Plan of the Course

Part I Ch1 Foundations of EC

EC Application

Part II Ch2 Retailing in EC

Ch3 Internet Consumer &Market Research
Ch5 EC for Service Industries
Ch6 Business-to-Businesses EC
Ch7 Intranet and Extranet
Part III
Support and Implementation Technological Support
Ch8 Electronic Payment System Ch11 Infrastructure for EC
Ch9 EC Strategy & Implementation
Ch10 Public Policy
Part IV

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 Chapter 1
Foundations of Electronic
Commerce

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 Definitions and Content of Field
Electronic Commerce (EC) is where
business transactions take place via
telecommunications networks, especially the
Internet.

Electronic commerce describes the buying

and selling patterns of products, services,
and information via computer networks
including the Internet.

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Definitions and Content of Field (cont.)
The infrastructure for EC is a ‘networked
computing’ environment in business,
home, and government.

E-Business describes the broadest

definition of EC. It includes customer
service and intra-business tasks. It is
frequently used interchangeably with EC.

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Definitions and Content of Field (cont.)

A global networked environment is known

as the ‘Internet’
A counterpart within organizations, is
called an ‘intranet’
An ‘extranet’ extends intranets so that
they can be accessed by business
partners.

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The dimensions of E-Commerce
Three dimensions:
- the product/service sold (physical/digital);
- the process [physical / digital]
- the delivery agent (or intermediary)
[physical / digital]

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The dimensions of E-Commerce
Traditional commerce:
all dimensions are physical
Pure EC:
all dimensions are digital
Partial EC:
all other possibilities include a mix of
digital and physical dimensions

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 The Dimensions of EC
The core of
s
es
Product

Electronic electronic commerce

r oc
P commerce areas

Agent
Virtual
Product
Digital
Product
Virtual process
Physical Digital process
Product Physical process
Physical

Traditional
Digital

Virtual
agent
agent

commerce agent

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 Framework for Electronic
Commerce
Framework for EC comprises of the following:
- EC management
- EC applications
- EC pillars
- Infrastructure
EC management:
The EC management coordinates the
applications, infrastructures, and pillars to
facilitate the business.

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 Framework for Electronic
EC applications: Commerce
Stocks, Jobs, On-line banking, On-line
marketing, Procurement & purchasing, Malls,
and advertising, Home shopping, Auctions,
Travel, On-line publishing are supported by
infrastructures, and their implementation is
dependent on four major areas people, public
policy, technical standards, and other
organizations (shown as supporting pillars in
the diagram).

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 Framework for Electronic
EC pillars: Commerce
People:
Buyers, sellers, intermediaries, services, IS
people, & management.
Public policy:
Legal, and privacy issues.
Technical standards:
Standards for documents, security, network
protocols, and payment.
Organizations:
Partners, competitors, alliances, govt.
services.
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 Framework for Electronic
Infrastructure: Commerce
1. Common business services infrastructure
(security smart cards / authentication,
electronic payment, directories/catalogs).
2.Messaging and information distribution
infrastructure (EDI, e-mail, HTTP).
3.Multimedia content and network publishing
infrastructure (HTML, JAVA, WWW).
4.Network infrastructure (Telecom, cable TV,
wireless, Internet), (VAN, WAN, LAN, Intranet,
Extranet).
5.Interfacing infrastructure, (The databases,
customers, and applications).
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 Classification of EC applications
Categories EC Applications:
1. Electronic markets:
- Buying and selling goods & services

2. Interorganizational systems:
- Facilitation technically

3. Customer service:
- Facilitation on respective business platform

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1. Electronic Markets
A market is a network of interactions and
relationships where information, products,
services, and payments are exchanged.
An electronic market is a place where
shoppers and sellers meet electronically.
In electronic markets, sellers and buyers
negotiate, submit bids, agree on an order,
and finish the execution on- or off-line.

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 Shopper/Purchaser Electronic commerce Seller/Supplier
network
(Infrastructure)
Product/service information request
Purchase request
Payment or payment advice
Purchase fulfillment request
Purchase change request

Electronic Market
(Transaction Hander)
Response to information request Response to fulfillment request
Purchase acknowledgment Shipping notice
Shipping notice
Purchase/service delivery (if online) Payment remittance notice
Payment acknowledgment Electronic transfer of funds

Payment approval
Electronic transfer of funds Electronic transfer of funds

Shopper/Purchaser’s
Bank Transaction Handler’s Bank Seller/Supplier’s
(Automated Clearing House) Bank

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2. Interorganizational Information Systems
An IOS involves information flow among two or more
organizations.
Its major objective is efficient routine transaction
processing, such as transmitting orders, bills, and
payments using EDI or extranets.
Scope: An IOS is a unified system encompassing two or
several business partners.
A typical IOS includes a company and its suppliers and/or
customers.

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Types of Interorganizational Systems
Electronic data interchange (EDI)
Extranets
Electronic funds transfer (EFT)
Integrated messaging systems
Shared databases
Electronically-supported supply chain
management

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3. Customer service
Install Web servers which allow each
customer:
- To browse the facilitation part of the
business

- to create individual web pages

that can be customized to record purchases
and preferences

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 Classification of EC field by the
Nature of the Transactions
Business-to-business: IOIS type
Business-to-consumer: typical shopper type
Consumer-to-consumer: direct / auction type
Consumer-to-business: typical seller type
Non business EC: not-for-profit type
Intra business transactions: intranet based
Others (comments)

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 The Benefits of EC
Benefits to Organizations

❙ Expands the marketplace to national and

international markets

❙ Decreases the cost of creating, processing,

distributing, storing and retrieving paper-based
information

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 Benefits to Organizations (cont.)
Reduces the time between the outlay of capital
and the receipt of products and services.

Supports business processes reengineering

(BPR) efforts

Allows reduced inventories and overhead by

facilitating “pull” type supply chain
management

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 Benefits to Consumers
Enables customers to shop or do other
transactions 24 hours a day, all year round
from almost any location.

Provides customers with less expensive

products and services by allowing them to
shop in many places and conduct quick
comparisons.

Allows quick delivery of products and services

in some cases, especially with digitized
products.
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 Benefits to Customers (cont.)
Customers can receive relevant and detailed
information in seconds, rather than in days or
weeks
Makes it possible to participate in virtual
auctions
Allows customers to interact with other
customers in electronic communities and
exchange ideas as well as compare
experiences
Electronic commerce facilitates competition,
which results in substantial discounts.
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The Limitations of EC Commerce
Technical Limitations of EC:
Lack of sufficient system’s security, reliability,
standards, and communication protocols

Difficulties in integrating the Internet and

electronic commerce software with some
existing applications and databases.

The software development tools are still

evolving and changing rapidly.

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 The Limitations of EC Commerce
Technical Limitations of EC:

Insufficient telecommunication bandwidth.

The need for special Web servers and other

infrastructures, in addition to the network
servers (additional cost)

Possible problems of interoperability or

incompatible

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The Limitations of EC Commerce
Non-Technical Limitations:
Cost and justification.
In house development.

Outsourcing

Difficulty in quantifying some intangible

benefits/needs of the customer.

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The Limitations of EC Commerce
Non-Technical Limitations:
Security and Privacy:
EC industry has a very long and difficult task
of convincing customers that online
transactions and privacy are, in fact, fairly
secure.
Lack of trust and user resistance.
Lack of touch and feel online
Many unresolved legal issues

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