1- introduction ecommerce

8/3/2019 1- Introduction Ecommerce

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BBT 304: Survey of eCommerce Technology

Mukira


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1. Provide history, present state and future outlookfor eCommerce and the internet.

2. Survey and define the key technology drivers of

eCommerce including network, software, and hardwarecomponents.

3. Review eCommerce infrastructures includingarchitecture models, security & payment systems.

4. Describe the general process of web design anddevelopment including tools and required skills.

5. Identify business models surrounding eCommerce includingmarketing strategies.

6. Explore international, ethical and tax issues surroundingeCommerce.

7. Provide experience in basic skills in web page authoring

using Microsoft Frontpage / dreamweaver.

Course Objectives


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Topics

1. What is eCommerce?

2. Electronic commerce prior to the Internet

3. Comparison to Traditional Commercea. Buyers & Sellers Viewpoint

b. Business processes

c. Fundamental business goals

4. Why eCommerce?

5.Seven Unique Features of eCommerce

T

echnology6. Appropriateness of eCommerce

7. The Internet: What Was, Is and Shall Be.

8. Publishing on the Web for Homework 1.


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In its broadest definition, eCommerce is digitally enabledcommercial transactions between and among organizations

and individuals.

Digitally enabled means, for the most part, transactionsthat occur over the Internet and World Wide Web(Web)

Commercial transactions involve the exchange of value(e.g. money) across organizational or individualboundaries in return for products and services.

Differentiated from eBusiness which is digitally enabledtransactions and processes within a firm, involvingInformation Systems controlled by the firm. Doesnt involvecommercial transactions across organizational boundaries.

W

hat is eCommerce?


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Components of eCommerce

Major components of eCommerce:

1. B2B Business to Business. Largest segment withabout $700B of all total $12Trillion in 2001(est)

Types include inter-business exchanges, e-distributors, B2B service providers,matchmakers and infomediaries

2. B2C Business to Consumer. Much smaller with on$65B in 2001(est).

Buzzwords: Internet pureplay-located only onthe web. Clicks and Mortar-both web andphysical location.


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Components of eCommerce

Major components of eCommerce (continued):

1. C2C Consumer to Consumer. Individuals sellingto each other through online market maker(eBay.com). Estimated at $5B in 2001.

2. P2P Peer to Peer.Allows iNet users to share filesand resources directly without having to go thru acentral web server. Napster is the most prevalentexample.

3. M-Commerce Mobile commerce. Use of wirelessdigital devices (Palm Pilots, cell phones) to conducttransactions. Just emerging but expected to growrapidly.


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Banks have used electronic funds transfers (EFTs), alsocalled wire transfers, for decades.

Businesses have been engaging in electronic datainterchange (EDI) since the 1960s. EDI occurs whenone business transmits computer readable data in astandard format to another business.

Drawbacks to mass adoption by business was high cost

of implementation; expensive, proprietary software,hardware, leased telephone lines.

EDI now adapting to the Internet at a much lower cost.Estimates of $1Trillion in transactions on the Internet by2003.

Electronic Commerce Not

New


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Business drives Technology

Technology Enables Business

To understand how Technology enables Business, orCommerce, we must review traditional commerce.

Once activities, or business processes in traditionalcommerce are identified, we can consider how they can beimproved through technology

Technology is not a panacea! Knowing when and when notto apply technology to business problems is the key.

Technology and Business

(Commerce)


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Origins of commerce predate recorded history.

Commerce is based on the specialization of skills.

Instead of performing all services and producing allgoods independently, people rely on each other for thegoods and services they need.

Example: In early times, the local shaman would cast aspell or intercede with the gods in exchange for foodand tools.This is called barter.

Origins of commerce


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Money has replaced bartering, but the basic mechanicsof commerce remain the same: one member of society

creates something of value that another member ofsociety desires.

Commerce is a negotiated exchange of valuable objectsor services between at least two parties and includes all

activities that each of the parties undertakes the completethe transaction.

T

raditional commerce


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Commerce can be viewed from at least two different

perspectives:1. The buyers viewpoint2. The sellers viewpoint

Both perspectives illustrate that commerce involvesa number of distinct activities, called Business

Processes.

Views of commerce


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Business processes are the activities that firmsengage in as they accomplish a specific elementof commerce

Examples include: Transferring funds Placing orders Sending invoices

Shipping goods to customers

B

usinessP

rocesses


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From the buyers perspective, commerce involvesthe following activities:

1. Identify a specific need2. Search for products or services that will satisfy

the specific need3. Select a vendor4. Negotiate a purchase transaction including

delivery logistics, inspection, testing, andacceptance

5. Make payment6. Perform/obtain maintenance if necessary

T

heB

uyers perspective


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From the sellers perspective, commerce involvesthe following activities:1. Conduct market research to identify customer

needs2. Create a product or service to meet those needs3. Advertise and promote the product or service4. Negotiate a sales transaction including delivery

logistics, inspection, testing, and acceptance5. Ship goods and invoice the customer6. Receive and process customer payments7. Provide after sales support and maintenance

T

he Sellers perspective


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Why eCommerce?

The Internet and eCommerce are new technologies to helpbusinesses increase profits.

So why are there no special textbooks or courses on TVCommerce , Radio Commerce , Railroad Commerce orHighway Commerce? These are also technologies thathave had profound impact on business in the 20th centuryand account for more commerce than eCommerce.

Simply put, eCommerce technologies are more powerfulthan any of the other technologies we have seen in the 20th

century.


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Unique Features of

eCommerce Technology

The features the set eCommerce Technology apart fromothers used in traditional commerce are:

1. Ubiquity internet/web technology is availableeverywhere: at work, home and elsewhere via mobiledevices.

Marketplace extended beyond traditional boundaries

Marketspace is created, available

24/

7/

365

Customer convenience increased, costs reduced.


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Unique Features of eCommerce Technology

(continued)

2. Global Reach the technology reaches across nationalboundaries, around the earth.

Commerce enabled across cultural and national boundariesseamlessly.

Potential customer reach extended.

Reduces barriers to markets.


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(continued)

3. Universal standards there is one set of technologystandards, namely internet standards.

Promotes technology adoption

Reduces costs of adoption


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(continued)

4. Richness Video, Audio, graphical and text messagesare possible.

Integration to a more powerful marketing messageand customer experience


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(continued)

5. Interactivity the technology allows active userinvolvement.

Consumers engage in dynamic dialog

Experience adjusted to the individual based onresponses.

Customer becomes co-participant in the process of

delivering goods to the market.


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(continued)

6. Information Density - the technology reducesinformation costs and increase quantity and quality.

Information processing, storage and communicationcosts drop dramatically.

Accuracy and timeliness improve greatly.

Information becomes plentiful, cheap and accurate.


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(continued)

7. Personalization/Customization the technology reachesallows personalized messages to be delivered to

individuals as well as groups.

Commerce enabled across cultural and nationalboundaries seamlessly.

Potential customer reach extended.

Reduces barriers to markets

.


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Fundamental Business Goals

The fundamental goal of a business is to earn a profit.Performing business processes in the most efficient way

possible furthers this goal.

Firms are increasingly interested in eCommerce becauseit can help increase profits.

All the advantages of eCommerce can be summarized inone statement:

eCommerce can Increase Sales and Decrease Costs.


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Examples of eCommerce

Enabling Business Goals

Increase Revenues

A company is able, through publishing its catalogsonline, to reach more customers for the same costs asprinting and mailing its catalogs. (LL Bean)

Decrease Costs

The same company can provide more timely product

information by updating its catalog online, than bymailing its catalog four times a year.


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It is important to identify which business processes

can be streamlined using eCommerce technologies.

It is equally important to realize that some processesmake effective use of traditional commerce and cantbe improved upon using technology.

Technology is not a panacea. Using it when it is

not necessary or helpful can be a costly mistake.

Appropriateness


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Business processes that are well-suited for electroniccommerce:

Sale/purchase of new books and CDs Online delivery of software Advertising and promotion of travel services Online tracking of shipments

The business processes that are especially well-suited

to eCommerce include Commodityitems.ACommodity is a product or service that hasbecome so standardized and well-known that buyerscannot detect a difference in the offerings of varioussellers and decide to buy based on price.

Well-suited for eCommerce


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Business processes that are well-suited to traditionalcommerce:

Sale/purchase of high fashion clothing Sale/purchase of perishable food products Small-denomination transactions Sale of expensive jewelry and antiques

Exceptions?

In general, products that buyers prefer to touch, smell,or otherwise closely examine are difficult to sell usingeCommerce.

Best for Traditional Commerce


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Would eCommerce or traditional commerce workbest for the following activities?

Sale/purchase of rare books Browsing through new books Sale/purchase of shoes Sale/purchase of collectibles (trading cards,

plates, etc.)

Questionable cases


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Some business processes can be handled well usinga combination of electronic and traditional methods:

Sale/purchase of automobiles Online banking Roommate-matching services Sale/purchase of investment/insurance products

Consumers can research products online and make finaltransactions in person.

In any business problem it is good practice to weigh theadvantages and disadvantages of a particular approach.Evaluating the application of eCommerce technology is no

Different.

Combinations of both


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For the seller: Increases sales/decreases cost. Makes promotion easier for smaller firms. Can be used to reach narrow market segments.

For the buyer: Makes it easier to obtain competitive bids

Provides a wider range of choices Provides an easy way to customize the level of

detail in the information obtained Allows anonymity and less pressure to buy.

Advantages of eCommerce


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In general:

Increases the speed and accuracy with whichbusinesses can exchange information.

Electronic payments (tax refunds, paychecks, etc.)cost less to issue and are more secure.

Can make products and services available inremote areas.

Enables people to work from home, providingscheduling flexibility.

Advantages of eCommerce II


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Some business processes are not suited toeCommerce, even with improvements intechnology.

Many products and services require a criticalmass of potential buyers (e.g. online grocers).

Costs and returns on eCommerce can bedifficult to quantify and estimate.

Cultural impediments: People are reluctant tochange in order to integrate new technology.

The legal environment is unclear and full ofconflicting laws; regulation has not kept up.

Disadvantages of

eCommerce


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The Internet

What Was.

What Is.And What Shall Be.

But First..


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The Internet is defined as a loosely configured globalwide area network. A network is the means ofconnecting computers together.

The Internet includes more than 31,000 differentnetworks in over 100 different countries. Itcurrently has about 115 million hosts.

Since each host can include multiple computers, itsdifficult to estimate total number of computersconnected to the internet.

What is the Internet?


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The Internet EvolutionThe Innovation Phase 1961 1974

Milestones

Early 1960s - Given the rise of both the nuclear age and

communism (cold war), the Department of Defense becameconcerned that a nuclear attack could destroy computersystems required to run their weapons systems.

1961 Leonard Kleinrock (MIT) publishes paper on packetswitching networks. The enabling technology for the

internet is conceived.1962 to 1963 J.C.R. Licklider (MIT) writes memos callingfor a Galactic Network of computers. He becomes head ofAdvanced Research Project Agency Network Developmentfor Department of Defense. The vision of a global network

is born.


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The Internet EvolutionThe Innovation Phase 1961 - 1974

Milestones (Chapter 3 p109-113)

1972 - eMail invented. First killer app of internet born.

1973 - Ethernet and Local Area Networks are invented.Client-server computing is invented.

1974 Open Architecture networking and TransmissionControl Protocol/Internet Protocol (TCP/IP)concepts are presented.TCP/IP enabled a single

open protocol to potentially connect any ofthousands of disparate local area networks with acommon addressing scheme to send and deliverdata.


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The Internet EvolutionThe Institutional Phase 1980 - 1993

Milestones

1980 DOD adopts TCP/IP as standard protocols.The

single largest computing organization in the worldadopts and legitimizes TCP/IP and packet switchingnetworks

1980 Personal computers invented.PCs representenabling technology for millions of people to connect

to the internet.

1983 DOD creates separate military network (MILNET).

ARPANET contains only civilian university traffic.Idea of Civilian internet is born.


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The Internet EvolutionThe Institutional Phase 1980 - 1993

Milestones

1983 Telnet and File Transfer Protocol (FTP) deployed on

internet as new killer apps.

1989 A world wide network of hyperlinked documents is

proposed based on a common language called HyperText Markup Language (HTML).The concepts of aninternet supported service called the World WideWeb is born.

1993 First graphical Web Browser (Mosaic) is invented.Mosaic made it easy for ordinary users to connect toHTML documents anywhere on the Web.


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The Internet EvolutionThe Commercialization Phase 1994 - Present

Milestones

1994 National Science Foundation (NSF) report plans

development of an I

nformation Superhighwaysupporting research, education, commercial andprivate interests.

1995 NSF privatizes internet backbone and turns controlover to major carriers ATT, Sprint, GTE and UUNetas primary Network Access Providers (NAP). Thefully commercial civilian internet is born.

1995 JeffBezos starts Amazon.com. First major earlyentry onto WWW as an internet pure play.


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The Internet EvolutionThe Commercialization Phase 1994 - Present

Milestones

1996 to 2000 Amount of venture capital backing Internetstart-up companies grows from $3.1 to $72.4Billion.Huge run up of stock market based on demand fornew internet stocks going public in Initial PublicOfferings (IPOs). Countless internet entrepreneursbecome (paper) millionaires from stock options.

2001 to Present Reality sets in as dot com companiesmount huge losses. Demonstration of faultybusiness models. VC money dries up, many internetcompanies go broke, stock market slides.


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The Internet has grown, and (most probably) willcontinue to grow, at high rate:

Year I nternet Hosts

1969 4

1979 1881989 159,0001993 2,056,000

1996 21,819,0001999 56,218,0002000 93,047,7852001(est) 115,000,000+

The Growth of the Internet


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Some of the Main factors that led to the surge inpopularity of the Internet:

The web-like ability to link from site to site enabledthrough HTML and HTTP.

The ease of use provided by the browsers graphicaluser interface.

The growth of personal computers and local area

networks that could be connected to the Internet.

The TCP/IP standard and packet switching.

Factors behind growth


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Evolution ofWeb Programming


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A Different Perspective


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E-Commerce I: 1995-2000

Characteristics (Table 1.5 p32):

Technology driven

Revenue growth emphasis Venture capital financing

Ungoverned

Entrepreneurial

Disintermediation (p.26)

Perfect markets (p.26)

Pure online strategies

First mover advantages (p.26)


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E-Commerce II: 2001-2006

Characteristics (Table 1.5 p32):

Business driven

Earnings/Profit emphasis Traditional financing

Stronger Regulation

Large traditional firms

Strengthening intermediaries

Imperfect markets, brands, network effects(p.26)

Mixed clicks and bricks strategies

Strategic follower strength


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And What Shall Be

Pundits and experts have a variety of opinions. Some

areas, however, that will continue to grow, albeit at a slower

pace(and as much venture capital!?!) mCommerce: Mobile computing

Broadband: higher speed lines for both business andindividuals as infrastructure matures.

B2B: Integration of web front ends to back officemission critical systems to allow more access bycustomers.

TCP/IP v6.0 and the X-Internet: The Xtended internet, awider variety of devices hooked up to the internet;televisions, appliances, etc.

1- introduction ecommerce

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