What is E-Commerce?Electronic commerce (e-commerce) is a general term for any type of business, or commercial transaction that involves the transfer of information across the Internet. This covers a range of different types of businesses from consumer-based retail sites, like Amazon.com, through auction and music sites like eBay or MP3.com, to business exchanges trading goods or services between corporations.

What is E-Commerce Cont’d?• Electronic commerce is the use of

electronic communication to do business.• E-commerce is not about technology.• It is not a new business.• E-commerce is a method for companies to

create and operate their business in new and efficient ways.

What is E-Commerce Cont’d?Most fundamentally, e-commerce represents the realization of digital, as opposed to paper-based or paperless , commercial transactions between businesses, between a business and its consumers, or between a government and its citizens or constituent business.

From Traditional Commerce to E-commerce

Sailing ships

Printing press

Steam engine

Telephone

Opened avenues for trade between buyers and sellers. Ancient times (thousands of

years ago)

From Traditional Commerce to E-commerce Cont’d

Electronic Funds Transfer (EFTs)

Electronic Data Interchange (EDI)

Internet

Wire transfers - used by banks

Businesses transfer electronic data- data not re-keyed- high implementation cost, thus excluded small businesses

On-line shopping

Business Processes Suited to Certain Type of Commerce

E-commerce Sale/purchase of books & CDs, travel

services, investments and insurance services Online delivery of software Online shipment tracking

Business Processes Suited to Certain Type of Commerce Cont’d

E-commerce & Traditional Sale/purchase of automobiles and residential

real estate (e.g. do research online then buy from a dealer or real estate agent)

Online banking Roommate matching service

Business Processes Suited to Certain Type of Commerce Cont’d

Traditional Sale/purchase of impulse items for immediate use,

high fashion jewelry and antiques (personal inspection required; prefer to touch, smell or examine closely)

Small denomination purchases and sales (since there is not yet a standard for transferring small amounts of money)

What Are the Advantages (merits) of E-commerce?

Increases sales, decreases cost Increased sales

Reach narrow market segments in geographically dispersed locations Create virtual communities

Decreased costs Handling of sales inquiries Providing price quotes Determining product availability

Allows small businesses to have global customer base Reduced cost through electronic sales enquires, price quotes and order taking Provides purchasing opportunities for buyers (businesses can identify new

suppliers and partners) Increase speed and accuracy for exchanged information, thus reducing cost

What Are the Advantages of E-commerce Cont’d? Business can be transacted 24hrs a day The level of detail of purchase information is selected by

user Digital products can be delivered instantly Tax refunds, public retirement and welfare support costs

less when distributed over the Internet Allows products and services to be available in remote

areas, e.g. remote learning

What Are the Advantages of E-commerce Cont’d?

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

– Provide price quote

What Are the Advantages of E-commerce Cont’d? It increases purchasing opportunities for buyers Negotiating price and delivery terms is easier The following cost less to issue and arrive securely and

quickly:

– Electronic payments of tax refunds

– Public retirement

– Welfare support

What Are the Disadvantages (demerits) of E-commerce? Inability to sell some products (e.g. high cost jewelry and

perishable foods, although supermarkets like www.Tesco.com, delivers to your home)

The newness and evolution of the current technology Many products require a large number of people to

purchase to be viable High capital investment

What Are the Disadvantages of E-commerce Cont’d? Difficulty in integrating current databases and transaction

processing systems into e-commerce solutions Cultural and legal obstacles

Transmission of credit card details Some consumers resistant to change Laws are unclear

Shipping profile: Products with a low value-to-weight ratio that can not be efficiently packed and shipped are unsuitable (use traditional commerce)

What Are the Disadvantages of E-commerce Cont’d Perishable grocery products are much harder to

sell online It is difficult to Calculate return on investment Loss of ability to inspect products from remote

locations Rapid developing pace of underlying

technologies

The 1st Wave of E-commerce The 1st wave was from

the mid 1990s to 2003 Dot-com boom (over

$100 billion in investment): Rapid growth from mid-1990s to 2000

Dot-com bust: in 2000 Gloom years: 2000 –

2003 (over $200 billion in investment)

Characteristics of the 1st Wave3

It was primarily a U.S. phenomenon Web pages were in English Internet technologies were slow and inexpensive (e.g.

dial-up lines) Bar codes and scanners used to track parts (B2B and

Business processes) Email, tool for unstructured communication On-line advertising main revenue source

The 2nd Wave of E-commerce Beginning in 2003 e-

commerce has shown signs of new life

Companies like Amazon.com (books), and eBay.com who survived the downturn were beginning to show profits

Continuous growth of B2C sales: 20-30% each year since 2000

Characteristics of the 2nd Wave International scope where sellers do business in many

countries and languages Faster, cheaper connections (x20 faster), broadband at

home (although more expensive) Radio frequency ID devices and smart cards Fingerprint readers and retina scanners (biometric

technologies) used for tracking Email, integral part of marketing

Characteristics of the 2nd Wave Cont’d E-commerce integral part of marketing and customer

contact strategy Some categories of on-line advertising, e.g. employment

services (job want ads) have replaced traditional advertising outlets

Problems Language conversions Currency conversions

Economic Forces Economics is the study of

how people allocate scare resources

Resources are allocated through: Commerce

(markets) Government actions

(e.g. taxes)