COMP2113COMP2113Introduction to Introduction to

Electronic CommerceElectronic Commerce

Richard HensonRichard HensonUniversity of WorcesterUniversity of Worcester

FebruaryFebruary 20082008

Introduction to E-commerceIntroduction to E-commerce Objectives:Objectives:

Describe the traditional supply chainDescribe the traditional supply chain Define electronic commerce and explain new Define electronic commerce and explain new

options for trading that have become available options for trading that have become available through e-commercethrough e-commerce

Distinguish between B2C and B2BDistinguish between B2C and B2B Identify and explain design features of web pages Identify and explain design features of web pages

that can be used by businessesthat can be used by businesses Categorise websites into one of several different Categorise websites into one of several different

typestypes

What is Commerce?What is Commerce?

Historically…Historically… associated with the activities directly involved with associated with the activities directly involved with

tradingtrading Other activities also involved in running a Other activities also involved in running a

business!!!business!!! e.g. marketing… management…e.g. marketing… management…

More recently, term used more broadly, to More recently, term used more broadly, to encompass all the activities in the “supply chain”encompass all the activities in the “supply chain”

Activities involved in Activities involved in Commerce?Commerce?

In groups of 3 or 4, compose a list of activities In groups of 3 or 4, compose a list of activities associated with businesses... associated with businesses...

The Supply ChainThe Supply ChainIdentify

need for product

Develop product

Make product

Customer buys product Gives customer

informationon other/new

products

Provide after-sales

support

Market product

upstream

downstream

Activities involved in E-Activities involved in E-commerce?commerce?

1.1. In the same group, compose a list of activities In the same group, compose a list of activities specifically associated with e-commerce... specifically associated with e-commerce... (i.e. buying online)(i.e. buying online)

Activities involved in E-Activities involved in E-commercecommerce

Some examples:Some examples: electronic activities that promote the organisation’s electronic activities that promote the organisation’s

productsproducts electronic distribution of information about those electronic distribution of information about those

productsproducts on-line orderingon-line ordering on-line paymenton-line payment ““intelligence” collected electronically about intelligence” collected electronically about

customer buying behaviourcustomer buying behaviour

E-commerce and E-businessE-commerce and E-business E-commerce is concerned with the storage, E-commerce is concerned with the storage,

processing and communication of electronic processing and communication of electronic information through the supply chaininformation through the supply chain

E-business is concerned concerned with E-business is concerned concerned with using software to replace manual procedures using software to replace manual procedures within a particular area of the supply chainwithin a particular area of the supply chain e.g. procurement (buying)e.g. procurement (buying) therefore actually part of e-commerce…therefore actually part of e-commerce…

Neither of these are particularly new…Neither of these are particularly new…

B2B, B2C, B2EB2B, B2C, B2E

Broadly three types of online transaction that Broadly three types of online transaction that could be regarded as part of doing business:could be regarded as part of doing business: Business sells to another business (B2B)Business sells to another business (B2B) Business sells to the consumer (B2C)Business sells to the consumer (B2C) Business communicates with its employees (B2E)Business communicates with its employees (B2E)

Many organisations will use B2B to get raw Many organisations will use B2B to get raw materialsmaterials

And use B2C (direct sales, possibly cutting And use B2C (direct sales, possibly cutting out the vendor) to market their productsout the vendor) to market their products

E-commerce definitionsE-commerce definitions Almost as many definitions as there are e-Almost as many definitions as there are e-

commerce text books!commerce text books! One popular definition or e-commerce: One popular definition or e-commerce:

“doing business, making use of electronic “doing business, making use of electronic communications media”communications media”

More accurate definition of e-commerce More accurate definition of e-commerce includes on-line marketing and after-sales includes on-line marketing and after-sales support as well as buying and selling on-linesupport as well as buying and selling on-line

Communication of information relating to Communication of information relating to business transactions can occur through any business transactions can occur through any digital media, not only via the Internetdigital media, not only via the Internet

Evolution of “doing business”Evolution of “doing business” Pre-18Pre-18thth century: all products made individually century: all products made individually

by hand, sometimes to customer requirements, by hand, sometimes to customer requirements, mostly taken to “market”mostly taken to “market”

18th/19th century: business transformed by 18th/19th century: business transformed by inventions such as spinning jenny that allowed inventions such as spinning jenny that allowed processes to be automatedprocesses to be automated

2020thth: Mass production revolutionised business: Mass production revolutionised business 2020th: th: Distribution enabled products to be Distribution enabled products to be

delivered to customers anywhere in the worlddelivered to customers anywhere in the world 2121stst: Internet Economy – products themselves : Internet Economy – products themselves

customised to meet customer requirementscustomised to meet customer requirements

Is E-commerce that new?Is E-commerce that new? Not for transactions between businesses…Not for transactions between businesses…

Larger companies have used EDI (Electronic Data Larger companies have used EDI (Electronic Data Exchange) and EFT (Electronic Funds Transfer) Exchange) and EFT (Electronic Funds Transfer) since the early 1980s, if not earlier…since the early 1980s, if not earlier…

But… many smaller companies continued to use But… many smaller companies continued to use traditional methods because of the high cost of traditional methods because of the high cost of using computers and telephone linesusing computers and telephone lines

Completely new for business to consumer Completely new for business to consumer transactions, because consumers have only transactions, because consumers have only quite recently been able to acquire the quite recently been able to acquire the technology to participatetechnology to participate

B2B e-commerceB2B e-commerce One business (seller) communicates One business (seller) communicates

information relating to ordering and payment information relating to ordering and payment electronically with another business (buyer)electronically with another business (buyer) either by private telecoms linkeither by private telecoms link Or via a secure Internet channelOr via a secure Internet channel

Business A - seller Business B - buyer

Telecoms link

B2C e-commerceB2C e-commerce Business markets products via website and Business markets products via website and

the Internetthe Internet Business communicates information relating Business communicates information relating

to ordering and payment electronically directly to ordering and payment electronically directly to the customer via secure Internet lineto the customer via secure Internet line

E-Business - seller Consumer - buyer

Secure Internet link

Activities involved in B2B e-Activities involved in B2B e-commerce (1)commerce (1)

Business develops a good working Business develops a good working relationship with its suppliersrelationship with its suppliers

Suppliers provide secure access to Suppliers provide secure access to parts of their information systems to parts of their information systems to check on product availability, etc.check on product availability, etc.

Supplier Business

Activities involved in B2B e-Activities involved in B2B e-commerce (2)commerce (2)

Business provides secure access to parts of Business provides secure access to parts of its information systems to ease its information systems to ease communication with supplierscommunication with suppliers

Suppliers send invoicesSuppliers send invoices Business can make payment electronicallyBusiness can make payment electronically

business supplier

Internet E-commerce (B2C) Internet E-commerce (B2C) the revolution!the revolution!

Post 1995: direct business to consumer Post 1995: direct business to consumer transactions (B2C e-commerce)transactions (B2C e-commerce) impossible before this date because consumers impossible before this date because consumers

simply didn’t possess the technologysimply didn’t possess the technology technology that makes B2C possible had been technology that makes B2C possible had been

building for at least 10 yearsbuilding for at least 10 years Leapt into the public domain in 1996 (US), two Leapt into the public domain in 1996 (US), two

years later (UK)years later (UK) now sometimes (increasingly?) the case that now sometimes (increasingly?) the case that

consumers have more technology in their homes consumers have more technology in their homes (including small networks) than the small business.(including small networks) than the small business.

Differences in activities Differences in activities involved in B2B and B2C involved in B2B and B2C

e-commercee-commerce Over to you again…Over to you again…

Who should use e-commerce?Who should use e-commerce? Anyone…Anyone…

who has something to sellwho has something to sell Can benefit by having a Can benefit by having a

potential world market, 24 potential world market, 24 hours a day, 365 days a year!hours a day, 365 days a year!

Must FIRST… be aware of Must FIRST… be aware of the set up, running costs and the set up, running costs and implications of selling implications of selling Internationally in this way…Internationally in this way…

Many UK businesses choose Many UK businesses choose only to deal with UK only to deal with UK customerscustomers…… http://www.imrg.org

Technologies involved in the Technologies involved in the development of e-commercedevelopment of e-commerce

This is NOT a module about technology…This is NOT a module about technology… but e-commerce couldn’t have happened without itbut e-commerce couldn’t have happened without it fascinating to briefly focus on the gradual them fascinating to briefly focus on the gradual them

earth shatteringly fast developments of the 1980s earth shatteringly fast developments of the 1980s and 1990sand 1990s

Technologies at the end of the 70s:Technologies at the end of the 70s: VERY large & expensive computersVERY large & expensive computers Software to replace manual processing of paper Software to replace manual processing of paper

documents:documents:» Order processing systemsOrder processing systems» Stock control systemsStock control systems

Technologies involved in the Technologies involved in the development of e-commercedevelopment of e-commerce

1.1. Digital processing and storage Digital processing and storage technologies:technologies:• faster, more efficient, more powerful CPUsfaster, more efficient, more powerful CPUs• faster, more compact, computer memoryfaster, more compact, computer memory• result – the “home” computerresult – the “home” computer

2.2. Development of digital communications Development of digital communications technologies & secure digital networkstechnologies & secure digital networks• networks became digitalnetworks became digital• Internet provided connectivityInternet provided connectivity

Technologies involved in the Technologies involved in the development of e-commercedevelopment of e-commerce

3.3. Network Software became standardisedNetwork Software became standardised• communications protocolscommunications protocols• Applications such as Applications such as

EDI, EFTEDI, EFT4.4. Development of secure analogue-digital Development of secure analogue-digital

computer-computer communications computer-computer communications through public networksthrough public networks

• digital Home computer could hook up to digital digital Home computer could hook up to digital Internet via sound-based telephone networkInternet via sound-based telephone network

Technologies involved in the Technologies involved in the development of e-commercedevelopment of e-commerce

5.5. Development of User-friendly human-Development of User-friendly human-computer interfacescomputer interfaces

• allowed non-computer professionals to allowed non-computer professionals to use “home” computers effectivelyuse “home” computers effectively

• Examples:Examples:• Windows & Windows applicationsWindows & Windows applications• Internet browsers for viewing web pagesInternet browsers for viewing web pages

Technological RevolutionTechnological Revolution It just happened that all these It just happened that all these

technologies came to maturity at just technologies came to maturity at just the right time…the right time…

The Internet now became accessible The Internet now became accessible through Tim Berners-Lee’s wonderful through Tim Berners-Lee’s wonderful inventioninventionThe World Wide Web…The World Wide Web…In Tim’s own words: In Tim’s own words: http://www.bcs.org/server.

php?show=nav.8997

Requirements for a Website Requirements for a Website offering B2C e-commerceoffering B2C e-commerce

Provide access to company marketing 24 Provide access to company marketing 24 hours and day, 7 days a week, anywhere in hours and day, 7 days a week, anywhere in the worldthe world

Need to:Need to: look good (company/product image, etc.)look good (company/product image, etc.) be quickly downloadable (downfall of boo.com?)be quickly downloadable (downfall of boo.com?) be up to datebe up to date provide useful product informationprovide useful product information

Should give the customer an opportunity to Should give the customer an opportunity to buy… [otherwise, not really e-commerce!]buy… [otherwise, not really e-commerce!]

How much do people use E-How much do people use E-commerce Websites?commerce Websites?

Recent UK figures for online sales:Recent UK figures for online sales: ““For 2005 as a whole, it calculated that spending over For 2005 as a whole, it calculated that spending over

the internet in the UK totalled £19.2bn, 32% more the internet in the UK totalled £19.2bn, 32% more than 2004than 2004

Shoppers spent £4.98bn online during the 2005 Shoppers spent £4.98bn online during the 2005 Christmas period, compared with £3.3bn for the same Christmas period, compared with £3.3bn for the same time a year earlier, according to e-commerce trade time a year earlier, according to e-commerce trade body IMRGbody IMRG

Some 24 million UK consumers shopped online in Some 24 million UK consumers shopped online in 2005, spending on average £816 each during the 2005, spending on average £816 each during the year, and £208 in the run-up to Christmas. year, and £208 in the run-up to Christmas.

IMRG now forecasts that e-commerce will grow by IMRG now forecasts that e-commerce will grow by 36% in 2006, with sales worth £26bn”36% in 2006, with sales worth £26bn”» Figures: Figures: http://news.bbc.co.uk/1/hi/business/4630472.stmhttp://news.bbc.co.uk/1/hi/business/4630472.stm

Producing Websites for Producing Websites for B2C e-commerceB2C e-commerce

A Website “on the net” consists of a number A Website “on the net” consists of a number of files held on an Internet serverof files held on an Internet server

Can use software that makes uploading files Can use software that makes uploading files as easy as transferring files between foldersas easy as transferring files between folders

Web pages themselves not difficult to Web pages themselves not difficult to produceproduce don’t need to be a programmerdon’t need to be a programmer but you do need to have an eye for design…but you do need to have an eye for design…

Websites for B2C Websites for B2C e-commercee-commerce

Plenty of development environments Plenty of development environments available that can:available that can:work with business logicwork with business logicuse software to generate the code for youuse software to generate the code for you

» even for sites that work with remote databases!even for sites that work with remote databases! Navigation through the site is all Navigation through the site is all

importantimportantpages must link together in a coherent pages must link together in a coherent

way...way...

Shopping website categoriesShopping website categories Several possibilities in order of Several possibilities in order of

increasing complexity/functionality:increasing complexity/functionality:““Small Ad” on a page on another websiteSmall Ad” on a page on another website““Billboard” web pageBillboard” web page““Cyberbrochure” of linked pagesCyberbrochure” of linked pagesDetailed Product InformationDetailed Product InformationPortalPortal““Virtual shopfront”Virtual shopfront”

Each type can now be scrutinised...Each type can now be scrutinised...

E-Commerce website types: E-Commerce website types: “small ad”“small ad”

Most basic solutionMost basic solution Example website: Example website:

provides basic company informationprovides basic company informationshould also include telephone number and should also include telephone number and

addressaddresscan also be the basis for e-commerce by can also be the basis for e-commerce by

including an e-mail address that can be used including an e-mail address that can be used to make ordersto make orders

E-Commerce website types: E-Commerce website types: “billboard”“billboard”

Use of a whole web page allows more detailed Use of a whole web page allows more detailed information to be includedinformation to be included

User can become interactive through use of a User can become interactive through use of a HTML form to send an email to a contact HTML form to send an email to a contact

Unique URL:Unique URL: Emails and stationary (letters/faxes/business cards) Emails and stationary (letters/faxes/business cards)

can include the URL of the website in their can include the URL of the website in their “signatures” to advertise the existence of the web site “signatures” to advertise the existence of the web site to contacts/customers to contacts/customers

The site can be made accessible to search engines in The site can be made accessible to search engines in a focused way through use of keywordsa focused way through use of keywords

Example: musicians site Example: musicians site Rod Rod PooleyPooley - Organist - Organist

E-Commerce website types: E-Commerce website types: “Cyber brochure” “Cyber brochure”

Much larger undertaking than a billboardMuch larger undertaking than a billboard Information sheets, brochures and general Information sheets, brochures and general

information about the business and its information about the business and its products/servicesproducts/services

Includes items that point to other web-Includes items that point to other web-based sources and informationbased sources and information

Gives businesses greater coverage and a Gives businesses greater coverage and a higher profilehigher profile

Example Web site:Example Web site: Left BankLeft Bank – riverside complex in Hereford – riverside complex in Hereford

E-Commerce website types: E-Commerce website types: “Local Portal”“Local Portal”

Gateway to other sitesGateway to other sites Can be used with cyberbrochure type Can be used with cyberbrochure type Provides a way into the web, and could Provides a way into the web, and could

be used as a user “home page”be used as a user “home page” Example website: Example website:

ChaddsChadds - department store in Hereford - department store in Hereford » links to related websiteslinks to related websites» local & community news/informationlocal & community news/information

E-Commerce website types: E-Commerce website types: “International portal”“International portal”

Sells space for advertising goods and Sells space for advertising goods and services - national or internationalservices - national or international

Has a facility to search the webHas a facility to search the weballows directed advertisingallows directed advertisingif user is searching on a keyword relating if user is searching on a keyword relating

to a type of product or service, particular to a type of product or service, particular advertising banners may flash up on the advertising banners may flash up on the screenscreen

Example website: Example website: BBCBBC web site web site

E-Commerce website types: E-Commerce website types: Virtual StorefrontVirtual Storefront

A full e-commerce implementationA full e-commerce implementation Provides combinations of:Provides combinations of:

Full information about the company (cyber Full information about the company (cyber brochure approach)brochure approach)

Links to other local/international) sites and search Links to other local/international) sites and search engines (Portal approach)engines (Portal approach)

On-line ordering of products and servicesOn-line ordering of products and services Secure on-line payment systemsSecure on-line payment systems

Example website:Example website: Amazon.co.Amazon.co.ukuk

E-Commerce website types: E-Commerce website types: “subscription only”“subscription only”

Members/customers only siteMembers/customers only site make money by offering service not productsmake money by offering service not products

Username/password only available by: Username/password only available by: subscribing to an on-line magazinesubscribing to an on-line magazine filling in an on-line formfilling in an on-line form

An increasing number of sites are requiring An increasing number of sites are requiring payment before subscription is allowed…payment before subscription is allowed… e.g. Information Finders like e.g. Information Finders like 192.com192.com e.g. e.g. Business TravelBusiness Travel

Next WeekNext Week

The technologies that drive e-commerce:The technologies that drive e-commerce: computerscomputers networks & the Internetnetworks & the Internet Browsers & serversBrowsers & servers web pagesweb pages web applicationsweb applications