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E-commerce



Definition

E-commerce (electronic commerce or EC)

± is buying and selling of goods and services onthe Internet, especially the World Wide Web

± Those activities which essentially involve

monetary transactions are termed as "e-

commerce"

± is the paperless exchange of business

information using Electronic Data

Interchange (EDI) and related technologies.



e-commerce

Electronic Mail (E-Mail), computer

bulletin boards, facsimile machines

(faxes), Electronic Funds Transfer (EFT)are all forms of EC.

All EC systems replace all or key parts of

paper-based work flow with faster,

cheaper, more efficient, and more reliable

communications between machines.



Why e-Commerce

Ecommerce is growing so fast because of itsquickness ± whereas in years gone by peoplewould send a cheque to the company and then

the company would cash the cheque beforedispatching the goods.

We can now use instant transactions to transfer money from account to account in a number of

seconds e-commerce can be described as the use of theInternet and the web to transact business



Ubiquity ± In traditional commerce, a marketplace is a physical

place we visit in order to transact. For example, television andradio are typically directed to motivating the customer to go

someplace to make a purchase. ± E-commerce is ubiquitous, meaning that it is available just about

everywhere at all times.

± It liberates the market from being restricted to a physical spaceand makes it possible to shop from your desktop.

± The result is called a market space.

± From consumer point of view, ubiquity reducestransaction costs- the cost of participating in a market.

± To transact, it is no longer necessary that you spendtime and money traveling to a market.



Features ««.

Global Reach ±

± E-commerce technology permits commercialtransactions to cross cultural and nationalboundaries far more conveniently andeffectively as compared to traditionalcommerce.

Universal Standards ± the technical standards of the Internet are

shared by all the nations around the world.



Information Density and Richness ± The Internet vastly increase information density.

± It is the total amount and quality of information available to allmarket participants, consumers and merchants.

± E-commerce technologies reduce information collection, storage,communication and processing costs.

± At the same time, these technologies increase greatly theaccuracy and timeliness of information, making information more

useful and important than ever.

Personalization ± E-commerce technologies permit personalization.

± E-commerce technologies make it possible for merchants toknow much more about consumers and use this information

more effectively than ever before ie enhance their ability to brandproducts, charge premium prices for high quality service andsegment the market into an endless number of subgroups, eachreceiving a different price.



Examples of Ecommerce

Amazon ± an online shopping

EBay -- an online based auction room

Tesco ± Also does internet shopping iTunes ± Buy music online

Microsoft ± Downloads, sales and

technical advice online McDonalds ± Only advertises online



To sell online is e-commerce but to bring and retaincustomers and educate them online about the product or service is e-business.

An e-commerce site can be as simple as a catalog page

with a phone no, or it can range all the way to a real timecredit and processing site where customer can purchasedownloadable goods and receive them on the spot.

e-business applications turn into e-commerce preciselywhen an exchange of value occurs.

Having a website to do it is not sufficient. But, having aprofessionally built website loaded with latesttechnologies to capture the attention of the visitor andwin his/her appreciation is required.



E-Commerce technologies

The three e-Commerce

technologies are:

± Electronic Markets

± Electronic Data Interchange

± Internet Commerce

El tr irk t

I t r t

C mm r EDI



Electronic markets

The use of information and communications technology to present a

range of offerings available in a market segment and hence enable:

± the purchaser to compare the prices (and other attributes);

± make a purchase decision.

The usual example of an electronic market is an airline booking

system.

There is the potential for new electronic markets to be created using

Internet technologies.



Electronic Data Interchange (EDI)

EDI provides a standardised system for coding trade transactions so thatthey can be communicated directly from one computer system to another.

EDI removes the need for printed orders and invoices and avoids the delaysand errors implicit in paper handling.

EDI is used by organisations that make a large number of regular transactions. Examples are the large supermarket chains and the vehicleassemblers which use EDI for transactions with their suppliers.



Internet commerce

Information and communications technologies can also be used toadvertise and make once-off sales of a wide range of goods andservices.

for example, the purchase of books that are then delivered by postor the booking of tickets that can be picked up by the clients whenthey arrive at the event.



The trade cycle

Conducting a commercial transaction involves the following steps:

± Pre-Sale:

Search - finding a supplier

Negotiate ± agreeing the terms of trade

± Execution: Order

Delivery

± Settlement:

Invoice

Payment ± After-sales, e.g. warrantee and service



Generic trade cycles

The trade cycle varies depending on:

± The nature of the parties to the transaction

± The frequency of trade exchanges

± The nature of the goods or services being exchanged.

Three generic trade cycles can be identified:

± Regular, repeat transactions between commercial trading partners

(Repeat)

± Irregular transactions between commercial trading partners (Credit)

± Irregular transactions in once-off trading relationships (commercial or retail) (Cash)



Generic trade cyclese eat redit asTrade ycle:

earc

e tiate

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Deli er

In ice

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re- ale

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ettle ent

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Electronic markets Emphasis on the search phase of the trade cycle

Typically an inter-organisational credit trade cycle

Limited applications ± airline seat bookings and financial

sector ± the operation of the electronic market is not

necessarily in the vendor¶s interests.

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

EM



Electronic Data Interchange

Used for standardised, repeat, inter-organisational transactions

Notable users of EDI are vehicle assemblers, component supplier¶s,

and supermarkets (and other multiple retailers), ordering the goods

to restock their shelves.

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

EDI



Internet commerce Used for once-off transactions ± consumer or inter-

organisational transactions.

Can apply to Search, Execution / Settlement and / or After

Sales.

Consumers pay at time of ordering ± businesses may have

credit arrangements with the suppliers.

Search

egotiate

rder

eliver

Invoice

ay ent

fter S

ales

re-Sale

xecution

Settle ent

fter S

ale

Internet



Parties to E-commerce

Transactions The User

± Who plans to purchase goods or services online

The Merchant

± Company or business house wishing to sell goods or services

The Issuer ± It is the credit card company that issues cards to the users

The Acquirer

± Is usually the banker of the merchant ± financial institution

The certificate Authority

± Neutral third party authority that issues certificates to themerchant, to the issuer and in some cases, the cardholder.



Parties in E commerce Transaction

Issurer Acquirer Merchant Cardholder

Prerequisite Certificate

Certificate

authority



Levels of E-commerce

Business to business ± Wholesaler may sell products to the retailer

Business to consumers ± Selling of goods /services to the end users.

± Reduces the costs associated with intermediaries, servicecenters and mass marketing campaigns.

± Also known as E-tailing ± process of selling of retail goods onthe Internet.

Consumers to consumers

± Sites like buy.com, baazi.com are auction sites, one can virtuallysell and buy any goods.

Business to employees



E-commerce Procedure

Filling form online ± Online form to enquire about the products or services

Selecting Product service ± Selecting items and adding to the Shopping cards

Web server ± Adding all the items to the web server database

Encryption ± Cryptography provides security

Forwarding

± Encrypted date is forwarded to the online processor, whichprovides payment services. Eg. Net banking, net safe, credit card network etc.

Leased Lines



E-commerce Procedure«..

Email Receipt ± Receipt through email, of the purchase approval and purchase

details.

Merchant Account

± Account is necessary for accepting credit cards.

Credit Card Processing

Verification ± Information sent via leased lines to the credit card network is

checked for validity and funds availability and an authorization

code is written via leased lines to a secure server.

Merchant Getting Money

Shipment of Goods



How to build an E-commerce

system Identifying business

Selection of technology Infrastructure

Implementation of E- business Solution

Shopping Cart

Selection of Language Selection of Currencies

Shipping Costs

Designing Storefront

D

ata Paths Database

Software

Security



Good Customer Experience

Rules1. Clear, concise web page wording.

2. Quick web page download time.

3. Appropriate web page width.

4. Simple web page design.

5. Few and small supporting graphics.

6. Large graphics only when good for the customer.

7. Jargon -free language.

8. A good search function.

9. Easy navigation.



Bad Customer Experience

Rules1. Error messages.

2. Long instructional text.

3. Fatal errors--like database error messages.

4. Irrelevant or flashy features.

5. Excessive or inaccurate search results.

6. Basic web errors--´page not found.´



Network

Facilitates to have external communicationwith outside organsization

File transfer or Distribution of informationquickly, efficiently

Sharing of Resources

Sharing information

Communication Links To share hardware and software by

several users



Topologies

Star

Bus Shared cable

Hub

Ring



Tree Network

Mesh

Interconnected

Rings



Client/Server (C/s)

± Server : is a computer providing services to the client

connected to it via the network

Job is to manage resources optimally among the clients ± Client : requests for some services from the server

Netscape is a web client giving access to information on a

web server.

Workstations are clients who request services such as data,

program files or printing from the server.



Components of C/S

Database server ± Deals with single database of information among many concurrent

users

± Controlling database access and other security requirements

± Protecting database

± Centrally enforcing global data Mail Server

± Receives, sends and stores the mail received for the clients connectedto it.

Client Application ± Front end.

± Part of the network system that users apply to interact with the availabledata

Network ± May be twisted cable, Ethernet cables , fiber optics etc.



WAN (Wide Area Networks)

A number of autonomous computers

located over a large remote geographical

area, each having their own

interconnections to the main network

The point of intersection of concentration

is called the gateway



Types of WAN

Private network

± A network designed and developed by one

organization is a private network wherein leased

circuits ie telephone lines are used for installing WAN ± ARPANET (Advanced Research Project Agency) first

private network

Public Networks

± They are government networks designed by the govt.dept or agencies.

± Run by Telecommunication authorities



Intranet

A micro internet is known as intranet.

Intra means within ± refers to private networkingwithin an organization

System with restricted audience Intranet has access to internet but internet hasno access to the Intranet

There is a internal web server where substantialinformation can be stored.

Anyone on the intranet with a computer onnetwork can view information documents locatedin the intranet server.



Extranet

an extension of corporate intranet connectinginternal networks of one company with theintranets of its customers, suppliers etc.

Intranet is designed to facilitate internalcommunication, while extranets are created for communicating business related information to aparticular vendor, distributor or customer.

Clients in the extranet system can access real

time information about the project status, costand development

Dealers visiting the extranets can order productsor service, check balances, etc.



Internet

It is inter-network

Is a window to the global superhighway and to thecyberspace.

Is a two way communication method. ± sender and thereceiver are on the same line of the system.

Objective of the internet is to facilitate the participatingusers to have mutual exchange of data ± between thecomputers

The management and control of the internet iscompletely decentralized and it is entirely managed byindividual and organizational volunteers.



Features of Internet

Computers have the capability to communicate witheach other.

The communication function between computersfacilitates access to information residing in one computer

from another computer A group of computers in a net system are connected with

the help of wire, cable or the wireless and communicatewith the help of software

It is the software which constitutes the network

Device used is modem connected to a telephone lineswhich facilitates that the two networks can communicatewith each other.



Gateway & WWW

Computer or the program that forward and route data between twoand more networks.

Commonly knows as computer that transmits files or email from onenetwork, which is a window of a country to another window of another country.

The VSNL ± Videsh sanchar nigam ltd is the sole overseascommunication organization of India

It is the backbone network that operates at a very high speed andcarries the bulk of the online traffic.

Small local or regional networks are connected to the WWW whichis a complex web of various networks.

Uploading refers to the transferring files via ftp from your computer to a remote host on the Net.

Downloading is moving a file from the Internet to your computer.



Importance of Internet

Streamline business operations

Reduce cost

Reach newer markets

Improve business cycle time

Improve customer service levels

Increase efficiency

Build potential ties with business partnersscattered worldwide



Internet Agents

Agents are programs that intensively search the Net to give specificresults to the Net users.

Mean programs that will enable users to do bidding automatically.

Can find the following for the net users ± Latest news

± Download it to the computers ± Monitor internet traffic

± Report on its total usage

± Find the best deal on the product one wants to buy

± Perform important web maintenance task

± Perform jobs cooperatively

Agents are called spiders, robots and knowbots. Popular search tools as Lycos, Infoseek and Altavista use spiders



Advantages of Internet

For operations

For pleasure

For business



Applications of Internet Email Usenet, news groups

± between user groups

± Way to share information and discussions

± News groups composed fo articles posted by readers and contributorson particular topics

± Public forum telnet ± Which enables the Net user to log on from computer to another

computer

± Allows the user to log onto a remote system via internet

FTP (file transfer Protocol) ± Protocol for transferring files on the Net

± Copying files from the remote host to the main host and vice versa

Archie ± Is a program that allows the user to search for information stored on

anonymous and large FTP sites on the Net.

± Called as search program- file can be searched by giving a keyword toserach for



Gopher

± Go for textual information from a huge public

database

± This is menu based information retrieval

system that allows the user to locate and

retrieve information on the Internet.

± There are list of government gopher servicesavailable in/pub/govt

Chatting (IRC)



Virtual Private Network

As the popularity of the Internet grew, businesses turned to it as a means of extending their own networks.

First came intranets, which are password-protected sites designed for useonly by company employees.

many companies are creating their own VPN (virtual private networ ) toaccommodate the needs of remote employees and distant offices.

Basically, a VPN is a private network that uses a public network (usually theInternet) to connect remote sites or users together.

Instead of using a dedicated, real-world connection such as leased line, aVPN uses "virtual" connections routed through the Internet from thecompany's private network to the remote site or employee.

Virtual private networks help distant colleagues work together, much likedesktop sharing.

A typical VPN might have a main LAN at the corporate headquarters of acompany, other LANs at remote offices or facilities and individual usersconnecting from out in



VPN Advantages

VPN permit to increase the span of the corporate network and boost theefficiency of the organization

Permits employees who are on move or travelling employees to access thenetwork from any place and respond to messages faster and answer queries quickly

Offers email facilities, internet access and control database services to

users in remote offices VPN uses the Net as the transport backbone to establish secure links with

business partners

Eliminates the use of expensive lease lines or frame relay circuits.

Include a number of security features including encryption, authenticationand tunneling.

Cut long distance telephone charges because a user typically dials a localcall to an ISP.

Provide flexibility and cost savings as corporations extend their network toinclude remote employees and business partners

Save telecommunications cost by using the Net to carry traffic



What is Inter-organizational

Commerce?

Electronic communication between the

firm and its environment.

Includes all forms of communicationdepicted in the EC model; but restricted to

communication between a firm and its

environment.

one-to-one; one-to-many; and many-to

many communications



Why Inter-organizational

Commerce?

Reduce costs

± decrease the cost of processing transactions

Reach new markets

± reach new customers and suppliers

Improve service

± speed up delivery of products

Sell new products

± can compete in different product markets

e-commerce p

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