Week 1 Overview of Electronic Commerce

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Week 1Overview of Electronic Commerce
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Qantas AirwaysA New Way to Compete

• The Problem
• Increased fuel costs placed pressure on the
  airline industry
• Qantas faced two major competitors and higher
  fees at Sydney Airport
• Air traffic dwindled after September 11th
• Qantas needed to replace aircraft in order to
  stay competitive
• Australian economy slowed down

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Qantas AirwaysA New Way to Compete

• The Solution
• Bought fuel contracts for future dates
  (traditional response)
• Took major steps to implement e-commerce (EC)
  involving buying, selling, and exchanging goods,
  services, information, and payments
  electronically

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Qantas AirwaysA New Way to Compete
Business-to-business (B2B)

• E-marketplace member
• Joined Airnew Co.links major airlines with
  suppliers
• Fuel
• Fuel services
• Light maintenance services
• Catering

• Joined Corporcure.com.au with 13 other large
  Australian corporations
• Electronically purchase general goods and
  services
• Office supplies
• Light bulbs
• Maintenance services

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Qantas AirwaysA New Way to Compete

• Formed Pan-Pacific exchange
• E-marketplace
• Business-to-business-to-consumer (B2B2C)
• Provides
• Full spectrum travel services
• Products and services to business partners
• Travel agencies who can use this marketplace to
  sell directly to consumers

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Qantas AirwaysA New Way to Compete

• Business-to-customer (B2C)
• Online booking
• E-mails to frequent-flyer members
• Mileage bonuses and opportunities to win 10,000
  AU
• Wireless communications

• Business-to-employee (B2E)
• Online training
• Online banking

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Qantas AirwaysA New Way to Compete

• The Results
• Qantas expects to see an estimated 85 million AU
  in cost reductions per year by 2003
• Qantas expects to increase annual revenues by
  700 million AU from nontravel sales
• Outlasted one competitor

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EC Definitions Concepts

• Electronic Commerce (EC) is the process of
  buying, selling, or exchanging products,
  services, and information via computer networks
• EC defined from these perspectives
• Communications
• Business process
• Service
• Online
• Collaborations
• Community

EC
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Pure Vs. Partial Electronic Commerce

• Three dimensions
• the product (service) sold physical / digital
• the process physical / digital
• the delivery agent (or intermediary) physical /
  digital
• Traditional commerce
• all dimensions are physical
• Pure EC
• all dimensions are digital
• Partial EC
• all other possibilities include a mix of digital
  and physical dimensions

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The Dimensions of Electronic Commerce
Digital Product
Digital process
Physical Product
Physical process
Physical agent
Digital agent
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Infrastructure
A Framework for Electronic Commerce
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Electronic Markets

• A market is a network of interactions and
  relationships where information, products,
  services, and payments are exchanged.
• The market handles all the necessary
  transactions.
• An electronic market is a place where shoppers
  and sellers meet electronically.
• In electronic markets, sellers and buyers
  negotiate, submit bids, agree on an order, and
  finish the execution on- or off-line.

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• Classification of EC by the Nature
• of the Transactions

• Business-to-business (B2B) EC model in which
  all of the participants are businesses or other
  organizations
• Business-to-consumer (B2C) EC model in which
  businesses sell to individual shoppers
• Consumer-to-business(C2B) individuals who use
  the Internet to sell products or services to
  organizations and /or seek sellers to bid on
  products or services they need
• Consumer-to-consumer (C2C) consumers sell
  directly to other consumers

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Classification of EC by the Nature of the
Transactions (cont.)

• Mobile commerce (m-commerce)EC transactions and
  activities conducted in a wireless environment
• Location-commerce(l-commerce)
• m-commerce transactions targeted to individuals
  in specific locations, at specific times
• Business-to-employee (B2E) EC model in which an
  organization delivers services, information, or
  products to its individual employees
• E-government Government-to-citizens (G2C) EC
  model in which a government entity buys or
  provides good, services, or information to
  businesses or individual citizens

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Electronic Commerce is Interdisciplinary

• Marketing
• Computer sciences
• Consumer behavior and psychology
• Finance
• Economic
• Production/Logistic

• Management information systems
• Accounting and auditing
• Management
• Business law and ethics

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The Benefits ofElectronic Commerce

• Benefits to Organizations

• Expands the marketplace to national and
  international markets
• Decreases the cost of creating, processing,
  distributing, storing and retrieving paper-based
  information
• Allows reduced inventories and overhead by
  facilitating pull type supply chain management
• The pull type processing allows for customization
  of products and services which provides
  competitive advantage to its implementers

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Benefits to Organizations (cont.)

• Reduces the time between the outlay of capital
  and the receipt of products and services
• Supports business processes reengineering (BPR)
  efforts
• Lowers telecommunications cost - the Internet is
  much cheaper than value added networks (VANs)

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Benefits to Customers

• Enables customers to shop or do other
  transactions 24 hours a day, all year round from
  almost any location
• Provides customers with more choices
• Provides customers with less expensive products
  and services by allowing them to shop in many
  places and conduct quick comparisons
• Allows quick delivery of products and services in
  some cases, especially with digitized products

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Benefits to Customers (cont.)

• Customers can receive relevant and detailed
  information in seconds, rather than in days or
  weeks
• Makes it possible to participate in virtual
  auctions
• Allows customers to interact with other customers
  in electronic communities and exchange ideas as
  well as compare experiences
• Electronic commerce facilitates competition,
  which results in substantial discounts.

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Benefits to Society

• Enables more individuals to work at home, and to
  do less traveling for shopping, resulting in less
  traffic on the roads, and lower air pollution
• Allows some merchandise to be sold at lower
  prices benefiting the poor ones
• Enables people in Third World countries and rural
  areas to enjoy products and services which
  otherwise are not available to them
• Facilitates delivery of public services at a
  reduced cost,increases effectiveness, and/or
  improves quality

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The Limitations ofElectronic Commerce

• Technical Limitations of Electronic Commerce

• Lack of sufficient systems security,
  reliability, standards, and communication
  protocols
• Insufficient telecommunication bandwidth
• The software development tools are still evolving
  and changing rapidly
• Difficulties in integrating the Internet and
  electronic commerce software with some existing
  applications and databases

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Technical Limitations of Electronic Commerce
(cont.)

• The need for special Web servers and other
  infrastructures, in addition to the network
  servers (additional cost)
• Possible problems of interoperability, meaning
  that some EC software does not fit with some
  hardware, or is incompatible with some operating
  systems or other components

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Non-Technical Limitations

• Other limiting factors are
• Lack of touch and feel online
• Many unresolved legal issues
• Rapidly evolving and changing EC
• Lack of support services
• Insufficiently large enough number of sellers and
  buyers
• Breakdown of human relationships
• Expensive and/or inconvenient accessibility to
  the Internet

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The Driving Forces of Electronic Commerce

• The New World of Business

• Business pressures
• Organizational responses
• The role of Information Technology (including
  electronic commerce)

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• Major Business Pressures

Strong competition Global economy Regional trade
agreements (e.g. WTA,NAFTA) Extremely low labour
cost in some countries Frequent and significant
changes in markets Increased power of consumers
Market and economic pressures
Changing nature of workforce Government
deregulation of banking and other
services Shrinking government budgets
subsides Increased importance of ethical and
legal issues Increased social responsibility of
organizations Rapid political changes
Societal and environmental pressures
Rapid technological obsolescence Increase
innovations and new technologies Information
overload Rapid decline in technology cost Vs.
performance ratio
Technological pressures
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Everything Will Be Changed

• Improving Direct Marketing

• Product promotion
• New sales channels
• Direct savings
• Time-to-market (reduced cycle time)
• Customer service
• Brand or corporate image

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Other Changes in the Workplace

• Transforming Organizations
• Work will change
• Technology learning
• Organizational learning

• Redefining Organization
• New product capabilities
• New business models

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Other Changes in the Workplace (cont.)

• Impacts on Manufacturing
• Pull processing, mass customization, shorter
  cycle time, integration (ERP), electronic bidding
  and procurement
• Impacts on Finance and Accounting
• Electronic payment systems, electronic cash,
  automating back office, home banking, electronic
  stock trading
• Human Resource Management
• Electronic recruiting, training, distance learning