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E Commerce Basics

This document discusses e-commerce (electronic commerce). It defines e-commerce as the buying and selling of goods and services over electronic networks, primarily the Internet. It describes the different models of e-commerce including business-to-business (B2B), business-to-consumer (B2C), business-to-government (B2G), and consumer-to-consumer (C2C). It also discusses the necessary technologies and infrastructure to support e-commerce such as networks, web servers, electronic catalogs, and payment systems.

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E-Commerce (Electronic Commerce Or EC)  TAHIR RASHID HAKEEM KSU - Riyadh
 E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet.  These business transactions occur either business-to-business, business-to-consumer, consumer-to-consumer or consumer-to- business.  E-Commerce (Electronic Commerce Or EC)  Definition
The Internet, intranets, and extranets are the foundation of e-commerce. Customers must be provided with a range of secure information, marketing, transaction, processing, and payment services. Trading and business partners rely on Internet and extranets to exchange information(EDI) and accomplish secure transactions. Company employees depend on a variety of Internet and intranet resources to communicate and collaborate in support of their EC work activities. Information system professionals and end users can use a variety of software tools to develop and manage the content and operations of the websites and other EC resources of a company. E-COMMERCE TECHNOLOGIES What technologies are necessary for e-commerce?
1. Selection and Value. Attractive product selections, competitive prices, satisfaction guarantees, and customer support after the sale. 2. Performance and Service. Fast, easy navigation, shopping, and purchasing, and prompt shipping and delivery. 3. Look and Feel. Attractive web storefront, website shopping areas, multimedia product catalog pages, and shopping features. INCENTIVES FOR ENGAGING IN E-COMMERCE The key to e-commerce success is to optimize several key factors, The incentives for engaging in e-commerce are listed as follows:
4. Advertising and Incentives. Targeted web-page advertising and e-mail promotions, discounts and special offers, including advertising at affiliate sites. 5. Personal Attention. Personal web pages, personalized product recommendations, web advertising, and e-mail notices, and interactive support for all customers. 6. Community Relationships. Virtual communities of customers, suppliers, company representatives, and others via newsgroups, chat rooms, and links to related sites. 7. Security and Reliability. Security of customer information and website transactions, trustworthy product information, and reliable order fulfilment. INCENTIVES FOR ENGAGING IN E-Commerce cont..
NEEDS OF E COMMERCE 1. Free and faster shipping. Businesses now have the option to partner with companies that work with retailers to offer customers free or faster shipping. 2. Consumer-driven demand and personalization. Consumers want unique, original products and businesses need to be able to deliver that in increasingly creative--and profitable— ways. 3. Growth of guided discovery To make shoppers' lives easier, more and more online businesses will start engineering the right mix of "guided discovery" to provide targeted and welcome suggestions that help consumers make purchases. 4. Business without borders.
Advantages of E-commerce • Faster buying/selling procedure, easy to find products. • Buying/selling 24/7. • Low operational costs and better quality of services. • Easy to start and manage a business. • No need of physical company set-ups. • Customers can easily select products from different providers without moving around physically.
Advantages of E-commerce  Instant worldwide availability  Reduced paperwork  Reduced errors  Reduced time  Easier entry into new markets  New business opportunities  Wider access to assistance and advice  Improved product analysis
Disadvantages of E-commerce  There is no guarantee of product quality.  There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
• Confidentiality issues • Credit card fraud • Security issues • Trust issues • Round-the-clock availability issues Disadvantages of E-commerce
 Application services.  Brokerage services, data or transaction management.  Interface and support layers.  Secure messaging, security and electronic document interchange.  Middleware and structured document interchange, and  Network infrastructure and the basic communication services. FRAMEWORK FOR E-COMMERCE The architectural framework for e-commerce consists of six layers of functionality or services as follows:
Applications: In the application layer services of e-commerce, it is decided that what type of e-commerce application is going to be implemented. (B2B, B2C, C2C, B2G) Information Brokerage and Management Layer: This layer is rapidly becoming necessary in dealing with the voluminous amounts of information on the networks. This layer works as an intermediary who provides service integration between customers and information providers, given some constraint such as low price, fast services or profit maximization for a client. Interface and Support Services: The third layer of the architectural framework is interface layer. This layer provides interface for e- commerce applications. Interactive catalogs and directory support services are the examples of this layer. FRAMEWORK FOR E-COMMERCE CONT . . .FRAMEWORK FOR E-COMMERCE CONT . . .
Secure Messaging Layer: electronic messaging services like e-mail, enhanced fax and EDI. Middleware services: The enormous growth of networks, client server technology and all other forms of communicating between/among unlike platforms is the reason for the invention of middleware services. The middleware services are used to integrate the diversified software programs and make them talk to one another. Network Infrastructure: We know that the effective and efficient linkage between the customer and the supplier is a precondition for e-commerce FRAMEWORK FOR E-COMMERCE CONT . . .FRAMEWORK FOR E-COMMERCE CONT . . .
EC APPLICATIONS EC applications are supported by infrastructure and by five support areas: People Public policy Marketing and advertising Support services Business partnerships
IMPACT OF E-COMMERCE ON BUSINESS  The new technology will transform business processes, the way products and services are created and marketed.  Local proximity may no longer be a significant factor in retaining customer. Local markets will be replaced by global markets.  Transparency and openness continue and will continue, to be effective business strategy.  The change in the business functions will lead to new business models and create new set of facts and circumstances  The Internet will emerge as a new platform for marketing of products and  services that will displace and rebuild existing economy.
E-Commerce Business Models
• Business-to-Business (B2B)Business-to-Business (B2B) • Business-to-Consumer (B2C)Business-to-Consumer (B2C) • Business-to-Government (B2G)Business-to-Government (B2G) • Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C) Models of E-Commerce
B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. • B2B is all about transactions between one organization and their partners. • Most B2B applications are in the areas of supplier management, inventory management, distribution management and payment management Business-to-Business (B2B)
Business-to-consumer e-commerce, or commerce between companies and consumers, involves customers gathering information; purchasing physical goods or information goods ( software's ). It is the second largest and the earliest form of e-commerce. Its origins can be traced to online retailing (or e-tailing). such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and ToysRus. Business-to-Consumer (B2C)
An extended list of types of B2C electronic commerce: Storefront (Retail Shop) - products offered for sale with revenue on sale. Shopping mall - multiple retailers with revenue from commission or space hire Auction - vendors or buyers pay fixed price or percentage Business exchanges - site facilitates transactions between companies for a fee Types of B2C e-commerce
Business-to-government e-commerce or B2G is generally defined as commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. This kind of e-commerce has two features:  first, the public sector assumes a pilot/leading role in establishing e-commerce; and  second, it is assumed that the public sector has the greatest need for making its procurement system more effective. Business-to-Government (B2G)
• Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. • This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions Consumer-to-Consumer (C2C)
C2C e-commerce comes in at least three forms: • auctions facilitated at a portal, such as eBay, which allows online real-time bidding on items being sold in theWeb; • peer-to-peer systems, such as the Napster model (a protocol for sharing files between users used by chat forums similar to IRC) and other file exchange and later money exchange models; and • classified ads at portal sites such as Excite Classifieds and eWanted (an interactive, online marketplace where buyers and sellers can negotiate and which features “Buyer Leads & Want Ads”).
E-commerce infrastructure • E-commerce infrastructure requires a variety of hardware, software, and networks. • The key infrastructures that are needed to support EC applications are networks, Web servers, Web server support and software, electronic catalogs, Web page design, and Internet access components.
THE HARDWARE INFRASTRUCTURE • Computers connected by a data connection (45 megabits/second) • ISP hosts and other powerful computers connect using (Broadband) lines • Leased lines (some businesses) • Modem dial-up connections • Cable modems • ADSL - Asymmetric Digital Subscriber Line
WEB STORE REQUIREMENTS • An organization's first venture into EC is the development of a Web site and the creation of a presence on the Internet. • E-commerce transactions must be executable worldwide, without any delay or mistake. • On a very basic website, an organization provides information about itself, its products and its services. • A more developed Web site will allow some interactions, such as sending an e-mail to request for the information or schedule an appointment, or ordering.
 Good designs can be very rewarding.  Outsourcing Web page designs should be carefully evaluated because of the high cost.  The company can register its Web site within a domain name as well as registering it with the major Web search engines.  A good web site must have a fast catalog search engine, special discounts, credit card and other payments, and shipping alternatives so that it can attract new customers.  It must offer customer support via help menus, tutorials, and list of FAQs. WEB STORE REQUIREMENTS
ELECTRONIC PAYMENTS  Payments are an integral part of doing business, whether in the traditional way or online.  Traditional payment systems are not effective for EC (using cash, writing a check, sending a money order have several limitations in EC) .  Usually in e-commerce, payments between buyers and sellers can take place electronically.  These include EFT (Electronic Fund Transfer), electronic checks, electronic credit cards, electronic wallets.
ELECTRONIC FUNDTRANSFER (EFT) • Electronic transfer of money using telecommunications networks. • EFT is fast. • Handle daily large volume of financial transactions. • EFT-based ATMs are available in shopping centers and business areas.
ELECTRONICWALLETS • Eliminating entry and storage of information on a merchant’s server. • One-click shopping. • Credit card companies like Visa and Master card offer e-wallet services, as do Yahoo!, America Online (called Quick Checkout) and Microsoft (Passport).
Issues of E-Commerce Lack of planning Unrealistic goals No business focus or site not integrated with your overall business. No promotion or misplaced promotion Spending a lot of money just to develop a site without also investing in promotion is wasteful Doing promotion and not following up. Bad site design & poor usability Simplicity works. Sometimes, it is more important to have targeted content with an overall customer focus than to have the latest whiz-bang gizmos and a flashy site. Is content easily found and is the site easy to navigate? Are fonts too small or set against the wrong background colour? Is it intuitive to visitors to know the next steps? Do you have a strong call to action?
Slow performance  Potentially good sites fail because of performance when visitors wait for the site to load. A site that takes more than a couple of seconds to load will not be successful  Slow sites are usually the result of bad design, a poorly selected host, non-optimised images, or sites overloaded with widgets and gizmos. Coding errors  The site may look and perform well on newer browsers but it can also crash on older browsers “Page Not Found” and other coding errors.
Security & hacking issues  Non-secure online payments  Spam attacks on a blog or user comments  Hacked or defaced site  Viruses on your site. Going cheap - you get what you pay for  When outsourcing, if the price sounds too good to be true then it just might be  Free hosting in foreign countries are generally slower with more downtime than local hosting  DIY and not relying on expert advice/help.
 M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).  M-Commerce is also Known as next-generation e-commerce.  M-commerce enables users to access the Internet without needing to find a place to plug in. M-commerce
 Wireless Application Protocol (WAP) is a technical standard for accessing information over a mobile wireless network.  A WAP browser is a web browser for mobile devices such as mobile phones that uses the protocol.  WAP supports HTML and XML, the WML language (an XML application) is specifically devised for small screens and one-hand navigation without a keyboard. Wireless Application Protocol (WAP)
• Switching Architecture • ATM is a Broadband cell relay method – Therefore also known as cell relay. • It is an advanced form of packet switching. • The WAN technology of the moment for businesses. • Very High Speed (155 Mbps to 622 Mbps) e.g. can transmit the entire Encyclopedia Britannica in one second. • There are variable rates of transmission but much faster than frame relays. • Multimedia technology that allows WAN to have simultaneous transmission of voice, video and data. ATM (Asynchronous Transfer Mode)
 ISDN is a switched digital network service that accommodates voice, data and imaging to other ISDN end users.  It converts analog telephone lines to digital.  Its goal is to link homes and businesses over telephone wires.  Sometimes known as narrowband ISDN.  Local Loop Transmission Technology.  Around for 10 years but is only widely used in last 3 to 4 years.  Not designed to be 24hr like T-1 or bandwidth on demand like frame relay service  Main problems are cost current availability of infrastructure. ISDN (Integrated Services Digital Network)
 Frame relay is a fast packet switching technology.  It is a point-to-point system that transmits variable length frames at the Data Link layer through the most cost effective path.  Requires frame relay routers or bridges.  Network Service  It is a Switching Architecture  Primarily for the purpose of LAN interconnection Frame Relay