E-commerce Chapter 1-8 PDF

CHAPTER ONE E-COMMERCE DEFINITION AND CONCEPT WHAT IS E-COMMERCE E-commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce commonly known as e-commerce or eCommerce. Electronic...

CHAPTER ONE E-COMMERCE DEFINITION AND CONCEPT WHAT IS E-COMMERCE E-commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce commonly known as e-commerce or eCommerce. Electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). What is EDI? What is EFT? WHAT IS EDI EDI is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system. EFT is the electronic exchange or transfer of money from one account to another EDI is still in place, and is so effective at reducing costs and improving efficiency that an estimated 95% of Fortune 1,000 companies use it. HISTORY OF E-COMMERCE Early EC was pioneered by Internet companies that didn't (and still don't) perform traditional retail. Called Pure Plays. such as Amazon.com and CDNow. More recently click and mortar stores have moved online like Barnes and Noble, Best Buy, the Gap, and Wal-Mart Tesco, Pizza Hut,Domino Pizza , Jakel HISTORY OF E-COMMERCE The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of E-Commerce was the airline reservation system, for example Sabre in the USA and Travicom in the UK. HISTORY OF E-COMMERCE: AMAZON.COM Early in 1994, working for D.E. Shaw in New York City, Jeff Bezos, a restless, 30-year-old hedge fund manager began researching the commercial possibilities of the Net. A year later, Bezos drove west, raising venture funds for a new small online book shop (originally called Cadabra.com), to be launched from his garage in Bellevue, Wash. Running on a Website and a warehouse, by its third year Bezos's precocious Amazon.com toppled $150 million in annual sales — a milestone that Wal- Mart founder Sam Walton needed 12 years (and 78 stores) to reach. HISTORY OF E-COMMERCE: STOCKS Electronic stock trading debuted 30 years ago with Instinet, Reuters' computer network that allowed after-hours trading. Charles Schwab first offered a dial-up trading service called The Equalizer in 1985. E*Trade founded in 1982 as an institutional trading service began offering consumer trading in 1992 through America Online and CompuServe. True Web-based trading arrived in 1994 with Chicago-based NET Investor, which offered 15-minute delayed quotes and charged $35 per trade. Ameritrade, Datek Online, and others followed, eventually driving commissions to as low as $8 per trade, and forcing the implementation of free, real-time stock quotes in 1998. HISTORY OF E-COMMERCE: TRAVEL Booking a trip over the Web back in 1995 meant going to a travel site and requesting a fare. In early 1997, Travelocity offered a paging service to its Web customers that alerted them if their flight was delayed. In the fall of 1997, Priceline.com launched its innovative, bid-based market for discount airfares. Today you can bid on empty seats, name your price, choose a seat from a diagram, and know of fare bargains often before agents have that information. HISTORY OF E-COMMERCE: ADS In 1994, the first national consumer brand site - www.zima.com - was launched for the Coor's owned beverage Zima. In October of 1994, Wired magazine's HotWired, dished up the first banner ads from 12 advertisers, including AT&T, Club Med, and Volvo. Sales for the entire online ad industry were $1 million that year, and HotWired owned 40 percent of it. In 1998, online ad revenues reached $2 billion, topping the $1.6 billion spent on "outside" ads, such as billboards. General Motors alone pumped in $12.7 million. Online ad revenue is expected to reach $11.5 billion by 2003 that’s 5 percent of the total U.S. ad market. HISTORY OF E-COMMERCE By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word “E-Commerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services. E-BUSINESS Electronic Business, shortly known as e-business, is the online presence of business. e-business is not confined to buying and selling of goods only, but it includes other activities that also form part of business like providing services to the customers, communicating with employees, client or business partners can contact the company in case if they want to have a word with the company, or they have any issue regarding the services, etc. EXAMPLES OF E-BUSINESS Email marketing to existing and/or prospective customers is an e-business activity, as it electronically conducts a business process—in this case, marketing. An online system that tracks inventory and triggers alerts at specific levels is also e-business. Inventory management is a business process, and when facilitated electronically, it becomes part of e-business. A content management system that manages the workflow between a content developer, editor, manager and publisher is another example of an e-business. In the absence of an electronic workflow, the physical movement of paper files would conduct this process. By electronically enabling it, it becomes an e-business. Online tools for human resources ranging from job listings and application processes to collecting and maintaining relative data about employees constitutes e-business. E-COMMERCE VS E-BUSINESS KEY DIFFERENCES BETWEEN E-COMMERCE AND E- BUSINESS Buying and Selling of goods and services through the internet is known as e-commerce. Unlike e-business, which is an electronic presence of business, by which all the business activities are conducted through the internet. e-commerce is a major component of e-business. e-commerce includes transactions which are related to money, but e-business includes monetary as well as allied activities. e-commerce has an extroverted approach that covers customers, suppliers, distributors, etc. On the other hand, e-business has an ambivert approach that covers internal as well as external processes. e-commerce requires a website that can represent the business. Conversely, e-business requires a website, Customer Relationship Management and Enterprise Resource Planning for running the business over the internet. e-commerce uses the internet to connect with the rest of the world. In contrast to e-business, the internet, intranet and extranet are used for connecting with the parties. CHARACTERISTICS OF E-COMMERCE Seven basic features of e-commerce are: Ubiquity Global Reach and Security Universal Standards Richness Interactivity Information Density Personalization UBIQUITY Ubiquity means that the commercial transaction or activity is available at any time from anywhere in the world. And in today’s business environment, you should ensure that your website is mobile-friendly as consumers continually rely on mobile devices for their internet connectivity. Having a responsive website ensures that your content intuitively adapts to whatever device is accessing it to provide the most user-friendly experience. GLOBAL REACH AND SECURITY E-commerce allows your company to reach consumers anywhere in the world. Global reach is the highest number of potential consumers a business can reach, essentially worldwide access. Of course, when working globally, security is always key. You must protect customer information and ensure privacy with a secure e-commerce platform. Security features should include an SSL certificate that establishes secure connectivity, two-factor authentication, a firewall and a privacy policy UNIVERSAL STANDARDS Universal standards mean that e-commerce operates on standard platforms with agreed methods and systems. This is where you should also look at the ease of use of your e-commerce site and ensure that you are keeping it simple in design and content. One study showed 76 percent of consumers say the most important characteristic of a website is its ease of use. The objective is to help shoppers get to what they want faster, and without running into the unnecessary complexity that can clog up the path to purchase. RICHNESS Richness refers to the content available on the e-commerce platform and how it used by the consumer. In order to ensure richness to your site, provide a variety of messages and means, such as videos, text, pictures, sound, links, SMS and more to enhance customer experience. Make sure you have high- resolution photos and video and feature multiple images to help customers get a better feel for your products. Remember that images are what make the sale, not the text, and ensure the images load quickly to the page. INTERACTIVITY Interactivity is the relationship a consumer has with the site, which is similar to a face-to-face customer meeting in a traditional business. Part of increasing the amount of interactivity you have with a consumer lies in your ability to connect with them on an emotional level. This creates brand trust and loyalty. Make sure your social marketing efforts are linked to your e-commerce site. Engage with your customers to show authenticity and they won’t feel like they are being sold to all the time. INFORMATION DENSITY Information density relates to the technological capabilities of e-commerce, in that vast amounts of information can be stored and made accessible very cheaply and without the need for bulky storage. In e-commerce banking, for example, a customer can have access to a vast array of personal records and the bank can store huge amounts of information as well. PERSONALIZATION E-commerce takes personalized selling and marketing to a new level because of the amount of information-gathering, interaction and engagement a consumer has online. Products and messages can be personally targeted in a much more efficient way, saving time and boosting the potential for sales. Make sure you feature user-generated reviews and offer the option to create wishlists, if applicable to your business. Personalizing a special offer can also help increase the amount of time a consumer is spending on your site. TYPES OF E-COMMERCE B2B – The process where buying and selling of goods and services between businesses is known as Business to Business. Example: Oracle, Alibaba, Qualcomm, etc. B2C – The process whereby the goods are sold by the business to customer. Example: Intel, Dell etc. C2C – The commercial transaction between customer to customer. Example: OLX, Quickr , Ebay etc. C2B - – The commercial transaction between customer to business. G2C- The process where buying and selling of goods and services between Government to Customer. Example MyEG B2B B2B can be open to all interested parties or limited to specific, pre-qualified participants (private electronic market). Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers B2C Businesses selling to the general public typically through catalogs utilizing shopping cart software. B2C is the indirect trade between the company and consumers. It provides direct selling through online. If you want to sell goods and services to customer so that anybody can purchase any products directly from supplier’s website. C2B A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. C2B empowers consumers around the world by providing the meeting ground and platform for such transactions. C2C It facilitates the online transaction of goods or services between two people. Though there is no visible intermediary involved but the parties cannot carry out the transactions without the platform which is provided by the online market maker such as eBay. G2C Government providing services to customer Transaction takes place in G2C. ADVANTAGES OF E-COMMERCE Ability to reach new markets Reduces costs (for some businesses) Increased purchasing opportunities More efficient (electronic payments, telecommuting, etc.) DISADVANTAGES OF E-COMMERCE Incompatibility for certain industries Limitations of the medium Costs!!! Skills required Cultural and legal issues CHAPTER 2 E-COMMERCE APPLICATION B2C E-COMMERCE Storefront Electronic newspaper Internet banking Electronic auctions B2C ▪ B2C (Business-to-Customer) ecommerce is the exchange of goods or services over the internet between online stores/businesses and individual customers. ▪ Traditionally, this could refer to individuals shopping for clothes for themselves at the mall, diners eating in a restaurant or subscribers deciding to get pay-per-view TV at home. ▪ More recently, however, the term B2C refers to the online selling of products, or e-tailing, in which manufacturers or retailers sell their products to consumers over the internet. ▪ An example of a B2C transaction would be someone buying a pair of shoes online or booking a pet hotel for a dog.. B2C MODELS B2C BUSINESS MODELS There are generally five business models: 1.Direct Sellers ▪ This is the type most people are familiar with – they are the online retail sites where consumers buy products. They can be manufacturers such as Gap or Dell or small businesses that create and sell products, but they can also be online versions of department stores selling products from a wide range of brands and manufacturers. Examples include Target.com, Macys.com, and Zappos.com. 2.Online Intermediaries ▪ These “go-betweens” put buyers and sellers together without owning the product or service. Examples include online travel sites such as Expedia and Trivago and arts and crafts retailer Etsy.  B2C BUSINESS MODELS 3. Advertising-Based ▪ This approach leverages high volumes of web traffic to sell advertising which, in turn, sells products or services to the consumer. This model uses high-quality free content to attract site visitors, who then encounter online ads. Media outlets that have no paid subscription component, such as the Huffington Post and Observer.com, are examples. 4. Community-Based ▪ This model uses online communities built around shared interests to help advertisers market their products directly to site users. It could be an online forum for photography buffs, people with diabetes, or marching band members. The best-known example is Facebook, which helps marketers target ads to people according to very specific demographics 5. Fee-Based ▪ These direct-to-consumer sites charge a subscription fee for access to their content. They typically include publications that offer a limited amount of content for free but charge for most of it – such as The Wall Street Journal – or entertainment services such as Netflix or Hulu ▪ Businesses selling directly to consumers should take into account how their target customers like to shop and buy products like theirs as they explore various business-to-consumer options, whether those possibilities involve in-person or online transactions. TYPES OF B2C FOUR COMMON B2C ▪ Electronic Storefront ▪ Electronic Newspaper ▪ Internet Banking ▪ Online Auctions 1-ELECTRONIC STOREFRONT ▪ An electronic storefront is an e-commerce solution for merchants who want to host a website that advertises their products or services and for which consumer transactions are generated online. Various software applications are available to merchants, which range from electronic shopping carts to secure payment gateways. Merchants that lack e-commerce technical skills find that storefront vendors are especially helpful when starting out or maintaining their online stores. ▪ Web analytics and secure socket layer (SSL) security are crucial aspects as well ▪ Some electronic storefronts include analytic interfaces for the purpose of growing online businesses as well as predictive analytics to anticipate future shopping trends. If a merchant needs it, websites can be custom designed, and technical support may be provided. ▪ Another name for an electronic storefront is an online storefront. 2-ELECTRONIC NEWSPAPER ▪ An online newspaper is the online version of a newspaper, either as a stand-alone publication or as the online version of a printed periodical. ▪ Going online created more opportunities for newspapers, such as competing with broadcast journalism in presenting breaking news in a more timely manner. The credibility and strong brand recognition of well established newspapers, and the close relationships they have with advertisers, are also seen by many in the newspaper industry as strengthening their chances of survival. ▪ The movement away from the printing process can also help decrease costs. ▪ Two types : ▪ Online only newspaper ▪ Hybrid newspaper - focused on online content, but also produce a print form ▪ Internet banking allows a user to conduct financial transactions via the Internet. Online banking is also known as online banking or web banking. ▪ Online banking offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments. Virtually every banking institution has some form of online banking, available both on desktop versions and through mobile apps. ▪ Online banking requires a computer or other device, 3-INTERNET an Internet connection, and a bank or debit card. In order to access the service, clients need to register for their bank's online banking service. In order to register, BANKING they need to create a password. Once that's done, they can use the service to do all their banking. ▪ Checks can now be deposited online through a mobile app. The customer simply enters the amount before taking a photo of the front and back of the check to complete the deposit.  Convenience is a major advantage of online banking. Basic banking transactions such as paying bills and transferring funds between accounts can easily be done 24 hours a day, seven days a week, wherever a consumer wishes. Online banking is fast and efficient. Funds can be transferred between accounts almost instantly, ADVANTAGES OF especially if the two accounts are held at the same institution. Consumers can open and close a number of ONLINE BANKING different accounts online, from fixed deposits to recurring deposit accounts that typically offer higher rates of interest. Consumers can also monitor their accounts regularly closely, allowing them to keep their accounts safe. Around-the-clock access to banking information provides early detection of fraudulent activity, thereby acting as a guardrail against financial damage or loss.  ▪ For a novice online banking customer, using systems for the first time may present challenges that prevent transactions from being processed, which is why some consumers prefer face-to-face transactions with a teller. ▪ Online banking doesn't help if a customer needs access to large amounts of cash. While he may be able to take a certain amount DISADVANTAGES at the ATM—most cards come with a limit—he will still have to visit a branch to get the rest. OF ONLINE ▪ Although online banking security is continually improving, such BANKING accounts are still vulnerable when it comes to hacking. Consumers are advised to use their own data plans, rather than public Wi-Fi networks when using online banking, to prevent unauthorized access. ▪ Additionally, online banking is dependent on a reliable Internet connection. Connectivity issues from time to time may make it difficult to determine if banking transactions have been successfully processed. ▪ Some banks operate exclusively online, with no physical branch. These banks handle customer service by phone, email, or online chat. ▪ These banks may not provide direct automatic teller machine (ATM) access but will make provisions for consumers to use ATMs at other banks and retail stores. They may reimburse consumers for some of the ATM fees charged by other financial institutions. Reduced overhead DO YOU KNOW? costs associated with not having physical branches typically allow online banks to offer consumers significant savings on banking fees. They also offer higher interest rates on accounts. ▪ Prominent online banks in the United States include Ally Bank, Bank5 Connect, Simple Bank, Discover Bank, and Synchrony Bank. 4-ONLINE AUCTIONS ▪ is an auction which is held over the internet. ▪ online auctions break down and remove the physical limitations of traditional auctions such as geography, presence, time, space, and a small target audience ▪ the largest online auction site is eBay, which was the first to support person-to-person transactions. Other popular examples of online auction sites include WebStore, OnlineAuction and Overstockt ▪ Malaysia online auction site https://bid2u.com.my/en B2B CHALLENGES B2C CHALLENGES ▪ Consumer traffic. If Google, Bing, or Yahoo! do not know your name, you do not exist. Search engine marketing and optimization are the lifeblood of any online business. The usual consumer behavior is to transition to a link on the first or second page of search results. A B2C website must be optimized to attract traffic; the structure, architecture, and content management system must work for you as from its creation. This is why the choice for a website platform is vital for its success. ▪ Product findability. Online stores continue are becoming more straightforward, more intuitive, and flashy-looking. The convenience of on-site searching and navigating is the key component of usability. The associations, specific jargon, abbreviations, autocomplete suggestions of the search dictionary, filters and refinements, clear product hierarchy - are the essential features that would dramatically increase conversion rates. If a client can’t find a product, he can’t buy it. B2C CHALLENGES ▪ Payment processing. Many customers are hesitant to submit their personal data to websites due to security reasons. SSL encryption, PCI compliance and other trust marks have proven to increase online clients' confidence. ▪ Client support. Sales are always about people. The cost of acquiring a new consumer is almost ten times higher than of maintaining an existing loyal customer, who usually spends 60% more than a new client. An optimized customer experience encourages visitors to become loyal customers. So the most significant emphasis should be on improving retention. Many strategies help make clients feel appreciated. Online shopping needs to be easy , it needs to motivate clients to become your partners, the advocates of your brand. FACTORS TO CONSIDER WHEN CHOOSING AN E- COMMERCE PLATFORM FACTORS TO CONSIDER WHEN CHOOSING AN E-COMMERCE PLATFORM Pricing and Payment. ▪ The first thing you should consider when searching for an ecommerce platform is the price. Whether you’re a small business just getting started or an already established brick & mortar business moving online, you need to know exactly what you’ll be paying.  FACTORS TO 2.Integrations ▪ Another factor you should consider when looking at ecommerce platforms is their integrations and plugins. Most CONSIDER WHEN platforms, such as Shopify, will have plenty of tools for you to run your business. Your business needs will be a determining factor when deciding on the plugins that will work best for you. When looking at the different platforms, think of what tools you’ll need or already use for your business. Here are some of the most popular types of plugins that you should look out for: ▪ Accounting plugins to help with sales, taxes, revenues, and profits CHOOSING AN E- ▪ Email marketing tools to help you keep in contact with your customers ▪ A platform that helps you reward your customers for using COMMERCE your products ▪ Apps to help with shipping your products PLATFORM 3. SEO Friendliness ▪ Ecommerce businesses are not exempt from FACTORS TO working on their SEO. In fact, it can be highly beneficial to have your store rank high in search results. You want your customers to find you CONSIDER WHEN when they’re searching for products like yours. ▪ Some of the most important factors when CHOOSING AN E- looking for an SEO friendly platform include: ▪ The ability to add a blog to your website ▪ The ability to use your own domain name COMMERCE ▪ The ability for customers to leave reviews PLATFORM FACTORS TO CONSIDER WHEN CHOOSING AN E-COMMERCE PLATFORM 4.Mobile Friendliness ▪ Did you know nearly 60% of searches are done from mobile devices? Often those searches continue on to a purchase from a mobile device. This means its important to look for platforms that allow customers to easily access your website as well as make a purchase on their mobile device. Diagram at the side is a great example from Shopify 5.Security ▪ No one want to enter their credit card information on a sketchy website, which FACTORS TO is why security is becoming one of the biggest concerns among consumers. While most software today will have CONSIDER WHEN robust security as standard, always check to make sure your platform CHOOSING AN E- supports HTTPS/SSL for a safe and secure checkout for your customers. COMMERCE ▪ Also, make sure that any platform you choose is PCI (Payment Card Industry) compliant. PLATFORM FACTORS TO CONSIDER WHEN CHOOSING AN E-COMMERCE PLATFORM 6 -Scalability ▪ All business owners hope their business will grow in the future, but you may not know to what extent. Nonetheless, it’s important to look for a platform that will scale along with your business. ▪ You don’t want to pay for features and storage that you’re not using when you first start out. You also want to keep up with higher demands as your business takes off. Choose a platform that you can scale to your business size and that won’t charge you outrageous fees for doing so. FUTURE OF E-COMMERCE THANK YOU. REFENCES ▪ https://www.shopify.my/encyclopedia/business-to-consumer-b2c ▪ https://www.investopedia.com/terms/o/onlinebanking.asp ▪ https://en.wikipedia.org/wiki/Online_auction ▪ https://www.2checkout.com/ecommerce-glossary/electronic-storefront/ ▪ https://virtocommerce.com/glossary/what-is-b2c-ecommerce ▪ https://www.digitaldoughnut.com/articles/2019/august/top-b2c-ecommerce- challenges-of-2019 ▪ https://www.searchenginewatch.com/2017/08/11/7-things-to-consider-when- choosing-an-ecommerce-platform/  Chapter 2 Supply Chain Management Strategy and Design 1  10-2 The Management of Green Supply Chains Information Supply Chains Technology: A Supply Lecture Chain Enabler Outline Supply Chain Supply Chain Integration Management (SCM) Software 10- 3 Supply Chains All facilities, functions, and activities associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flows An integrated group of processes to “source,” “make,” and “deliver” products The Supply Chain- 10-4 Supply Chain for Denim Jeans 10-5 Supply Chain for Denim Jeans (cont.) 10-6 Supply Chain Processes 10-7  More difficult than manufacturing Does not focus on the flow of physical goods Supply Chain for Service Providers Focuses on human resources and support services More compact and less extended 10-8  Value chain every step from raw materials to the eventual end user ultimate goal is delivery of maximum value to the end user Value Chains Supply chain activities that get raw materials and subassemblies into manufacturing operation ultimate goal is same as that of value chain 10-9  Demand chain increase value for any part or all of chain Terms are used Value Chains interchangeably Value creation of value for customer is important aspect of supply chain management 10-10 10- 11 Supply Chain Management (SCM) Managing flow of information through supply chain in order to attain the level of synchronization that will make it more responsive to customer needs while lowering costs Keys to effective SCM information communication cooperation trust  A major objective of SCM: respond to uncertainty in customer demand without creating costly excess inventory Supply Chain Negative effects of uncertainty Uncertainty lateness and Inventory incomplete orders Inventory insurance against supply chain uncertainty 10-12 Supply Chain Uncertainty and Inventory Factors that contribute to uncertainty inaccurate demand forecasting long variable lead times late deliveries incomplete shipments product changes batch ordering price fluctuations and discounts inflated orders 10-13 Bullwhip Effect Occurs when slight demand variability is magnified as information moves back upstream 10-14  Risks are aggregated to reduce the impact of individual risks Risk Pooling Combine inventories from multiple locations into one Reduce parts and product variability, thereby reducing the number of product components Create flexible capacity 10-15 “Green” Supply Chains Sustainability Meeting present needs without compromising the ability of future generations to meet their needs Sustaining human and social resources It can be cost effective and profitable Can provide impetus for product and process innovations Impetus comes from downstream in the supply chain and moves upstream to suppliers 10-16  Reducing waste through quality Sustainability programs helps achieve sustainability and Quality goals Improving fuel efficiency of vehicles Management Telecommuting Eco-friendly packing materials Energy-efficient facilities 10-17  Information links all aspects of supply chain replacement of physical business Information E-business processes with electronic ones Technology: A Supply Electronic data a computer-to- Chain Enabler interchange computer exchange of business (EDI) documents data creates an Bar code and instantaneous computer record point-of-sale of a sale 10-18 IT: Supply Chain Enabler Radio frequency Internet Build-to-order (BTO) identification (RFID) technology can send product data allows companies to communicate direct-sell-to-customers model via from an item to a reader via radio with suppliers, customers, shippers the Internet; extensive waves and other businesses around the communication with suppliers and world instantaneously customer 10-19 Supply Chain Enablers 10-20  Automated data collection system Bar code contains identifying information Bar Codes Provide instantaneous tracking information Checkout Update inventory records Identify trends scanners Order material create point- Schedule orders of-sale data Plan deliveries 10-21 Radio Frequency Identification (RFID) Use radio waves to Provides complete Continuous transfer data from visibility of product inventory chip to a reader location monitoring Reduce labor to Reduce inventory RFID is not manage inventory costs standardized yet Difficult to track between systems 10-22 RFID Capabilities 10-23 RFID Capabilities 10-24  Share information among supply chain members Reduced bullwhip effect Early problem detection Faster response Builds trust and confidence Supply Chain Integration Collaborative planning, forecasting, replenishment, and design Reduced bullwhip effect Lower costs (material, logistics, operating, etc.) Higher capacity utilization Improved customer service levels 10-25  Coordinated workflow, production and operations, procurement Production efficiencies Fast response Improved service Supply Chain Quicker to market Integration Adopt new business models and technologies Penetration of new markets Creation of new products Improved efficiency Mass customization 10-26  10-27 Two or more companies in a supply chain to synchronize their Collaborative demand forecasts into a single plan to meet customer demand Planning, Forecasting, and Replenishment (CPFR) Parties electronically exchange past sales point-of- on-hand scheduled forecasts trends sale data inventory promotions  Computer-to-computer exchange of documents in a standard format Purchasing, shipping and receiving Improve customer service Electronic Data Reduce paperwork Interchange Increase productivity Improve billing and cost efficiency Reduce bullwhip effect through information sharing 10-28  Savings due to lower transaction costs Reduction of intermediary roles Shorter supply chain response times E-Business & Wider presence and increased visibility Supply Chain Management Greater choices & more info for customers Improved service Collection & analysis of huge amounts of customer data & preferences Access to global markets, suppliers & distribution channels 10-29  Read these real world case studies on how SCM reduced cost https://www.logisticsbureau.com/7 -mini-case-studies-successful- supply-chain-cost-reduction-and- Good management/ Reading on SCM Read these real world cases on multifacet SCM approach by companies of different industries https://supplychainminded.com/su pply-chain-management-case- study-executives-guide/ 10-30  Enterprise resource planning (ERP) software that integrates the SCM Software components of a company by sharing and organizing information and data 10-31  can be defined as powerful innovative technologies that is capable of changing the traditional way of doing various processes of supply chain like supply chain planning, task execution, interacting with all the participants of supply chain, achieving integration among the members of supply chain and enabling new business model Digital Supply Chain is the result of the application of electronic Digital Supply technologies to every aspect of the end to end Supply Chain. Chain electronic connectivity is at the heart of the Digital Supply Chain as enabled by a plethora of Management enabling, and disruptive, technologies such as : - Big Data - Internet of Things - Robotics - 3D Printing - Nanotech - Block Chain 10-32 Digital Supply Chain Management Digital transformation is a change and hence every initiative of organizational change should be managed with extreme care (Wade and Marchant 2014). Digital transformation cannot be achieved by the effort of single person rather it is a portfolio of initiatives that work together to achieve the change. As suggested by Farhani, Meier and Wilke 2017, every supply chain consist of various activities that are executed to procure raw materials, convert that material into final products, store that as finished product inventory and at the end deliver them to the ultimate customers. They have divided SCM into seven dimensions which are suppliers, production, inventory and logistics, customers, information technology, human resources and performance measurement 10-33 7 Dimensions of Digital Supply Chain Management Benefits of Digital Supply Chain Management Clear visibility of inventory Reduced inventory levels levels because of fully More decentralized Greater transparency leading because more just-in-time integrated system warehousing in order to to better decision making. procurement will be used. throughout the entire value reduce delivery times. chain. Reduce the delivery times Better understanding of Improved supply chain Higher sales, higher profit since it will reduce the customer‟s requirement flexibility and reducing the margin, strong bonding with number of stages in the through demand sensing and risks and costs involved in customer. selling chain. up-to-date sales information. supply chain. More number of alternatives will be available in the Maintenance of competitive decision-making process advantage. leading to better supply chain management decision. 10-35 References http://128.171.57.22/bitstream/10125/41665/paper0516.pdf http://128.171.57.22/bitstream/10125/41666/paper0517.pdf https://iopscience.iop.org/article/10.1088/1757- 899X/455/1/012074/pdf https://www.logisticsbureau.com/7-mini-case-studies- successful-supply-chain-cost-reduction-and-management/ https://supplychainminded.com/supply-chain-management- case-study-executives-guide/ 10-36  Chapter 2 Customer Relationship Management Learning Outcomes Upon completion of this content, students should be able to: Understand definition of CRM explain the importance to know customer understand customers and seller background investigation methods understand supplier information background describe the usage of mobile apps and social network for marketing purposes What is Customer Relationship Management Customer relationship management (CRM) is a term that refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth. Customer data, Internet technologies and information technology (IT) are the main infrastructure of any successful CRM strategies. It has improved marketing and changed the way relationships between companies and their customers What is Customer Relationship Management (cont.) Electronic customer relationship management (E-CRM) is a part of the concept of e-business which by using electronic tools and technology enables companies and organizations to serve customers more accurately with faster services all the time within wider area with less cost. E-CRM systems support all ways of the communication with the customer contain of sales, delivery and after sales service. E-CRM system support email, online marketing, online purchase, online banking, interaction chat, personalize and customize service, create customer profiles, automatic response and help.  The importance to know customer Evolving customers’ interest Consumers’ interests are constantly evolving and changing. It is important to keep up with trends that may influence customers and plan to offer the latest innovations to customers ahead of competitors Establish Relationships Companies that know what their customers’ wants and what they expect can customizing the customer experience thus, create trust, loyalty and repeat businesses. They should know that you truly care about them and the well being of their company. Knowing your customers and provide good customer service will help to ensure a long lasting relationships.  The importance to know customer (cont.) Understand customers’ needs Understanding your clients’ needs and being able to meet their demands will give your business a competitive edge. Knowing specifically what buyers want, companies can build and deliver the precise solutions to meet the needs. Focusing marketing strategy The better you know your audience, the more effectively you can create appealing content ideas, make formats decisions, handle positioning and placement, promote the content, and put the right product in place. Customers and sellers background investigation methods Reasons to investigate online business customers: Based on Information Age (2016) and Nilsen Report (2016), there is a significance increase of e-commerce fraud since 1993. The number of fraud cases has increased by 19% compared to 2013. Out of every $100 in turnover, fraudsters currently snatch 5.65 cents. Thus it is necessary to investigate customer’s and seller ‘s backgrounds especially if it involve large transactions. Necessary information needed about customer before making decision to proceed online transaction are: Customer’s company year of establishment, main products, customer position in industry, purchasing history, purchasing working flow, authorize person in charge, competitors, market distribution and others. Customers background investigation methods To investigate the credibility and accountability of customers, several available tools and application can be used: Customs database Google and the local search engine Enterprise website of the customer Enterprise database（such as Kompass） From other channels (such as purchasing history in e- commerce platform itself) Ask the customer itself  Customs database Database provided by countries worldwide, to check trade data transactions, import export data and others. Some examples: http://comtrade.un.org/data - provide worldwide official global trade data. Provided by United Nation www.infodriveindia.com- provide India import - export data www.datamyne.com- provide US import‐export transactions data www.eximpulse.com – research company that provide analytics information on import – export based in Gurgaun, India http://trade.stats.gov.my/- provide Malaysia import-export official data More and more can be found from the internet, not all the countries open their customs import and export database, but if we need, we can still check them a and get the summary data for our analysis.  Search engine Find out the product and the buyer’s name from their local search engine can get more useful information of the customer. According to Camscore Report February 2016, below is the top 6 ranking search engines. Google - Google search engine It is the most-used search engine on the World Wide Web, handling more than three billion searches each day. As of February 2016, 64% searches were powered by Google. Bing - Owned by Microsoft. The second most popular search engine, as 21.4% searches were powered by Bing. Yahoo – Yahoo search is powered by Bing with 12.2% searches. Ask.com- Receives approximately 3% of the search share. It is based on question/answer format. AOL.com – Receive 0.06% of the search share. The AOL network includes many popular web sites like engadget.com, techchrunch.com and the huffingtonpost.com. Baidu.com - the most popular search engine in China. Baidu is serving billion of search queries per month. It is currently ranked at position 4, in the Alexa Rankings.  Enterprise website of the customer Search the buyer’s company name or other related keywords, we can get to the customer’s enterprise website and find the Key person to contact with. Metal related machine maker Enterprise website of the customer (cont.) Not match for their product  Enterprise database Online global business directory to facilitate the search for potential customers and suppliers. Kompass- The leading online global business directory with nearly 4 million registered businesses in 70 countries, 23 Million key product references, 3.5 Million executives names and 750,000 trade and brand names Europages - The main business directory for finding, selecting and contacting companies in all European countries. It has near 3 million companies registered. Other entreprise databases that can also be referred to are ExportFocus.com, CEO Express.com and many others  Existing Customers Information on E- commerce Platform Finding suppliers and customers are easy, the hard part is selecting the right one. In Alibaba e-commerce platform, there are few guidelines Verified customer information by platform Blue labeled buyer means the buyer information has been verified by Alibaba.com Existing Customers Information on E-commerce Platform (cont.) Check the buyer’s purchasing history and key activities. Key Activity Information can help supplier track the buyer’s activities on the Alibaba.com and make clearer judgement. Existing Customers Information on E- commerce Platform (cont.) Example customer’s purchasing history and key activities. What we can get from this information in each inquiry Behavior in 90 days He has placed order online New customer Serious buyer Know what he is buying  Ask the customer Contact customer directly to get information from them might be the best and efficient way. The companies can ask directly through phone, email or face-to-face, and request documentation to support their information. The person-to-person request is incredibly effective, particularly if the requester has spent a lot of time with the customer or have experience dealing with the customer before.  Supplier Information Background To avoid scam and fraud, and to find the right suppliers, suppliers background also need to be checked and validated. Decision should be based on the following information: The experience in the industry – based on registered company profile, year of establishment, type of industry, history of business transactions, experience in the industry etc. Production capital- the more capital they have, the more likely they are to care about their reputations, brands and quality. The production scale- the more capital, the stronger their scale of operations. Product Certification and Patent – this can ensure the quality of the products Quality Management System (QMS) such as ISO9001 can help to minimize any quality issues. Patent can minimize product scam issues Supplier Information Background (cont.) The position of the field/ industry – determine if the supplier is product leader in the industry. The strong influence and strong position of the supplier can determine their capability and credibility to supply products. Overseas service station – Suppliers that do international business, should have strong customer service support at local and international stations. Research and Design – Supplier should emphasize on continuous improvement of the product life cycle through product extension. Investment on R & D can help to produce better product quality. Mobile apps and marketing theory Mobile apps marketing is a advertising medium that offer mobile application to support interactions with customers through smart mobile devices. The mobile apps marketing life cycle normally a sequence of stages as below: Acquisition is the first step in a user’s interaction with the app. Companies need to get customer to download and install the app. Activation means user’s first actions to activate their account by for example adding their email address or making an initial purchase. Retention means turning the app into a regular destination for customer. Customer can go back and forth between stages. Each stage requires different strategies and tactics, and each is required for a successful mobile app marketing strategy. Mobile E-commerce Apps : AliSuppliers The AliSuppliers app is a management and information tool for suppliers on Alibaba.com. Suppliers can access trade and marketing services to better engage and interact with buyers. Key features include: A platform for easily managing trade quotations, messages and orders from other countries A push notification, SNS and mobile marketing management system A database for trade and e-commerce information Online business seminars for suppliers Information on offline events AliSuppliers target to serve importer, exporter, foreign trade company, wholesaler or independent business, to improve business management and streamlines consumer engagement. Mobile E-commerce Apps : Alisuppliers According to analysis,68% e-commerce website traffic coming from the mobile devices According to the analysis, 55% of the buyers accept mobile business as their main method to do the business. Small business mostly that involve transaction between customer and businesses has became the main player of the platform. The apps allows “Click to share” the popular product of companies to the social network service (SNS) such as Facebook, Twitter, LinkedIn and Pinterest, Instagram and so on. Mobile apps and marketing theory Some Screen shotsof AliSuppliers which show the combination of business network and SNS promotion. Combination of business network and SNS network in Alibaba.com References Camscore Report (2016), Camscore Explicit Core Desktop Search Share Report, URL https://www.comscore.com/Insights/Rankings/comScore-Releases-February-2016-US-Desktop- Search-Engine-Rankings Chris, A. (2016), Top 10 Search Engines In The world. URL: https://www.reliablesoft.net/top-10- search-engines-in-the-world/ Dalir, M, Zarch, M.E., Aghajanzadeh, R. and Eshghi, S. (2017), International Academic Journal of Organizational Behavior and Human Resource Management, Vol. 4, No.2, pp12- 22. Gronkvist, F., 2017, How to Avoid Scams, Middle-Men, and Fraud on Alibaba, URL: https://startupbros.com/how-to-avoid-scams-middle-men-and-fraud-on-alibaba/ Guay, M. (2017) The Beginner's Guide to CRM: Customer Relationship Management, URL https://zapier.com/learn/crm/what-is-a-crm/ Hall, A. (2012), To Succeed as an Entrepreneur, Know Your Customer URL: https://www.forbes.com/sites/alanhall/2012/06/14/to-succeed-as-an-entrepreneur-know-your- customer/#72342e613696 References Lonergan, K. (2016), the Seven Types of E-commerce Fraud Explained. The Information Age. URL http://www.information-age.com/seven-types-e-commerce-fraud-explained-123461276/ Newman, E. (2016), Understanding Customer Needs and Wants URL: http://corp.yonyx.com/customer-service/18217/ The Nilsen report (2016), Craud Fraud, Issue 1096, Oct 2016. URL https://www.nilsonreport.com/publication_newsletter_archive_issue.php?issue=1096 Two Rivers Conferencing (2014), The Importance of Knowing Your Customers to Maximize Business Potential, URL: http://www.trconf.com/blog/2014/09/the-importance-of-knowing-your-customers- to-maximize-business-potential.html Vessella, V. (2015), Knowledge is Power: The Importance of Understanding Your Clients URL: http://www.business2community.com/customer-experience/knowledge-power- importance-understanding-clients-01404914#mAMVypJVtWh05iew.99 Thank you  CHAPTER 3 International Trade Basic International Trade Basic International Business in Changing Global Environment Methods of Payment in International Trade Negotiating the Price Bill of Lading Shipping Terms for International Trade Pro-forma Invoice Increasing the Sales Why are we not getting any orders? Order processing and shipment  International Business in Changing Global Environment Worldwide changes and developments give the new dimensions to economic development in the political and business arena. Some of the major development are: 1. The increased potential of a United States-Canada-Mexico free trade region through the North American Free Trade Agreement (NAFTA) 2. The emergence of the European Union with 27 member countries and around 480 million people. 3. Continental economic efforts to help rebuild Russia and the other countries of the former Soviet Union. 4. The continued economic power of Japan in the Pacific Rim and renewed progress of Chine. 5. Four Tigers of Hong Kong, Taiwan, South Korea, and Singapore 6. 6. Southeast Asian countries of Malaysia, Thailand, Indonesia, and Vietnam. International Business in Changing Global Environment In international business, capital is no longer the key success factor. International business success greatly depends on human factors Human side of international business Communication Motivation Leadership Methods of Payment In International Trade Cash-in-Advance Letter of Credits Documentary Collections Open Account Cash-In-Advance With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers/ telegraphic transfer and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, because it creates cash-flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Letter of Credit Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyer’s foreign bank. An LC also protects the buyer because no payment obligation arises until the goods have been shipped or delivered as promised. Letter of Credit Types of Letter of Credit 1. Irrevocable and revocable letters of credit 2. Confirmed and unconfirmed letters of credit 3. Transferable letters of credit 4. Standby letters of credit 5. Revolving letters of credit 6. Back-to-back letters of credit  Types of Letter of Credit 1. Irrevocable and revocable letters of credit A revocable letter of credit can be changed or cancelled by the bank that issued it at any time and for any reason. An irrevocable letter of credit cannot be changed or cancelled unless everyone involved agrees. Irrevocable letters of credit provide more security than revocable ones. 2. Confirmed and unconfirmed letters of credit When a buyer arranges a letter of credit they usually do so with their own bank, known as the issuing bank. The seller will usually want a bank in their country to check that the letter of credit is valid. For extra security, the seller may require the letter of credit to be ‘confirmed’ by the bank that checks it. By confirming the letter of credit, the second bank agrees to guarantee payment even if the issuing bank fails to make it. So a confirmed letter of credit provides more security than an unconfirmed one. Types of Letter of Credit 3. Transferable letters of credit A transferable letter of credit can be passed from one ‘beneficiary’ (person receiving payment) to others. They’re commonly used when intermediaries are involved in a transaction. 4. Standby letters of credit A standby letter of credit is an assurance from a bank that a buyer is able to pay a seller. The seller doesn’t expect to have to draw on the letter of credit to get paid. 5. Revolving letters of credit A single revolving letter of credit can cover several transactions between the same buyer and seller. 6. Back-to-back letters of credit Back-to-back letters of credit may be used when an intermediary is involved but a transferable letter of credit is unsuitable. Documentary Collection A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporter’s bank), which sends documents to a collecting bank (importer’s bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The draft gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-payment. Drafts are generally less expensive than LCs. Document Against Payment In this method of payment, the exporter ships the goods to his buyer and send his draft (bill of exchange) with the necessary export documents through his bank. The exporter bank then sends the documents to the corresponding bank in the buyer’s country. The bank of importer asks the importer to pay the draft and release the documents. If the buyer pays the amount, then bank handover the document to the buyer and if the buyer does not make the payment, the bank will not handover the documents to buyer and exporter will suffer loss Document Against Acceptance This is the most unsecured method of payment in export trade. In this method of payment, exporter send the documents to his buyer through his bank. The buyer’s bank handover the documents to the buyer only upon : Acceptance which implies that he agrees to pay the amount of draft (bill of exchange) After expiry of the period of credit (or usance period). The maximum usance period is 180 days. The disadvantage of this term is it allow buyer to take delivery of the goods before making the payment. Open Account An open account transaction is a sale where the goods are shipped and delivered before payment is due, which is usually in 30 to 90 days. Obviously, this option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. However, the exporter can offer competitive open account terms while substantially mitigating the risk of non-payment by using of one or more of the appropriate trade finance techniques, such as export credit insurance. Comparison between Type of Payments Comparison between Type of Payments Cash-in- Letter of Credit Documentary Open Account Advance Collection Time of Payment Before shipment When shipment On presentation As agreed upon is made of draft Good available After payment After payment After payment Before payment to buyers Risk to exporter None Very little – None Disposal of Relies on buyer unpaid goods to paid as agreed upon Risk to importer Relies on Assured Relies on None exporter to ship shipment but exporter to ship goods as relies on goods as ordered exporter to ship described in the goods as documents described in the documents Negotiating the Price Tips in price negotiation… Never offer the lowest price at the first quotation No buyer will consider the price offered is cheap. They will always bargain to get cheaper price Never give the buyer options you don’t want them to select Do not make assumptions Bill of Lading A bill of lading is a legal document between the shipper of goods and the carrier detailing the type, quantity and destination of the goods being carried. The bill of lading also serves as a receipt of shipment when the goods are delivered at the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper and receiver. Bill of Lading Ocean Bill of Lading A non-negotiable ocean bill of lading allows the buyer to receive the goods upon showing identification. If the bill is deemed negotiable, then the buyer will be required to pay the shipper for the products and meet any of the seller's other conditions. An ocean bill of lading allows the shipper to move goods across international waters. Inland Bill of Lading If the goods are to be initially shipped over land, an additional document, known as an "inland bill of lading", will be required. The inland bill only allows the materials to reach the shore, while the ocean bill allows them to be transported overseas. Bill of Lading Master Bill of Lading House Bill of Lading Issued by the actual carrier, such as MSC, Maersk, Yang Ming Issued by the forwarder company, such as XYZ Forwarding Lines, etc. Ltd, etc. Signed either by the carrier or an agent of the carrier. Signed by the forwarding company without any agency Issued on a pre-printed form of an actual carrier's bill of indication of the carrier. lading. Always subject to Hague Rules, The Hague-Visby Rules and Issued on a pre-printed form of a forwarder company's bill of US COGSA (US Carriage of Goods by Sea Act 1936. ) etc. lading. May or may not be subject to Hague Rules, The Hague-Visby Rules and US COGSA (US Carriage of Goods by Sea Act 1936. ) etc. States the terms and conditions of the carriage, as a result States the terms and conditions of the forwarding company, consignee may have protection in case the goods are as a result consignee will not be having a legal protection in damaged or lost in transit. case the goods are damaged or lost in transit. States actual carrier's bill of lading number. States forwarder company's bill of lading number. Shipping Terms for International Trade FAS – Free Alongside Ship The seller delivers when the goods are placed alongside the buyer's vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the seller to clear the goods for export. However, if the parties wish the buyer to clear the goods for export, this should be made clear by adding explicit wording to this effect in the contract of sale. This term should be used only for non-containerized seafreight and inland waterway transport. Shipping Terms for International Trade FOB – Free on Board Under FOB terms the seller bears all costs and risks up to the point the goods are loaded on board the vessel. The seller must also arrange for export clearance. The buyer pays cost of marine freight transportation, bill of lading fees, insurance, unloading and transportation cost from the arrival port to destination. FOB should only be used for non-containerized seafreight and inland waterway transport. However, FOB is still used for all modes of transport despite the contractual risks that this can introduce. Shipping Terms for International Trade CFR – Cost and Freight The seller pays for the carriage of the goods up to the named port of destination. Risk transfers to buyer when the goods have been loaded on board the ship in the country of Export. The Shipper is responsible for origin costs including export clearance and freight costs for carriage to named port. The shipper is not responsible for delivery to the final destination from the port (generally the buyer's facilities), or for buying insurance. If the buyer does require the seller to obtain insurance, the Incoterm CIF should be considered. CFR should only be used for non-containerized seafreight and inland waterway transport. Shipping Terms for International Trade CIF – Cost, Insurance & Freight This term is broadly similar to the above CFR term, with the exception that the seller is required to obtain insurance for the goods while in transit to the named port of destination. CIF requires the seller to insure the goods for 110% of their value under at least the minimum cover of the Institute Cargo Clauses of the Institute of London Underwriters (which would be Institute Cargo Clauses (C)), or any similar set of clauses. The policy should be in the same currency as the contract. CIF should only be used for non-containerized seafreight. Shipping Terms for International Trade Pro-forma Invoice A pro-forma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods. Typically, it gives a description of the purchased items and notes the cost along with other important information, such as shipping weight and transport charges. Pro- forma invoices are often used for customs purposes on imports. A pro-forma invoice differs from a simple price quotation in that it is usually considered a binding agreement, despite the fact that, like a price quote, the terms of sale are subject to change. A wide variety of businesses in virtually all industries use pro-forma invoices. Pro-forma Invoice Most pro-forma invoices provide the buyer with a precise sale price. It includes any commissions or fees, such as applicable taxes or shipping costs. Though the pro-forma invoice may be subject to change, it serves as a good faith estimate to avoid exposing the buyer to any unexpected charges once the transaction has fully completed. A pro-forma invoice may be sent prior to the shipment of any agreed-upon deliverables, or along with the shipped items. While it does contain exact details regarding the costs associated with the sale, it does not serve as an official invoice upon which a payment must be made. Pro-forma Invoice Pro-forma Invoice VS Commercial Invoice Generally, if the sale has already been completed, a commercial invoice is used as a record of the sale. In comparison, a pro-forma invoice may be used when a transaction is not officially complete. This can apply to instances where full payment is not due until certain goods are received, as dictated by any other sales contracts between the buyer and seller businesses. A traditional commercial invoice requires a large amount of data, including information about both the buyer and seller, descriptions, quantities and values for all items being shipped, and the location of the purchase. A pro-forma invoice requires significantly less information. This generally must include enough to allow for required duties to be determined and a general examination of the included goods. If a pro-forma invoice is used, a commercial invoice is required to be presented within 120 days. Increasing the Sales How to increase the sales of your products… Attract your customer… professionally Make the deal during site-visit by customer Make the customer think that the business is profitable Don’t be afraid to start with small order Why are we not getting any orders? Communication barriers No urgency from the buyer sides Can’t get the customer’s trust Different purchasing style Buyers are not satisfied with the quality of the products No product standard Order processing and shipment Monitoring of production Provide status report Inspection and report service Keep the buyer updated Arrange for shipment Preparation of the documentations After sales services References Trade Finance Guide, US Department of Commerce, International Trade Administration Letters of Credit for Importers and Exporters. Retrieved from https://www.gov.uk/guidance/letters-of-credit-for-importers-and-exporters Shipping Terms Explained. Retrieved from https://www.wwcf.com.au/Shipping- Terms Pro-Forma Invoice. Retrieved from http://www.investopedia.com/terms/p/pro- forma-invoice.asp Katavić, Ivica, International Business In Changing Global Environment (March 24, 2013). Available at SSRN: https://ssrn.com/abstract=2238652 or http://dx.doi.org/10.2139/ssrn.22386 52 Thank you CHAPTER 4 TECHNOLOGY SUPPORTING E-COMMERCE OUTLINE Network Technologies Electronic Payment E-marketplace Electronic Catalogues Electronic Shopping Cart Recommender Systems & Intelligent Agents Technological Advancements FIRST UP 2 CONSULTANTS  NETWORK TECHNOLOGIES FIRST UP3 CONSULTANTS INTERNET The term 'Internet' comes out of the concept of 'internetworking‘ At its most basic level, the Internet is a utility connecting localized computer networks with computer networks that extend across a wider area, like a region or a continent. According to Internet Live Stats (September 19, 2016) there was an estimated 3,459,730 Internet users worldwide. represents nearly 40 percent of the world's population. largest number of Internet users by country is China, followed by the United States and India. See http://www.internetlivestats.com/internet-users/ for live feed FIRST UP CONSULTANTS  FIRST UP 5 CONSULTANTS  FIRST UP 6 CONSULTANTS EXTRANET FIRST UP 7 CONSULTANTS  FIRST UP 8 CONSULTANTS ELECTRONIC PAYMENT FIRST UP 9 CONSULTANTS 7.1 ELECTRONIC PAYMENT SYSTEMS History Perspective Though the digital payment process was operational from 1960s, with the advancement of technology and e- commerce evolution, digital cashless payments have become a mainstream in the recent pastNegotiating the Price It is observed that credit card is the most widely used electronic payment mechanism FIRST UP CONSULTANTS CHRONOLOGY DIGITAL PAYMENT SYSTEM DEVELOPMENT FIRST UP CONSULTANTS  With the need of transferring the money between two peers in no time, the concept of electronic fund transfer through internet came into picture. Many possible solutions like Wire Transfer and ATM networks have been developed to support the need. FIRST UP CONSULTANTS PAYMENT CARDS Payment card Describes all types of plastic cards used to make purchases Categories: credit cards, debit cards, charge cards Credit card (Visa, MasterCard) Spending limit based on user’s credit history Pay off entire credit card balance May pay minimum amount Card issuers charge unpaid balance interest Widely accepted Consumer protection: 30-day dispute period Card not present transactions Cardholder not present during transaction Extra degree of risk for merchant and bank FIRST UP CONSULTANTS  Debit card Removes sales amount from cardholder’s bank account Transfers sales amount to seller’s bank account Issued by cardholder’s bank Carries major credit card issuer name Charge card (American Express) No spending limit Entire amount due at end of billing period No line of credit or interest charges Examples: department store, oil company cards Retailers may offer their own charge cards FIRST UP CONSULTANTS ADVANTAGES AND DISADVANTAGES OF PAYMENT CARDS With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers/ telegraphic transfer and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, because it creates cash-flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. FIRST UP CONSULTANTS ADVANTAGES AND DISADVANTAGES OF PAYMENT CARDS Advantage for merchants Fraud protection Can authenticate and authorize purchases using a payment card processing network Advantage for U.S. consumers Liability of fraudulent card use: $50 Frequently waived if card stolen Greatest advantage Worldwide acceptance Currency conversion handled by card issuer FIRST UP CONSULTANTS ADVANTAGES AND DISADVANTAGES OF PAYMENT CARDS Disadvantage for merchants Per-transaction fees, monthly processing fees Viewed as cost of doing business Goods and services prices: slightly higher Compared to environment free of payment cards Disadvantage for consumers Annual fee Provide built-in security for merchants Assurance of payments Card transaction steps transparent to consumers FIRST UP CONSULTANTS PAYMENT ACCEPTANCE AND PROCESSING Internet payment card process made easier Due to standards EMV standard Single standard handling payment card transactions Visa, MasterCard, MasterCard International United States online stores, mail order stores Must ship merchandise within 30 days of charging payment Significant violation penalties Charge account when shipped CVN Three- or four-digit number printed on the credit card Not encoded in the card’s magnetic strip FIRST UP CONSULTANTS PAYMENT ACCEPTANCE AND PROCESSING Open and closed loop systems Closed loop systems Card issuer pays merchant directly Does not use intermediary American Express, Discover Card Open loop systems (three or more parties) Third party (intermediary bank) processes transaction Visa, MasterCard: not issued directly to consumers Credit card associations: operated by association member banks Customer issuing banks: banks issuing cards FIRST UP CONSULTANTS  Merchant accounts Merchant bank (acquiring bank) Bank wanting to accept payment cards Merchant account required to process Internet transactions payment cards Obtaining account Merchant provides business information Bank assesses business type risk Bank assesses percentage of sales likely to be contested FIRST UP CONSULTANTS PAYMENT ACCEPTANCE AND PROCESSING Merchant accounts (cont’d.) Chargeback process Cardholder successfully contests charge Merchant bank must retrieve money from merchant account Merchant may have to cover chargeback potential Problem facing online businesses: fraud 10 percent of all credit card transactions completed online Responsible for 70 percent of total dollar amount of credit card fraud FIRST UP CONSULTANTS FIGURE 1 Processing a payment card transaction FIRST UP CONSULTANTS ONLINE PAYMENT Electronic Fund Transfer Electronic Bill Payment E-cheque Digital Currency FIRST UP CONSULTANTS ELECTRONIC FUNDS TRANSFER (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff. EFT transactions are known by a number of names. In the United States, they may be referred to as electronic checks or e-checks. The term covers a number of different payment systems, for example: cardholder-initiated transactions, using a payment card such as a credit or debit card direct deposit payment initiated by the payer direct debit payments for which a business debits the consumer's bank accounts for payment for goods or services wire transfer via an international banking network such as SWIFT electronic bill payment in online banking, which may be delivered by EFT or paper check transactions involving stored value of electronic money, possibly in a private currency. FIRST UP CONSULTANTS ELECTRONIC BILL PAYMENT a feature of online, mobile and telephone banking, similar in its effect to a giro, allowing a customer of a financial institution to transfer money from their transaction or credit card account to a creditor or vendor such as a public utility, department store or an individual to be credited against a specific account. These payments are typically executed electronically as a direct deposit through a national payment system, operated by the banks or in conjunction with the government. Payment is typically initiated by the payer but can also be set up as a direct debit. In addition to the bill payment facility, most banks will also offer various features with their electronic bill payment systems. These include the ability to schedule payments in advance to be made on a specified date (convenient for installments such as mortgage and support payments), to save the biller information for reuse at a future time and various options for searching the recent payment history. FIRST UP CONSULTANTS E-CHEQUE An eCheque is a payment that you make directly from your bank account. You can only send an eCheque if your bank account is the only payment method attached to your bank account, and you don't have a credit or debit card as a back-up payment method. If you have a back-up payment method, you won't be able to send eCheques. eCheques are not instant payments. It usually takes between three and five working days for an eCheque to complete FIRST UP CONSULTANTS E-CHEQUE FIRST UP CONSULTANTS ELECTRONIC PayPal CASH Supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders Payment processing services to businesses, individuals Earns profit from float Money deposited, not used immediately Charges transaction fee Businesses using service to collect payments Peer-to-peer (P2P) payment system Free payment clearing service for individuals Payments from one type of entity to another of the same type Malaysia- MOLPay, iPay88 Alibaba - Alipay FIRST UP CONSULTANTS NEAR FIELD COMMUNICATION PAYMENT (NFC) With the invention of RFID technology in 1983 by Charles Walton, a new form payment method was developed which is known as Contactless payment (refer Fig. 2) In 1995 First contactless payment was implemented in Seoul Bus transport. Followed by Speedpass in 1997 to pay fuel charges in US gas stations. In 2007, Barclay Card first implemented NFC based credit cards in UK FIRST UP CONSULTANTS BLOCK DIAGRAM OF NFC BASED PAYMENT FIRST UP CONSULTANTS NFC Many leading companies started to incorporate contactless features in their Smartphones. Google first introduced their mobile payment app Google Wallet in 2011. This App stores the credit card and bank information in the cloud. Then it use it using a passcode and pay in the Point of Sale (POS) terminals which supports the contactless payment. Google also provided a Google Wallet Card, which is linked with the Google wallet and can be used virtually anywhere. FIRST UP CONSULTANTS NFC In October 2014, Apple Pay was introduced. These devices have NFC antennas built into them for communication with the POS terminal. Android Pay was introduced in October 2015. It is estimated that 65% of the total transaction in their retails shops will be made by mobile payments by the year 2025. Samsung Pay was launched in South Korea on August 20, 2015 and in the United States on September 28 of the same year. In 2016 at the International Consumer Electronics Show (CES 2016), the telecommunications company announced that Samsung Pay would be coming soon to a variety of banks in Australia, Brazil, Spain and Singapore Microsoft Wallet was launched in 21st June 2017 in USA LG Pay was launched in 2nd June 2017 in South Korea FIRST UP CONSULTANTS E-MARKETPLACE FIRST UP 33 CONSULTANTS WHAT IS E-MARKETPLACE Internet-based electronic market that allows online business-to-business communications and transactions. An online marketplace (or online e-commerce marketplace) is a type of e-commerce site where product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. 34 FIRST UP CONSULTANTS E-MARKETPLACE FIRST UP 35 CONSULTANTS ELECTRONIC CATALOGUE FIRST UP 36 CONSULTANTS ELECTRONIC/ONLINE CATALOGUE FIRST UP 37 CONSULTANTS ELECTRONIC/ONLINE CATALOGUE FIRST UP 38 CONSULTANTS ELECTRONIC/ONLINE CATALOGUE FIRST UP 39 CONSULTANTS  HOW CAN AN ELECTRONIC CATALOGUE HELP YOUR SALES? Its digital form allows users to perform regular updates quickly and easily at zero cost, ensuring the accuracy of product data when it is presented to a wide client base. Furthermore, the changes made are immediately available for buyers to see. In an increasingly competitive business environment, the ability to provide updated product information quickly can lead to additional market opportunities and put your sales people one step ahead of the competition. Rapid search is one of the significant advantages that online catalogues deliver for businesses. E-catalogues allow buyers to perform more efficient inquiries by providing accessing to the online catalogue from anywhere Internet access is available. Once connected, buyers can consult the latest data from suppliers and search for specific product information such as descriptions, prices and product images. Suppliers are able to share their latest product data with as many retailers as they choose. An electronic catalogue gives them more flexibility to add or remove products, correct mistakes and update features, all without reprinting. Unlike conventional catalogues, e-catalogues facilitate a direct relationship between the company and its clients. This in turn enables faster decision-making and improved responsiveness to market demands. E-catalogues allow small and medium-sized companies to benefit from all the advantages traditionally reserved for larger companies with a worldwide client base and distribution. FIRST UP CONSULTANTS  ELECTRONIC SHOPPING CART FIRST UP 41 CONSULTANTS ELECTRONIC SHOPPING CART Is a piece of e-commerce software on a web server that allows visitors to an Internet site to select items for eventual purchase, analogous to the American English term "shopping cart An online shopping cart is a virtual method of keeping track of one's planned purchases on a website. Multiple items may be added to a shopping cart on a website; then, when one is ready to check out, it is simple to purchase the items in one easy step. The software allows online shopping customers to accumulate a list of items for purchase, described metaphorically as “placing items in the shopping cart” or “add to cart.” Upon checkout, the software typically calculates a total for the order, including shipping and handling (i.e., postage and packing) charges and the associated taxes, as applicable. Nearly all online shopping websites offer the option of an online shopping cart to customers, because of course, it is beneficial to the business to allow the customer to purchase more than one item at a time. To access the shopping cart on a website, usually one only needs to click on a small "shopping cart" icon near the top of the page. FIRST UP CONSULTANTS  FIRST UP CONSULTANTS ELECTRONIC SHOPPING CART- TECHNICAL These applications typically provide a means of capturing a client's payment information, but in the case of a credit card they rely on the software module of the secure gateway provider, in conjunction with the secure payment gateway, in order to conduct secure credit card transactions online. Some setup must be done in the HTML code of the website, and the shopping cart software must be installed on the server which hosts the site, or on the secure server which accepts sensitive ordering information. E-shopping carts are usually implemented using HTTP cookies or query strings. In most server based implementations however, data related to the shopping cart is kept in the session object and is accessed and manipulated on the fly, as the user selects different items from the cart. Later at the process of finalizing the transaction, the information is accessed and an order is generated against the selected item thus clearing the shopping cart. Although the most simple shopping carts strictly allow for an item to be added to a basket to start a checkout process (e.g., the free PayPal shopping cart), most shopping cart software provides additional features that an Internet merchant uses to fully manage an online store. Data (products, categories, discounts, orders, customers, etc.) is normally stored in a database and accessed in real time by the software. Shopping Cart Software is also known as e-commerce software, e-store software, online store software or storefront software and online shop. FIRST UP CONSULTANTS ELECTRONIC SHOPPING CART- COMPONENTS Storefront: the area of the Web store that is accessed by visitors to the online shop. Category, product, and other pages (e.g., search, bestsellers, etc.) are dynamically generated by the software based on the information saved in the