2–1

Unit 2
E-Business
Unit time: 0 Minutes

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Complete this unit, and you’ll know how to:

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A E-Commerce

B Webmail

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C Online Banking

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2–2 Computer Fundamentals: Book 2

Topic A: E-Commerce
E-Tailing
The word e-tailer is a portmanteau word derived from 'electronic' and 'retailer', in a
similar way to 'e-mail'. The word has been in use since at least 1995

Types of e-tailers
Two distinct categories of e-tailers are pure plays and bricks and clicks. A pure play e-
tailer uses the Internet as its primary means of retailing. Examples of pure play e-tailers

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are Dell and Amazon.com. A brick and click e-tailer uses the Internet to push its good
or service but also has the traditional physical storefront available to customers.

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Combining this new type of retail and the old of a general store is a new type of store

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which is part of the green economics movement, promoting ethical consumerism.

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Advantages to e-tailing
E-tailers who take part in pure play–type business have the opportunity to turn higher

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profit margins, due in part to the fact that many of the overhead expenses associated
with a physical retail space, such as labour, retail space, and inventory, can be

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significantly alleviated. Pure play allows for a retailer to be able to reach customers
world wide, whilst still only maintaining one location for each and every customer to

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visit, 24 hours a day, 7 days a week.

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Disadvantages to e-tailing
Many studies have shown that e-tailers are failing to meet the needs of online customers

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and that they generally only have one chance to make a good impression if they want
their customers to return. It is said that the three most important things that e-tailers

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today must work on to ensure profitability are "search, support and promotion

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E-tail legislation

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E-tailers must also abide by many rules, regulations, and legislation set up by
organizations such as the Federal Trade Commission and the Electronic Retailing
Association. These organizations in the United States, as well as similar ones around the

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world, ensure that e-tailers remain ethical in their practices and do not misrepresent
products online, among many other things.

FO Customer support
For customers, e-tailers can be a fast and convenient way to shop, but problems can
sometimes occur. Examples of possible problems include lost shipments, errors in
shipments, overbilled customers, faulty products, and credit card fraud. There are many
organizations designed to protect the customer and his/her rights, and examples are the
Better Business Bureau and TRUSTe
 E-Business 2 –3

B2B – Business to Business

Business-to-business (B2B) describes commerce transactions between businesses, such
as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
Contrasting terms are business-to-consumer (B2C) and business-to-government
(B2G).
The volume of B2B transactions is much higher than the volume of B2C transactions.
The primary reason for this is that in a typical supply chain there will be many B2B
transactions involving subcomponent or raw materials, and only one B2C transaction,
specifically sale of the finished product to the end customer.
For example, an automobile manufacturer makes several B2B transactions such as

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buying tires, glass for windscreens, and rubber hoses for its vehicles. The final

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transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.
In these new times, with new rules and new players, business-to-business e-commerce

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will be the main underpinning of a company’s strategy, operation and technology
systems. E-commerce replaces traditional supply chain and distribution network models

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that have provided the materials, services and products for companies. Those who want
to succeed must build a strategy that ensures them a position in the new e-commerce

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world.

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Skeletal Beginnings

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Fortunately, most companies already have at least the skeletal beginnings of an e-
commerce business already in place. That foundation is your internal computer network,

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which is a key component of any future business-to-business e-commerce system. Your
internal network likely includes an Intranet, which is an internal proprietary site

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created for effective collaboration and information sharing by company employees.

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Through it, employees share computer resources and data and communicate via email.

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Your company may also already have in place an Extranet, which is a section of your
network accessible to partners or vendors outside the company who may have a need for

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the information.

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Portals
Intranets and extranets are only a small part of B2B e-commerce, but serve as a starting

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point. As e-commerce matures, companies will need to create or use portals as
gateways. Portals are the work spaces of the future where people will go for information

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specific to their jobs. If you expect to become a participant in ecommerce transactions,
you will need to create or use portals with content that attracts other participants. For

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example, industries will begin seeing specific portals which gather and organize
industry information. Those needing that information will return again and again.
Portals that provide information about specific industries will rely on infomediaries.
Portals purchase, package and deliver content while infomediaries create, package and
sell that content. For example, infomediary ZDNET.com creates computer and
software-related content for their own site and sell that same content to others who need
it.
2–4 Computer Fundamentals: Book 2

B2C – Business to Consumer

Business-to-consumer (B2C, sometimes also called Business-to-Customer) describes
activities of businesses serving end consumers with products and/or services.
An example of a B2C transaction would be a person buying a pair of shoes from a
retailer. The transactions that led to the shoes being available for purchase, that is the
purchase of the leather, laces, rubber, etc. as well as the sale of the shoe from the
shoemaker to the retailer would be considered (B2B) transactions

C2B – Consumer to Business

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Consumer-to-business (C2B) is an electronic commerce business model in which
consumers (individuals) offer products and services to companies and the companies

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pay them. This business model is a complete reversal of traditional business model

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where companies offer goods and services to consumers (business-to-consumer = B2C).
Example of C2B is you selling your old school books to a second hand book shop.

C2C – Consumer to Consumer

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Consumer-to-consumer (C2C) (or citizen-to-citizen) electronic commerce involves the

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electronically-facilitated transactions between consumers through some third party. A
common example is the online auction, in which a consumer posts an item for sale and

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other consumers bid to purchase it; the third party generally charges a flat fee or
commission. The sites are only intermediaries, just there to match consumers. They do

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not have to check quality of the products being offered.
Example of C2C is Ebay or Amazon.

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 E-Business 2 –5

Topic B: Webmail
Webmail
Webmail (or Web-based e-mail) is an e-mail service intended to be primarily accessed
via a web browser, as opposed to through a desktop e-mail client (such as Microsoft
Outlook, Mozilla's Thunderbird, or Apple Inc.'s Mail). Very popular webmail providers
include Gmail, Yahoo! Mail, Hotmail, and AOL.
A major advantage of webmail over application-based e-mail is that a user has the
ability to access their inbox from any Internet-connected computer around the world.

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However, the need for Internet access is also a drawback, in that one cannot access old

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messages when not connected to the Internet. On the other hand, if one uses the IMAP
protocol through an application-based e-mail client, all contents of the mailbox will be

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consistently displayed in both the webmail and the PC e-mail client contexts.
In 1997, before its acquisition by Microsoft, Hotmail (now Windows Live Hotmail)

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introduced its service, which became one of the first popular web-based e-mail
offerings. Following Hotmail's success, Google's introduction of Gmail in 2004 sparked

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a period of rapid development in webmail, due to Gmail's new features such as
JavaScript menus, text-based ads, and bigger storage.

Newsgroups

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Newsgroups are part of the Usenet system. Usenet is a world-wide system whereby text

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on various subjects is copied all over the internet, and each internet site which
participates keeps a copy of the subject areas it wants. Usenet is not like a web page,

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which generally exists in just one place, defined by its URL; it is copied to many

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locations around the world. This means that you can always access a copy which is

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fairly close to you, which is fast because you don't have to go through congested
international network links.

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Usenet is divided up into several thousand subject groups called newsgroups; soc is one

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of these. The soc part indicates that it is a social group (as opposed to scientific,
computing, etc). Each newsgroup acts rather like a bulletin board; each user can post
messages to it, which in Usenet are called news articles. These are then propagated

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around the world for other people to see, and perhaps to reply to, either by e-mail or by
posting a follow-up article to the newsgroup.

FO Chat
Online chat can refer to any kind of communication over the Internet, but is primarily
meant to refer to direct one-on-one chat or text-based group chat (formally also known
as synchronous conferencing), using tools such as instant messengers, Internet Relay
Chat, talkers and possibly MUDs. The expression online chat comes from the word chat
which means "informal conversation".
2–6 Computer Fundamentals: Book 2

Instant Messaging
Instant messaging (IM) is a form of real-time direct text-based communication
between two or more people using shared clients. The text is conveyed via devices
connected over a network such as the Internet.
IM falls under the umbrella of chat, as it is a real-time text-based networked
communication system, but is distinct in that it is based on clients that facilitate
connections between specified known users (often using "Buddy List", "Friend List" or
"Contact List"), whereas Chat includes web-based applications that allow
communication between (often anonymous) users in a multi-user environment (an
analogy would be comparing a telephone and a bar-room. With the telephone, you have

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to know the contact information to reach the other person, whereas you just show up at
the bar and see who is there to chat with).

VoIP or Internet Telephone

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Short for Voice over Internet Protocol, a category of hardware and software that
enables people to use the Internet as the transmission medium for telephone calls by
sending voice data in packets using IP rather than by traditional circuit transmissions of

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the PSTN. One advantage of VoIP is that the telephone calls over the Internet do not
incur a surcharge beyond what the user is paying for Internet access, much in the same

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way that the user doesn't pay for sending individual e-mails over the Internet.

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There are many Internet telephony applications available. Some, like CoolTalk and
NetMeeting, come bundled with popular Web browsers. Others are stand-alone

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products. VoIP also is referred to as Internet telephony, IP telephony, or Voice over the
Internet (VOI).

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 E-Business 2 –7

Topic C: Online Banking

Explanation Once upon a time, money was substantial stuff that glinted in the sun and clinked when
you dropped it on the table. Investments were engraved certificates that you kept in your
safe-deposit box if they worked out, and used as bathroom wallpaper if not. Well, that
was then Now money and investments are mere electronic blips scampering from
computer to computer, and if you do any banking or investing, one of the computers
they scamper through might as well be yours.
You can do just about any banking online that doesn't require physically handling pieces
of paper, which means everything except depositing checks and withdrawing cash. For

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those, you have to use an ATM or, for the truly retro, physically visit a bank branch and
talk to a human being. But we help you avoid that last option as much as possible

Going to the Bank without ever leaving home

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Nearly every bank in the country now offers online banking. They don't do it to be cool;

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they do it because online banking is vastly cheaper for them than ATMs or tellers.
Because both you and your bank have a strong interest in making sure that the person

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messing around online with your accounts is you, the signup process is usually a bit
complicated — with the bank calling you to verify that you signed up, or mailing you a

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paper letter with your password.

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After you're signed up, you visit the bank's Web site and log in with your new user
name or number and password. Each bank's Web site is different, but they all show you

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an account statement along the lines of the one from John's bank, shown in Figure 1-1.

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Figure 1-1: A week of bank stuff, give or take a few details
2–8 Computer Fundamentals: Book 2

As you can see, deposits and withdrawals look like they do on a printed statement that
you receive in the mail. If you click the View Image link next to a check number, it
shows you a picture of the canceled check. The Automated Clearing House, or ACH,
lines are described in a nearby sidebar.
If you use an accounting program like Quicken or Microsoft Money, banks invariably
offer a way to download your account info into your program. Look for a link labeled
Download or Export. In Figure 1-1, it's the small Export History button, near the upper
left corner.
Details differ, but beyond the capability to check your statement, banks all offer roughly
the same services, including transfers and bill paying.

Transferring Money between Bank Accounts

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If you have more than one account at a bank, a checking and savings account, some
CDs, or a mortgage, you can usually move money from one account to another. In the

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account shown in Figure 11-1, the line that says "Internet Banking Transfer" indicates
that money has been transferred from the checking account to a mortgage account, to

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make the monthly mortgage payment. To get a better idea of how this works, here are
the steps for transferring money from a checking account to a mortgage account (note

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again that the specific steps vary from bank to bank):

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Click the Transfer button (or whatever your bank's Web site calls it).

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2. Enter the amount you want to transfer in the box labeled something like Amount.

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3. Select the account that the transferred money is coming from, generally from a list

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of possible "From" accounts.

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4. Select the account number that the transferred money is going to, generally from a
list of possible "To" accounts.
5.

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Click the button labeled something like Transfer or Do It — it's done.

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For the past 150 years or so, the usual way to get money from one person's account at a

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bank to a second person's account at another bank has been for the first person to write a
check and give it to the second person, who takes it to her bank and deposits it. (At

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least, that's the system in the U.S. — in Europe, the first person writes out a bank

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transfer and gives it to his bank to set up the payment.) Now that we're in the computer
age, we have a high-tech replacement for this process: Automated Clearing House
(ACH) transfers.
ACH transfers can do anything a check can do. Rather than print payroll checks,
companies can use ACH to deposit the money directly into employees’ bank accounts.
The U.S. government uses ACH to make Social Security payments. You can use ACH
to pay bills or to move money between accounts at different banks. For most purposes,
ACH transactions are better than paper checks because they're faster and more reliable.
To identify the account to use for an ACH transfer, you need to provide the routing
number that identifies the bank and the account number at that bank. The easiest way to
find the routing number for your own checking account is to look at the line of funny-
looking numbers printed along the bottom of one of your checks. The routing number
consists of nine digits, usually printed at the left end of the line.
 E-Business 2 –9

The account number also appears on that line, and a check number (which ACH doesn't
use) may appear, too. Savings accounts work for ACH transfers, too; to get the routing
number, look at a check from the same bank or call the bank and ask.
You may be wondering "Can anyone who knows my account number suck money out
of my account by using ACH?" Yes, but when you get your statement, you can
challenge any bogus ACH transaction just as you can challenge a forged check and get
your money back. In practice, ACH is safe and reliable, and we use it for our own
accounts all the time.
It's that easy. Most banks handle transfers within the bank the same day; at John's bank
you can enter a transfer as late as 7 p.m., which is handy when you remember at
dinnertime that the mortgage is due today.

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Many banks also let you make transfers to and from accounts at other banks, using
ACH. To set up the transfers, you provide the other bank's routing code and account

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number. Depending on the bank, it may require a voided check from that account, verify
that the account name is the same as your account name, or just believe the numbers

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you enter. After you set up a transfer, it's like a transfer within your own bank: You
specify the accounts and the amount and then click. You can also transfer money
between your bank and your mutual fund or brokerage account. In Figure 1-1, for

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example, the ACH deposits from ING DIRECT are from another bank, and the ACH

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deposit from VGI-ST TRSY is from a Vanguard mutual fund.
Remember:Transfers to other banks have two important differences: time and price.

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Even though the transfer is handled entirely electronically, it takes anywhere from two
days to a week for the money to show up at the other end, depending on the other bank.

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The time it takes for any particular bank is pretty consistent, so if the transaction took
three days last time, expect it to take three days next time. If you really need the money

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to be there so that you can write checks on it, allow a week, and keep an eye on your

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balances until you've done enough transfers to know how long they take.

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The price for transfers varies from two bucks down to zero, with no consistency among

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banks. A transfer can be started from either the sending or receiving end; often, bank A
charges you $1 if you tell it to send money to bank B, but if (instead) you tell bank B to

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receive the exact same money from bank A, it's free.
Tip: You can use PayPal to move money from just about any bank account to any other
bank account for free. It's a handy, increasingly common way to do online transfers (and

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it's described later in this chapter).

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Paying Bills Online

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Writing checks is so twentieth century. Now you can pay most of your bills online. In
many cases, you can arrange for automatic payments from your bank account for
routine monthly bills. (In Figure 1-1, "Bank America" refers to the MasterCard bill.)
We've arranged for payments for credit cards, the electric and gas companies, and
mobile phones — a pretty typical mix. Each of these companies has its own procedure.
We use a credit card example to show how this usually works. Figure 1-2 shows the
online payment page at Capital One, a large credit card bank. When logged in to their
Web site, you set up the payments by entering for your bank account the routing code
and account number that ACH needs (see the preceding sidebar, "ACH! It's better than a
check!"). After the payment info is set up, you visit the Web site, specify how much you
want to pay, and the bill is paid from your bank account. Usually you get credit the
same day, which is a big help to avoid paying credit card interest.
2–10 Computer Fundamentals: Book 2

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Figure 1-2: Pay the credit card bill with one click.

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If you want to automate all your bill paying, most banks can accommodate you with a
bill-pay service. Most banks use one of a handful of specialized companies in this field.
Usually you can choose from two levels of service: one only lets you pay bills from a

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list of about 300 large companies that want to send you your bill electronically; the
other lets you pay anyone. Some banks provide bill pay for free, some charge, and some

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provide it for free as part of a package.

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Figure 1-3 shows the bill payment service from John's bank. To set it up, you pick the

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companies to pay and then enter your account number and the name and address of the
company if the bank doesn't already have it on file. Some bill-pay systems offer the

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option of electronic presentment, which means you get your bill on the Web rather than
by paper mail. You also tell the system which bank account you want to pay the bills

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from. Then, to pay your bills each month, you just visit the bank's Web site and enter
the amount to pay and the date. The bank automatically moves the money out of your

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account on that date.

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 E-Business 2–11

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Figure 1-3: Point, click, and pay the water bill.

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If the payment service knows the payee's bank account info, it uses ACH to pay.
Otherwise, the service prints an old-fashioned paper check and mails it.

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