Electronic Commerce and the Internet : Issues, Problems, and

Perspectives

Electronic Commerce and the Internet : Issues, Problems, and

Perspectives

R NATH, M AKMANLIGIL, K HJELM, T SAKAGUCHI AND M SCHULTZ

International Journal of Information Management, Vol. 18, No. 2, pp. 91-101, 1998

ProMan Hyekyeong Shin

POSTECH

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Contents

Introduction1

Electronic commerce and the internet2

Methodology3

Results4

Summary and conclusion5

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Introduction (1/5)

Definitions of Electronic Commerce (EC)Kalakota and Whinston(1996)

“…a modern business methodology that addresses the need of organization, merchants, and consumers to cut costs while improving the quality of goods and services and increasing the speed of service delivery. The term also applied to the use of computer networks to search and retrieve information in support of human and corporate decision-making”“EC involves the buying and selling of information, products, and services via computer networks today and in the future via any one of the myriad of networks that make up the Information Superhighway”

Kestenbaum and Straight(1996)

“EC is the integration of e-mail, electronic funds transfer EDI and similar techniques into a comprehensive electronic-based system of business functions”

Buyers’ Guide to Electronic Commerce

“EC is using information technology to improve relationships between business partners”

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Introduction (2/5)

Several features of EC· Organizations use EC to simplify and streamline business process by substituting electronic means for paper documents. (Electronic Data Interchange, Electronic Funds Transfer, e-mail, World Wide Web)

· EC enables and facilitates the formation of electronic markets.

Definitions of Electronic MarketBakos(1991) “an interorganizational system that allows the participating buyers and s

ellers to exchange information about prices and product offerings”

Klein and Langenohl

“Electronic markets involve the totality of exchange relationships between market participants with potentially the same rights. All interaction processes between the actors are supposed and automated by an electronic market system – at least to the completion of the trading/matching phase”

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Introduction (3/5)

· Transactions between acompany and consumer over public networks for the purpose of home shopping or home banking

· Transactions with trading partners using EDI

· Transactions forinformation gathering such as market research

· Transactions for informationdistribution…including

advertising, sales, and marketing

Classification scheme for activities that can be accomplished using EC

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Introduction (4/5)

· Providing a much-less-expensive alternative communication medium than a proprietary networkor leased lines

· Availability of easy-to-use

· Growing body of users

Internet in facilitating

EC is imperative!!!

Internet

In spite of the fact that there is considerable interest and potential in the use of the internet for business purpose, but there is a

paucity of research in identifying and articulating issues that can guide business managers in the use of the Internet for commerce.

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Introduction (5/5)

The primary objective of this research is to fill this gap. Through interviewing executives in several firms, this research intends to provide insights and develop answers to the following questions.

1. To what extent are firms using the Internet for EC?

2. What are the benefits of conducting EC using the Internet?

3. What impediments are firms facing or likely to face when

conducting EC using the Internet?

4. What steps need to be taken to overcome these

impediments?

5. What factors and issues need to be considered before

engaging in EC on the Internet?

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EC and the internet (1/2)

Common business services infrastructure

Messaging and information distribution infrastructure

Multimedia content and network publishing infrastructure

Information Superhighway infrastructure ☞ Backbone of EC

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EC and the internet (2/2)

EC application on the Internet– ex. Web-based Internet service (Yamaha at Buena Park),

Car-loan process (IBM & Chase Manhattan Bank N.A.)

World Wide Web (WWW) in Internet– Internet shopping mall

ex. Amazon Books (www.amazon.com)

Electronic Data Interchange (EDI) on the Internet vs. VAN– On the Internet, per transaction cost is much lower than that on a VAN.– EDI on the Internet is still in its infancy in terms of security and customer service.

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Methodology - Interviewing

1. To what extent is your firm using the

Internet for commerce? And for what

specific purposes?

2. What are the impediments that your firm has

encountered (or may encounter) using the

Internet?

3. How can a firm overcome these

impediments?

4. What advice would you give to other firms

embarking on commerce on the

Internet?

5. How essential is the Internet to your

business?

6. Is there anything else that you would

like to say about the Internet as a business

tool?

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Results (1/4)

Internet Usage

· The extent to which these firms use the Internet varied quite a bit.

· Almost all of the companies have plans to increase the ways and the extent to which they use the Internet.

Benefits of the Internet for EC

· Ease of access and global reach

· Low-cost advertising medium“The purpose of the Internet offerings are to open our products and services to a new customer base who prefer to use Internet for their shipping needs and to maintain a leading-edge technology position and image in the marketplace and against our competitors”

· Low barriers to entry

· Perceived image enhancer

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Results (2/4)

Impediments 1. Security

· Client/Sever risk, data transfer and transaction risk, and virus risk ☞ · Start out by using the Internet only for transactions that require limited on-line processing of non-sensitive data.· Invest in security software and hardware such as firewalls, encryption programs and virus protection programs.· Realize that no system is completely safe - managing Internet security is a never ending process.

2. Costs· Connection · Hardware/Software· Set-up· Maintenance☞ Start out slowly with limited services and then determine the value added to the company.

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Results (3/4)

3. Legal issues· It is uncertain what the possible legal issues are that will start to pop up as business on the Internet progresses.☞ Make sure before your organization starts that they havegood legal advice and an EC literate legal expert on theirteam.

4. Training and maintenance · A qualified staff whose job would be to initiate, update and maintain their Internet facilities is needed.☞ Outsourcing certain functions and services

5. Lack of skilled personnel ☞ Outsourcing

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Results (4/4)

6. Uncertainty and lack of information·”While my company’s target market is a group of mothers with children, the possibility to reach this target through the Internet is unknown. According to some sources, there are 30 million uses out there, but there is no way to confirm this and even if it is true, how many of them are our target is impossible to know”

☞ Evidence of the Internet as a vehicle for EC is needed inorder to justify its widespread use.

7. Etc.· Performance, reliability, compatibility, and degradation of response time especially during peak hours· How to deal with customer service issues when conducting commerce in the Internet.

Advice to organizations

1. Educate yourself

2. Start slowly and proceed cautiously

3. Adequately protect your information assets

4. Allocate sufficient resources

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Summary and conclusion

Two contributions of this study

1. Practitioners who are planning to conduct commerce in the Internet

· What to expect when implementing EC application using the Internet

☞ Benefits

· What kinds of problems they may face

☞ Impediments

2. Researchers who studying phenomenon

· Providing an initial point to begin the process of scientific inquiry into this popular and emerging paradigm for conducting business

Thank You !!!Thank You !!!