E-Commerce Lecture 4 PDF

CSM 184 E-COMMERCE  E-Commerce Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet. Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet...

CSM 184 E-COMMERCE  E-Commerce Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet. Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet.  E-Commerce Since transactions go through the internet and the Web, the terms I- commerce (Internet commerce), icommerce and even Webcommerce have been suggested but are now very rarely used Other terms that are used for online retail selling include e-tailing, virtual-stores or cyber stores. A collection of these virtual stores is sometimes gathered into a ‘virtual mall’ or ‘cybermall’. ELECTRONIC-BUSINESS E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. E-business is the transformation of key business processes through the use of Internet technologies. An e-business is a company that can adapt to constant and continual change. The Process Of E-Commerce E-COMMERCE A consumer uses Web browser to connect to the home page of a merchant's Web site on the Internet. The consumer browses the catalog of products featured on the site and selects items to purchase. The selected items are placed in the electronic equivalent of a shopping cart or electronic basket When the consumer is ready to complete the purchase of selected items, she provides a bill-to and ship-to address for purchase and delivery E-COMMERCE When the merchant's Web server receives information, such as a credit card number, it computes the total cost of the order--including tax, shipping, and handling charges-- and then displays the total to the customer. The customer can now provide payment E-COMMERCE When the credit card number is validated and the order is completed at the Commerce Server site, the merchant's site displays a receipt confirming the customer's purchase. The Commerce Server site then forwards the order to a Processing Network for payment processing and fulfillment. DISTINCTION BETWEEN E-COMMERCE AND E- BUSINESS Electronic commerce can be broadly defined as the exchange of merchandise (whether tangible or intangible) on a large scale sometimes between different countries using an electronic medium – namely the Internet E-business can broadly be defined as the processes or areas involved in the running and operation of an organisation that are electronic or digital in nature. ◦ These include direct business activities such as marketing, sales and human resource management but also indirect activities such as business process re- engineering and change management  THE KEY DRIVERS It is important to identify the key drivers of e-commerce to allow a comparison between different countries Technological factors – The degree of advancement of the telecommunications infrastructure which provides access to the new technology for business and consumers. Political factors – including the role of government in creating government legislation, initiatives and funding to support the use and development of e-commerce and information technology Social factors – incorporating the level and advancement in IT education and training which will enable both potential buyers and the workforce to understand and use the new technology Economic factors – including the general wealth and commercial health of the nation and the elements that contribute to it.  LEVELS OF ELECTRONIC-COMMERCE E-Commerce is carried out primarily in five levels, and the main aspect of ecommerce is a merchant selling products or service to the consumers The following are some popular ecommerce models used by companies engaged in e-commerce 1. Business to Business E-commerce (B2B) 2. Business to Consumers E-commerce (B2C) 3. Consumer-to-Consumer E-commerce (C2C) 4. Consumer-to-Business E-commerce (C2B) 5. Business to Employees E-commerce (B2E)  LEVELS OF ELECTRONIC-COMMERCE E-Commerce is carried out primarily in five levels, and the main aspect of ecommerce is a merchant selling products or service to the consumers The following are some popular ecommerce models used by companies engaged in e-commerce i. Business to Business E-commerce (B2B) Transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks B2B is defined as the sales of goods or services between businesses via online channels  LEVELS OF ELECTRONIC-COMMERCE ii. Business to Consumers E-commerce (B2C) B2C is the most popular form of e-commerce. B2C (business-to-consumer) e-commerce is the online sale of products or services of a business to consumers. B2C provides direct trade between the company and consumers. Difference between B2B and B2C E- Commerce B2C customers tend to make smaller orders and quicker buying decisions, while B2B customers are willing to spend weeks researching vendors before making a purchase. B2B businesses form long-lasting relationships with customers, and their customers are less likely to impulse buy from the first company that sparks their interest.  In B2C e-commerce, the buying process is often driven by emotions: B2C customers want products that improve their lives and make them happy.  LEVELS OF ELECTRONIC-COMMERCE iii. Consumer-to-Consumer E-commerce (C2C) In this model, if anyone wants to sell anything, all one has to do is post a message on the site, giving details of the product and the expected price and wait for an interested customer to turn up and buy it LEVELS OF ELECTRONIC-COMMERCE iv. Consumer-to-Business E-commerce (C2B) A consumer-to-business model, or C2B, is a type of commerce where a consumer or end user provides a product or service to an organization. Consumer-to-business (C2B) is a business model where an end user or consumer makes a product or service that an organization uses to complete a business process or gain competitive advantage. An example of C2B model of e-commerce is the site Priceline.Com, which allows prospective airline travellers, tourists in need of hotel reservations etc. to visit its websites and indicate their preferred price for travel between any two cities  LEVELS OF ELECTRONIC-COMMERCE v. Business to Employees E-commerce (B2E) With B2E, the target is not companies, but their own employees. A B2E strategy covers everything a business can do to attract, recruit, onboard, train, empower and retain employees. In a broader and vaster sense, B2E tries to encompass all those aspects that businesses do for attracting and retaining competent staff in a highly competitive market.  Flexible working hours, bonuses, opportunities for education, aggressive recruiting are some strategies that a business incorporates as a part of the business-to-employee strategy.  THE BENEFITS OF ELECTRONIC-COMMERCE TO ORGANIZATIONS Benefits of e-commerce to organizations International marketplace. By becoming e-commerce enabled, businesses now have access to people all around the world. Operational cost savings. The cost of creating, processing, distributing, storing and retrieving paper based information has decreased. Mass customisation. The pull-type processing allows for products and services to be customised to the customer‘s requirements. Enables reduced inventories and overheads by facilitating ‘pull‘-type supply chain management - this is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organisation and its authorised partners THE BENEFITS OF ELECTRONIC-COMMERCE TO ORGANIZATIONS Digitisation of products and processes. Particularly in the case of software and music/video products, which can be downloaded or e- mailed directly to customers via the Internet in digital or electronic format. No more 24-hour-time constraints. Businesses can be contacted by or contact customers or suppliers at any time.  BENEFITS OF E-COMMERCE TO CONSUMERS 24/7 access. Enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location More choices. Customers not only have a whole range of products that they can choose from and customise, but also an international selection of suppliers BENEFITS OF E-COMMERCE TO CONSUMERS Price comparisons. Customers can ‘shop‘ around the world and conduct comparisons by visiting different sites, or by visiting a single site where prices are aggregated from a number of providers and compared Improved delivery processes. This can range from the immediate delivery of digitised or electronic good to the on-line tracking of the progress of packages being delivered by mail or courier. An environment of competition where substantial discounts can be found or value added, as different retailers vie for customers BENEFITS OF E-COMMERCE TO SOCIETY Enables more flexible working practices. which enhances the quality of life for a whole host of people in society, enabling them to work from home Facilitates delivery of public services. For example, health services available over the Internet LIMITATIONS OF ELECTRONIC-COMMERCE TO ORGANIZATIONS Lack of sufficient system security, reliability, standards and communication protocols Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up‘ and not be left behind Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimental to the organisation Facing increased competition from both national and international competitors Problems with compatibility of older and ‘newer’ technology. There are problems where older business systems cannot communicate with web-based and Internet infrastructures, leading to some organisations running almost two independent systems where data cannot be shared. LIMITATIONS OF E-COMMERCE TO CONSUMERS Computing equipment is needed for individuals to participate in the new ‘digital‘ economy, which means an initial capital cost to customers. A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web. Cost of access to the Internet, whether dial-up or broadband tariffs. Cost of computing equipment. Not just the initial cost of buying equipment but making sure that the technology is updated regularly Lack of security and privacy of personal data. Physical contact and relationships are replaced by electronic processes. A lack of trust because they are interacting with faceless computers. Limitations of e-commerce to society Breakdown in human interaction. Social division. There is a potential danger that there will be an increase in the social divide between technical haves and have-nots Reliance on telecommunications infrastructure, power and IT skills, which in developing countries nullifies the benefits when power, advanced telecommunications infrastructures and IT skills are unavailable or scarce or underdeveloped Wasted resources. As new technology dates quickly how do you dispose of all the old computers, keyboards, monitors, speakers and other hardware or software? Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in times of crisis as stocks are kept to a minimum and delivery patterns are based on pre- set levels of stock which last for days rather than weeks DISCUSSION What are some of the solutions to these limitations? BUSINESS TO BUSINESS E-COMMERCE (B2B) In a B2B transaction, the interaction is between businesses. Business to Business e-commerce provides small and medium enterprises (SMES) with an excellent opportunity to access new markets, improve customer service and reduce costs B2B transactions are however relatively high value in nature and organisations are slow to change their traditional systems for the supply chain management.  B2B MODELS There are four different types of B2B models available which are as follows: 1. Direct Connection Model In the direct model your business connects directly to each of your trading partners for sending and receiving electronic documents Your IT organization is responsible for all mapping, translation, technical support and tracking documents. But, as the size of your community grows, you need more resources to implement and support each new trading partner. You need to continually monitor communications, manage trading partner calls and resolve issues quickly Adding to the complexity, trading partners frequently insist on using different protocols, particularly if they are also trading with other enterprises B2B MODELS The graphic below illustrates the direct B2B scenario. This model is sometimes called the ―spaghetti model, or the ―spider model‖ because of its complexity  B2B MODELS 2. Network Model To avoid the complexity of the direct model, many companies decide to work exclusively through a B2B Service Provider, which, in the days prior to the internet, was referred to as a Value-Added Network (VAN). In this model, you have a single connection to the Service Provider using whatever protocol you prefer – e.g. AS2, SFTP, FTPS, FTP over VPN, RosettaNet Likewise, your trading partners connect to the Service Provider, each selecting the connectivity protocol that best meets its company‘s requirements. The Service Provider facilitates the exchange of electronic documents via its network. B2B MODELS The graphic below illustrates the network model of B2B. B2B MODELS 3.Hybrid Model The hybrid approach to B2B is a combination of the direct and network models Businesses will connect directly via the internet to their trading partners with whom they do the highest volume of transactions, using one or two preferred protocols, in order to save on Service Provider transaction fees ‘ For large communities, the hybrid model is much more commonly used today The graphic below illustrates the hybrid model of B2B B2B MODELS B2B MODELS 4. Managed Model In the managed model, the business outsources the entire B2B process to an external Service Provider. This greatly reduces resource requirements, expenses and complexity The Service Provider receives your business documents directly from your ERP system (SAP, Oracle, etc.) and then assumes responsibility for all the mapping, translation, technical support, data center operations and document tracking Once documents are ready for delivery to your trading partners, the service provider delivers them either directly to the partners or via the network, depending on the individual trading partner requirements. The graphic below illustrates the managed model. B2B MODELS (Managed Model )  Threats of E-Commerce Hackers attempting to steal customer information or disrupt the site A server containing customer information is stolen. Imposters can mirror your ecommerce site to steal customer money Authorized administrators/users of an ecommerce website downloading hidden active content that attacks the ecommerce system. A disaffected employee disrupting the ecommerce system. REFERENCE - DEPT OF CSE & IT, VSSUT BURLA  Threats of E-Commerce It is also worth considering where potential threats to your ecommerce site might come from, as identifying potential threats will help you to protect your site. Consider: Who may want to access your ecommerce site to cause disruption or steal data; for example competitors, ex-employees, etc. What level of expertise a potential hacker may possess; if you are a small company that would not be likely to be considered a target for hackers then expensive, complex security may not be needed. REFERENCE - DEPT OF CSE & IT, VSSUT BURLA Risks in Electronic Payment systems: Customer's risks – Stolen credentials or password – Dishonest merchant – Disputes over transaction – Inappropriate use of transaction details Merchant‘s risk – Forged or copied instruments – Disputed charges – Insufficient funds in customer‘s account – Unauthorized redistribution of purchased items Discussion What are some of the Electronic payments Issues in Ghana? Intranet  Intranet An intranet is a private network contained within an enterprise that is used to securely share company information and computing resources among employees A company-wide intranet can constitute an important focal point of internal communication and collaboration, and provide a single starting point to access internal and external resources. In its simplest form, an intranet is established with the technologies for local area networks (LANs) and wide area networks (WANs)  Intranets Network within an organization that uses Internet protocols and technologies for: Collecting, storing, and disseminating useful information that supports business activities Otherwise known as corporate portals Facilitates internal use by employees ◦ Companies also allow trusted business partners to access their intranets  Intranets Uses Internet technologies to solve organizational problems Different from a LAN Defining and limiting access is important for security reasons  Exhibit 7.2 The Internet versus Intranets Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MIS6| CH7 44 Uses and Benefits Accessing information: with a content management system (CMS) and frequently integrated with an organization’s document management system (DMS), intranets can be used to centrally host and access documents, policies, and information employees require to perform their roles. Connecting people: globalized organizations and those with employees working remotely, on the frontline or across a range of office locations face challenges connecting their staff. An intranet helps colleagues find one another, connect, and communicate: building a virtual culture. Uses and Benefits Knowledge management: alongside formal information and documents, organizations typically hold vast levels of knowledge amongst their employees. Completing tasks or workflows: combining forms or transactional applications with hosted information, intranets enable employees to self-serve and complete common processes Internal communications: through social and communication tools such as blogs, wikis, forums, and discussions, an intranet can be used to facilitate effective two-way internal communications between management and staff.  Uses and Benefits Measuring and improving employee engagement: it’s known to have a critical impact on business performance, yet presents one of the greatest challenges for business leaders. Supporting strategic business objectives: intranets can play an active role in support high-level business objectives Time: Intranets allow organizations to distribute information to employees on an as-needed basis; Cost-effectiveness: Users can view information and data via web browser rather than maintaining physical documents such as procedure manuals, internal phone list and requisition forms  Extranets Secure network that: ◦ Uses the Internet and Web technologies to connect intranets of business partners ◦ Facilitates communication between organizations or between consumers Considered to be a type of inter-organizational system (IOS) ◦ Electronic funds transfer (EFT) ◦ Electronic data interchange (EDI)  Extranets Allow companies to reduce internetworking costs and give a competitive advantage ◦ Leads to increased profits Require a comprehensive security system and management control  Exhibit 7.4 Simple Extranet Architecture Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible website, in whole or in part. MIS6| CH7 50 Advantages of Extranets Coordination Feedback Consumer satisfaction Cost reduction Expedited communication