e-commerce and e-business

SICS 3653: E-COMMERCE
SICS 3653: E-COMMERCE
AND E-BUSINESS
AND E-BUSINESS
Ebenezer Nortey Yebuah
Ebenezer Nortey Yebuah
(ETONY)
(ETONY)


outline
outline

Introduction to E-Commerce
Introduction to E-Commerce
•
Definition of E-Commerce and E-business
Definition of E-Commerce and E-business
•
Major types of E-Commerce (briefly)
Major types of E-Commerce (briefly)
•
History of E-Commerce
History of E-Commerce
•
Benefits of E-Commerce to
Benefits of E-Commerce to

Organizations

Organizations

Consumers
Consumers

society
society
•
Limitations of E-Commerce
Limitations of E-Commerce

The digital economy
The digital economy
•
The new Business environment
The new Business environment
•
Business pressures
Business pressures
•
Organizational responses
Organizational responses

E-Marketing
E-Marketing
•
E-marketing issues
E-marketing issues
•
Economics of E-marketing

Economics of E-marketing
•
Effects of marketing on organizations
Effects of marketing on organizations

E-Commerce technology/infrastructure
E-Commerce technology/infrastructure

Communications network
Communications network

Security and legal issues
Security and legal issues
•
Need for E-Commerce security
Need for E-Commerce security
•
Basic security issues
Basic security issues
•
Types and treats and attacks
Types and treats and attacks
•
Security risk management
Security risk management
•
Securing E-Commerce communication
Securing E-Commerce communication

Business models for E-Commerce

Business models for E-Commerce

Implementation of E-business systems
Implementation of E-business systems


Definition of E-Commerce and
Definition of E-Commerce and
business
business

E-Commerce
E-Commerce
: the process of buying, selling, or exchanging products,
: the process of buying, selling, or exchanging products,
services, and information through computer networks.
services, and information through computer networks.
•
Communication
Communication
: the delivery of goods, services, information, or payment
: the delivery of goods, services, information, or payment
electronically
electronically
•
Commercia
Commercia
l: the ability to buy and sell products, services, and information
l: the ability to buy and sell products, services, and information
electronically

electronically
•
Business process
Business process
: completing business process electronically i.e. replacing
: completing business process electronically i.e. replacing
physical process with information
physical process with information
•
Services
Services
: tool for improving the quality of customer services, and increasing
: tool for improving the quality of customer services, and increasing
the speed of service delivery whiles cutting cost
the speed of service delivery whiles cutting cost
•
learning
learning
: enables online training and educations
: enables online training and educations
•
Collaborative
Collaborative
: supports inter and intraorganizational collaboration
: supports inter and intraorganizational collaboration
•
Community
Community
: provides a meeting place for members to learn and collaborate.
: provides a meeting place for members to learn and collaborate.

Definition of E-Commerce and
Definition of E-Commerce and
business
business

Commerce
Commerce
: transactions between
: transactions between
business partners. (electronically=e-
business partners. (electronically=e-
commerce)
commerce)

E-business
E-business
: the buying and selling
: the buying and selling
of goods and services and also
of goods and services and also
serving customers, collaboration with
serving customers, collaboration with
business partners, and conducting
business partners, and conducting
electronic transactions with an
electronic transactions with an
organization.
organization.

Definition of E-Commerce and
Definition of E-Commerce and
business
business

Various forms of E-Commerce based on the level
Various forms of E-Commerce based on the level
of digitalization,
of digitalization,

Of the products/services
Of the products/services

The process
The process

The delivery agent
The delivery agent

Brick and mortar organization
Brick and mortar organization
:
:
zero digitalization i.e.
zero digitalization i.e.
pure physical organization.
pure physical organization.
•

Conduct all their business activities on physically
Conduct all their business activities on physically

Virtual organizations
Virtual organizations
:
:
digitalization of 1 i.e. (pure play)
digitalization of 1 i.e. (pure play)
•
Does all business tractions inline.
Does all business tractions inline.

Click and mortar
Click and mortar
:
:
partial digitalization i.e. click and mortar
partial digitalization i.e. click and mortar
•
Has an online presence, but does basic business processes physically
Has an online presence, but does basic business processes physically


Types of E-Commerce
Types of E-Commerce

The nature or transaction or interaction is mostly used to class
The nature or transaction or interaction is mostly used to class
the E-Commerce

the E-Commerce
•
Business-to-business B2B
Business-to-business B2B
: transactions between business partners
: transactions between business partners
•
Business-to-consumer C2C
Business-to-consumer C2C
: transactions between business
: transactions between business
organizations and individual shoppers
organizations and individual shoppers
•
Consumer-to-business C2B
Consumer-to-business C2B
: transaction in which individuals sell
: transaction in which individuals sell
products and services to business
products and services to business
•
Consumer-to-consumer C2C
Consumer-to-consumer C2C
: transactions between individual
: transactions between individual
consumers
consumers

Interdisciplinary nature of E-Commerce: computer science,
Interdisciplinary nature of E-Commerce: computer science,

marketing, consumer behavior, finance, economics, management
marketing, consumer behavior, finance, economics, management
information systems, accounting, management, business, law,
information systems, accounting, management, business, law,
robotics, public administration and engineering.
robotics, public administration and engineering.


History
History

Electronic funds transfer
Electronic funds transfer
(early 1970s)
(early 1970s)
“
“
It use was mostly limited to large organizations, financial
It use was mostly limited to large organizations, financial
institutions, and a few hardcore business”
institutions, and a few hardcore business”

Electronic Data Interchange
Electronic Data Interchange
,
,
“
“
use to transfer routine documents, which expanded electronic
use to transfer routine documents, which expanded electronic

transfers from financial institutions to manufacturers, retailers,
transfers from financial institutions to manufacturers, retailers,
services industries etc”
services industries etc”

Internet and the world wide web
Internet and the world wide web
: the
: the
commercialization of the internet, saw the coining of the
commercialization of the internet, saw the coining of the
term E-COMMERCE.
term E-COMMERCE.
E-Commerce applications quickly multiplied due to the rapid
E-Commerce applications quickly multiplied due to the rapid
development of new networks, protocols, and EC software, due to
development of new networks, protocols, and EC software, due to
increase in competition and other business pressures
increase in competition and other business pressures

There has been many innovative applications, ranging from
There has been many innovative applications, ranging from
online direct sales to E-learning.
online direct sales to E-learning.


Benefits of E-Commerce
Benefits of E-Commerce

The E-Commerce revolution is as profound as the

The E-Commerce revolution is as profound as the
change that accompanied the industrial revolution
change that accompanied the industrial revolution
(Clinton and Gore 1997)
(Clinton and Gore 1997)

E-Commerce enormous potential benefits to
E-Commerce enormous potential benefits to
organizations, individuals and society, considering
organizations, individuals and society, considering


•
The global nature of the technology
The global nature of the technology
•
The opportunity to reach millions of people
The opportunity to reach millions of people
•
Its interactive nature
Its interactive nature
•
The variety of possibilities for its use
The variety of possibilities for its use
•
The resourcefulness and rapid growth of its supporting
The resourcefulness and rapid growth of its supporting
infrastructure (especially the web)
infrastructure (especially the web)

Benefits of E-Commerce
Benefits of E-Commerce

Organizational benefits
Organizational benefits
•
Global reach
Global reach
: can easily and quickly locate the best suppliers, more customers
: can easily and quickly locate the best suppliers, more customers
and more suitable business partners. i.e. buy cheaper and sell more.
and more suitable business partners. i.e. buy cheaper and sell more.
•
Cost reduction
Cost reduction
: EC decreases the cost of creating, processing, distribution,
: EC decreases the cost of creating, processing, distribution,
storing and retrieving paper-based information.
storing and retrieving paper-based information.
•
Supply chain improvement
Supply chain improvement
: supply chain inefficiencies can be minimized e.g
: supply chain inefficiencies can be minimized e.g
Inventory and deliver delays
Inventory and deliver delays
•
Extended hours:24/7/365
Extended hours:24/7/365

•
Customization
Customization
: pull-type production (build-to-order)
: pull-type production (build-to-order)
•
New business models
New business models
: tendering (reverse auction), name-your-own-price
: tendering (reverse auction), name-your-own-price
model, affiliate marketing, viral marketing etc.
model, affiliate marketing, viral marketing etc.
•
Vendors’ specialization
Vendors’ specialization
: EC enables high degree of specialization
: EC enables high degree of specialization
•
Lower communication cost:
Lower communication cost:
EC lowers telecommunications cost.
EC lowers telecommunications cost.
•
Efficient procurement
Efficient procurement
: EC can reduce administrative cost, purchasing prices, and
: EC can reduce administrative cost, purchasing prices, and
reducing cycle time.
reducing cycle time.
•

Improved customer relations
Improved customer relations
: EC enable close customer relations
: EC enable close customer relations
•
Up-to-date company material
Up-to-date company material
: EC enables company information to be updated
: EC enables company information to be updated
by the minute
by the minute
•
No city business permits and fees
No city business permits and fees
•
etc
etc


Benefits of E-Commerce
Benefits of E-Commerce

Consumer benefits
Consumer benefits
•
ubiquity
ubiquity
: EC allows shopping 24/7/365 from almost any
: EC allows shopping 24/7/365 from almost any
location.

location.
•
More products and services
More products and services
: EC gives more choices.
: EC gives more choices.
•
Cheaper products and services
Cheaper products and services
: EC providers price variety
: EC providers price variety
for goods and services
for goods and services
•
Instant delivery
Instant delivery
: e.g. digitized product
: e.g. digitized product
•
Information availability:
Information availability:
relevant and detailed information
relevant and detailed information
in seconds
in seconds
•
Participate in auctions:
Participate in auctions:
virtual auctions
virtual auctions

•
Electronic communities
Electronic communities
: consumers can interact with other
: consumers can interact with other
consumers
consumers
•
Get it you way
Get it you way
: customization and personalization of
: customization and personalization of
products and services
products and services
•
No sales tax
No sales tax
: most online sales are tax free
: most online sales are tax free


Benefits of E-Commerce
Benefits of E-Commerce

Societal benefits
Societal benefits
•
Telecommuting:
Telecommuting:
more people work and shop

more people work and shop
at home
at home
•
Higher standard of living
Higher standard of living
: competitive prices
: competitive prices
allow lower income earners to shop more
allow lower income earners to shop more
•
Hope for the poor
Hope for the poor
: great opportunity for the
: great opportunity for the
poor to sell, buy and learn new skills
poor to sell, buy and learn new skills
•
Availability of public services
Availability of public services
: health care,
: health care,
education, and distribution of government
education, and distribution of government
social services can be done at a reduce cost to
social services can be done at a reduce cost to
a large number of people.
a large number of people.

Limitations
Limitations

Technological
Technological
•
Lack of universally accepted standards for quality,
Lack of universally accepted standards for quality,
security, and reliability
security, and reliability
•
Telecommunication bandwidth is insufficient (mostly for
Telecommunication bandwidth is insufficient (mostly for
m-commerce)
m-commerce)
•
Software development tools are still evolving.
Software development tools are still evolving.
•
Difficulties in integrating the internet and EC software
Difficulties in integrating the internet and EC software
applications and databases.
applications and databases.
•
Special web servers are needed in addition to the
Special web servers are needed in addition to the
network servers (added cost)
network servers (added cost)
•
Internet accessibility is still expensive and/ or

Internet accessibility is still expensive and/ or
inconvenient
inconvenient
•
Order of fulfillment of large-scale B2C requires special
Order of fulfillment of large-scale B2C requires special
automated warehouses
automated warehouses


Limitations
Limitations

Non-technological
Non-technological
•
Security and privacy concerns deter some customer from
Security and privacy concerns deter some customer from
buying
buying
•
Lack of trust in EC and in unknown sellers hinder buying
Lack of trust in EC and in unknown sellers hinder buying
•
Many legal and public policy issues, including taxations,
Many legal and public policy issues, including taxations,
remain unresolved
remain unresolved
•
National and international government regulations sometimes

National and international government regulations sometimes
get in the way
get in the way
•
Difficulty in measuring some benefits in EC. (e.g. advertising,)
Difficulty in measuring some benefits in EC. (e.g. advertising,)
lack of matured measurement methodology
lack of matured measurement methodology
•
Some customers like to touch and feel the product
Some customers like to touch and feel the product
•
Adamant to change from physical to virtual store
Adamant to change from physical to virtual store
•
Lack of trust in paperless, faceless transactions
Lack of trust in paperless, faceless transactions
•
Insufficient number (critical mass) of sellers and buyers (some
Insufficient number (critical mass) of sellers and buyers (some
cases) needed to make profit
cases) needed to make profit
•
Increasing number of fraud on the net
Increasing number of fraud on the net
•
Difficulty to obtain venture capital due to the dot-com disaster
Difficulty to obtain venture capital due to the dot-com disaster

Digital Economy
Digital Economy

The Digital revolution
The Digital revolution
•
Digital Economy: an economy that is based on digital technologies, including
Digital Economy: an economy that is based on digital technologies, including
digital communications networks, computers, software, and other related
digital communications networks, computers, software, and other related
information technologies.
information technologies.

Digital networking and communications infrastructures provides the global
Digital networking and communications infrastructures provides the global
platform over which people and other organizations interact,
platform over which people and other organizations interact,
communicate,, collaborate and search for information.
communicate,, collaborate and search for information.

Choi and whinston says this platform is characterized by
Choi and whinston says this platform is characterized by
•
A vast array of digital products: databases, news & information, books, software
A vast array of digital products: databases, news & information, books, software
ETC, that delivered over a digital infrastructure any time, anywhere in the world
ETC, that delivered over a digital infrastructure any time, anywhere in the world
•
Consumers and firms conducting financial transaction digitally through digital
Consumers and firms conducting financial transaction digitally through digital

currencies or financial tokens that are carried via network computers and mobile
currencies or financial tokens that are carried via network computers and mobile
devices
devices
•
Microprocessors and networking capabilities embedded in physical goods such as
Microprocessors and networking capabilities embedded in physical goods such as
home appliances and automobiles
home appliances and automobiles


Digital Economy
Digital Economy

Digital economy: the convergence of computing and
Digital economy: the convergence of computing and
communications technology on the internet and other networks
communications technology on the internet and other networks
and the resulting flow of information and technology that is
and the resulting flow of information and technology that is
stimulating e-commerce and vast organizational changes.
stimulating e-commerce and vast organizational changes.

This convergence is enabling all types of information (data, audio,
This convergence is enabling all types of information (data, audio,
video, etc) to be stored, processed, and transmitted over
video, etc) to be stored, processed, and transmitted over
networks to many destinations worldwide
networks to many destinations worldwide


The digital economy is creating a digital revolution, evidence by
The digital economy is creating a digital revolution, evidence by
unprecedented economy performance and the longest period of
unprecedented economy performance and the longest period of
uninterrupted economic expansion in certain parts of the world.
uninterrupted economic expansion in certain parts of the world.

Web-based E-Commerce systems are accelerating the digital
Web-based E-Commerce systems are accelerating the digital
revolution by providing competitive advantage to organizations
revolution by providing competitive advantage to organizations


The new business environment
The new business environment

Highly competitive (due to economic,
Highly competitive (due to economic,
societal, legal and technological
societal, legal and technological
factors)
factors)

Quick and sometimes unpredictable
Quick and sometimes unpredictable
change
change

The need for more production, faster
The need for more production, faster

and with fewer resources
and with fewer resources


The new business environment
The new business environment

Huber (2003) “new business environment
Huber (2003) “new business environment
created due to accelerated advances in
created due to accelerated advances in
science”
science”

This advances creates scientific knowledge
This advances creates scientific knowledge

This scientific knowledge feeds on itself
This scientific knowledge feeds on itself
resulting in more and more technology
resulting in more and more technology

Rapid growth in technology results in a
Rapid growth in technology results in a
large variety of more complex systems.
large variety of more complex systems.


The new business environment
The new business environment


As a result the business environment is
As a result the business environment is
characterized by
characterized by
•
A more turbulent environment ( more business
A more turbulent environment ( more business
problems and opportunity)
problems and opportunity)
•
Stronger competition
Stronger competition
•
Frequent decision making by organizations
Frequent decision making by organizations
•
Large scope for decisions considerations
Large scope for decisions considerations
(market, competition, political and global)
(market, competition, political and global)
•
More information/knowledge needed for
More information/knowledge needed for
decisions
decisions


Pressure on businesses
Pressure on businesses


Market and economic
Market and economic
•
Strong competition
Strong competition
•
Global economy
Global economy
•
Regional trade agreement
Regional trade agreement
•
Extremely low labour cost in some
Extremely low labour cost in some
regions
regions
•
Frequent and significant changes in
Frequent and significant changes in
markets
markets
•
Increase power of consumers
Increase power of consumers


Pressure on businesses
Pressure on businesses


Societal
Societal
•
Changing nature of workforce
Changing nature of workforce
•
Government deregulation- more
Government deregulation- more
competition
competition
•
Shrinking government subsidies
Shrinking government subsidies
•
Increased importance of ethical and
Increased importance of ethical and
legal issues
legal issues
•
Increased social responsibility of
Increased social responsibility of
organizations
organizations
•
Rapid political changes
Rapid political changes


Pressure on businesses
Pressure on businesses


Technological
Technological
•
Increasing innovations and new
Increasing innovations and new
technologies
technologies
•
Rapid technological obsolescence
Rapid technological obsolescence
•
Rapid decline in technology cost versus
Rapid decline in technology cost versus
performance ratio
performance ratio


Pressure on businesses
Pressure on businesses

Business as usual no more enough (price
Business as usual no more enough (price
reduction & closure of unprofitable facilities)
reduction & closure of unprofitable facilities)

Need for new innovations (
Need for new innovations (
critical response
critical response

activities
activities
)
)
•
Customization
Customization
•
Creating new products
Creating new products
•
Providing superb costumers services
Providing superb costumers services

E-commerce facilitate most of these responses
E-commerce facilitate most of these responses


Organizational responses
Organizational responses

Strategic systems: provides org. with
Strategic systems: provides org. with
strategic adv.
strategic adv.
•
Increase their market share
Increase their market share
•
Better negotiation with their suppliers

Better negotiation with their suppliers
•
Prevent competitors from entering their
Prevent competitors from entering their
territory
territory
e.g. FedEx tracking system
e.g. FedEx tracking system

Continuous improvement efforts & BPR:
Continuous improvement efforts & BPR:
continuous efforts to improve productivity,
continuous efforts to improve productivity,
quality and customer services
quality and customer services
•
E.g. Dell ERP and Intel’s customer tracking
E.g. Dell ERP and Intel’s customer tracking


Organizational responses
Organizational responses

Customer relationship management: e.g. personalization, sales-
Customer relationship management: e.g. personalization, sales-
force automation
force automation

Business alliances: org. enter collaborate for mutual benefit aided
Business alliances: org. enter collaborate for mutual benefit aided

mostly by e-commerce.
mostly by e-commerce.

Electronic markets
Electronic markets

Reduction in cycle time & time to market: e.g. use of extranet
Reduction in cycle time & time to market: e.g. use of extranet

Empowerment of employees: the ability to take decision on
Empowerment of employees: the ability to take decision on
costumers (decentralization)
costumers (decentralization)

Supply chain improvement:
Supply chain improvement:
•
Reduce supply chain delays
Reduce supply chain delays
•
Reduce inventories
Reduce inventories
•
Eliminate inefficiencies
Eliminate inefficiencies


Organizational responses
Organizational responses


Mass customization: production of large
Mass customization: production of large
customized items ( in an efficient way)
customized items ( in an efficient way)

Intra-business: from sales force to
Intra-business: from sales force to
inventory control
inventory control

Knowledge management: the process
Knowledge management: the process
creating or capturing knowledge, storing
creating or capturing knowledge, storing
and protecting it, updating, maintaining
and protecting it, updating, maintaining
and
and
using
using
it.
it.