Electronic Commerce

Chapter 1

Introduction to Electronic
Commerce
 Contents

• What is Electronic Commerce?

• A Brief History of Electronic
Commerce
• Overview of Electronic Commerce
Components
• Business-to-Business Electronic
Commerce
• Supply Chain Electronic Commerce
• Business-to-Consumer Electronic
Commerce
• The Impact of Electronic
Commerce on the Business
 What is Electronic
Commerce?

Electronic Commerce comprises a host

of techniques designed to make
businesses more efficient, competitive
and even collaborative. It should enable
companies to:

• Improve the way in which they run

their business
• Improve relationships with trading
partners
• To expand their business, either
globally or into new markets
 Definition 1
“Electronic Commerce covers any form
of business or administrative transaction
or information exchange executed using
any information and communications
technology (ICT).”

E-Centre
 Definition 2
“The application of advanced
information technology to
increase the effectiveness of the
business relationships between
Trading Partners.”

Automotive Industry Action

Group in North America
 Definition 3

“the enablement of a business vision

supported by advanced information
technology to improve efficiency and
effectiveness within the trading process”.

eCommerce Innovation Centre

 Definition 4

Electronic Commerce should fulfil the following

criteria:

 It involves the transmission of data between computer

applications via any electronic media
 Data is transmitted in an agreed standard format
 The data is used to enable a business process or
processes between trading partners and/or the consumer
 Communications and
Computing Milestones - 1

1842 Samuel Morse patents the telegraph

1876 Bell patents the telephone; first telephone message
1895 Guglielmo Marconi sends first radio-telegraph message
1926 Baird demonstrates television
1935 First telephone call around the world; IBM introduces “IBM 601”,
a punch card machine with an arithmetic unit based on relays and
of doing a multiplication in 1 second
1943 Colossus – the earliest programmable electronic computer
1946 ENIAC - weighed 30 tonnes and contained 18,000 electronic
valves, consuming around 25kW of electrical power - 100,000
calculations a second
1947 The transistor is invented
1951 UNIVAC-1. The first commercially available electronic
computer
1957 The Russians launched the first satellite, Sputnik
1958 First integrated circuit
1963 First Minicomputer built by Digital Equipment
 Communications and
Computing Milestones - 2

1964 IBM releases its famous Model 360 computer that

eventually led to $100 billion in sales over its life cycle
1969 ARPAnet (Advanced Research Projects Agency) begins;
later becomes the basis of the Internet
1973 The File Transfer Protocol (FTP) is introduced making it
easier to transfer data information
1975 Ethernet specifications announced; 5.25-inch floppy
disk introduced
1976 X.25 standard for packet switched networks published
1977 Apple II computer introduced
1979 Arcade Video game ‘Space Invaders’ released
1981 IBM introduces its PC
1982 First cellular telephone system; The TCP/IP Protocol
established, and the Internet is formed as a connected
set of networks using TCP/IP
 Communications and
Computing Milestones - 3
1985 Microsoft Windows Launched; CD-ROM invented
1987 SONY introduces the 3.5-inch floppy disk
1980s Local Area Networks (LANs) emerge as an effective
way to transfer data between a group of local
computers
1991 Rules for ISDN decided
1992 The World Wide Web is born
1993 The Internet browser MOSAIC is introduced; Intel
launch Pentium processor
1994 The Netscape Internet browser is introduced
1995 Windows '95
1996 56K modems introduced
1997 Digital Television; IBM's Deep Blue, the first computer
to beat a reigning World Chess Champion, Gary
Kasparov, in a full chess match
1998 Microsoft released Windows ‘98
Simpler Trade Procedures

The Single Administrative Document is developed to reduce

the amount of forms needed in shipping
 Business Applications

 FTP  Advertising
 Email  Credit Card
 VoiceMail transfer
 Conference
 EDI
 Bulletin Boards
 On-line
Catalogues
 Marketing
 Stockbroking
 Many, many
more
Components of Electronic
Commerce

 Communications
 Standards
 Software
 Communications Options

 Telephone  Networks
- Dial-up Connection - Local Area Networks
- Leased Line - Wide Area Networks
- Intranets
 ISDN
- Extranets
- Basic Rate
- Primary Rate
 Satellite
 Value Added Networks  The Internet
(VANs) - Messaging
 X.400 an International - File Transfer
- Telnet
Standards Organisation
- WWW
(ISO) standard for secure
- XML
messaging
 Standardisation

“The adoption of any standard way of

formatting data adopted by a community
of users”
Trading Using Proprietary
Standards

Each company
needs three
different standards
in order to do
business with its
trading partners
Trading Using a Single
Agreed Standard

Each company
requires only ONE
standard in order
to do business with
its trading partners
 Electronic Commerce
Software Functions

 Data extraction from relevant application(s),

or data entry
 Data encoding to agreed standard format
 Data transmission to recipient(s)
 Data receipt by recipient(s)
 Data decoding for internal applications
 Data insertion into relevant application(s)
Business-to-Business
Electronic Commerce

 Electronic Data Interchange (EDI)

 Enhanced Messaging
– Email
– Voice Mail
– Fax
 Teleconferencing
 Integrated Systems
– Intranets
– Database Publishing
– Knowledge Management
 Aim of EDI

“To transfer data application to

application, regardless of platform or
operating system, without human
intervention”
Teleconferencing

Teleconferencing
enables people
anywhere in the world
to hold ‘face-to-face’
meetings
Integrated Systems

 Intranets
 Database Publishing
 Knowledge Management
Supply Chain Electronic
Commerce

 Stock Control
 Just-In-Time Deliver
 Transportation
 Warehouse Management
 Stock Control

 Can of beans swiped

 Stock system updated
 Beans re-ordered
electronically
A Use of EDI in Shipping

Ships can forward

information about
their cargo to enable
stacking plans for
containers to be
calculated
Barcodes

In addition to helping
retailers, barcodes on
packaging and pallets
can help managers
optimise the
warehousing availability
 Business-to-Consumer
Electronic Commerce

 Database Applications
 Kiosks
 Internet Store Fronts
 Downloadable Software and Software
Support
 Internet Auctions
 Advertising on the Internet
 Interactive TV
Database Applications

Holiday
bookings at a
travel agent
rely on
Electronic
Commerce
Internet Store Fronts

Amazon is one of
the best known
Internet store
fronts, selling not
only books, but
music, videos,
toys
and “eCards”.
 The Impact of Electronic
Commerce on the Business

Electronic Commerce drivers include:

 The falling prices and increased power of

computing
 Developments in computing and networking
 The development of common standards for the
exchange of data
 The Phases of Electronic
Commerce Implementation

 Replacing the manual paper-based

operations with electronic alternatives
 Rethinking and simplifying the information
flows
 Using the information flows in new and
dynamic ways
 Teleworking

 Teleworking means that individuals

can choose to work from anywhere in
the world
 It gives companies the option to limit
the amount of office space they use
 Summary

This session has covered:

 Definitions of Electronic Commerce

 A Brief History of Electronic Commerce
 The Components of Electronic Commerce
 Business-to-Business Electronic Commerce
 Supply Chain Electronic Commerce
 Business-to-Consumer Electronic Commerce
 The Impact of Electronic Commerce on the
Business