Electronic Commerce

Electronic Commerce (EC) Electronic Commerce involves making business transactions via telecommunications networks, primarily the Internet. It is also sometimes referred to as e-business (or e-biz) Evolution of EC: Electronic commerce applications began in the early 1970s. Electronic data interchange (EDI) extended the types of participating companies. EC applications expanded rapidly with the commercialization of the Internet in the early 1990s.

The field of EC can be divided into two segments: Electronic markets, or e-marketplaces - networks of interactions and relationships where information, products, services, and payments are exchanged. B2C, company-centric, and B2B transactions. Interorganizational information systems (IOS) - information flow among two or more organizations. Applies to B2B applications only

Some benefits of EC to organizations are: EC allows vendors to reach a large number of customers, anywhere around the globe, at a very low operating cost. Companies can procure materials and services from other companies rapidly and less expensively. Marketing distribution channels can be drastically cut or eliminated. EC decreases the cost of based information by as much as 90%. Customer services and relationships are facilitated by interactive, one-to-one communication, at a low cost.

Some benefits of EC to consumers are: Benefits of EC (cont.) Some benefits of EC to consumers are: EC often provides customers with less expensive products and services by allowing them to shop in many places. EC provides customers with more choices. EC enables customers to shop 24 hours a day, year round, from almost any location. Customers can receive relevant and detailed information and other services in seconds. EC enables consumers to get customized products and services.

Some benefits of EC to society are: Benefits of EC (cont.) Some benefits of EC to society are: EC is a major facilitator of the digital economy. EC enables more individuals to work at home, resulting in less traffic and lower air pollution. EC allows some goods to be sold at lower prices, so less affluent people can buy them, increasing their standard of living. EC enables people in developing countries and rural areas to enjoy products and services previously unavailable. EC facilitates a superior delivery of public services.

Models of EC Business-to-Business (B2B) Business-to-Consumers (B2C) Consumer-to-Organizations (C2O) Consumer-to-Consumer (C2C) Intrabusiness (Intraorganizational) Commerce Government-to-Citizens (G2C) Collaborative commerce (c-commerce) Mobile Commerce (m-commerce)

Other EC Activities Intrabusiness and Business to Employees (B2E) Buying, selling and collaborative EC can be conducted within the company, usually using the Intranet and corporate portal. E-government Government-to-citizens (G2C) Electronic benefits transfer (EBT) - governments transfer Social Security, pensions, and other benefits directly to recipients’ bank accounts or smart cards. Government-to-business (G2B) Government-to-government (G2G)

Electronic Payment Systems Security Requirements e.g. Authentification, Privacy, Integrity, Non-repudiation, Safety Single-Key (Symmetric) Encryption Public-Key Infrastructure Public and Private Keys Digital Signatures Electronic Certificates Protocols Secure Socket Layer (SSL). Secure Electronic Transaction Protocol (SET)

Electronic Payment Systems (cont.) Electronic Credit Cards Electronic Checks (e-Checks) Purchasing Cards Electronic Payment From Cellular Phones Electronic funds transfer (EFT) Electronic cash (e-cash) E Cash for Micropayments Stored-Value Cards Enhanced Smart Cards Person-to-Person (P2P) Payment. Electronic Wallets

Fraud on the Internet Internet Stock Fraud Fraud in Electronic Auctions Other Financial Fraud e.g. Selling bogus investments Federal Trade Commission provides a list of 12 scams most likely to arrive on the net e.g. Bulk mail solicitors, Chain letters, Work-at-home schemes Buyer Protection is critical to the success of any commerce, and especially EC, where buyers do not see the sellers. Seller Protection safeguards vendors against consumers who refuse to pay or who pay with bad checks.

EC-related Legal Issues Domain Name Problems arise when several companies compete over a domain name. Taxes and Other Fees Federal, state, and local authorities are scrambling to figure out how to get a piece of the revenue created electronically. Copyright Protecting software and other intangible creations is difficult over the Web.

Ethical Issues Privacy and Web tracking. The human element. Privacy issues are related to both customers and employees. The human element. The implementation of EC may lead to personnel dissatisfaction and loss of salespeople’s income Disintermediation. The use of EC may result in the elimination of a company’s employees as well as brokers and agents.

EC Failures The major wave of EC failures started in 2000, as secondary funding that was needed by Internet-based EC began to dry up. Here are some examples; PointCast, a pioneer in the personalized Web-casting, folded in 1998 due to an incorrect business model. An Internet mall, operated by Open Market, was closed in 1996 due to an insufficient number of buyers. E-toys, a virtual toy retailer that impacted the entire toy industry folded in 2001 due to inability to generate profit. Advertising company Advertexpress.com, in the U.K., failed due to lack of second-round funding.

Limitations of EC Non-Technical Limitations Legal issues Lack of universally accepted standards Insufficient bandwidth Still-evolving software development tools Difficulties in integrating the Internet and EC software Non-Technical Limitations Legal issues National and international government regulations Difficulty of measuring EC benefits Customer resistance Lack of a critical mass