Introduction to Electronic Commerce - Iowa State University PDF

Chapter 1: Introduction to Electronic Commerce E-Commerce and E-Business Electronic commerce is the use of technology, in particular the Internet, to conduct business – e-commerce generally refers to buying or selling electronically, usually interactively – e-business refers...

Chapter 1: Introduction to Electronic Commerce E-Commerce and E-Business Electronic commerce is the use of technology, in particular the Internet, to conduct business – e-commerce generally refers to buying or selling electronically, usually interactively – e-business refers to conducting business activities, including business to business activities, using electronic communication (sonny games) 2  Categories of Electronic Commerce Five general e-commerce categories: – Business-to-consumer (b2c) – Business-to-business (b2b) – Business processes – Consumer-to-consumer (c2c) – Business-to-government (b2g) 3 4 5 6  Important Electronic Commerce Terminology Transaction – An exchange of value Business processes – The group of logical, related, and sequential activities and transactions in which businesses engage Telecommuting or telework – Employees log in to company computers through the Internet instead of traveling to the office 7  The History of Electronic Commerce Electronic funds transfers (EFTs) – Also called wire transfers – Electronic transmissions of account exchange information over private communications networks Electronic data interchange (EDI) – Transmitting computer-readable data in a standard format to another business 8 E-COMMERCE TECHNOLOGIES Commercial History of the Internet Internet Technology Innovations for E-Commerce 9  The History of Electronic Commerce Value-added network (VAN) – Independent firm that offers connection and transaction-forwarding services to buyers and sellers 10 11  The First Wave of Electronic Commerce Defining characteristics of the first wave: – Dominant influence of U.S. businesses – Extensive use of the English language – Many new companies started with outside investor money – Unstructured use of e-mail – Over-reliance on advertising as a revenue source 12  The Second Wave of Electronic Commerce Second wave: – Global enterprises in many countries are participating in electronic commerce – Established companies fund electronic commerce initiatives with their own capital – Customized e-mail strategies are now integral to customer contact 13  Business & Revenue Models and Business Processes Business model – A set of processes that combine to yield a profit Revenue model ‫نموذج اإليرادات‬ – A specific collection of business processes used to: Identify customers Market to those customers Generate sales to those customers 14  Typical Business Models in EC Online direct marketing Electronic Electronic tendering marketplaces and systems (e.g., reverse exchanges auction) Value-chain integrators Name your own price Value-chain service Affiliate marketing providers Viral marketing Information brokers Group purchasing Bartering Online auctions Deep discounting Product and service Membership customization Supply chain improvers customization 15  Product/Process Suitability to Electronic Commerce A commodity is something that … – Is hard to distinguish from the same products or services provided by other sellers – Includes features that have become standardized and well known 16  Product/Process Suitability to Electronic Commerce Shipping profile – Collection of attributes that affect how easily a product can be packaged and delivered High value-to-weight ratio – Can make overall shipping cost a small fraction of the selling price 17  Advantages of Electronic Commerce Electronic commerce can increase sales and decrease costs If advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country Using e-commerce sales support and order- taking processes, a business can: – Reduce costs of handling sales inquiries ‫استفسارات المبيعات‬ – Provide price quotes ‫عروض األسعار‬ 18  Advantages of Electronic Commerce Ecommerce … – increases purchasing opportunities for buyers – makes easier negotiating price and delivery terms ‫شروط التسليم‬ 19  Disadvantages of Electronic Commerce Perishable products are difficult to sell online It is difficult to: – Calculate return on investment – Integrate existing databases and transaction- processing software into software that enables e-commerce Cultural and legal obstacles also exist 20  Electronic Marketplaces What are the functions of markets? 1. matching buyers and sellers 2. facilitating the exchange of information, goods, services, and payments associated with market transactions 3. providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market 21  Using Electronic Commerce to Reduce Transaction Costs Businesses and individuals can use electronic commerce to reduce transaction costs by: – Improving the flow of information – Increasing coordination of actions 22  Transaction Costs (before EC) Transaction costs are the total costs that a buyer and seller incur ‫يتحمل‬ – Significant components of transaction costs: Cost of information search and gaining Investment of the seller in equipment to supply products or services to the buyer 23  Network Economic Structures Network economic structures: Companies coordinate their strategies, resources, and skill sets by forming long-term, stable relationships with other companies and individuals based on shared purposes Strategic alliances: Relationships created within the network economic structure Virtual companies/organizations: Strategic alliances that occur between or among companies operating on the Internet Strategic partners: Entities that come together as a team for a specific project or activity 24  Network Effects – Most activities yield less value as the amount of consumption increases – As more people or organizations participate in a network, the value of the network to each participant increases 25  Identifying Electronic Commerce Opportunities Firm ‫مؤسسة‬ – Multiple business units owned by a common set of shareholders Industry ‫صناعة‬ – Multiple firms that sell different products to similar customers 26  Strategic Business Unit Value Chains Next Lecture Value chain – A way of organizing the activities that each strategic business unit undertakes Primary activities include: – Designing, producing, promoting ‫ترويج‬, marketing, delivering, and supporting the products or services it sells Supporting activities include: – Human resource management and purchasing 27 28  Industry Value Chains Value system – Larger stream of activities into which a particular business unit’s value chain is embedded 29 30  SWOT Analysis: Evaluating Business Unit Opportunities In SWOT analysis: – An analyst first looks into the business unit to identify its strengths and weaknesses – The analyst then reviews the operating environment and identifies opportunities and threats 31 32 33  International Nature of Electronic Commerce Companies with established reputations: – Often create trust by ensuring that customers know who they are – Can rely on their established brand names to create trust on the Web Customers’ inherent lack of trust in “strangers” on the Web is logical and to be expected 34  Language Issues To do business effectively in other cultures a business must adapt to those cultures Researchers have found that customers are more likely to buy products and services from Web sites in their own language Localization – Translation that considers multiple elements of the local environment 35  Culture Issues An important element of business trust is anticipating how the other party to a transaction will act in specific circumstances Culture: – Combination of language and customs – Varies across national boundaries – Varies across regions within nations 36  Infrastructure Issues Internet infrastructure includes: – Computers and software connected to the Internet – Communications networks over which message packets travel 37  Infrastructure Issues (continued) Flat-rate access system – Consumer or business pays one monthly fee for unlimited telephone line usage 38 39