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Introduction to e-commerce

Dr. Noman Islam


Objectives
The objectives of the course are to introduce the
concept of electronic commerce, and to understand
how electronic commerce is affecting business
enterprises, governments, consumers and people in
general.
Outcome
At the end of the course, the students is expected to realise the
problems involved in designing and building e-commerce systems;
understand the need to design EC system; be fully aware of the
principles and practice to the design and development of EC systems;
and be able to apply these principles in practice
Course Outline
1. Introduction
2. Network technologies
3. Automated negotiations
4. Security issues
5. Auctions
6. m-commerce
7. Supply chain management
8. B2B and B2C
9. Automated negotiation
10. Copyrights
Definition of Commerce
• The exchange of goods and services for money
• Commerce typically consists of:
Buyers - these are people with money who want to purchase a good
or service.
Sellers - these are the people who offer goods and services to buyers.
Producers - these are the people who create the products and
services that sellers offer to buyers.

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E-Commerce
• Transformation of economic activity into digital media
- Exchange information, content, agreements, and services among parties that
are connected to through the Internet.
• Enables new ways of creating, delivering and capturing value to
customers.
- Availability
- Convenience

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What is E-commerce
• Distributing, buying, selling and marketing products and services over
electronic systems
• E-business for commercial transactions
• The trading or facilitation of trading in products or services using computer
networks, such as the Internet
• Involves supply chain management, e-marketing, online marketing, EDI
• Uses electronic technology such as:
- Internet
- Extranet/Intranet
- Protocols

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Key technologies
• Mobile commerce
• Electronic funds transfer
• Supply chain management
• Internet marketing
• Online transaction processing
• Electronic data interchange (EDI)
• Inventory management systems
• Automated data collection systems
Mobile Commerce
• The delivery of electronic commerce capabilities directly into the
consumer’s hand, anywhere, via wireless technology
• Services such as money transfer, location based services, mobile
banking, ticketing etc.
Internet marketing
• Uses the Internet to deliver promotional marketing messages to
consumers
• Search engine marketing (SEM), social media marketing, many types
of display advertising (including web banner advertising), and mobile
advertising
Online shopping
• e-tail, e-web-store, e-shop, e-store, Internet shop, web-shop, web-
store, online store, online storefront and virtual store
• evokes the physical analogy of buying products or services at a bricks-
and-mortar retailer or shopping center
• The largest of these online retailing corporations are Alibaba,
Amazon.com, and eBay
Open marketplace
• 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.
• A darknet market or cryptomarket is a commercial website on the
dark web that operates via darknets such as Tor or I2P. They function
primarily as black markets, selling or brokering transactions involving
drugs, cyber-arms, weapons, counterfeit currency, stolen credit card
details, forged documents, unlicensed pharmaceuticals, steroids,
other illicit goods as well as the sale of legal products.
Payment
• Online shoppers commonly use a credit card or a PayPal account in
order to make payments.
• Alternative means:
• Cash on delivery
• Wire transfer
• BitCoin
• Disadvantages
• Security issues such as identity theft, phishing, spyware
• Hidden cost
• Privacy issue
Dotcom bubble
• The dot-com bubble was a historic speculative bubble covering
roughly 1997–2000
• The period was marked by the founding (and, in many cases,
spectacular failure) of several new Internet-based companies
commonly referred to as dot-coms.
• The "dot-com bubble" was also called the dot-com boom, the
Internet bubble, the dot-com collapse, and the information
technology bubble.
Distribution Channels
• Pure-click or pure-play companies are those that have launched a
website without any previous existence as a firm.
• Bricks-and-clicks companies are those existing companies that have
added an online site for e-commerce.
• Click-to-brick online retailers that later open physical locations to
supplement their online efforts.
Digital Economy
• Digital economy refers to an economy that is based on digital
computing technologies.
• The digital economy is also sometimes called the Internet Economy,
the New Economy, or Web Economy
Forces Shaping the Digital Age

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Forces Shaping the Digital Age
• Digitalization & Connectivity
• Intranets : connect people within a company.
• Extranets : connect a company with its suppliers, distributors, and outside
partners.
• Internet : connects users around the world.

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Definitions
• Internet:
- A collection of computers that speak a common language – protocol
• Intranet:
- Private version of the Internet
- Main purpose to share company information and computing resources
among employees
• Extranet:
- Private network that users outside the company can access
- Requires security and privacy
- Collaborate with other companies

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Forces Shaping the Digital Age
• New Types of Intermediaries:
• Direct selling via the Internet bypassed existing intermediaries
(disintermediation).
• “Brick-and-mortar” firms became “click-and-mortar” companies.
• As a result, some “click-only” companies have failed.

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Forces Shaping the Digital Age
• Customization and Customerization:
• With customization, the company custom designs the market offering for the
customer.

• With customerization, the customer designs the market offering and the
company makes it.

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E-commerce Today
• The Internet is the perfect vehicle for e-commerce because of its
open standards and structure.
• No other methodology or technology has proven to work as well as
the Internet for distributing information and bringing people together.
• It’s cheap and relatively easy to use it as a medium for connecting
customers, suppliers, and employees of a firm.
• No other mechanism has been created that allow organizations to
reach out to anyone and everyone like the Internet.

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E-commerce Today
• The Internet allows big businesses to act like small ones and small
businesses to act big.
• The challenge to businesses is to make transactions not just cheaper
and easier for themselves but also easier and more convenient for
customers and suppliers.
• It’s more than just posting a nice looking Web site with lots of cute
animations and expecting customers and suppliers to figure it out
• Web-based solutions must be easier to use and more convenient than
traditional methods if a company hopes to attract and keep
customers.
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Four Categories of E-Commerce
Business originating from...

Business Consumers

Business B2B C2B

And selling
to...

Consumers B2C C2C

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Distinct Categories of E-Commerce
 Business to Business (B2B) refers to the full spectrum of e-
commerce that can occur between two organizations.
This includes purchasing and procurement, supplier
management, inventory management, channel management,
sales activities, payment management &service and support.
Examples: FreeMarkets, Dell and General Electric

 Business to Consumer (B2C) refers to exchanges between


business and consumers, activities tracked are consumer
search, frequently asked questions and service and support.
Examples: Amazon, Yahoo and Charles Schwab & Co

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Distinct Categories of E-Commerce (cont’d)
 Peer to Peer (C2C) exchanges involve transactions between and among
consumers. These can include third party involvement, as in the case of the
auction website Ebay.
Examples: Owners.com, Craiglist, Monster

 Consumer to Business (C2B) involves when consumers band together to


present themselves as a buyer in group.
Example: www.planetfeedback.com

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Key Drivers of E-commerce
• Technological – degree of advancement of telecommunications
infrastructure
• Political – role of government, creating legislation, funding and
support
• Social – IT skills, education and training of users
• Economic – general wealth and commercial health of the nation

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Key Drivers of E-business
• Organizational culture- attitudes to R&D, willingness to innovate and
use technology
• Commercial benefits- impact on financial performance of the firm
• Skilled/committed workforce- willing and able to implement and use
new technology
• Requirements of customers/suppliers- in terms of product and service
• Competition- stay ahead of or keep up with competitors

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