E-Commerce: An Introduction to Electronic Commerce and its Attributes, Slides of Fundamentals of E-Commerce

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INTRODUCTION TO

E-COMMERCE

Prepared by Nick Gachui, BSc. Computer Science (JKUAT), MSc. Software

Engineering (JKUAT).

THE TERM “E-COMMERCE” E-Commerce

• (^) “Electronic commerce, commonly written as E-Commerce, is the trading in products or services using computer networks, such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction’s life cycle, although it may also use other technologies such as E-Mail.

E-Business

• (^) “Electronic business, or E-Business, is the application of information and communication technologies (ICT) in support of all the activities of business. Commerce constitutes the exchange of products and services between businesses, groups and individuals and can be seen as one of the essential activities of any business. Electronic commerce focuses on the use of ICT to enable the external activities and relationships of the business with individuals, groups and other businesses or E-Business refers to business with help of Internet i.e. doing business with the help of Internet network. The term <E- Business> was coined by IBM’s marketing and Internet team in 1996.” (Wikipedia 2015)

Digital economy

• (^) “Digital economy refers to an economy that is (substantially) based on computing technologies. The digital economy is also sometimes called the Internet Economy, the New Economy, or Web Economy. Increasingly, the “digital economy” is intertwined with the traditional economy making a clear delineation harder.” (Wikipedia 2015)
• (^) We will not use the term “digital economy” further on in this unit, because business is business be it traditional or digital. And boundaries are moving every day due to technical development. However, we will repeatedly use the term “digital” or “digitalized” to indicate that subjects or activities are based on ICT.

Contd…

• Focus on business processes:

о We support business processes, of course, as we did it for the last

decades, but now the total processes, running through several organizations and

crossing their boundaries, are supported.

о We automate business processes not longer only within organizations, as

it was “the” traditional objective of ICT, but now the automation is related to the total

process, running through all involved organizations, and not only to the sub-process

within the own organization.

о We increase the speed of business processes. Additional potentials can be

realized with the coupling of processes between different organizations.

о We increase the economic efficiency of business processes, again through

coupling of business processes at the boundaries of the business partners.

Contd…

• Usage of a global network:

о Internet plays a dominant role and has become a universal technical

infrastructure. Thus it builds a global virtual place where every organization and

person being interested in making business can come together without

geographical and time restrictions.

о Global networks allow the exchange of information without any

restrictions in time and independently from any geographical distances.

о We “know” (means: assume) that the Internet is always up and running

(7·24h).

E-COMMERCE WITH THE “5-C-MODEL” Commerce

• (^) In the electronic marketplaces there is a matching of customers and suppliers, an establishing of the transaction terms, and the facilitation of exchange transactions.
• (^) With the broad move to the Web-enabled enterprise systems with relatively uniform capabilities as compared to the legacy systems, a universal supply-chain linkage has been created. Collaboration
• (^) The Web is a vast nexus, or network, of relationships among firms and individuals.
• More or less formal collaborations are created or emerge on the Web to bring together individuals engaged in knowledge work in a manner that limits the constraints of space, time, national boundaries, and organizational affiliation.

Contd…. Communication

• As an interactive medium, the Web has given rise to a multiplicity of media products.
• (^) This universal medium has become a forum for self-expression (as in blogs) and self- presentation (as, for an example, in Polyvore: www.polyvore.com).
• The rapidly growing M-Commerce enables connectivity in context, with location-sensitive products and advertising.
• In the communications domain, the Web also serves as a distribution channel for digital products. Connection
• Common software development platforms, many of them in the open-source domain, enable a wide spectrum of firms to avail themselves of the benefits of the already developed software, which is, moreover, compatible with that of their trading and collaborating partners.
• (^) The Internet, as a network of networks that is easy to join and out of which it is relatively easy to carve out virtual private networks, is the universal telecommunications network, now widely expanding in the mobile domain.

ADDITIONAL TERMS

• (^) M-Commerce (Mobile Commerce) M-Commerce (Mohapatra 2013, pp. 81–82) is commonly understood as the usage of mobile devices for business purposes, especially mobile phones and PDA’s (Personal Digital Assistants). Main features of M-Commerce are:
• Location independence of (mobile) customers,
• High availability of services through well established mobile phone networks,
• Increasing computing power of mobile devices,
• Interactivity of mobile devices (voice and data transfer),
• Security (when using mobile phone networks),
• Localization of customers through cell structure,
• Accessibility of customers,
• Potential of personalized services/offers.

Contd…

• (^) E-Procurement (Electronic Procurement)
• (^) In general, E-Procurement (Chakravarty 2014, p. 115) is the automation of an

organization’s procurement processes using Web-based applications. It enables widely

dispersed customers and suppliers to interact and execute purchase transactions. Each

step in the procurement process is captured electronically, and all transaction data is

routed automatically, reducing time and cost of procurement. Properly deployed, E-

Procurement can deliver tremendous value to enterprises in different ways.

• (^) In a narrower sense E-Procurement is seen as the ordering of MRO goods (MRO =

Maintenance/Repair/Operations) on the basis of Web-based application systems

directly by the demand carrier to reduce process costs in the area of so-called C-articles

(C-articles represent a small portion of the total financial procurement volume, but cause

a significant portion of the procurement costs).

Contd…

• (^) E-Administration (Electronic Administration)
• “E-administration refers to those mechanisms which convert the paper processes in a traditional office into electronic processes, with the goal to create a paperless office. Its objective is to get total transparency and accountability within any organization.” (Wikipedia 2015)
• (^) E-Democracy (Electronic Democracy)
• (^) “E-Democracy incorporates 21st-century information and communications technology to promote democracy. That means a form of government in which all adult citizens are presumed to be eligible to participate equally in the proposal, development, and creation of laws.” (Wikipedia 2015)

BUSINESS MODELS RELATED TO E-COMMERCE

• Access provider
• (^) The access provider ensures (technical) access to the Internet. We should have in mind, that somebody

has to pay the access provider so that we can get access to the Internet. Who pays? We or somebody

else? In many (most?) areas of the world it is a totally privatized business, though sometimes in the

political arena the access to the Internet is declared as a modern human right. Obviously there is a

similarity to telephone network(s). However, it (normally) works in this privatized form.

• (^) Traditional business models, which are somehow similar to the business of an access provider, are

operators of a technical infrastructure, e.g. telephone networks, car highways, or railways.

• (^) Search engine
• (^) Search engines are the most used software in the Internet. They are the starting step for many Internet-

based activities, not only but, of course, also if somebody is looking for a business opportunity. Again we

must ask: Who pays? The one, who wants to find something or someone? Or the one, who wants to be

found?

• (^) A traditional and similar business model is given by the so-called “yellow pages”, where firms are listed

and grouped according to branches and locations.

Contd…

• Portal
• A portal is a website, which provides a set of services to the user so that he/she sometimes thinks that he/she is using a single but very complex software system. Portals are often used in big organizations to control the access of employees to the different ICT systems; each employee gets a specific menu of “his”/“her” applications. Also content providers use portals, though in the narrow sense that they only deliver content and no application systems.
• (^) Online marketplace/electronic mall
• An online marketplace is a website, where suppliers and potential customers can come together like on a real marketplace in a small town. An E-Mall is a set of online shops, which can be found on one website.
• Examples of traditional and similar business models are shopping centers, omnibus orders (One person is customer of the shop and buys for a group of people), marketplaces and buying associations.

Contd…

• (^) Virtual community
• (^) A virtual community is a platform for communication and exchange of experience. It is similar to a virtual club or association. We always should ask: Who is the owner? Who is the person or organization behind the platform? Who pays? The members or the visitors? The community operator?
• (^) Information broker
• (^) An information broker collects, aggregates and provides information, e.g. information with respect to products, prices, availabilities or market data, economical data, technical information.
• (^) Here we have to ask: Can we trust the information? Is it neutral or just a product placement? Who pays? The visitor? Some providers? Financed through advertisements?
• (^) Traditional and similar business models are magazines running tests of computers, cars, consumer goods, restaurants.