E-Business and E-Commerce

Jack G. ZhengMay 23rd 2008

MIS Chapter 5

Introduction

What is e-commerce “Electronic commerce (e-commerce) is any transaction

completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services.”*

Or simply, buying and selling on the Internet (Web)

What is e-business “Electronic business (e-business) is any process that a business

organization conducts over a computer-mediated network.”* “Any business processes (activities)” include both internal and

external, transactional and non-transactional It covers e-commerce

* See http://www.census.gov/epcd/www/ebusines.htm

E-Commerce Models

B2C (business to consumer) The most well known

B2B (business to business) The largest segment (12 times

more than B2C)

C2C (consumer to consumer) Auction sites such as ebay.com

C2B (consumer to business)? Not well implemented Usually means buyer-centered

reverse auction priceline.com

E-Commerce Growth

E-Commerce Growth in the USA

Organization

Individual

E-Activity? E-Society?

Government Community

EmployeeConsumer Member

Non-profit

Company

Resident/Non-resident

Education

Student

B2C E-Commerce (e-Tailer) Styles Pure plays

No physical stores Amazon, Dell, E*Trade …

Click(s)-and-mortar Retailers which has both an Internet presence and physical

stores (or retail agent) In contrast to brick-and-mortar

M-Commerce “M” for mobile – using mobile devices like cell phone, PDA,

or laptop

Advantages and Problems of B2C

Advantages Problems

For consumers

For businesses

What is likely to be sold online? Commodity-like products

Product features are uniform and standard; look and feel is not important

Are the following commodity like products? Books? Electronics? Computer (parts)? Furniture? Clothes? Shoes? Grocery? (Webvan case study)

Why did it fail? Are there opportunities for online grocery? What are the ways to

succeed?

Digital Products

Digital products (information products): software, video, music, e-book, articles, reports, news … They don’t have physical appearance They are easy to be mass-customized and personalized They can be delivered at the time of purchase Fixed cost is high while marginal cost is close to zero

The distribution of information products is expected to change dramatically in future They have global reach They foster disintermediation Information product medium is less important Unbundling: only pay for the part you want Micro-payments

How B2B is different from B2C? MRO (maintenance, repair and operation materials)

Indirect materials Materials that are necessary for running a business, but do

not directly contribute to the primary business activities For example, office supplies

Direct materials Directly used in manufacturing or service Critical to their business

How B2B is different from B2C? Transaction is

Contracted Regular, continuous and repeated Large amount More procedures

Billing and payment is Regular, continuous and repeated Usually separate from delivery Large amount More procedures

B2B Automation

B2B has the need to be automated by computer systems Save cost (human labor) Save time (lead time)

There is the need to integrate computer systems and processes from both parties EDI (Electronic Data Interchange) XML and Web Services

EDI (1)

EDI is the direct computer-to-computer transfer of transaction information in standard business documents, in a standard format

Computer-to-computer exchange Over a telecommunication network (VAN, or the Internet)

EDI (2)

Standard business document Formal business document, such as request for

quotation and purchase order (ANSI X12)

Standard format A fixed, predefined format that both computer system

can understand

EDI replaces paper documents processing, thus shortens purchase/supply cycle lower labor costs

E-Commerce Payment Systems B2C/C2C

Credit cards and smart cards (cash cards) Electronic check (electronic transfer) Financial cybermediary (online payment service)

PayPal Electronic Bill Presentment and Payment (EBPP) systems Digital wallet

B2B Financial EDI (FEDI), which directly involves banks

Good Resources

E-Stats from US Census http://www.census.gov/eos/www/ebusiness614.htm

CIO.com eCommerce Center http://www.cio.com/research/ec/

Web security http://www.secinf.net/websecurity/