E-Commerce
E-Commerce
-the use of the internet and the Web to transact
business
-Electronic commerce is more than just handling
purchase transactions and funds transfers over the
Internet.
-Focus on electronic commerce involving the
customer has increased.
-Businesses of all sizes can lower costs by using the
Internet.
The Cycle of E-Commerce
Follow-on Sales
Access
Searches
Queries
Surfing
Customers Online Ads Online Orders
Standard Orders
Distribution
Online: soft goods
Delivery: hard goods
Electronic
Customer Support
E-Commerce and Business Processes
Seller Customer
Phone,
Send info Request info
fax, e-mail Web
Provide Data sheets, Identify
surfing
info catalogs, demos, etc.
need
Web site Web searches,
Web ads (1) Information
sharing
Newsgroups
Find Find
customer source
Net
Communities
Corporate Demos,
Databases Provide reviews Evaluate
info Purchase Web site Credit cards,
orders digital cash
(2) Ordering
EDI (3) Payment
Fulfill Deliver soft goods electronically Purchase (4) Fulfillment
order
Web site,
phone,
Use, (5) Service
fax, e-mail,
Support maintain and support
E-mailing
lists
E-Commerce
- focusing on digitally enabled commercial
transactions between and among
organizations and individuals
• Digitally enabled transactions - includes all
transactions mediated by digital technology
• Commercial transactions - involves the
exchange of value (ex. Money) across
organizational or individual boundaries.
EXCHANGE OF VALUE
• Is important for understanding the
limits of e-commerce. Without
EXCHANGE OF VALUE, no commerce
occurs.
E-Commerce and E-Business
• E-Business – refer primarily to the
digital enablement of transactions and
processes within a firm, involving
information systems under the control
of the firm
• E-Commerce – involves EXCHANGE OF
VALUE.
Why do we have to study
• Prior to the development of E-Commerce E-Commerce?
1. the process of marketing and selling goods was a mass-
marketing and salesforce-driven process.
2. Consumers are viewed as passive targets of advertising
“campaigns” and branding blitzes intended to influence
consumers long-term product perceptions and immediate
purchasing behavior.
3. Selling was conducted in well-insulated “channels”.
4. Consumers were considered to be trapped by
geographical and social boundaries, unable to search widely
for the price and quality.
5. Information about prices, cost and fees could be hidden
from the consumer, creating profitable “Information
Asymmetries” for the selling firm.
7 Unique Features of
E-Commerce Technology
1. Ubiquity – Internet/Web technology is
available everywhere: at work, at home,
and elsewhere via mobile devices, anytime.
2. Global reach – the Technology reaches
across national boundaries, around the
earth.
3. Universal Standards – there is one set of
technology standards, namely Internet
standards.
4. Richness – Video, audio, and text messages
are possible
7 Unique Features of
E-Commerce Technology
5. Interactivity – the technology works through
interaction with the user.
6. Information Density – The technology
reduces information costs and raises quality.
7. Personalization/Customization – the
technology allows personalized messages to
be delivered
5 Major Types of E-Commerce
1. B2C – (Business to Consumer) which is the
most commonly discussed type of e-
commerce, in which on-line businesses
attempt to reach individual consumers
2. B2B – (Business to Business) primarily
involve in inter-business exchanges, but a
number of other B2B business models have
developed, including e-distributors, B2B
service providers, matchmakers
5 Major Types of E-Commerce
3. C2C – (Consumer to Consumer) provides a
way for consumers to sell to each other, with
the help of an online market maker.
4. P2P – (Peer to Peer technology) enables
Internet users to share files and computer
resources directly without having to go
through a central web server.
5. M-Commerce – (Mobile Commerce) refers to
the use of wireless digital devices to enable
transactions on the Web.
E-Commerce Business Models
1. Value Proposition
2. Revenue Model
3. Market Opportunity
4. Competitive Advantage
5. Market Strategy
6. Organizational development
7. Management team
5 Primary Revenue Models
Revenue Example Revenue Source
Model
1. Advertising Yahoo.com Fees from advertising in
exchange for ads.
2. Subscription WSJ.com, Fees from subscribers in
Consumerreports.or exchange for access to
g content or services
3. Transaction eBay.com, E- Fees (commissions) for
Fee Trade.com enabling or executing a
transaction
4. Sales Amazon.com Sales of goods,
DoubleClick.net information or services
5. Affiliate MyPoints.com Fees for business
referrals
E-commerce Payments
Systems
Traditional Payment Systems
1. Cash
2. Checking Transfer
3. Credit Cards
4. Stored Value Systems
5. Accumulating Balance Payment Systems
New Payment Systems
1. Digital Cash
2. Online Stored value systems
3. Digital Accumulating Balance Payment Systems
4. Digital Credit Accounts
5. Digital Checking
Traditional Payment Systems
1. Cash – it is instantly convertible into
other forms of value without the
intermediation of any other institution
2. Checking Transfers – funds are
transferred directly via a signed draft or
check from a customer’s checking
account to a merchant or other
individual
Traditional Payment Systems
3. Credit Cards – represent an account that
extends credit to consumers, permits
consumers to purchase item while deferring
payment and allows consumers to make
payments to multiple vendors at one time.
4. Stored Value Systems – accounts created by
depositing funds into an account and from
which funds are paid out or withdrawn as
needed.
5. Accumulating Balance Payments Systems –
accounts that accumulate expenditures and
to which consumers make periodic payment
5 New Forms of Payment
System
1. Digital Cash
2. Online Stored value systems
3. Digital Accumulating Balance Payment
Systems
4. Digital Credit Accounts
5. Digital Checking
Issues of E-Commerce
Model for organizing issues
1. Information rights
2. Property rights
3. Governance
4. Public safety and welfare
• Information rights – What rights to their
own personal information do individuals
have in a public marketplace, or in their
private homes, when Internet technologies
make information collection so pervasive
and efficient? What rights do individuals
have to access information about business
firms and other organizations?
• Property rights – How can traditional
intellectual property rights be enforced in an
Internet world where perfect copies of
protected works can be made and easily
distributed worldwide in seconds?
• Governance – Should the internet and e-commerce
be subject to public laws? And if so, what law-
making bodies have jurisdiction – state, federal,
and/or international?
• Public Safety and welfare – What efforts should be
undertaken to ensure equitable access to the
Internet and e-commerce channels? Should
governments be responsible for ensuring the
schools and colleges have access to the Internet? Is
certain online content and activities – such as
pornography and gambling- a threat to public safety
and welfare? Should mobile commerce be allowed
from moving vehicles?
Understanding basic concepts related to
PRIVACY
• Privacy – is the moral right of individuals to be left
alone, free from surveillance or interference from
others
• Information privacy – Information privacy includes
both the claim that certain information should not
be collected at all by governments or business
firms, and the claim of individuals to control the use
of information about themselves.
• Due process – as embodied by the Fair Information
Practices Doctrine, informed consent, and opt-
in/opt-out policies also play an important role in
privacy.
Privacy and Information
Rights
• The internet provide an ideal
environment for invading personal
privacy of millions of users on a scale
unprecedented in history.
Intellectual Property Rights
3 Main types
1. Copyright
2. Patent
3. Trademark
Copyright:The problem of perfect
copies and encryption
Copyright law – protects original forms of
expression such as writings (books,
periodicals, lecture notes), art, drawings,
photographs,, music, motion pictures,
performances, and computer programs from
being copied by others for a minimum of 50
years. It does not protect ideas – just their
expression in a tangible medium such as
paper, cassette tape, or handwritten notes.
Patents: Business Methods and
Processes
Patent – grants the owner an exclusive
monopoly to the ideas behind an
invention for 20 years. They protect the
ideas themselves and not merely the
expression of ideas.
Trademarks: Online Infringement and
Dilution
Trademark law – is a form of intellectual
property protection for trademarks – a
mark used to identify and distinguish
goods and indicate their source
Governance
4 Stages of the governance of E-commerce
and the Internet
1. Government Control Period 1970 – 1994
2. Privatization 1995 – 1998
3. Self-Regulation 1995 – present
4. Government Regulation 1998- present
Questions and issues raised:
1. Who will control e-commerce?
2. What elements will be controlled?
3. How will the controls be
implemented?
Public Safety and Welfare
Most critical issue is
- on the protection of children strong
sentiments against pornography in any
public media.
- efforts to control gambling and
protection of public health through
restricting sales of drugs and cigarettes