(BCA-3005) E- COMMERCE AND APPLICATIONS Dr. B. B. Sagar
BCA 3005 ELECTRONIC COMMERCE AND APPLICATIONS SYLLABUS Module -I E-Commerce: Origin and Need of E-Commerce, Features of E-Commerce, Advantages of E-Commerce, Electronic Commerce Models, Types of Electronic Commerce, Value Chain in Electronic Commerce, Nature and Scope of Ecommerce, Applications of E-Commerce. Module -II Internet, World Wide Web, Internet Architecture, Composition of Internet, Nature and Benefits of E. D. I, E. D. I Communication, Legal Issues in E. D. I, Demerits of E. D. I. Module -III Security Overview, Electronic Commerce Threats, Encryption, Cryptography, Public Key and Private Key Cryptography, Digital Signatures, Digital Certificates, Firewall, Public Key Infrastructure for Security(PKI), Cryptographic Applications. Module -IV Overview of Electronic Payment Technology.
Module -V Business Models and Revenue Models over Internet, e-Governance, Digital Commerce, Mobile Commerce, Strategies for Business over Web. Module -VI Evolution of Cyber Laws in India, IT Act 2000. Module -VI Issues of Trademarks and Domain Names, Management Challenges in On-line Retailing, Supply Chain Management Fundamentals, Online Auctions, ECommerce Portals, and Barriers to Growth of E-Commerce in India. TEXT BOOK: 1. Kamalesh K Bajaj & Debjani Nag, E-Commerce , 2 nd Edition, Tata Mc. Graw-Hill REFERENCE BOOKS: 1. Laudon, E-Commerce, 4 th Edition, Pearson, 2008. 2. D. Whiteley, E-Commerce, Tata Mc. Graw-Hill
Module -I E-Commerce: Origin and Need of E-Commerce, Features of ECommerce, Advantages of E-Commerce, Electronic Commerce Models, Types of Electronic Commerce, Value Chain in Electronic Commerce, Nature and Scope of E-commerce, Applications of ECommerce.
Introduction to E- Commerce → What is E-Commerce? → Difference of E-Commerce and Traditional Commerce → Origin and needs of E-Commerce → Forces behind E-Commerce → Factors affecting E-Commerce → Generic Framework of E-Commerce → Types of E-Commerce → Value chains in E-Commerce → Characteristics of E-Commerce → Why E-Commerce over Internet? → Capabilities Required for E-Commerce
What is “E-Commerce”? • E-commerce is a short version of the term Electronic Commerce • Online business activities for products and services • E-commerce is usually associated with buying and selling of products or services over the Internet • penetration and spread of the internet has fuelled e-commerce • Examples of e-commerce are: Electronic Funds Transfer (EFT), Internet Marketing, Electronic Data Interchange (EDI), Supply Chain Management, Online Transaction Processing, Inventory Management Systems, and Automated Data Collection Systems etc Three classes of e-commerce applications: - Customer-to-business - Business-to business - Intra-organzational
Difference between E-commerce and EBusiness? Commerce : The exchange of commodities, buying and selling, of products and services requiring transportation, from location to location is known as commerce. E-commerce is buying and selling of Information, Product and Services using an electronic medium. It is accepting credit and payments over the net, doing banking transactions using the Internet, selling commodities or information using the World Wide Web and so on. E-Business in addition to encompassing E-commerce includes both front and back-office applications that form the engine for modern E-commerce. E-business is not just about E-commerce transactions; it's about re-defining old business models, with the aid of technology to maximize customer value. E-Business is the overall strategy and E-commerce is an extremely important facet of E-Business.
Why Study E-commerce? • Technology is different and more powerful than other technologies • Has challenged much traditional business thinking • Has a number of unique features that help explain why we have so much interest in e-commerce
Origins and Growth of E-commerce • It is difficult to pinpoint just when e-commerce began. There were several pioneers to e-commerce. • In the late 1970 s, a pharmaceutical firm named Baxter Healthcare initiated a primitive form of B 2 B e-commerce by using a telephone-based modem that permitted hospitals to reorder supplies from Baxter. • These technologies, which first appeared in the late 1970’s, allowed for the exchange of information and the execution of electronic transactions between businesses, typically in the form of electronic purchase orders and invoices. • This system was later expanded during the 1980 s into a PC-based remote order entry system and was widely copied throughout the United States long before the Internet became a commercial environment. • The 1980 s saw the development of Electronic Data Interchange (EDI). • The term e-commerce was originally conceived to describe the process of conducting business transactions electronically using technology from the Electronic Data Interchange (EDI) and Electronic Funds Transfer ( EFT).
• EDI and EFT were the enabling technologies that laid the groundwork for what we now know as e- commerce. • The Boston Computer Exchange, a marketplace for used computer equipment started in 1982, was one of the first known examples of e-commerce. • Throughout the 1980’s, the proliferation of credit cards, ATM machines and telephone banking was the next step in the evolution of electronic commerce. • The birth of companies such as e. Bay and Amazon (launched in 1994) really began to lead the way in e- commerce. • 1995: Beginning of e-commerce • First sales of banner advertisements • Both e. Bay and Amazon were among the first to establish prominent e-commerce brands. • The most prominent e-commerce categories today are computers, books, office supplies, music, and a variety of electronics. Dell. com, 1997. • Since then, e-commerce fastest growing form of commerce in the United States and the
The Growth of B 2 C E-commerce
The Growth of B 2 B E-commerce
Unique Features of E-commerce Technology • Ubiquity • Global reach • Universal standards • Information richness • Interactivity • Information density • Personalization/customization • Social technology
Definitions of E-Commerce E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. Zwass defines e-commerce as “EC is the sharing of business information, maintaining business relationships, and the conducting business transactions by means of telecommunications networks” e-commerce includes not only buying and selling goods over Internet, but also various business processes within individual organizations that support the goal. Four different types of information technology are converging to create the discipline of e-commerce: - electronic messages, email and fax - sharing a corporate digital library - electronic document interchange utilizing EDI and electronic funds transfer - electronic publishing to promote marketing, advertising, sales, and customer support
E-Commerce Definitions in different perspectives : • From a communications perspective: “e- commerce is the delivery of information, products/services or payments via telephone” • From Business process perspective; “e-commerce is the application of technology to ward the automation of business transaction and workflow”. • From service perspective: “ e- commerce is a tool that address the desire of firms, consumers and management to cut service cost while improving the quality of goods and increasing the speed of service delivery”. • From an online perspective: “e-commerce provides the capability of buying and selling products and information on the internet and other online services”.
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Forces Behind E- Commerce • Global Customer • Global Product • Global operations • Global Resources • Global Collaborations
Advantage of e – commerce 1. Facilitates the globalization of business: -e – commerce facilitates the globalization of business by providing some economical access to distant markets and by supporting new opportunities for firms to increase economies by distributing their products internationally. 2. Provides increased purchasing opportunities for the buyer: -As e – commerce increases sales opportunities for the seller, it also increases purchasing opportunities for buyer. 3. Lowering staffing cost: - As in e – commerce, the selling & purchasing process is outline, the amount of interaction with staff is minimized 4. Market based expansion: - An e – commerce is open to entirely new group of users, which include employees, customers, suppliers & business partners.
Advantage of e – commerce cont… 5. Reduction of paper storage. 6. Increased customer service & loyalty: - e – commerce enables a company to be open for business wherever a customer needs it. 7. Increase speed & accuracy: - E – commerce see the speed and accuracy with which business can exchange information, which reduces cost on both Types of E-com sides of transactions. It is available 24 hours a day & 7 days a week. 8. Increased profits: -With e – commerce, companies reach more & more customers where physical commerce cannot reach, thus increasing profits. 9. Increased response times: - In e – commerce, the interaction with the system take place in real time & therefore allows customer or bidder to respond more Quickly & thus reduces the time of discussion between then as in traditional commerce.
Types of E-commerce • Classified by market relationship • Business-to-Consumer (B 2 C) • Business-to-Business (B 2 B) • Consumer-to-Consumer (C 2 C) • Classified by technology used • Peer-to-Peer (P 2 P) • Mobile commerce (M-commerce)
Different types of E-Commerce Business (organization) B 2 B Business (organization) Customer (individual) B 2 C (e. g Amazon) Ø B 2 b -Intel selling micro processors to Dell Ø-Dell selling me alaptop ØMc Donalds selling me a Big Mac ØHeinz selling ketchup to Mc Donalds Customer (individual) C 2 B (e. g Priceline) ØMe selling my old schoolbooksto a second handbook shop C 2 C (e. g e. Bay) ØMary buying an i. Pod from Tom on e. Bay ØMe selling a car to my neighbour on OLX
E-commerce Categories • There are general e-commerce categories: o. Business to Consumer (or B 2 C) e-commerce o. Business to Business (or B 2 B) e-commerce (sometimes called e-procurement) o. Business processes that support buying and selling activities o. Consumer-to-consumer (or C 2 C) e-commerce o. Peer-to-Peer (P 2 P) e-commerce o. Business-to-government (or B 2 G) e-commerce
B 2 C e-commerce Description • Businesses sell products or services to individual customers (consumers) • commerce between companies and consumers • involves customers gathering information; purchasing physical goods or information goods • online retailing companies such as Amazon. com, Drugstore. com, Beyond. com, Flipkart. com, Lenskart. com Example : Walmart. com sells merchandise to consumers through its Web site : www. walmart. com
B 2 B e-commerce • Description • Businesses sell products or services to other businesses • (1) open to the entire public or (2) limited to a group of businesses who have been part of the specific group • Transaction cost reduced through reduction in search costs • costs of processing transactions (e. g. invoices, purchase orders and payment schemes) • cost in trading processes • eliminating intermediaries and distributors • increase in price transparency • creates supply-side cost-based economies of scale Example: Grainger. com sells industrial supplies to large and small businesses through its Web site: www. grainger. com
Business Processes that Support Buy/Sell Activities • Description • Businesses and other organisations maintain and use information to identify and evaluate customers, suppliers and employees (and to support buying, selling hiring, planning and other activities). More and more of this information is being shared • Example • Dell Computer uses secure internet connections to share current sales and forecasts information with suppliers who use it to plan their production. • As a result they deliver the right quantities of components at the right time
C 2 C e-commerce Description • Participants in an online marketplace can buy and sell goods from each other • commerce between private individuals or consumers • online auctions • auctions facilitated at a portal, such as e. Bay, which allows online real-time bidding on items being sold in the Web; • There is little information on the relative size of global C 2 C ecommerce. However, C 2 C figures of popular C 2 C sites such as e. Bay and Napster indicate that this market is quite large. These sites produce millions of dollars in sales every day Example: Consumers and businesses trade with each other on e. Bay. com. Web site: www. ebay. com
Peer-to-Peer (P 2 P) E-commerce • Uses peer-to-peer technology, which enables Internet users to share files and computer resources without having to go through a central Web server • Napster most well-known example until put of business for copyright infringement • Today, Kazaa is the leading P 2 P software network, although also under attack for copyright infringement • 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 e. Wanted (an inter- active, online marketplace where buyers and sellers can negotiate and which features “Buyer Leads & Want Ads”).
M-Commerce • buying and selling of goods and services through wireless technology • handheld devices such as cellular telephones and personal digital assistants (PDAs) are used • m-commerce will become the choice for digital commerce transactions • bill payment and account reviews can all be conducted from the handheld devices • consumers are given the ability to place and pay for orders on-the-fly • delivery of entertainment, financial news, sports figures and traffic updates to a single mobile • different server than that accessed by the regular online users • allow users to book and cancel rail, flight, movie tickets through their mobile devices
M-Commerce. . contd. . • critical considerations for this strategy is the software solution that the organization uses • ‘all in one’ device strategy vs individual device based technology • banks can use cost effective virtual distribution channel • Financial inclusion • Greater reach across the population • convenience without compromising security • benefits are in terms of usage, reach, cost of installation, efforts and money for maintenance, upgradeability and sustainability 31
M commerce. . contd. . • address the needs of all the players (including regulatory requirements) • solution is adopted that can be deployed fast, and can be scalable • care of disparate systems, customized solutions and maintenance cost • a platform that easily integrates new services and allows banks to be flexible • allowing the bank to reap benefits from the full potential of the mobile commerce • M commerce strategy requires a clear vision and objectives and not ‘one size fits all’ approach
B 2 G e-commerce • Description • Business sell goods or services to governments and government agencies • Example • Cal-Buy portal for businesses that want to sell online to the State of California • Web site • www. pd. dgs. ca. gov/calbuy/default. htm
E-commerce Categories Example • You are a computer manufacturing company who performs the following activities on the Internet: • • • Sells computers to individuals (B 2 C) Purchases parts (e. g. hard drives, power supplies etc. ) from a supplier (B 2 B) Hires staff, manage customer accounts, advertise, etc. (Business processes) Sells computers to the Government to be used in schools (B 2 G) On e. Bay. com individuals buy and sell this brand of computers (C 2 C)
Relative Sizes of E-commerce Categories Business processes that support buy/sell activities B 2 B e-commerce B 2 C e-commerce
Websites that are engaged in B 2 B ecommerce Ø commodityindia. com Ø Indiaconstruction. com Ø clickforsteel. com Ø dell and sony Ø etc. Websites that are engaged in ( B 2 C) e-commerce Ø Amazon. com, Ø llbean. com, Ø Comp. USA. com, Ø Travelocity. doc, Ø hotels. com, Ø chow. net, Ø rediff. com, Ø jaldi. com, Ø indiatimes. com, Ø indiaballs. com, schwab. com
Websites that are engaged in ( C 2 B) e-commerce Ø razerfinish. com, Ø Reverse. Auction. com, Ø priceline. com, Ø Mercata. com, Ø voxcap. com Websites that are engaged in ( C 2 C) e-commerce Ø baazee. com Ø ICQ. com Ø MSN. com Ø ek. com. au Ø careeron. com. au Ø bidorbuy. com Ø OLX. com Ø Quiker. com
What’s the Commerce Value Chain? • Generally: • Value added during the process of creating and delivering a product or service • Commonly used to describe manufacturing of things • Consider Value-Added Tax (VAT) based systems
Value Chains (in general) • Way of organizing activities a business unit does to design, …, support products or services • At each stage, how can things be improved? • And can the internet help?
Chain for Internet Systems • Four parts: Attract; Interact; Act; React • Attract • Get and keep customer interest • Activities: advertising, marketing • Interact • Turn interest into orders • Content/product driven: web pages, info, query results, etc. • Activities: Filling form, detals
Chain for Internet Systems. . • Act • Process and manage orders • Activities: • Order processing -- shopping carts, taxation, shipping charges) • Payment processing -- account, credit cards, third-party financial companies, etc. • Fulfillment -- deliver hard goods, packing, shipping; carry out e-service; deliver digital goods (file, software, license) • React • Service customers, order tracking, returns, warranties, rebates, help services
Another View • Of course it’s not linear • Not necessarily even sequential now Attract Interact React Act
Industry Value Chains • Set of activities performed by suppliers, manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services • Internet reduces cost of information and other transactional costs • Leads to greater operational efficiencies, lowering cost, prices, adding value for customers Slide 2 -43
E-commerce and Industry Value Chains
Firm Value Chains • Activities that a firm engages in to create final products from raw inputs • Each step adds value • Effect of Internet: • Increases operational efficiency • Enables product differentiation • Enables precise coordination of steps in chain Slide 2 -45
E-commerce and Firm Value Chains Slide 2 -46
Firm Value Webs • Networked business ecosystem • Uses Internet technology to coordinate the value chains of business partners • Within an industry • Within a group of firms • Coordinates a firm’s suppliers with its own production needs using an Internet-based supply chain management system Slide 2 -47
Internet-Enabled Value Web
The value chain. The key to intra-business e-commerce is improving value chain efficiency.
Figure 6. 4 The value chain for a personal computer manufacturer.
Figure 6. 5 Each value chain process consists of subprocesses.
Efficiency and Effectiveness • Objective: reduce operating costs • Efficiency gains • Within individual processes • Across the value chain • Efficiency-based competitive advantage • Hidden from public view • Relatively easy to sustain
Factors affecting e-commerce • Major forces fuelling e-commerce economic forces, marketing and customer interaction forces, and Technology communications costs, low-cost technological infrastructure, speedier and more economic electronic transactions with suppliers, lower global information sharing and advertising costs, and cheaper customer service cost networking of corporations, suppliers, customers/clients, and independent contractors into one community • Networking of the various departments within a corporation, and of business operations and processes • • •
Factors affecting e-commerce. . contd. . • critical business information to be stored in a digital form • retrieved instantly • transmitted electronically • connecting businesses (small, medium or large) to trading partners • sourcing out supplies, buying and selling goods and services online in real time • center for management of content and the processing of business transactions • support services such as financial clearance and information services • regional, vertical and industry-specific interoperable B 2 B e-markets across the globe
Factors affecting e-commerce. . contd. . • provide their target consumers with more detailed product and service information using e-commerce • logistical and technological infrastructure to other retailers • expertise in credit analysis • tracking orders • product comparison systems • digitizing content, compression and the promotion of open systems technology • convergence of telephone services, television broadcast, cable television, and Internet access
E-commerce components • A corporate Web site with e-commerce capabilities • A corporate intranet so that orders are processed in an efficient manner • IT-literate employees to manage the information flows and maintain the e-commerce system • Banking institutions that offer transaction clearing services • National and international logistics • cost-efficient transport of small and big packages • critical mass of the population with access to the Internet and disposable income • Firms/Businesses with order fulfilling capability
E-commerce components. . contd. . • A legal framework governing e-commerce transactions • Legal institutions that would enforce the legal framework • A robust and reliable Internet infrastructure; • A pricing structure that doesn’t penalize consumers for spending time on and buying goods over the Internet • global collection of networks connected to share information • common set of protocols
E-commerce components • Important component of e-commerce based firm is the website • website should have technology that will make it easier for its customers to navigate • site should offer every single feature necessary • fully-functional and sustainable ecommerce web site • stable server for hosting • provide customer specific services • technology partners who constantly upgrade the features as well as technology • help business partners such as logistics partners and suppliers to share and exchange business data • Alternatively Saa. S can be used for running these services (reduce cost)
Business transformation through e-commerce • Linking stakeholders through e-commerce • Supply chain management integration • The product flow • The information flow • The finances flow • Shared data in diverse database systems, data warehouse • Sharing data “upstream” (with a company’s suppliers) and “downstream” (with a company’s clients) • shared digital business infrastructure • including integrated value chains • e-business management model • business policies consistent with e-commerce laws, teleworking/virtual work, distance learning, incentive schemes 59
E-COMMERCE APPLICATIONS: ISSUES AND PROSPECTS • e-banking, e-tailing and online publishing/online retailing • telephone banking, credit cards, ATMs • E-commerce in developing countries • • Cash-on-delivery Bank payments electronic payment system Security issues in e-payment • Factors the growth of e-banking in developing countries • • access to the Internet Inclination for banking over the internet access to high-quality products Security over internet
Future trend in e-banking in third world countries • Lead users • Followers • Rejecters • Interest in conducting complex activities over the Internet • E-tailing (or electronic retailing) • selling of retail goods on the Internet • 1997 is considered the initial year • Lower customer acquisition costs • Online publishing • newsletters, online magazines and databases, brochures and other promotional materials, books • Internet as a medium
Future trend in e-banking in third world countries. . contd. . • Online publishing • Advantages • • low-cost universal access independence of time and place ease of distribution effective marketing outreach medium • Issues • • • what kind of business model would result in the most revenue Pricing, mark up fairness of charges to advertisers inadequate copyright protection encryption for paid subscribers unsolicited commercial e-mail or “spam mail”
• Electronic commerce or "e-Commerce" E-commerce covers online processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production. More sophisticated system such as flight and hotel reservation system. • e-Commerce breaks into two components: • Online Shopping - the scope of information and activities that provides the customer with the information they need to conduct business with you and make an informed buying decision. • Online Purchasing - the technology infrastructure for the exchange of data and the purchase of a product over the Internet. Online purchasing is a metaphor used in business-to- business e. Commerce for providing customers with an online method of placing an order, submitting a purchase order, or requesting a quotation.
e-Business: E-Business is a super-set of e-Commerce. E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, and human resources. E-business includes electronic mechanism to distribute information not directly related to buying and selling of goods. Examples: Product specifications, customer testimonials, and product reviews. Purchasing activities on your site, e. g. , order forms, shopping carts, and credit card processing. Customers can’t interact directly with the firm. (territory barrier)
e-commerce and e-business • E-commerce: information and communications technology (ICT) is used in inter-business or interorganizational transactions • E-business: ICT is used to enhance one’s business • Three primary processes are enhanced in e-business • 1. Production processes, which include procurement, ordering and replenishment of stocks; processing of payments; electronic links with suppliers; and production control processes, among others; • 2. Customer-focused processes, which include promotional and marketing efforts, selling over the Internet, processing of customers’ purchase orders and payments, and customer support, among others; and • 3. Internal management processes, which include employee services, training, internal information-sharing, video-conferencing, and recruiting
Internet economy • includes e-commerce and e-business • pertains to all economic activities using electronic networks • It is made up of three major segments • • physical (ICT) infrastructure, business infrastructure, and Commerce Intermediaries
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