chapter 1 overview of electronic commerce e/arabic/index.jsp?site_no=2123
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Chapter 1
Overview of Electronic Commerce
http://web2.aabu.edu.jo/staff_site/arabic/index.jsp?site_no=2123
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Chapter 1 Prentice Hall 2
Learning Objectives
Define electronic commerce (EC) and describe its various categories
Describe and discuss the content and framework of EC Describe the major types of EC transactions Describe some EC business models Describe the role of the digital revolution in EC and the
economic impact of EC Discuss the contribution of EC in helping organizations
respond to environmental pressures Discuss the benefits of EC to organizations, consumers,
and society Describe the limitations of EC
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Chapter 1 Prentice Hall 3
Electronic Commerce:Definitions and Concepts
electronic commerce (EC)
The process of buying, selling, transferring, or exchanging products, services, or information via computer networks.
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Chapter 1 Prentice Hall 4
Electronic Commerce:Definitions and Concepts
e-business
E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but alsoServicing customersCollaborating with business partnersConducting electronic transactions
within an organization
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Chapter 1 Prentice Hall 5
Electronic Commerce:Definitions and Concepts
1.1
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Chapter 1 Prentice Hall 6
Electronic Commerce:Definitions and Concepts
Traditional commerce: all dimensions are physicalBrick-and-mortar organizations
Old-economy organizations (corporations)
Perform all business off-lineSell physical products by means of
physical agents
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Chapter 1 Prentice Hall 7
Electronic Commerce:Definitions and Concepts
PURE VERSUS PARTIAL ECPure EC: all dimensions are digital
virtual (pure-play) organizationsOrganizations that conduct their business activities solely online. (eBay, AOL –media services)
Partial EC: a mix of digital and physical dimensions
Click-and-mortar (click-and-brick) organizationsConduct EC activitiesDo their primary business in the physical worldExamples: GE, IBM, Intel
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Chapter 1 Prentice Hall 8
Electronic Commerce:Definitions and Concepts
INTERNET VERSUS NON-INTERNET EC Non-Internet EC is the use of EC technologies
on private (as opposed to public) networks.intranet
An internal corporate or government network that uses Internet tools, such as Web browsers, and Internet protocols.
extranet
A network that uses the Internet to link multiple intranets.
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Chapter 1 Prentice Hall 9
Electronic Commerce:Definitions and Concepts
Interorganizational information systems (IOSs)Communications systems that allow routine transaction processing and information flow between two or more organizations.
intraorganizational information systemsCommunication systems that enablee-commerce activities to go on within individual organizations.
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Chapter 1 Prentice Hall 10
Electronic Commerce:Definitions and Concepts
Internet EC is the use of EC technologies on public (as opposed to private) networks.electronic market (e-marketplace)
An online marketplace where buyers and sellers meet to exchange goods, services, money, or information.
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Chapter 1 Prentice Hall 11
The EC Framework, Classification, and Content
An EC FrameworkEC applications supported by
infrastructure and 5 support areasPeoplePublic policyTechnical standards and protocolsBusiness partnersSupport services
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Chapter 1 Prentice Hall 12
The EC Framework, Classification, and Content
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Chapter 1 Prentice Hall 13
Thu 22-9 The EC Framework, Classification, and Content
CLASSIFICATION OF EC BY THE NATURE OF THE TRANSACTIONS OR INTERACTIONS
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
Business-to-business-to-consumer (B2B2C): EC model in which a business provides some product or service to a client business; the client business maintains its own customers, to whom the product or service is provided
e-tailingOnline retailing, usually B2C. E-tailors began to fail in 1999
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Chapter 1 Prentice Hall 14
The EC Framework, Classification, and Content
consumer-to-business (C2B)
E-commerce model in which individuals use the Internet to sell products or services to organizations or individuals who seek sellers to bid on products or services they need.
consumer-to-consumer (C2C)
E-commerce model in which consumers sell directly to other consumers.
mobile commerce (m-commerce)
E-commerce transactions and activities conducted in a wireless environment.
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Chapter 1 Prentice Hall 15
The EC Framework, Classification, and Content
location-based commerce (l-commerce)M-commerce transactions targeted to individuals in specific locations, at specific times.
intrabusiness ECE-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization.
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Chapter 1 Prentice Hall 16
The EC Framework, Classification, and Content
business-to-employees (B2E)E-commerce model in which an organization delivers services, information, or products to its individual employees.
collaborative commerce (c-commerce)E-commerce model in which individuals or groups communicate or collaborate online.
peer-to-peerTechnology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce.
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Chapter 1 Prentice Hall 17
The EC Framework, Classification, and Content
e-learning
The online delivery of information for purposes of training or education.
e-government
E-commerce model in which a government entity buys or provides goods, services, or information from or to businesses or individual citizens.
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Chapter 1 Prentice Hall 18
Thu 22-9 The EC Framework, Classification, and Content
exchange
A public electronic market with many buyers and sellers.
exchange-to-exchange (E2E)
E-commerce model in which electronic exchanges formally connect to one another for the purpose of exchanging information.
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Chapter 1 Prentice Hall 19
Sun 25-9 Interdisciplinary Nature of EC
Marketing Computer sciences Consumer behavior and psychology Finance Economics Management information systems Accounting and auditing Management Business law and ethics Others
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Chapter 1 Prentice Hall 20
Brief History of EC
EC applications first developed in the early 1970s --- Electronic funds transfer (EFT)
Limited to: Large corporations Financial institutions A few other daring businesses
Electronic data interchange (EDI)—electronic transfer of documents: Purchase orders Invoices E-payments between firms doing business
Enlarged pool of participants to include: Manufacturers Retailers Service providers
Internet became more commercialized in the early 1990s Stock trading Travel reservation systems
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Chapter 1 Prentice Hall 21
The EC Framework, Classification, and Content
Web 2.0
The second-generation of Internet-based services that let people generate content, collaborate, and share information online in perceived new ways—such as social networking sites, wikis, and communication tools.
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The Digital Revolution Drives E-Commerce
digital economy
An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.
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The Digital Revolution Drives E-Commerce
The digital revolution accelerates EC mainly by providing competitive advantage to organizations.
The digital revolution enables many innovations (Digital products, financial transactions, Information as commodity)
virtual worldA user-defined world in which people can interact, play, and do business. The most publicized virtual world is Second Life.
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The Business Environment Drives E-Commerce
THE BUSINESS ENVIRONMENTThe Business Environment Impact ModelBusiness Pressures and Opportunities
Market, societal and technological.Organizational Response Strategies
Agility, CRM, KMS, E-markets, …etc.
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Chapter 1 Prentice Hall 25
The Business Environment Drives E-Commerce
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Chapter 1 Prentice Hall 26
Sun 25-9 EC BUSINESS MODELS
business model A method of doing business by which a company can generate revenue to
sustain itself.
Revenue sources are Transaction fees (Stock trade fee) Subscription fees (AOL monthly fee) Advertisement fees (Ads on google as banners) Affiliate fees (Refering customers to other sites) Sales (Wal-Mart, Amazon)
Value proposition is the description of the benefits a company can derive from using EC
Search and transaction cost efficiency
Lock-in – switching costs
Novelty
Complementarities – bundling products with services
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Chapter 1 Prentice Hall 27
Tue 27-9 (2) EC BUSINESS MODELS
TYPICAL EC BUSINESS MODELS Online direct marketing (Used in B2C and B2B,
Suitable for digitizable products)
Electronic tendering systems for procurement tendering (bidding) system (reverse auction)
Model in which a buyer requests would-be sellers to submit bids; the lowest cost or highest value bidder wins.
name-your-own-price model
Model in which a buyer sets the price he or she is willing to pay and invites sellers to supply the good or service at that price.
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Chapter 1 Prentice Hall 28
EC BUSINESS MODELS
Find the best price also known as a search engine model through intermediaries
affiliate marketing
An arrangement whereby a marketing partner (a business, an organization, or even an individual) refers consumers to the selling company’s Web site.
viral marketing
Word-of-mouth marketing in which customers promote a product or service to friends or others.
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Chapter 1 Prentice Hall 29
EC BUSINESS MODELS
group purchasing
Quantity (aggregated) purchasing that enables groups of purchasers to obtain a discount price on the products purchased.
SMEs
Small-to-medium enterprises.e-co-ops
Another name for online group purchasing organizations.
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Chapter 1 Prentice Hall 30
EC BUSINESS MODELS
Supply chain improvers (Hub instead of linear) Information brokers (infomediaries) Online auctions Product customization and service
personalization customization
Creation of a product or service according to the buyer’s specifications.
personalization
The creation of a service or information according to specific customer specifications.
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Chapter 1 Prentice Hall 31
Thu 29-9 (3) The Digital Enterprise
digital enterpriseA new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: • reach and engage customers more effectively,• boost employee productivity, • and improve operating efficiency.
It uses converged communication and computing technology in a way that improves business processes.
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Chapter 1 Prentice Hall 32
The Digital Enterprise
corporate portal
A major gateway through which employees, business partners, and the public can enter a corporate Web site.
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Chapter 1 Prentice Hall 33
The Benefits of EC
Benefits to OrganizationsExpands the marketplace to national and
international marketsDecreases the cost of creating, processing,
distributing, storing and retrieving paper-based information
Lowers telecommunications cost - the Internet is much cheaper than value added networks (VANs)
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Chapter 1 Prentice Hall 34
Benefits of EC (cont.)
Benefits to consumers Enables consumers to shop or do other
transactions 24 hours a day, all year round from almost any location
Provides consumers with more choices Provides consumers with less expensive
products and services by allowing them to shop in many places and conduct quick comparisons
Facilitates competition, which results in substantial discounts
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Chapter 1 Prentice Hall 35
Benefits of EC (cont.)
Allows quick delivery of products and services (in some cases) especially with digitized products
Consumers can receive relevant and detailed information in seconds, rather than in days or weeks
Makes it possible to participate in virtual auctions
Allows consumers to interact with other consumers in electronic communities and exchange ideas as well as compare experiences
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Chapter 1 Prentice Hall 36
Benefits of EC (cont.)
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 less affluent people
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 of EC Technical limitations
There is a lack of universally accepted standards for quality, security, and reliability
The telecommunications bandwidth is insufficient Software development tools are still evolving There are difficulties in integrating the Internet and
EC software with some existing (especially legacy) applications and databases.
Special Web servers in addition to the network servers are needed (added cost).
Internet accessibility is still expensive and/or inconvenient