MIS486- Electronic and Mobile Commerce Technologies in the New Era

What is E-Commerce?Business Perspective

• Commerce is all about buying and selling.• Everything has two prices:

• In the difference lies all of human commerceBuy Low

Sell High

$ Markup $

What is E-Commerce?

• Initial Definition (c.1998): E-Commerce - The application of information technologies to enable commercial transactions between two parties.

The Internet

Why has E-Commerce become so important?

• E-Commerce has evolved to mean more than just buying and selling.– Info sharing (Web catalogues, ads, communities)

– Ordering (e-mail, e-forms)

– Payment (traditional, credit cards, EDI, digital cash) – Fulfillment (Web-site, e-mail, fax, phone)

– Service & support (Web notes, FAQs, bulletin boards, e-mail)

Why has E-Commerce become so important?

The Driving Force The Internet Economy• To reach 50,000,000 users

– Radio took 38 years– Computers took over 16 years– TV took 13 years– The Internet took 4 years!

• Over 75% of (12.3M)Australian homes now have PCs

Electronic Commerce: The Second Wave

• Electronic commerce (e-commerce)

– Businesses trading with other businesses and internal processes

• Electronic business (e-business)

– Term used interchangeably with e-commerce

– The transformation of key business processes through the use of Internet technologies

Categories of Electronic Commerce

• Five general e-commerce categories:– Business-to-consumer– Business-to-business– Business processes– Consumer-to-consumer– Business-to-government

• Supply management or procurement– Departments are devoted to negotiating purchase

transactions with suppliers

Categories of Electronic Commerce (continued)

• Transaction – An exchange of value

• Business processes– The group of logical, related, and sequential

activities and transactions in which businesses engage

• Telecommuting or telework– Employees log in to company computers through

the Internet instead of traveling to the office

E-Business Models• Storefront – shopping on-line, a business a model where

buyer and seller interact directly. Eg B2C (business-to-consumer) www.more.com, www.ticketmaster.com

• Shopping-cart technology: shopping cart and merchant server (database) – www.amazon.com is a widely recognized example

• Online shopping malls – purchase items from several shops from a mall in 1 transaction – www.mall.com

Auction model

• Place bids in open competition (with or without reserve price)

• In 2000, $3.8 billion spent on person-to-person auctions

• $52 billion was projected to be spent on B2B auctions

• On eBay, people can buy/sell just about anything (http://www.ebay.com/)

Portal model

• Gives visitors the chance to find almost everything they are looking for in 1 place

• Search engines are horizontal portals – provide broad range of topics

• Vertical portals are more specific – offering a great deal of info in a single area of interest.

• Sites: www.hotbot.com, www.about.com, www.altavista.com, www.yahoo.com

Dynamic pricing models

• Customers can name their prices – bargain hunting• Eg www.priceline.com, www.imandi.com• Name-your-price (priceline)• Comparison pricing model – customers can poll to

find out the lowest price – www.bottomdollar.com• Demand-sensitive pricing model – customers to

demand better, faster service at cheaper prices and shopping in groups to get group rate (www.mercata.com)

• www.aol.com - 22 mill users in interactive mode for browsing/email/chatting and downloading

Bartering model

• Offering one item in exchange for another• www.ubarter.com• Other models: rebates, offering free products

and services (www.hsx.com)

B2B

• Buying, selling, partnering, bartering or trading between 2 or more businesses

• Procurement and effective chain management can be difficult and costly.

• www.icgcommerce.com enables transactions on the internet

Other models

• Online trading and lending – securities, stocks (www.etrade.com)

• Getting a loan online (www.eloan.com)• Recruiting on the web eg www.dice.com,

www.guru.com.• Online news services (www.espn.com)• Online travel services

(www.cheaptickets.com)

Other models

• Online entertainment• Online automotive sites• Energy online – energy commodities• Selling brainpower – buy patents and

intellectual property• Online art dealers (www.art.net)• E-learning (www.click2learn.com)

Generic Classification

• Business-to-Business– eg. transactions using EDI, VANs, VPN

• Business-to-Customer – eg. homebanking, stock-trading, on-line reservations, & purchase

• Business-to-Government• Citizen-to-Government• Community (ie. Industry e-commerce)

– eg. Intranets, supply-side e-commerce, demand-side e-business & customer service

The Development and Growth of Electronic Commerce

• Electronic funds transfers (EFTs)

– Also called wire transfers

– Electronic transmissions of account exchange information over private communications networks

• Electronic data interchange (EDI)

– Transmitting computer-readable data in a standard format to another business

The Development and Growth of Electronic Commerce (continued)

• Trading partners

– Businesses that engage in EDI with each other

• Value-added network (VAN)

– Independent firm that offers connection and transaction-forwarding services to buyers and sellers engaged in EDI

Why has E-Commerce become so important?

The Canadian Statistics

• Over 75% of (12.3M)Canadian homes now have PCs• Over 55% (6.7M) of those are Internet connected, up 51% over 2002• 64% regularly go online from home or work (2003), 5% gain over 2002

(but note that it is slowing down: 19% growth in 2000, 24% growth in 2001))

• 12% buy regularly over web, 38% have bought (2002)• 38% download music• 58% bank from home via the web• 64% of wired households use boardband (highpeed, non dial-up)

The Internet Economy Business Growth

297,000 small businesses(30% of total)

77,000 medium businesses(50% of tota l)

6,000 large businesses(100% of total)

100

1996 20001998

80

60

40

20

Businesses(thousands)

300

Companies connecting

Source:Forrester

The Internet Economy Global Forecast

$3.2T

$1,000

$2,000

$3,000

0

Sales (billions)

1998 1999 2000 2001 2002 2003

$80 $170 $390 $970 $2,000 $3,200Source: Forrester

Hyper-growth begins

$150B

1998 – 111M users2000 – 320M users2005 – 720M users

E-Commerce & E-Business

• E-Business is defined as the process of using electronic technology to do business

• E-Commerce can be defined as a subset of

E-Business, and is the subset of E-Business that focuses on commerce

Business Models, Revenue Models, and Business Processes

• Business model

– A set of processes that combine to yield a profit

• Revenue model

– A specific collection of business processes used to:

• Identify customers

• Market to those customers

• Generate sales to those customers

The Emergence of E-Business

EnterpriseResourcePlanning

SupplyChain

Management

CustomerRelationshipManagement

SellingChain

Management

ProcurementManagement

KnowledgeManagement

SuppliersServices

CustomersDistributersCustomers

Partners

GovernmentAgentsPartners

So Where’sthe E-Commerce?

The Sea of “E-”

• “E-” or “e-” has been added to the almost everything

• E-mail• E-procurement• E-care• E-government• E-learning• others …

Recently we have started to see the same with “M-” or “m-”.

M-Commerce

• M-Commerce is E-Commerce over wireless communications and typically to smaller handheld devices

• August, 2000 – DataMonitor predicted that the market for wireless E-Commerce solutions in the U.S. would grow 1000% by year 2005

• $1.2 billion US annually

The Benefits of E-Commerce

• Opens new markets• Shortens business cycles• Reduces processing/paperwork• Extends reach beyond physical outlets• Permits customized products/service

Limitations of E-Commerce

• Customer authentication• Web-site navigation• Web differentiation• Integration of Internet with other customer

service channels (telephone, counter, kiosk, etc.)

Language Issues

• To do business effectively in other cultures a business must adapt to those cultures

• Researchers have found that customers are more likely to buy products and services from Web sites in their own language

• Localization

– Translation that considers multiple elements of the local environment

Culture Issues

• An important element of business trust is anticipating how the other party to a transaction will act in specific circumstances

• Culture:

– Combination of language and customs

– Varies across national boundaries

– Varies across regions within nations

What Is E-Commerce?Technology Perspective

SQLHTTP

Servlets

HTMLServers

Applets

BrowsersTCP/IP

CGI

Cookies

POP

Database

JSPs

Java

MIMEDW/DM

SMTP

FTP

Authentication

EncryptionWireless PervasiveComputing

Smart Cards

XML

URL

e-Payment SSL

What is E-Commerce?Technology Perspective

Cell-Phone

PDA

Laptop

Desktop

WebApplication

Servers

Data and Transaction

Servers

EdgeServer

The Hardware

The Software

The Skill SetsThe Methods

Summary

• Commerce– Negotiated exchange of goods or services

• Electronic commerce– Application of new technologies to conduct

business more effectively

• First wave of electronic commerce– Ended in 2000

• Second wave of electronic commerce– New approaches to integrating Internet

technologies into business processes

Summary (continued)

• Using electronic commerce, businesses have:– Created new products and services– Improved promotion, marketing, and delivery of

existing offerings

• The global nature of electronic commerce leads to many opportunities and few challenges

• To conduct electronic commerce across international borders, you must understand the trust, cultural, language, and legal issues