E-Commerce

Electronic Commerce
(E-commerce)

Created by:
Ailene L. Madato
BSCS 4

Introduction to E-commerce and
E-Business
We are all aware on the effects of the fast
changing technology on our lives: socially and
economically aspects. We have been engaging to the
new techniques and things that the technology offers
such as new gadgets and applications.
In terms of business, the business community has
realized that to be able to stay globally
competitive, they must be able to cope up with the
new trend of business competition, and that is to
engage in e-business, which also offers e-commerce.

• E-commerce
o Definition: refers to online transactions - buying and selling
of goods and/or services over the Internet.

• E-business
o Definition: covers online transactions, but also extends to all
Internet based interactions with business partners, suppliers
and customers such as: selling direct to
consumers, manufacturers and suppliers; monitoring and
exchanging information; auctioning surplus inventory; and
collaborative product design. These online interactions are
aimed at improving or transforming business processes and
efficiency.

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

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

Significance of E-commerce and E-Business

• Through e-commerce, consumers are given more choices on what
product they will going to buy. Since e-commerce offers
faster, easy, and more open process, consumers will be able to do
transactions whenever they are and whatever they do as long as they
have their gadgets with the and internet connections to go online.
• Electronic business techniques allows business, companies and
organizations to link their external and internal data processing
systems more efficiently and flexibly, to work more closely with the
suppliers and partners, and to better cope up to the needs and
expectations of their customers.

B2B and B2C
• B2B (Business to Business)
Definition: B2B deals primarily with other businesses, not the general
public
– Relationship driven
– Maximize the value of the relationship
– Small, focused target market
– Multi-step buying process, longer sales cycle
– Brand identity created on personal relationship
– Educational and awareness building activities
– Rational buying decision based on business value

• B2C (Business to Consumer)
Definition: B2C provides products and services directly to the end
user
– Product driven
– Maximize the value of the transaction
– Large target market
– Single step buying process, shorter sales cycle
– Brand identity created through repetition and imagery
– Merchandising and point of purchase activities
– Emotional buying decision based on status, desire, or price

E-commerce Fundamentals

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

E-commerce Market Place
• A marketplace is a website which allows merchants
and individual traders to sell their wares through
their system, for either a percentage of the sale or
for a listing fee. The sale system that a marketplace
uses varies from one to another, but they can
generally be classified into the following,
– Auction
– fixed price
– classified ad
– store front

E-commerce Business Models

• Business model – set of planned activities designed to result in a
profit in a marketplace
• Business plan – document that describes a firm’s business model
• E-commerce business model – aims to use and leverage the
unique qualities of Internet and Web

E-commerce Infrastructure

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

Marketing
• Of all the infrastructure elements, marketing may be the
most important. To succeed, your website must be found.
Once visitors are on your site, you need to keep them
there and compel them to buy from you. That’s the job of
your marketing team. Whether it’s website design, social
media, search marketing, merchandising, email, or other
forms of advertising, it's all about marketing.
• To effectively manage marketing activities in-house is
very challenging. Most small ecommerce businesses
outsource some element of marketing.

Facilities
• A key competitive advantage that ecommerce businesses
have over brick-and-mortar stores is the investment in their
physical offices and warehouses. In many cases, you can
host your business out of a home office and your basement
or garage. If you drop ship or outsource fulfillment, you may
be able to do that for a long period of time. Even when you
grow to have many employees, you can set up your offices
in class B or C space, as you have no need for a fancy store
in the right location.
• A word of advice is to keep your options flexible. Try to find
an office park that has a wide variety of spaces in different
sizes. You may be able to start in a smaller space and move
up to a larger one without penalty, as your needs change.

Customer Service
• There are many choices today for delivering high-quality
customer service. You can manage those activities in-house
or outsource to a third party. Basic customer service for
sales and post-sales activities can be handled using
email, and by providing an 800 number for more extensive
phone support. A customer-management system will make
those activities easier, but for smaller companies it is not a
requirement.
• Live chat will impact your operations as someone needs to
be available during specified hours of operation. Be sure to
gauge the impact of that on your organization, if you decide
to handle those activities in house

Information Technology
• Choosing the right ecommerce platform is one of the most important
decisions you will make in your business. Do you want to build and host
your own system, outsource the development and then manage the
system going forward, or use a hosted, software-as-a-service platform
that is more turnkey and externally managed?
• If you build and host your own system, you may need more cash upfront
and skilled administrators and developers on your staff. By using a SaaS
platform, you will not need to host or manage the system in-house, but
you may still need web developers on staff. Choosing to outsource the
development and hosting will reduce your staffing costs, but you will
incur higher costs for any future enhancements or changes to your
websites.
• There are pros and cons to any approach. Just be sure to think through
the impacts on both your staffing and your cash flow and bottom line
before you move forward.

Fulfillment
• Another key decision is whether you will manage your own inventory or
outsource those activities to a fulfillment house or through drop shipping
arrangements with your suppliers.
• Managing your own inventory will provide you with a high level of
control, but you will tie up your cash in inventory, warehouse space, and
your own fulfillment staff. In some industries — like the jewelry supply
industry that my previous business was in — managing your own
inventory was the most logical choice. We had no alternative for drop
shipping, and most items were purchased in bulk and were very small.
We did not trust preparation and fulfillment to an outside service.
• Select the best fulfillment option to meet your needs. Be sure to
understand the costs involved and analyze the other options before
moving forward.

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

Internet
• refers to the global network of public computers running
Internet Protocol.
• a worldwide system of computer networks that allows users
to send and receive information from other computers.

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

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

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

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

E-procurement
E-procurement is the business-to-business purchase and sale of supplies
and services over the Internet. An important part of many B2B
sites, e-procurement is also sometimes referred to by other
terms, such as supplier exchange. Typically, e-procurement Web sites
allow qualified and registered users to look for buyers or sellers of
goods and services. Depending on the approach, buyers or sellers may
specify prices or invite bids. Transactions can be initiated and
completed. Ongoing purchases may qualify customers for volume
discounts or special offers.
E-procurement software may make it possible to automate some buying
and selling. Companies participating expect to be able to control parts
inventories more effectively, reduce purchasing agent overhead, and
improve manufacturing cycles. E-procurement is expected to be
integrated with the trend toward computerized supply chain
management.

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

The benefits of E-Marketing include:
• Speed: messages are delivered straight to the recipients'
inboxes, instantly
• Reach and Penetration: overcomes geographical parameters
that exist with other communication methods
• Ease and Efficiency: messages can be distributed to multiple
recipients at the click of the mouse
• Low Cost: requires minimal investment to set up an appropriate
technical system
• Targeted: allows you to target specific recipient groups and
reach a defined, engaged audience

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

• Key Tools and Elements of Customer Relationship Management

Change Management
Change management is a systematic approach to dealing with
change, both from the perspective of an organization and on the
individual level. A somewhat ambiguous term, change management
has at least three different aspects, including: adapting to
change, controlling change, and effecting change. A proactive
approach to dealing with change is at the core of all three aspects. For
an organization, change management means defining and
implementing procedures and/or technologies to deal with changes in
the business environment and to profit from changing opportunities.
In a computer system environment, change management refers to a
systematic approach to keeping track of the details of the system (for
example, what operating system release is running on each computer
and which fixes have been applied).

Analysis and Design
Analysis for E-commerce
• Understanding processes and information flows to improve service
delivery
• “Information is an agent of coordination and controls and serves as
a glue that holds together organizations, franchises, supply chains
and distribution channels. Along with material and other resource
flows, information flows must also be handled effectively in any
organizations.

Task Analysis and Task Decomposition
• Before a process can be designed and implemented, a more
detailed breakdown is required known as Task Analysis.
• Curtis, et. al. (1992) framework:
Level 1 – business process are decomposed into;
Level 2 – activities which are further divided to;
Level 3 – task
Level 4 – sub-task

Identify Entities
• Entity is a group of similar or related data
• Entities define the broad groupings of information such as
information about different people, transactions or products.
When the design is implemented, each design will form a
database table.

Identify Attributes
• Attribute is a property or characteristic of an entity
• Entities have different attributes that describes the
characteristics of any single instance of an entity. When the
design is implemented, each attribute will form a field, and the
collection of fields for one instance of the entity such as a
particular customer will form a record

Identify Relationships
• Relationship describes how different tables are linked
• The relationships between entities requires identification of
which fields are used to link the tables. The fields that are used
to link the tables are referred to as key fields. A primary key is
used to uniquely identify each instance of an entity and a
secondary key is used to link a primary key to another key

Analysis Consideration (Bevan)

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

Management of Mobile Commerce Services
Internet has made available a wide range of applications and services over the
World Wide Web at a low cost. Millions of users enjoy the benefits accrued
by Internet, by using their desktop computers or portables. At the same
time, the number of users of mobile terminals (phones, PDAs, and
communicators) is continuously increasing.
The miniature size of mobile terminals and the fact that they can easily fit in a
pocket and carried everywhere makes them an ideal channel for offering
personalized and localized services to the continuously increasing number of
mobile users. We define Mobile electronic commerce (M-Commerce) as any
type of transaction of an economic value having at least at one end a mobile
terminal and thus using the mobile telecommunications network. This
means, that E-Commerce transactions performed by a mobile customer via a
fixed terminal (e.g. from a hotel room) or via a portable computer that is
connected to the Internet via a modem and wired network are not included
in our definition of M-Commerce
M-Commerce creates new business opportunities for players in the field, like
content and service providers and especially for Mobile Network Operators
who can play a more active role in a m-commerce transaction and become
more profitable and competitive.

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

4G (4th Generation) Mobile Telephony
• Carriers that use orthogonal frequency-division multiplexing
(OFDM) instead of time division multiple access (TDMA) or code
division multiple access (CDMA) are increasingly marketing their
services as being 4G, even when their data speeds are not as
fast as the International Telecommunication Union (ITU)
specifies. According to the ITU, a 4G network requires a mobile
device to be able to exchange data at 100 Mbit/sec. A 3G
network, on the other hand, can offer data speeds as slow as
3.84 Mbit/sec.
• From the consumer's point of view, 4G is more a marketing
term than a technical specification, but carriers feel justified in
using the 4G label because it lets the consumer know that he
can expect significantly faster data speeds.

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

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

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

Other Wireless Technology Issues

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