Course code: ABI 204Course Name: Introduction to E-Commerce

AMA University

Prelim PeriodUnit 1:Unit 1:

Introduction to E-CommerceIntroduction to E-Commerce

Unit2:Unit2:Technology Infrastructure: The Internet Technology Infrastructure: The Internet

and the World Wide Weband the World Wide Web

Page 1 – 10 from the notesPage 1 – 10 from the notes

Unit 1: ObjectivesUnit 1: ObjectivesIn this chapter, you will learn about: The basic elements of electronic commerce Differences between electronic commerce and

traditional commerce Advantages and Disadvantages of E-Commerce Business Process Suitability for E-Commerce Economic forces that have created a business

environment that fosters electronic commerce The ways in which businesses use value chains

to identify electronic commerce opportunities

What is E-CommerceWhat is E-Commerce??Electronic commerce refers to business activities

conducted using electronic data transmission via the Internet and the World Wide Web.

The three main elements of e-commerce are: Business-to-consumer(B2C) Business-to-business (B2B)The transactions and business processes that

support selling and purchasing activities on the Web

 Other categories include: consumer-to-consumer

(C2C) and consumer-to-government (C2G).

EFTs and EDIsEFTs and EDIsElectronic Funds Transfers (EFTs) refers to the computer-

based systems used to perform financial transactions electronically. It has been used by banks for many years.

Electronic Data Interchange (EDI) occurs when one business transmits computer-readable data in a standard format to another business.

EDI refers to the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner.

Businesses who engage in EDI with each other are called trading partners.

Firms, such as General Electric and Wal-Mart, have been pioneers in using EDI to improve their purchasing process.

Value Added Network Value Added Network (VAN)(VAN)

A value added network is an independent firm that offers connection and EDI transaction forwarding services to buyers and sellers engaged in EDI.

VANs are responsible for ensuring the security of transmitted data.

VANs charge a fixed monthly fee plus a per-transaction charge to subscribers.

Activities as Business Activities as Business ProcessesProcesses

Business processes refer to the group of logical, related, and sequential activities and transactions in which businesses engage, including:

Transferring funds Placing orders Sending invoices Shipping goods to customers

Important Factors Affecting Product Important Factors Affecting Product SuitabilitySuitability

Commodity item – product or service that has become standardized and well known. Office supplies, computers and airline transportation are examples of products or services.

Shipping profile – collection of attributes that affect how easily a product can be packaged and delivered.

Advantages of Electronic Advantages of Electronic CommerceCommerce

Electronic commerce can increase sales and decrease costs.

Web advertising reaches a large amount of potential customers throughout the world.

The Web creates virtual communities for specific products or services.

A business can reduce its costs by using electronic commerce in its sales support and order-taking processes.

Electronic commerce increases sale opportunities for the seller.

Electronic commerce increases purchasing opportunities for the buyer.

Disadvantages of Electronic Disadvantages of Electronic CommerceCommerce

Some business processes are difficult to be implemented through electronic commerce.

Return-on-investment is difficult to apply to electronic commerce.

Businesses face cultural and legal obstacles to conducting electronic commerce.

International Electronic International Electronic CommerceCommerce

About 60 percent of all electronic commerce sites are in English, therefore many language barriers need to be overcome.

The political structures of the world present some challenges.

Legal, tax, and privacy are concerns of international electronic commerce.

Internet and World Wide Internet and World Wide WebWebInternet is a large system of interconnected

computer networks that spans the globe. A part of the internet known as World Wide

Web is a subset of computers on the internet that are connected to each other in a specific way that makes their contents easily accessible to each other.

Web includes an easy-to- use standard interface. This interface makes it possible for people who are not computer experts to use the web.

Economic Forces and Electronic Economic Forces and Electronic CommerceCommerce1. Business activity

Business activity today occurs within large hierarchical business organizations, referred to as firms or companies.

2. Transaction Costs Transaction costs are the total of all costs that a

buyer and a seller incur as they gather information and negotiate a purchase-sale transaction.

3. Network Effects As more people or organizations participate in a

network, the value of the network to each participant increases.

The Role of Electronic The Role of Electronic CommerceCommerce

Electronic commerce can play a role in 1. reducing costs 2. improving product quality 3. reaching new customers or

suppliers 4. creating new ways of

selling existing products

Value Chains in E-Value Chains in E-CommerceCommerceA value chain is a way of organizing the

activities that each strategic business unit undertakes to design, produce, promote, market, deliver, and support the products or services it sells.

Strategic Business Unit Value Chains The support activities of a value chain for

a strategic business unit include: Finance and administration Human resources Technology development

Industry Value ChainsIndustry Value Chains Value system describes the larger stream

of activities into which a particular business unit’s value chain is embedded.

Industry value chain (IVC) refers to value systems.

IVC is used to identify opportunities for cost reduction, product improvement, or channel reconfiguration.