Introduction to E-Commerce

• The application of Electronic Commerce (E-Commerce) dates back to the 1970s.
• With the widespread use of the internet in the 1990s, the term E-commerce emerged.
• E-commerce is a modern form of activity dependent on communication and the information technology revolution.
• This revolution is a technical core engine generating applications which impact life activities.
• Key applications are E-Commerce, E-Government, and E-Learning.
• E-commerce includes two words: Commerce and Electronic.
• Commerce: economic activity in which products/services between governments, organizations, or individuals are circulated.
• Electronic: commercial activity using modern electronic methods and media, primarily the internet.

Definition of E-Commerce

• E-commerce is a process by which goods, services, and information are sold, bought, and exchanged over the Internet.
• Activities of E-commerce:
• Electronic banking services
• Electronic auctions
• Online ticket booking portals
• The COVID-19 pandemic made e-commerce very popular and played a prominent role in the growth of economic sectors worldwide.
• Remote shopping has changed consumer behavior resulting in e-commerce becoming the only way for companies and institutions to survive.
• Experts predict that e-commerce purchases will reach 95% of global purchases in 2040.
• E-retail sales will reach 22% of total global retail sales in 2023.

Vision 2030 and E-Commerce in Saudi Arabia

• The Kingdom of Saudi Arabia supports e-commerce and Vision 2030 will clearly promote it.
• Artificial intelligence will play a role in classification/analysis of opinions of e-store customers and fraud prevention.
• The Ministry of Commerce and Investment in the Kingdom established a specialized e-commerce unit to follow up on e-commerce developments.
• The unit aims to build a specialized information base and prepare research/statistical studies related to e-commerce.
• The Kingdom initiated the E-Commerce Council in 2018 that includes representatives from 16 government agencies to oversee the e-commerce stimulus program.
• Council proposes policies/legislation related to e-commerce.
• E-commerce adopts an unconventional method in reaching consumers around the world.
• Information on e-commerce products is obtained from a web page.
• The request and documents must be electronic, and payment is made through computerized information networks.

Advantages of E-Commerce

• Saves time, effort and money through fast communication without the need to meet in person.
• Reduces the role of the human factor because e-commerce depends on information technology.
• Secures new job opportunities through employing specialists in communications, information technology, and e-commerce.
• Reduces prices, because the electronic market does not require the same expenses as entering traditional markets.
• This reduction leads to reduction in both prices of goods and cost of marketing.
• Increases the number of customers that can be reached, and provisions them with goods, services and information.
• Overcomes temporal/spatial constraints in promoting goods, services and information, and facilitates exchanges.
• Seller gains a global marketing outlet throughout the week.
• Consumer can complete the shopping process via mobile phone at any hour.
• Allows for receiving goods and services electronically including programs, books, research, and obtaining consultations.
• Transactions are done electronically without using paperwork, using emails as legal correspondence.
• Ease of entering into e-commerce aids in the fight against monopoly on goods and services, in the interest of the consumer.

E-Commerce vs. E-Marketing

• E-Commerce is exchanging goods, services, and information through an intermediary, including electronic buying/selling using information technology.
• E-Marketing is offering and marketing goods/services on the Internet to gain new customers while maintaining existing customers.
• E-marketing is a vital part of e-commerce where businesses advertise goods/services to attract customers online.

Advantages of E-Marketing

• Easy application due to using electronic communication and information technology.
• Customers worldwide and is direct.
• Reduces the costs of displaying goods by not needing to distribute, store, and promote them through billboards or telephone calls.
• Opens the way for anyone to market goods and services.
• Allows the sale of goods/services outside the company's scope.
• Provides the time necessary to search for the right item.
• Efficient targeting by focusing on marketing offers to categories of customers worldwide (e.g. dentists).
• Delivers goods/services to customers quickly and directly.
• Allows dealing with a huge number of customers at the same moment through a website.
• Enables marketers to evaluate advertising campaign performance through the e-marketing service without the need to publish questionnaires or spend money on data collection.

Factors for Successful E-Marketing

• Presenting a successful product.
• Creating an attractive, updated website.
• Directing advertisements and marketing offers to the target group in their original language.
• Being attractive and attracting attention.
• Measuring customer satisfaction.

Pillars of E-Commerce

• Business activity: The cornerstone of e-commerce, like other business activities conducted by owners of goods/service providers.
• Electronic documents: E-commerce is based on electronic documents, where paper correspondence disappears.
• All transactions are turned into data/information flowing over the internet, without affecting the business process's legal nature.
• Globalization/internationalization: E-commerce is the real implementation of globalization.
• Legal relations from the trade are transcontinental.

E-Commerce in Saudi Law

• E-commerce is an integrated system giving opportunity to carry out commercial business processes between partners using global interconnected networks.
• In 1428, the Saudi Council of Ministers endorsed the Electronic Transactions Act.
• The Act’s objective was to promote electronic transactions on local/international levels for trade, medicine, education, e-government, and payment.
• It includes the removal of obstacles hindering transaction and electronic signatures.
• Saudi law defines electronic commerce transactions as "Any exchange freelancing or contract or any other procedure to be concluded or implemented fully or partially by electronic means".

Challenges of E-Commerce

• Lack of online stores that support the Arabic language.
• Difficulty and cost of creating/setting up an online store.
• Weak interest in e-marketing.
• Product delivery time to the customer.
• Customers not trusting electronic payment methods or paperless transactions.

The Impact of the COVID-19 Pandemic

• Entrepreneurs/project owners faced great challenges, including financial liquidity and raw material shortages.
• Increased prices, product safety concerns, and deceptive consumers.
• Cyber security, legal legislation, and government facilitation issues.

E-Commerce Types

• The concept of e-commerce is a broad concept covering all activities or commercial transactions conducted between the parties through appropriate electronic means such as internet.
• Parties include those concerned about trade deals.
• E-commerce divides depending on the principal parties and nature.

The Business-to-Consumer Model (B2C)

• Refers to electronic transactions between business organizations and customers.
• Distributors display goods and services to customers, market and sell them through e-tailing.
• The e-tailers also provide support, services and answer questions electronically.
• Customers order products from the website over the internet, pay by card, and get the product by mail (either electronically or traditionally).
• Examples include: www.Amazon.com and www.Walmart.com

Amazon

• Considered one of the first and most important American e-commerce companies in the world.
• Founded in 1994 and released on the internet in 1995.
• Sells many products, starting with books to furniture.

Walmart

• One of the largest American companies in global sales volume.
• Established in 1962.
• The biggest company in terms of revenue based on the 2014 Fortune 500 list.
• Business-to-consumer activities include:
• E-commerce Shopping
• Online Banking
• Online Customer Service
• Charge Cards
• Phone Bank
• Digit Cash/E-Cash

The Business to Business Model (B2B)

• Refers to electronic transactions between organizations/online purchasing of goods and services between business organizations.
• E-Marketplaces are used for buying and selling between the organizations over the Internet.
• The buyer/seller communicate and exchange ideas, advertise, and auction.
• The B2B model is used to:
• Reduce costs
• Increase the efficiency of the business process
• Achieve a higher rate of profit

The Consumer to Consumer Model (C2C)

• Transactions between consumers, where a consumer sells to another through advertising products on a web site to sell personal belongings.
• Includes Electronic Auctions where e-businesses transactions are conducted between individuals.
• Examples include: eBay or Haraj

The Consumer to Business Model (C2B)

• Individuals who sell goods and services to business organizations, cooperate to increase profits

The Non-Business Model

• Associations or charitable, religious or social institutions whose aims are humanitarian.
• Offer e-commerce to reduce running costs or improve management.
• Other classifications of e-commerce if we expand the concept of e-commerce:
• E-commerce within the organization (Intra Business): internal e-commerce is within the limits of the business itself.
• E-commerce from Government to Citizen (G2C)
• E-commerce from Citizen to Government (C2G): consumer pays an electronic bill or health insurance.
• E-commerce from Governments to Business (G2B): government provides companies with goods and services.
• E-commerce from Business to Government (B2G): organizations provide goods and services to the government.
• E-commerce between Governments to Government (G2G): commerce is between a government sector and another government sector.
• E-commerce from government to employees (G2E).

Payment and Settlement Systems for E-Commerce

• Payment and settlement systems are important for the success/development of e-commerce.
• The use of certain payment/settlement systems.
• Development of other means/methods through Networking Technology.

Smart Card

• One of the most important electronic payment cards.
• Made of flexible plastic processed by silicon.
• Consists of microchip and power memory.
• Records cardholder data.

Advantages of Smart Cards

• Stores all data about the cardholder such as name, address, issuing bank, exchange method, the amount disbursed and its history also the client's banking life history.
• The client chooses the method of dealing with the card whether a credit dealing or prompt payment.
• This type of the card is against forgery and fraud or misuse by others in case of theft or attempt to counterfeit.
• The card system allows card reader sets in commercial premises to audit the financial accounts of their owners whether they were Visa or MasterCard clients.

Debit Card

• Plastic card authorizes the cardholder to transfer money from their checking account to the seller by providing a proof of identity.
• Transaction is conducted when the cardholder gives their debit card to the seller.
• The card reader sends a transfer request message to the consumer's bank.
• The bank checks the customer's account and makes sure that there are sufficient funds, as well as confirming that the card is not stolen.

Advantage of Debit Cards

• Saving time and effort of customers.
• Increasing the revenue of the issuing bank (bank); the cost of communication to confirm the validity of the card is more than the cost of dealing with coins and banknotes.
• The value of withdrawals or payments is deducted from the balance of the bank account.

Credit Cards

• These cards are issued by banks to be used in payments, purchases and cash withdrawals through debt with a certain ceiling.
• Allow the customer to pay off his entire debt or pay part of it and postpone the rest.

Advantages of Credit cards

• Saves time and effort of the cardholder.
• Increases the income of the issuing bank as a result of the fees charged for services or late payment.
• Provides instant purchase and postpaid.
• Issued in local and foreign currencies.
• Allows the cardholder to pay in local currency whether the purchasing process was in the country or abroad.

Infrastructure for Supporting Electronic Commerce

• Among the most prominent components of the Electronic Infrastructure is the ICT sector, which consists of the following:
• Wired and wireless communication networks and communication devices such as fax, fixed and mobile phones.
• Computers, application software, operation and technical support services.
• Human capital used in business and e-commerce.
• Availability of information technology-producing sectors.
• These components provide the electronic infrastructure that helps the widespread of the use of the internet and creates the right environment for e-commerce.
• The internet has played a key role because internet is considered as the electronic channel through which commercial exchanges and transactions processed.