Introduction to e-Commerce_ Internet and World Wide Web by dffhrtcv3


									 Introduction to e-Commerce,
Internet and World Wide Web

          Week - 1

• Chapter 1: In the Beginning from Electronic
  Commerce, from Vision to Fulfillment by Elias
  M. Awad

• Chapter 2: The Internet and the World Wide
  Web from Electronic Commerce, from Vision to
  Fulfillment by Elias M. Awad

          What is e-Commerce
• Brings the universal access of the Internet to
  the core business processes of buying and
  selling products and services.
• E-Commerce assists in
  – Generating demand for products and services.
  – Improving order management, financial transactions
    and logistics.
• Successful e-Commerce should result in
  reduction of transaction costs and streamlining
  of business processes.
       Examples of e-Commerce
• Credit card authorisation

• Online travel reservations

• Global wire funds transfer

• Point of Sale (POS) transactions

• Electronic banking

• Fund raising

• Auctioneering                      4
          Different Perspectives
• Communications perspective
  – The ability to deliver products, services, information
    or payment via a network.
• Consumer and business interface perspective
  – Various exchanges of information and transactions,
     • Business to business
     • Business to consumer
     • Consumer to consumer
• Business process perspective
  – Activities that directly support commerce
    electronically by means of networked connections.
         Different Perspectives (Contd.)
• Online perspective
  – An electronic environment that makes it possible to
    buy and sell products, services and information on
    the Internet.
• Information structural perspective
  – Involves various media
     •   Data
     •   Text
     •   Web pages
     •   Internet multimedia.
• Market perspective
  – Introduction of local outlets into global markets
  – Projection or regional goods and services globally.   6
           What is e-Business
• Connects critical business constituencies
• Using electronic information to enhance
  performance and create value by forming new
  relationships between and among businesses
  and processes.
• Involves creation of business strategies and
• Combines resources of traditional information
  systems with the ubiquitous World Wide Web.
            E-Business Goals
• Reach new markets
• Create new products and services
• Build customer loyalty
• Enrich human capital
• Make optimum use of existing and emerging
• Achieve market leadership and competitive
           Changing Traditions
• Open business practices

• Convenient market search

• Physical transactions without physical
 involvements and interactions
  – Inquiries
  – Orders
  – Payments
  – Deliveries
             E-Commerce Drivers
• Digital convergence and global standarisation
  – Systems communicate and interact
• Ubiquity
  – Omnipresence and state awareness
• Value addition to job roles and employee tasks
  – Junior employees handle greater responsibilities
• Affordable infrastructure and services
  – Services and infrastructure also available on lease
• Competitive global market environment
  – Pressure on operating costs and profit margins.
• Customised products and services
  – Handling of customised requests at a mass-market
    scale                                            10
            E-Commerce Myths
• Setting up a web site is easy
  – But ensuring its availability and performance is
• E-commerce is cheap when compared to
  purchasing a mainframe
  – Cost of e-commerce infrastructure is dependent on
    the volume of business activity.
• E-commerce means end of mass marketing
  – Businesses still have to advertise their presence on
    the web.
• Everyone is doing it
  – Successful e-commerce requires a compelling
    business reason and sound strategic planning.       11
        E-Commerce Myths (Contd.)
• E-commerce is lurcative
  – But businesses must have mature business
    processes and lifecycle for e-commerce.
• E-commerce is revolutionary
  – Proportionate attention needs to be paid to aspects
    related to 24/7 warehousing, delivery, customer
    support, etc.
• Online retailing is always the low-cost channel
  – Minus the maintenance of an outlet and production
    of paper catalogues, e-commerce requires
    maintenance of delivery channels, warehouses and
    supply chains while striving to be competitive.
  – Recurring expenditures of web site and
    infrastructure maintenance can be exorbitant.     12
         E-Commerce Myths (Contd.)
• All products can be sold online
  – Some can only be advertised.

• Customers can be bought
  – But will only be loyal if the business maintains

• Online firms face less pressure to grow and
  achieve economies of scale
  – Because of the speed with which success may be
    achieved, business scalability may be more critical.13
        E-Commerce Myths (Contd.)

• Size is not important for online firms
  – Cyber customers are known to have preferred e-
    commerce with large brand names.

• The middleman is out
  – Online reselling, headhunting, directory services
    etc. is the emerging trend in e-commerce.

     Advantages of E-Commerce
• Lower relative cost
  – Proportionate investment allows startup companies
    to compete with market leaders.

• Economic Operations
  – Administration of e-commerce infrastructure can be
    relatively more economical than that of a off-line

• Higher Margin
  – For the same scale of business, processing
    overheads reduce considerably.
  Advantages of E-Commerce (Contd.)
• Better customer service
  – Responsive and accurate online customer service.
• Convenient market search
  – No need to physically move from store to store to
    make price and promotions comparisons.
• Productivity gains
  – Lesser resource allocation
  – Value added resources
• Teamwork
  – Higher overall interactivity between consumers and
    businesses.                                       16
  Advantages of E-Commerce (Contd.)
• Knowledge markets
  – Convenient research environment
• Information sharing, convenience and control
  – 24/7 operations possible with minimum physical
• Contemporary business models
  – Large scale barter trade
  – Payments in kind vs. cash
• Product customisations
  – Convenient market research allows development of
    customisable products or products with wider
    consumer base.                                 17
      Limitations of E-Commerce
• Security
  – Cyber consumers remain skeptical of revealing
    financial authorisations on Internet.
• System and data integrity
  – Security against viruses, hackers and attackers.
  – Major challenges include defense against
    disruptions and unauthorised changes in data.
• E-commerce is not free
  – Small businesses still have to compete with the
    reputation of market leaders.
   Limitations of E-Commerce (Contd.)
• Consumer search is neither cost effective nor
  – Consumers may need quality guarantees and
    assistance in search, adding to the eventual cost of
    the product or service.
• Fulfillment problems
  – Business may grow rapidly and the infrastructure
    may not be able scale with the growth.
• Customer relations problems
  – E-business requires customer loyalty to survive.
   Limitations of E-Commerce (Contd.)
• Products people wont buy online
  – For some products people like to “road-test” the
    product before making a purchase.
• Corporate vulnerability
  – Corporations do web-farming to extract business
    intelligence from online marketing information of
    their competitors.
• Lack of blueprint for handling e-commerce
  – Traditional corporate structures and procedures
    inhibit progress in e-commerce.
  – Most corporations have significant shortage of e-
    literate executives.
   Limitations of E-Commerce (Contd.)
• High-risk of Internet Startup
  – Most Internet startups fail because of,
     • Lack of sound business strategy,
     • Disproportionate investment of time and resources,
     • Inappropriate merchandise.

      Critical Success Factors in
• A sound strategy that has complete support of
  the top management.
• A clear goal of long-term customer relationships
  and value.
• Making full use of Internet and related
• A scalable and integrated business process and
    Value Chains in E-Commerce
• A value chain is an organisation of activities of
  a business so that each activity adds value to
  the total operation of the business.
• Competitive advantage is achieved when an
  organisation links activities in its value chain
  more cost effectively and efficiently than its
• Activities should be linked such that value-
  added (output) of one activity contributes to the
  input of another activity.
• Activities of an organisation can be divided into
  – Primary activities
  – Support activities                            23
   Primary Activities of a Business
• Inbound Logistics
  – Procurement activities that represent the supply
    side of the business.
     •   Vendor selection
     •   Comparative shopping
     •   Negotiation of supply contracts
     •   JIT arrival of goods

  – Business must be able to expeditiously exchange
    data with its suppliers regardless of the electronic
    format or technology.
Primary Activities of a Business (Contd.)
• Operations
  – Conversion of received raw materials into the
    •   Fabrication
    •   Assembling
    •   Testing
    •   Packaging

  – Provides added value for the marketing function.

  – Data should be shared at maximum networking
    speeds between internal and external partners
    involved in the operations.
Primary Activities of a Business (Contd.)
• Outbound Logistics
  – Storage, distribution and shipping of the

  – Involves
    • Warehousing
    • Materials handling
    • Shipping and timely delivery to the retailer or customer

  – This activity adds value to marketing and sales.

Primary Activities of a Business (Contd.)
• Marketing and Sales
  – Activity dealing with the customers

  – Includes
     •   Advertising
     •   Product promotion
     •   Sales management
     •   Identifying product’s customer base
     •   Identifying distribution channels

  – Output of this activity can trigger increased
    production, more advertising etc.               27
Primary Activities of a Business (Contd.)
• Service
  – Activity focusing on after-sales service to the
  – Includes
     •   Testing
     •   Maintenance
     •   Repairs
     •   Warranty work
     •   Replacement parts
  – Output of this activity results in
     • Satisfied customer base
     • Improved image of the product and business
     • Potential for increased production and sales
   Support Activities of a Business
• Corporate Infrastructure
  – Backbone activity of a business unit.
  – Includes
     •   General management
     •   Accounting and finance
     •   Planning
     •   Legal services
  – Often pictured in
     • An organisation chart.
     • A communication network.
     • Authority structure
  – Each position holder must have an added value to
    the organisation.                                  29
Support Activities of a Business (Contd.)
• Human Resources
  – Unique activity of matching the right people to the

  – Involves
     • Recruitment and retention
     • Training and career path development
     • Compensation and benefits administration

  – Output of this activity affects virtually every other
    activity in the company.
Support Activities of a Business (Contd.)
• Technology Development
  – Focuses on improving the product and business
    processes in the primary activities.
  – Output of this activity contributes to the product
    quality, integrity and reliability.
  – Effective technology development eases pressures
    on the sales, service and customer relation teams.
• Procurement
  – Focuses on the purchasing function.
  – Should ensure the availability of quality raw material
    for production.
        E-Commerce Integration
• Trend in e-commerce: Integration of the entire
  – From the time the consumer purchases on the
    website to the time the product is actually received.
• The lifecycle focuses around three major e-
  commerce applications,
  – Business to consumer (B2C)
     • Performed on the Internet
  – Business to business (B2B)
     • Performed on the Internet and Extranet
  – Business within business
     • Performed on the Intranet.
E-Commerce Transaction Lifecycle
                 Business to
                                   Business to      Business within
                                   Business (B2B)   Business
               Internet (e.g.,
                                                    Intranet (Internal
               orders via e-
Communications                     Extranet         procurement
               mails, online
                                                    and processing)
               form fill ins)
                                   Restricted to
                                   company staff    Restricted to
Access           Unrestricted
                                   and business     company staff
                 Minimal except    Firewalls,
Security                                            Firewalls
                 verification      authentication

                 Credit cards or   Predefined       Within business
                 electronic cash   credit agreement charges        33
      Supply Chain Management
• Integrating the networking and communication
  infrastructure between businesses and
  suppliers to ensure
  – having the right product,
  – in the right place,
  – at the right time,
  – at the right price,
  – in the right condition.
• An integral part of the B2B framework.
• Transforms the way companies deal with
  suppliers, partners and customers to improve
  efficiency and profitability.                  34
   Supply Chain Management (Contd.)
• Supply chain management employs powerful
  tools that allow companies to exchange
  information in an effort to
  – reduce cycle times,
  – have expeditious fulfillment of orders,
  – minimize excess inventory,
  – improve customer service.
• Important strategic advantages of supply-chain
  – Better collaboration with business partners,
  – Lower operational costs,
  – Reduced cycle times.                           35
   Supply Chain Management (Contd.)
• Supply chain management also now focusing
  on end-customers.
  – Integration between sales-force automation
    applications and between consumers and business
    customers means all partners can configure and
    order online whatever they want.
• Direct integration of businesses transforms the
  roles of wholesale suppliers.
  – Financiers and logisticians,
  – Outsource sellers,
  – Post-sales support providers.
• Communications perspective
  – Interconnected heterogeneous networks operating
    a unified protocol that masks the underlying
    technological dissimilarities.
  – Internet appears as a single network to its users.

• Information and management perspective
  – Information and Multimedia Superhighway.
    •   Data via the World Wide Web
    •   Data via non-Web-based applications.
    •   Internet phone calls
    •   Internet movies                                  37


Fault Resilience in Internet

Information Transfer on the Internet
• Information to be transmitted over the Internet
  is segmented into packet.
• Each packet is transmitted independently of the
  others even if they belong to the same
• Packetisation of information to be
  communicated provided efficiency and
• Packets were communicated from the source to
  the destination using a protocol.
• A protocol is a set of rules used by computers
  in communicating messages across a network 40
  Hierarchical Structure of Internet
              High Speed Backbone Networks

       NAP                 NAP                NAP

  Regional Nets        Regional Nets     Regional Nets

 Regional ISPs         Regional ISPs     Regional ISPs

        Local Nets               Local Nets

User   User     User    User   User    User   User   User 41
  Internet Service Providers (ISPs)
• Companies that link users to the Internet.
• Retail ISPs
  – Linking consumers and businesses to the Internet.
  – Monitoring and maintaining customer web sites.
  – Network management and system integration.
  – Provision of free services
     • News bulletins and weather updates.
     • Search engines
     • Freeware and shareware software.
• Wholesale ISPs
  – ISP of ISPs.
• Competitive industry.
             World Wide Web
• An organisation of files designed around a
  group of servers on the Internet that are
  programmed to handle requests from browser
  software on user terminals.
• Originally web documents were text documents
  with links within documents linking to other
  documents or sections of other documents.
• Now web documents can link to other media on
  the Internet, such as images, video, audio and
  animated graphics.
  – Browsers can invoke handler software for each
    different type of media.
                Web Protocols
 – Hyper-Text Transfer Protocol
 – Allows transfer of requests for web pages from
   clients and the retrieved web pages from servers to
   clients for display.
 – Uniform Resource Locator
 – A name that represents the address of a specific
   web site.
 – URL is divided into two parts
   • Protocol, e.g., http, ftp, file.
   • Resource, i.e., name of server and the file on the server.
            Web Protocols (Contd.)
  – Secure Sockets Layer
  – A protocol for transmitting information in a secure
    manner over the Internet.
  – Secure HTTP
  – An extension of HTTP that provides various security
    features such as client server authentication.
  – Also allows web clients and servers to specify
    privacy capabilities.

  Internet: Enabler of E-Commerce
• Marketing and selling products and services
  – Convenient entry into global competition.
  – Require effective planning for successful business
• Expeditious business
  – Speed compresses business processes and
    promotes growth of customer base.
• Surveys and experiments
• Level playing field
  – Enables smaller organisations to compete with
    larger organisations.                                46
  Internet: Enabler of E-Commerce
• Resource conservation and cost effective
• Can provide a superior customer service and
  support resource.
• Support for management functions through
  formal (e.g., e-mail) and ad hoc mechanisms
  (e.g., chat services and mailing lists).
• Triggering new business activities
  – E.g., selling used books to university and college
            Internet Limitations
• Security and privacy
  – Viruses, sniffing, DoS attacks etc.
• Fakes and forgeries
  – Authentication and authorisation.
• Stressful operations
  – Businesses unable to scale with expeditious growth.
  – Customers require road test before commiting to a
  – Shipping regulations.

         Searching Mechanisms
• Search engines
  – A web site or a database with tools to generate that
    database and search its contents.
• Web robots
  – Collection parts of search engines that roam web
    sites, retrieve messages and sort, index and then
    download them one by one.
• Spiders
  – A software tool that prowls the Web looking for new
    sites where specific information is likely to reside.

           Searching Mechanisms
• Portal
  – A location on the Web that acts as a launching point
    for searching and retrieving information.
  – An all-purpose homebase for web users.
• Bookmark
  – A facility on web browsers that allows users to save
    URL address (web addresses) for future access.

           Internet Terminologies
• Browser
  – A software program installed on a user terminal
    allowing users to access and view information
    stored on the Web.
  – Represents the client side of the Web.
• Server
  – A computer with an installed operating system to
    store information or applications required by the
    client programs.
• Telnet
  – An Internet service that allows a visitor to access
    remote computer locally.                              51
         Internet Terminologies (Contd.)
  – File Transfer Protocol
  – A common mechanism of communicating files
    between computers connected to the Internet.
• Malicious software
  – Any software that causes damage by spreading
    itself to other computers via e-mail, infected floppies
    or other network connections.
  – Categories
     •   Trojan horse: Appear to perform legitimate tasks.
     •   Zombies: Operate on behalf of masters to attack sites.
     •   Viruses: Perform destructive tasks.
     •   Worms: Reproduce, blocking Internet resources.           52

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