Foundations of Ecommerce and Topics of the Subject

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Foundations of E-commerce and Topics of the
Subject
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E-commerce or E-business?

• E-commerce business transactions that take place
  via telecommunications networks
• E-business buying and selling, servicing
  customers, collaborating with business partners,
  and conducting electronic transactions within an
  organization
• This subject uses the broader definition of EC
  and thus focuses on e-business (but the terms are
  used interchangeably)

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The scope of e-commerce
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EC from Different Perspectives

• Communication perspective delivery of
  information, products/services or payments by
  electronic means
• Business process perspective application of
  technology toward the automation of business
  transactions and work flow
• Service perspective technology to cut the costs
  and improve the quality of service delivery
• Online perspective buying and selling of
  products and information on the Internet and
  other online services

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E-commerce and Technologies

• We will primarily focus on the Internet and
  Internet-based technologies (IP-based), since the
  Internet is responsible for the exponential
  growth of EC over the last 12 years
• However, other telecommunications or electronic
  technologies also fit our requirements
• Private networks (e.g., EDI)
• Smart cards
• Fax
• Wireless
• Etc.

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Growth in Internet Domains
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Internet Use by Region
Source www.internetworldstats.com
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Internet Penetration Rates by Region
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Access to the Internet by Country
Source www.internetworldstats.com
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The Ultimate Goal Value Chain Integration
SUPPLIERS
CUSTOMERS
Supply-chain management
Electronic commerce
COMPANY
Manufacturing Distribution Employees Purchasing
Electronic procurement
Customer service
Stock management
Interactive marketing
Integrated forecasting
Demand forecasting
Quality systems management
Transaction management
Source The Economist
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How much EC?

• Degree of digitization of the product or service
  (physical or digital)
• Degree of digitization of the intermediary or
  agent (physical or digital)
• Degree of digitization of the business process
  (physical or digital)
• 8 possibilities with the two extremes of pure EC
  and no EC, and partial EC for the other 6
• We consider it EC when there is a least 1 digital
  dimension (7 possibilities)

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EC Applications

• Electronic markets
• Buying and selling goods and services over a
  digital infrastructure
• Inter-organizational systems (IOS)
• Facilitates inter or intra-organization flow of
  information, communication and collaboration
• Providing customer service

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Electronic Markets

• An electronic market is the place where buyers
  and sellers meet
• Can be B2B, B2C, or C2C
• Usually built around public networks like the
  Internet
• Relationships can be established at the time of
  transaction and for 1 or more times
• Online service providers are the usual outside
  communications companies involved
• Involves negotiation between buyers and sellers

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IOS

• Involves the flow of information among 2 or more
  organizations (limited to B2B)
• The objective is efficient transaction processing
  such as transmitting orders, bills, or payments
  using EDI or Extranets
• Relationships are pre-determined
• There is no negotiation, only execution
• Built around private or public networks
• Arrangements are made on the nature and format of
  documents and the networks to be used

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Types of IOS

• EDI, B2B connection over private or public
  networks
• Extranets secured B2B (usually Intranets) over
  the Internet
• EFT
• Integrated messaging delivery of e-mail and fax
  documents through a single system that combines
  EDI, e-mail, and forms
• Shared databases (usually over Extranets)
• Supply chain management

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Nature of Transactions

• B2B most EC and includes electronic markets and
  IOS
• B2C
• C2C classifieds and auction sites
• C2B individuals selling services to companies
• Non-commercial academic institutions, nonprofit
  organizations, government agencies, etc. (e.g.,
  G2B, G2C)
• Intra-business usually on Intranets (e.g., B2E)
  or between machines (M2M)

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Reality Strikes

• E-commerce experienced a massive downturn (but
  things are looking good now)
• Huge number of failures for dot-coms including
  some highly prominent ventures
• Massive devaluation of stock market, especially
  the technology market
• Massive scale-back in IT investments major
  players suffered like Cisco, Oracle, Sun
• Long-term its necessary and healthy
• More rational view of e-commerce
• A stronger focus on value creation

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What Went Wrong?

• A lot of companies focused on market share and
  attracting customers not on profitability
  (usually done by lowering the priceGBF strategy)
• Capital was too readily available and managers
  were not accountable (e.g., Boo.com)
• Investment bankers also played a role
• New technologies often create bubbles and
  over-investmentsherd mentality (e.g., rail,
  cars, etc.)
• Businesses rushed in without planning often for
  a stock price boost
• Forgot about the fundamentals
• The fundamentals have not changed

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Where we are today

• The death of e-commerce has been greatly
  exaggerated
• Boom to bust cycle had many believing that
  e-commerce was no longer viable
• B2B e-commerce continues to dominate
• Over USD1 trillion in 2006 transactions across a
  variety of industries (automobile, finance,
  pharmaceutical, electronics, and many others)
• B2C has rebounded and his growing rapidly again
• US on-line retail sales over 211 billion in 2006
• Travel, consumer electronics, computers, and
  information products (e.g., books, music, and
  news) continue to dominate

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Subject OverviewContent and Structure

• Strategic use of e-commerce within a business
  environment
• Focus on value creation
• Mostly targeted at traditional businesses
• Four basic components to the subject
• Technical foundation (e-commerce and Internet
  technologies) and business models
• B2C e-commerce (products, services, Information
  goods)
• B2B e-commerce (scm, exchanges, Intranets)
• Special topics not-for-profit sector, wireless
  commerce, social networking and Web 2.0, and
  security

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Technical Foundation and Business models

• 2 classes
• Internet technologies Akamai
• Business models Amazon

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B2C E-commerce

• 2 classes
• Tangible products and services Rakuten
• Information goods Peer-to-peer

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B2B E-commerce

• 2 classes
• Intranets, extranets, and exchanges Covisint
• Supply chain management STMicroelectronics

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Special Topics

• 4 classes
• Not-for-profit ITC eChoupal
• Social networking and user-generated content
  LinkedIn
• Wireless commerce Mobile Felica
• Security and payment systems iPremier

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Next Class

• E-commerce technologies
• Case Akamai
• Focus more on the technical aspects