved in commerce. In many cases, business processes
use traditional commerce activities very effectively, and
technology cannot improve upon them. Products that buyers prefer to
touch, smell, or examine closely are difficult to sell using
electronic commerce. For example, customers might be reluctant to
buy high-fashion clothing and perishable food products as shown in
Figure 1.5, such as meat and fruits, if they cannot closely examine
the products before agreeing to purchase them.
Figure 1.5: Perishable food items
Source: http://www.akumal-villas.com
Retail merchants have years of traditional commerce experience
in creating store environments that help convince customers to buy.
This combination of store design, layout and product display
knowledge is called mmerchandising. In addition, many salespeople
have developed skills that allow them to identify customer needs
and find products or services that meet those needs. The art of
merchandising and personal selling can be difficult to practise
remotely. On the other hand, some products are easier to sell on
the Internet than others. As can be seen in Figure 1.6, products
such as books or CDs are good candidates for e-commerce because
customers do not need to experience the physical characteristics of
the particular item before they buy it. Since one copy of a new
book is identical to other copies, and since the customer is not
concerned about fit, freshness or other such qualities, customers
are usually willing to order a title without examining the specific
copy they will receive.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 12
Figure 1.6: Books are potential e-commerce products
Source: http://earth911.com Let us look at Table 1.5 which shows
examples of business processes. They can be divided as follows:
(a) Processes well-suited to e-commerce;
(b) Processes better-suited to traditional commerce; and
(c) Processes well-suited to e-commerce and traditional
commerce.
Table 1.5: Examples of Business Processes
E-commerce Traditional Commerce E-commerce and Traditional
Commerce
Sale/purchase of books, CDs and travel services
Sale/purchase of impulse items for immediate use
Sale/purchase of automobiles
Online delivery of software Sale/purchase of perishable food
products
Online banking
Sale purchase of investment and insurance products
Small-denomination purchases and sales
Roommate-matching services
Online shipment tracking Sale/purchase of high value jewellery
and antiques
Sale/purchase of residential real estate
Of course, these suitability classifications depend on the
current state of available technologies, and thus, might change as
new tools emerge for implementing e-commerce. One business process
that is especially well-suited to electronic commerce is the
selling of commodity items.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 13
A product that has a strong brand identity such as a Sony CD
player is easier to sell on the Web than an unbranded item, as the
brands reputation reduces or increases the buyers concerns about
the items quality. Other items that are well-suited to e-commerce
are those that appeal to small, but geographically dispersed groups
of customers. Collectible comic books are an example of this type
of product. A combination of traditional and e-commerce strategies
works best when the business process includes both commodity and
personal inspection elements. For example, many people are finding
information on the Web about new and used automobiles, but only a
few people would be willing to buy a used car without driving and
personally inspecting it. In the above case, e-commerce provides a
good platform for buyers to obtain information about available
models, options, reliability, prices and dealerships. However, the
variability in the condition of used cars makes the traditional
commerce component of personal inspection a key part of the
transaction negotiation. The next two sections summarise some
advantages and disadvantages of e-commerce.
1.1.5 Advantages of E-commerce
Do you know why firms are interested in e-commerce? Firms are
interested in it because, quite simply, it can help increase the
profits. All the advantages of e-commerce for businesses can be
summarised in one statement as shown.
A commodity item is a product or service that is hard to
distinguish from the same products or services provided by other
sellers. Its features have become standardised and well- known.
Gasoline, books, CDs office supplies, soap, computers, and
furniture are all examples of commodity products or services.
In which business process does a combination of traditional and
e-commerce strategies work best? Explain.
SELF-CHECK 1.2
E-commerce can increase sales and decrease costs.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 14
The advantages of e-commerce are as shown in Table 1.6:
Table 1.6: Advantages of E-commerce
Advantages Description
Easily reach the target market
Well-planned Web advertising can get even a small firms
promotional message out to potential customers in every country in
the world. A firm can use e-commerce to reach narrow market
segments that are geographically scattered. The Web is particularly
useful in creating vvirtual communities, gathering of people who
share common interests on the Internet, that become ideal target
markets for specific types of products or services.
Cost-effective A business can reduce the costs of handling sales
inquiries, providing price quote and determining product
availability by using e-commerce in its sales support and
order-taking processes. Just as e-commerce increases sales
opportunities for the seller, it increases purchasing opportunities
for the buyer. Negotiating price and delivery terms is easier in
e-commerce because the Internet can help companies efficiently
obtain competitive bid information. E-commerce increases the speed
and accuracy with which businesses can exchange information, which
reduces costs on both sides of transactions.
Great variety E-commerce provides buyers with a wider range of
choices than traditional commerce because buyers can consider many
different products and services from a wider variety of sellers.
Some buyers prefer a great deal of information in deciding on a
purchase; others prefer less. E-commerce provides buyers with an
easy way to customise the level of detail in the information they
obtain about a prospective purchase.
Fast access Instead of waiting for days for the mail to bring a
catalogue or product specification sheet, or even minutes for a fax
transmission, buyers can have instant access to detailed
information on the Web. Some products such as software, audio clips
or images can even be delivered through the Internet, which reduces
the time buyers must wait to begin enjoying their purchases.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 15
Safe Electronic payment can be easier to audit and monitor than
payment made by cheque, providing protection against fraud and
theft losses.
Availability E-commerce enables people to work from home and
this brings the benefit of avoiding commuter-caused traffic and
pollution. E-commerce can also make products and services available
in remote areas. For example, distance education is making it
possible for people to learn skills and earn degrees no matter
where they live.
1.1.6 Disadvantages of E-commerce
We have looked at the advantages of e-commerce. Now, let us move
on to the disadvantages of e-commerce. Most of the disadvantages
stem from the newness and rapidly developing pace of underlying
technologies. These disadvantages will disappear as e-commerce
matures and becomes more available and acceptable by the general
population. The disadvantages of e-commerce are as shown in Table
1.7.
Table 1.7: Disadvantages of E-commerce
Disadvantages DDescription
Difficulty in examining and selecting
Some business processes may never adopt e-commerce. For example,
perishable foods, unique high-cost items and antiques as it might
be impossible to inspect adequately from a remote location,
regardless of any technologies that may be devised in the future.
Many products and services require that a significant mass of
potential buyers to be equipped and willing to buy through the
Internet. Most online grocers focus their sales efforts on packaged
goods and branded items. Perishable grocery products, such as fruit
and vegetables, are much harder to sell online because customers
want to examine and select specific items that are still fresh and
appealing.
Difficulty in calculating the cost
Businesses often calculate return-on-investment numbers before
committing to any new technology. In e-commerce, investments are
difficult to calculate, because the costs and benefits are
unquantifiable. Costs, which are a function of technology, can
change dramatically even during a short-lived e-commerce
implementation projects, as the underlying technologies are
changing too fast.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 16
Difficulty in recruiting and retaining employees
Many firms have had trouble recruiting and retaining employees
with the technological, design, and business process skills needed
to create an effective e-commerce presence.
Difficulty in integrating existing databases and software
Business face the difficulty of integrating existing databases
and transaction-processing software designed for traditional
commerce into the software that enables e-commerce.
Difficulty in terms of cultural and legal aspects
Many businesses face cultural and legal obstacles in conducting
e-commerce as some consumers are fearful to send their credit card
details to online merchants that they have never met.
However, as more businesses and individuals find the benefits of
e-commerce to be compelling, many of these technology and
culture-related disadvantages will be resolved and become less
challenging.
1.1.7 Differences between E-commerce and E-business
The rapid advancement of technology and its application in the
business seem to be accompanied by similar rapid changes in
terminology. The use of the term e-commerce has been supplemented
by additional terms such as e-business. There is a debate among
consultants and academicians about the meaning and limitations of
both terms: e-commerce and e-business. Some argue that e-commerce
encompasses the entire world of electronically based organisational
activities that support a firms market exchanges including a firms
entire information systems infrastructure. On the other hand,
others argue that e-business encompasses the entire world of
internal and external electronically based activities, including
e-commerce. For the purposes of this module, we will use the term
e-business to refer primarily to the digital enabling of
transactions and processes within a firm, involving information
systems under the control of the firm. For most of the part,
e-business does not include commercial transactions involving an
exchange of value across organisational boundaries. For example, a
companys online inventory control mechanisms are a component of
e-business, but such internal processes do not directly generate
revenue for the firm from outside businesses or consumers, as
e-commerce does.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 17
It is true; however, that an e-business infrastructure can also
support e-commerce exchanges. For example, an e-commerce and
e-business systems can blend together at the business firm
boundary, at the point where internal business systems link up with
suppliers for example, e-business applications turn into e-commerce
precisely when an exchange of value occurs. In simple words, we can
conclude that e-commerce primarily involves transactions that cross
firm boundaries. In contrast, e-business primarily concerns the
applications of digital technologies to business processes within
the firm.
1. Name one type of business process which is not listed in the
topic that you believe would be a good candidate for e-commerce.
Explain why.
2. Surf the following websites which deal with business
processes in E-commerce. Then, answer the questions.
http://www.mphonline.com (Books) http://www.cimbclicks.com
(E-banking) http://www.airasia.com (Airline tickets reservation)
http://www.parksononline.com (Department stores) (a) What does
these business deal with?
(b) What are other examples of business processes which involve
e-commerce?
ACTIVITY 1.2
1. Define e-commerce.
2. By using your own words, explain how e-commerce is unique and
different from traditional commerce.
EXERCISE 1.1
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TOPIC 1 INTRODUCTION TO E-COMMERCE 18
CATEGORIES OF E-COMMERCE
In this section, you will get to know the different categories
of e-commerce. There are four major categories (refer to Figure
1.7):
(a) Business-to-consumer (B2C);
(b) Business-to-business (B2B);
(c) Consumer-to-consumer (C2C);
(d) Consumer-to-business (C2B).
Figure 1.7: Four categories of e-commerce Source: Adapted from
Rayport, J. F., & Jaworski, B. J. (2008).
Introduction to e-commerce. Boston: McGraw-Hill In the following
sections, you will learn in depth, the categories of e-commerce and
m-commerce.
1.2.1 Business-to-Consumer E-commerce
What is business-to-consumer e-commerce? In this model, the
seller is the business and the buyer is the consumer (public).
Products for sale can be physical objects such as books, flowers,
computers, groceries, prescription drugs, music, movies, and cars.
They also can be
1.2
Business-to-consumer (B2C) e-commerce consists of the sale of
product or services from a business to the general public or an end
user.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 19
intangible items. For example, an online magazine or download
purchase software. Popular services offered by B2C businesses
include online banking, stock trading, and airline reservations.
Sellers that use a B2C business model can maximise benefits by
eliminating the middleman. Businesses sell products directly to
consumers without using traditional retail channels. This enables
some B2C companies to sell products at a lower cost and with faster
service than comparable traditional commerce. Consumers also derive
benefits from the B2C business model. They have access to a variety
of products and service without the constraints of time or
distance. Consumers easily can make comparisons between shops to
find the best buy. Many B2C websites provide consumer services such
as access to product reviews, chat rooms and other product-related
information. These services often attract and retain customers.
Many B2C businesses personalise their websites to consumers by
tracking visitors preference while they browse through the web
pages. This enables the B2C business to target advertisement,
determine customer needs, and personalise offerings to a customer s
profile. You will learn more on B2C businesses in Topic 2. For now,
we will move on to the second category of e-commerce:
Business-to-Business (B2B).
1.2.2 Business-to-Business E-commerce
What is meant by business-to-business e-commerce?
An example of B2B is when, a company that manufactures bicycles
uses the Internet to purchase tires from its supplier. Many
businesses use the unique advantages of Internet to communicate
with business partners. For example, some companies provide
services to assist a manufacturer with locating suppliers. The
Internet enables all participants in a supply chain to relay
information to each other. A supply chain consists of the
interrelated network of facilities and a distribution method that
obtains materials, transforms materials into finished products and
delivers the finished products to customers.
Business-to-business (B2B) e-commerce consists of the sale and
exchange of products and service between businesses.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 20
Most businesses that engage in B2C e-commerce also participate
in B2B e-commerce. Thus, many companys websites also provide goods
and services to other businesses. A company engages in B2B
e-commerce when stocking its warehouse and engages in B2C
e-commerce when selling goods in the warehouse to consumers. Basic
examples of B2B e-commerce sites are vendor, service, broker and
info-mediary sites. A vendor for B2B site, also called an
e-procurement site, is a product supplier that allows purchasing
agents to use a network to shop, submit request for quotes (RFQs),
and purchased items. A service B2B site uses the network to provide
one or more services to businesses such as financing, warehousing
or shipping. A brokering B2B site acts as a middleman by
negotiating the contract of a purchase and a sale. An info-mediary
(acronym for information intermediary) B2B site provides
specialised information about suppliers and other businesses.
1.2.3 Consumer-to-Consumer E-commerce
Now, let us look at the meaning of C2C.
The most popular vehicle for C2C e-commerce is the online
auction. An online auction is similar to negotiating, in which a
consumer auctions goods to other consumers. If you are interested
in an item, then you will bid on it. The highest bidder at the end
of the bidding period purchases the item. In C2C e-commerce, the
consumer does the following:
(a) Prepares the product for market;
(b) Places the product for auction or sale; and
(c) Relies on the market-maker to provide a catalogue, search
engine and transaction-clearing capabilities so that products can
be easily displayed, discovered and paid for. Websites like eBay
(www.ebay.com.my) and lelong (www.lelong.com.my) are the perfect
examples for C2C e-commerce.
Consumer-to-consumer (C2C) e-commerce consists of individuals
using the Internet to sell products and service directly to other
individuals.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 21
Another form of C2C e-commerce is Internet peer-to-peer (P2P) as
shown below.
With the appropriate software and Internet connection, users can
copy files from someone elses hard disk to their hard disks.
Although music-sharing services are now fee based, these programmes
initially stirred controversy related to musics copyright
infringement. They allowed users to easily copy MP3 music files
from one computer to another. Other activities in C2C e-commerce
include:
(a) Classified ads (e.g. www.freeclassifields.com);
(b) C2C exchange (e.g. www.targetbarter.com)
(c) Personal service (e.g. www.match.com).
(d) Virtual property (e.g. www.mmorpg.com)
1.2.4 Consumer-to-Business E-commerce
What is meant by consumer-to-business e-commerce?
These groups may be economically-motivated, as with demand
aggregators, or socially-oriented, as with cause-related advocacy
groups at SpeakOut.com. Examples of C2B are in the forms of
affiliate marketing, answering online polls for companies, being a
freelance developer, etc. For example, a shampoo-producing company
sends you an online survey and asks you to fill it out. When you
have filled in the survey, you will be paid a particular amount of
money for your service in the form of answers given for the
questions posed in the survey.
Internet peer-to-peer (P2P) describes an Internet network that
enables users with the same networking software to connect to each
others hard disks and exchange files directly without having to go
through a central web server.
Consumer-to-business (C2B) e-commerce is a complete reversal of
the business-to-consumer (B2C) model. In a consumer-to-business
model, a consumer offers goods or services to companies and the
companies pay for them.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 22
1.2.5 Mobile Commerce (M-commerce)
Even though it is not regarded as one of the main categories of
e-commerce, m-commerce still plays a significant role in
e-commerce.
Traditional e-commerce provides access to anyone, anytime and
anywhere via wireless devices such as the Internet. In essence,
wireless networks utilise newly available bandwidth and
communication protocols to connect mobile users to the Internet.
While existing wireless networks have limited bandwidth capacity,
soon their capacity will increase significantly. In general,
wireless web technology will enable the extension of existing Web
business models to service the mobile work force and consumer of
the future. For instance, Amazon.com recently made its site
accessible by wireless mobile devices. Currently, there are many
more cell phone subscribers than there are Internet users. When
cell phones become truly Web-ready, a development expected within
the next several years, analysts predict an explosion of interest
in m-commerce.
Mobile-commerce (m-commerce) takes traditional e-commerce models
and leverages emerging new wireless technologies to permit mobile
access to the web.
What traditional barriers are almost eliminated by e-commerce?
Discuss your answers.
SELF-CHECK 1.3
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TOPIC 1 INTRODUCTION TO E-COMMERCE 23
ORIGIN AND GROWTH OF E-COMMERCE
Although e-commerce is a very recent phenomenon of the 1990s, it
already has a history. The history of e-commerce can be divided
into three periods:
(a) IInnovation (1995-2000);
(b) CConsolidation (2001-2006); and
(c) RReinvention (2007-future).
1.3
Visit these websites to get a clear view of each category of
e-commerce below:
Business-to-consumer (B2C) http://www.amazom.com http://
www.yahoo.com
Business-to-business (B2B) http://www.alibaba.com
http://www.dell.com
Consumer-to-consumer (C2C) http://www.ebay.com.my
http://www.lelong.com.my
Consumer-to-business (C2B) http://www.freelancer.com
http://www.google.com/adsense
Mobile commerce (m-commerce)
http://www.cimbclicks.com.my/mobilebankinguide.htm
After viewing each website, describe how the features of
websites in each categories are different compared to others.
ACTIVITY 1.3
1. How does B2C business model maximise their benefits?
2. Describe B2B e-commerce.
3. What is the role of consumer in a C2C e-commerce?
EXERCISE 1.2
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TOPIC 1 INTRODUCTION TO E-COMMERCE 24
Let us look at the definition given for each period.
Each of these e-commerce periods is characterised by a set of
visions and driving forces. In the following sections, we will take
a look at each period in detail.
1.3.1 Innovation Era (1995-2000)
The early years of e-commerce were the time where key e-commerce
concepts were developed and explored. Thousands of dot.com
companies were formed and backed by over $125 billion in financial
capital in the United States. For computer scientists and
information technologists, the earlier success of e-commerce was
attributed to a powerful set of information technologies developed
over 40 years, from mainframe computer to personal computer,
Internet and networking technologies. The vision was that everyone
in the world could afford inexpensive computer with access to
Internet.
Innovation era was a period of explosive growth, beginning in
1995 with the first widespread use of the web to advertise
products, and ending in 2000 when stock market valuations for
dot.com companies began to collapse.
Consolidation era began in 2001, by which time the sobering
reassessment of e-commerce companies and the value of their stock
had occurred. Emphasis was shifted to business-driven approach
rather than technology-driven approach where large traditional
firms learned to use the web to strengthen their market
position.
Reinvention era began in 2007 and extends through the present
day and into the uncertain future. This period involves the
extension of Internet technologies, the discovery of new business
models based on consumer-generated content, social networking and
virtual-online lives.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 25
For economists, e-commerce raised the realistic prospect of a
perfect Bertrand market. Let us look at the definition
provided.
Merchants in turn would have equal direct access to hundreds of
millions of customers. In this near-perfect information
market-space, transaction costs would plummet because the costs of
searching for prices, product descriptions, payment settlement, and
order fulfilment would all fall drastically. New shopping bot
programmes would automatically search the entire web for the best
prices and delivery times. For merchants, the cost of searching for
customers would also fall, reducing the need for wasteful
advertising. Prices and even costs would be increasingly
transparent to the customer, who could now know exactly, and
instantly the worldwide best cost, quality, and availability of
most products. In turn, the market middleman would disappear. The
distributors, wholesalers and other factors in the marketplace that
are intermediates between producers and consumers, each demanding a
payment and raising costs while adding little value. Manufacturers
and content originators would develop a direct market relationship
with their customers. The resulting intense competition, the
decline of intermediaries, and the lower transaction costs would
eliminate products brands, and along with it, the possibility of
monopoly profits based on brands, geography, or special access to
factors of production. Prices for products and services would fall
to the point where prices covered costs of production plus a fair,
market rate of return on capital, plus additional small payments
for entrepreneurial effort (that would not last long). Unfair
competitive advantages (which occur when one competitor has an
advantage that others cannot purchase) would be eliminated, as
would extraordinary returns on invested capital.
Bertrand market is a market where price, cost, and quality
information is equally distributed, where a nearly infinite set of
suppliers compete against one another, and where customers have
access to all relevant market information worldwide.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 26
That vision was called friction-free commerce as explained
below.
For real-world entrepreneurs, their financial backers and
marketing professionals in the Innovation period, the idea of
friction-free commerce was far from their own visions. For these
players, e-commerce represented an extraordinary opportunity to
earn far above normal returns on investment, far above the cost of
borrowing capital. The e-commerce market space represented access
to millions of consumers worldwide that used the Internet and a set
of marketing communications technologies (e-mail and web pages)
that was universal, inexpensive and powerful. These new
technologies permit marketers to practise what they have always
done which is segmenting the market into groups with different
needs and price sensitivity, targeting the segments with branding
and promotional messages, and positioning the product and pricing
for each group; but with even more precision. In this new market
space, extraordinary profits would go to first movers. Let us look
at the following to figure out who are first movers.
Online businesses using the new technology could create
informative, community-like features unavailable to traditional
merchants. The thinking was that once customers became accustomed
to using a companys unique Web interface and feature set, they
could not easily be switched to competitors.
Friction-free commerce is a vision of commerce in which
information is equally distributed, transaction costs are low,
prices can be dynamically adjusted to reflect actual demand,
intermediaries decline and unfair competitive advantages are
eliminated.
First movers are firms which were the first to market in a
particular area and which moved quickly to gather market share.
First movers could establish a large customer base quickly, build
brand name recognition early, build an entirely new distribution
channel, and then inhibit competitors (new entrants) by building in
switching costs for their customers through proprietary interface
designs and features available only at one site.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 27
E-commerce was, after all, a totally new way of shopping that
would have to offer some immediate cost benefits to consumers.
Doing business on the Web was thought to be much more efficient
compared to traditional commerce, or even when compared to direct
mail catalogue, the costs of customer acquisition and retention
were also supposed be so much lower, profit would inevitably
materialise out of these efficiencies. Given that the market share
and the number of visitors to the site are dynamic, revenue became
far more important in the earlier stages than earnings or profits.
Entrepreneurs and their financial backers in the Innovation period
expected that extraordinary profitability would come, but only
after several years of losses. Thus, the Innovation period of
e-commerce was driven largely by visions of profiting from new
technology, with the emphasis on quickly achieving very high market
visibility. Overall, the Innovation period of e-commerce was
characterised by experimentation, capitalisation and hyper
competition.
1.3.2 Consolidation Era (2001-2006)
The crash in stock market values for dot.com companies
throughout 2000 is a convenient mark to the end of that period.
There were a number of reasons for that crash such as: (a)
RRebuilding the Internal Business Systems
A part of the run-up technology stocks was due to enormous
information technology capital expenditure of large American firms
who were rebuilding their internal business systems to withstand
the challenges of the year 2000 problem (Y2K). The simple change
from year 1999 to 2000 was believed to be a major threat to
corporate systems. Once these systems were rebuilt, this
information technology capital expenditure declined, sending the
earnings forecasts of technology companies down.
(b) BBuilt Excess Capacity in High-Speed Networks
In early 2000, it became clear that the telecommunications
industry had built excess capacity in high-speed fibre optic
networks. Price wars were breaking out in telecommunications
markets, and it was clear that earnings in this sector would fall
dramatically, with many smaller firms going bankrupt and unable to
pay debts incurred to build high-speed networks.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 28
(c) LLess Sales Growth The 1999 e-commerce Christmas season
provided less sales growth than anticipated, and more importantly,
demonstrated that e-commerce was not easy. Many dot-com retailers
could not deliver in time and this hurt the credibility of B2C
e-commerce in general.
(d) RRise in Valuations of Dot.Com and Technology Companies
The valuations of dot.com and technology companies had risen so
high that even supporters were questioning whether earnings of
these companies could ever grow fast enough to justify the prices
of the shares. Some high-tech companies had stock values 400 times
earnings. And as it turned out, most dot-com companies especially
those specifically devoted to e-commerce in fact did not have any
earnings! Most, in fact, were losing money while showing revenue
growth. Even supporters of the e-commerce phenomenon began to
wonder if the dot.com companies would ever become profitable. The
stock market crash of dot.com companies led to a sobering
reassessment of the prospects for e-commerce and the methods for
achieving business success.
While the Consolidation period continues in an extremely rapid
pace of growth in customers and revenues, it is clear that many of
the visions for e-commerce developed during the Innovation period
have not been fulfilled. For instance, economists visions of
friction free commerce have not been entirely realised. Prices are
sometimes lower on the Web, but the low prices are primarily a
function of entrepreneurs selling products below their costs.
Consumers are less price sensitive than expected; surprisingly, the
websites with the highest revenue also have the highest prices.
There remains considerable persistent price dispersion on the web,
and the concept of one world, one market, and one price has
weakened as entrepreneurs discover new ways to differentiate their
products and services. For instance, prices on books and CDs vary
by as much as 50% and prices for airline tickets as much as 20%.
Brands remain very important in e-commerce as consumers trust some
firms more than others to deliver a high quality product on time.
Search costs may have fallen, but the overall transactions costs of
actually completing a transaction in e-commerce remains very high.
About 65% of e-commerce purchases are terminated in the shopping
cart stage because of these consumer uncertainties:
(a) Will the merchant actually deliver?
(b) What is the time frame of delivery?
(c) Does the merchant really have stock on this item?
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TOPIC 1 INTRODUCTION TO E-COMMERCE 29
In many product areas, it is easier to call a trusted catalogue
merchant than order on a website. Intermediaries may have not
disappeared as predicted, and few manufactures or producers have
actually developed a one-to-one sales relationship with their
ultimate customers. If anything, e-commerce has created many new
opportunities for middlemen to aggregate content, products, and
services into portals and thereby introduce themselves as the new
intermediaries. Yahoo.com and Amazon.com are two examples of this
kind of new intermediaries. Nor have the visions of many
entrepreneurs and venture capitalists for e-commerce during the
Innovation period materialised exactly as predicted. First-mover
advantage appears to have succeeded only for a small group of
sites. Historically, first movers have been the long-term losers,
with the early-to-market innovators usually being displaced by
established fast follower firms with the financial, marketing,
legal and production assets needed to develop mature markets, and
this has proved true for e-commerce as well. The overall costs of
doing business on the Web including the costs of technology, site
design and maintenance, and warehouses for fulfilment are no lower
than the costs faced by the most efficient brick-and-mortar stores.
The start-up costs can be staggering. Attempting to achieve
profitability by raising prices has often led to large customer
defections. If you want to know, from the e-commerce merchants
perspective, the e in e-commerce does not stand for easy.
1.3.3 Reinvention Era (2007-Future)
E-commerce entered the Reinvention period in 2007 which extends
through the present day and into the uncertain future. This is the
period of reinvention involving the extension of Internet
technologies, the creation of new business models based on
consumer-generated content, social networking and virtual online
lives, exemplified by the fast moving entrepreneurial firms such as
Facebook, YouTube, MySpace and Twitter. Even though, only a few of
the new models have been profitable from their huge audience, many
still have the potential to be profitable in the future.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 30
Table 1.8 summarises the differences among the three periods of
e-commerce evolution.
Table 1.8: Evolution of E-commerce
Innovation (1995-2000)
Consolidation (2001-2006)
Reinvention (2007-Future)
Technology-driven Business-driven Audience, customer and
community driven
Revenue growth emphasis
Earnings and profits emphasis
Audience and society network growth emphasis
Venture capital financing
Traditional financing Smaller venture capital financing, early
small firms buyouts by large online players
Ungoverned Stronger regulation and governance
Extensive government surveillance
Entrepreneurial Large traditional firms Large pure web-based
firms
Disintermediation Strengthening intermediaries
Proliferation of small online intermediaries renting business
processes of larger firms
Perfect markets Imperfect markets, brands and network
effects
Online market imperfections
Pure online strategies Mixed bricks and clicks strategies
Return of pure online strategies in new markets; extension of
mixed bricks- and -clicks in traditional retail markets
First mover advantages
Strategic follower strength
First-mover advantages return in new markets as traditional web
players catch up
Low complexity retail products
High complexity retail products
Services
Source: Laudon, K. C., & Traver, C. G. (2010).
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TOPIC 1 INTRODUCTION TO E-COMMERCE 31
1.3.4 Predictions for the Future
The future of e-commerce is now clearer, although not certain.
There are six main factors that will help define the future of
e-commerce and they are: (a) RRise on Overall Revenues, Technology
Products, and Customers
There is little doubt that the technology of e-commerce, the
Internet, the Web, and the growing number of wireless Internet
appliances will continue to propagate through all commercial
activities. The overall revenues from e-commerce will continue to
rise on a very steep growth path, most likely in the range 12% to
18% per year through 2012. The number of products and services sold
on the web and the size of average purchase order are both growing
at double-digit rates. There has been a significant broadening of
online product mix compared to the earlier years when books,
computer software and hardware are the main products sold online.
The faster growing e-commerce categories include home products,
office supplies, sporting goods and apparel/accessories.
(b) RRise in the e-commerce Prices E-commerce prices will rise
to cover the real costs of doing business on the web and to pay
investors a reasonable rate of return on their capital. When a
company or a business model managed to attract consumers towards
it, costs such as tax, governments regulation and other additional
costs will be imposed to it. Thus, the increase in price will cover
the imposed costs and make it possible to cover the costs of
conducting the business.
(c) RRise in the e-commerce Margins and Profits E-commerce
margins (the difference between the revenues from sales and the
costs of goods) and profits will rise to levels more typical of all
retailers. However, there is a possibility that the profit margin
will reduce in the case of tight competition with other online
businesses.
(d) RRadical Change in the Cast of Players The cast of players
will change radically. In the B2C and B2B market spaces,
traditional well-endowed, experienced online companies such as
AirAsia will continue to play a growing and dominant role in
e-commerce while new start-up ventures will gain large online
audiences for new products and services not dominated by large
players.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 32
(e) LLarge Number of Successful Integrated Firms The number of
successful pure online companies will remain smaller than
integrated firms that adopt mixed click-and-brick strategies,
combining traditional sales channels and online efforts. Examples
of integrated firms are as follows:
(i) Amazon.com will increasingly use printed catalogues;
(ii) Procter & Gamble will continue to develop informative
websites such as Tide.com; and
(iii) Major automotive companies will continue to improve the
content and value of their websites even if they do not enter into
direct sales relationships with consumers but instead use the web
to assists sales through dealers which thereby strengthens the
traditional intermediaries and channels.
In summary, the future of e-commerce will be a mixture of
traditional retail extending their brands to online markets.
E-commerce firms in the earlier period such as Amazon and eBay will
strengthen their financial results and dominant positions. New
entrepreneurs and venture capitalist in e-commerce firms have the
potential to be in the prominent position by developing new
audiences from the growth of social network and community based
activities.
What is the difference between market space and marketplace?
SELF-CHECK 1.4
1. Discuss the ways in which the e-commerce era can be
considered both a success and a failure.
2. What factors will help define the future of e-commerce over
the next four to five years?
EXERCISE 1.3
To get more information on history and growth of e-commerce,
please check the following websites:
http://www.internetworldstats.com/
http://www.ecommerceland.com/history_ecommerce.html
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TOPIC 1 INTRODUCTION TO E-COMMERCE 33
UNDERSTANDING E-COMMERCE: ORGANISING THEMES
E-commerce as shown in Figure 1.8 involves three broad
interrelated themes as follows:
(a) Technology;
(b) Business; and
(c) Society.
Figure 1.8: E-commerce three broad interrelated themes
Technologies were the first to be developed. Then these
developments were exploited commercially. Once commercial
exploitation of these technology become widespread, a host of
social, cultural and political issues arise. In the following
sections, we will explore more on the three themes in
e-commerce.
1.4.1 Technology
The development and mastery of digital computing and
communications technology is at the heart of the newly emerging
global digital economy known as e-commerce. To understand the
likely future of e-commerce, you need a basic understanding of the
information technologies upon which it is built. E-commerce is a
technologically driven phenomenon that relies on a host of
information technologies as well as fundamental concepts from
computer science developed over a 50 year period. At the core of
e-commerce are the Internet and the World Wide Web (WWW). Behind
these technologies, there are a host of complementary technologies,
personal computers, local area networks, relational databases,
client/server
1.4
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TOPIC 1 INTRODUCTION TO E-COMMERCE 34
computing and fibre optic switches, to name just a few. These
technologies lie at the heart of sophisticated business computing
applications such as enterprise-wide computing systems, supply
chain management systems and customer relationship management
systems. E-commerce relies on all these basic technologies and not
just on the Internet. The Internet, while representing a sharp
break from prior corporate computing and communications
technologies, is nevertheless just the latest development in the
evolution of corporate computing and part of the continuing chain
of computer-based innovations in business. To truly understand
e-commerce, you need to know something about client/server
computing, packet-switched communications, and protocols such as
TCP/IP, Web servers and HTML. All of these topics are described
fully in Topic 3.
1.4.2 Business
While the technology provides the infrastructure, it is the
business applications that provide the potential for the
extraordinary returns on investment that create the interest and
excitement in e-commerce. New technologies present new ways of
organising production and business transaction. It change the
strategies of existing firms: Old strategies were made obsolete and
new ones need to be invented. New technologies are the birthing
grounds for thousands of new companies to offer new products and
services. To truly understand e-commerce, you will need to be
familiar with some key business concepts, such as the nature of
electronic markets, information goods, business models, firms and
industry value chains, industry structure and consumer behaviour in
electronic markets.
1.4.3 Society
E-commerce is increasingly subject to the laws of nations and
global entities. In order to conduct successful e-commerce
business, we need to understand the pressures that global
e-commerce places on contemporary society. Among the common issues
are intellectual property, individual privacy and public policy.
The cost of distributing digital copies of copyrighted or
intellectual property tangible works of minds such as music, books
and videos are nearly zero on the Internet. This caused e-commerce
to present special challenges to the various methods societies have
used to protect intellectual property rights in the past.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 35
Since the Internet and the Web are exceptionally proficient at
tracking the identity and behaviour of individuals online,
e-commerce raises difficulties for preserving privacy, or the
ability of individuals to place limits on the type and amount of
information collected about them, and to control the uses of their
personal information. The global nature of e-commerce also poses
public policy issues of equity, equal access, content regulation,
and taxation. If some societies choose to ban selected images,
selected commercial activity (i.e., online sports betting) or
political messages from their public media, then how can that
society exercise content and activity control over a global
e-commerce site? What rights do nation-states and their citizens
have with respect to the Internet, the web, and e-commerce?
List and briefly explain the major themes underlying the study
of e-commerce.
EXERCISE 1.4
Is it ethical and legal to download copyrighted music to your
computer for personal use? Give reasons for your answer. To get
more information on computer and society, visit these websites:
http://www.copyright.gov/ http://www.myipo.gov.my/
http://www.uspto.gov/trademarks/index.jsp http://www.privacy.org/
http://www.sigcas.org/
ACTIVITY 1.5
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TOPIC 1 INTRODUCTION TO E-COMMERCE 36
Commerce, the negotiated exchange of goods and services, has
been
practised in traditional ways for thousands of years.
E-commerce is the application of new technologies; particularly
Internet and web technologies, to help individuals, business and
other organisations to better conduct business.
The four main attributes of e-commerce are:
Intra and inter-organisational activities that support the
exchange;
Technology-enabled;
Technology-mediated; and
Exchange of digitised information between.
The eight elements of e-commerce are:
Core strategic decisions are technology-based;
Ubiquitousness;
Real-time competitive responsiveness;
Technology-based customer interface;
Customer controlled interaction;
Knowledge of customer behaviour;
Permit personalisation and customisation; and
Global reach.
The four major categories of e-commerce are:
Business-to-consumer;
Business-to-business;
Consumer-to-business; and
Consumer-to-consumer.
The advantages of e-commerce include easy-to-access target
market, cost effectiveness, great variety, fast access, safe and
avaibility.
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TOPIC 1 INTRODUCTION TO E-COMMERCE 37
However, the disadvantages are include:
Difficulty in examining and selecting;
Difficulty in calculating the cost;
Difficulty in recruiting and retaining employees;
Difficulty in integrating existing databases and software;
and
Difficulty in terms of cultural and legal aspects.
Three major themes in e-commerce are technology, business and
society.
Brickandmortar
Business process
Business-to-business
Business-to-consumer
Clicks-and-brick
Consolidation
Consumer-to-business
Consumer-to-consumer
E-commerce
First movers
Friction-free
Innovation
Internet peer-to-peer
Reinvention
Traditional commerce
M-commerce