Electronic Commerce Semester 1 Term 1 Lecture 2

Forces Fuelling E-Commerce Interest in e-commerce is being fuelled by: –Economic forces –Customer interaction forces –Technology-driven digital convergence

Economic Forces Under relentless pressure to reduce costs and stay competitive, firms are attracted to the economic efficiencies offered by electronic commerce These include low-cost technological infrastructures, reducing the costs of technology upgrades and obsolescence; low- cost and accurate electronic transactions with suppliers; the low cost of global information sharing and advertising and the ability of companies to provide low-cost customer service alternative e.g. banks

Marketing & Customer Interaction Forces Companies also employ electronic commerce to provide marketing channels, to target microsegments or small audiences, and to improve post-sales customer satisfaction by creating new channels of customer service and support Companies want to supply target consumers with product and service information in greater detail than that provided in a television or full-page advertisement

Technology & Digital Convergence Digital technology has made it possible to convert characters, sounds, pictures and motion video into a bit stream that can be combined, stored, manipulated, and transmitted quickly, efficiently, and in large volumes without loss of quality As a result, e-commerce and the multimedia revolution are driving the previously disparate industries such as communications, entertainment, publishing, and computing worlds into ever closer contact, forcing industries with traditionally different histories and cultures to compete and co- operate

Implications of Various Forces Economic and marketing forces and digital convergence have influenced how industries are repositioning themselves to take advantage of new opportunities, including the creation of entirely new service delivery channels, the development of new markets for existing products, and the development of new information-based products for the online environment

E-Commerce Industry Framework Before companies can exploit the capabilities of e-commerce and make it an industrial- strength tool for business, they need to understand the technological framework better E-commerce not only affects transactions between parties, it also influences the way markets will be structured Traditionally, market ties were created through the exchange of goods, services and money E-commerce adds a new element: information

E-Commerce Industry Framework Continued Even those aware of the importance of e- commerce have little understanding of online jargon, or how the industry is structured Such confusion is further entrenched by the media’s use of different names to refer to the same phenomenon or its various elements: The Information Superhighway, the Internet, Cyberspace, Interactive Media etc. An understanding of the overall industry is critical in developing e-commerce based business strategies

The Information Superhighway The Information Superhighway has many different types of transport systems and does not function as merely a single connection that links one location to another Instead the architecture is a mixture of many forms of high-speed network transport, whether it be land-based telephone, air-based wireless, modem-based PC, or satellite-based

Function of the Information Superhighway The Information Superhighway is the transport foundation that enables the transmission of content The electronic system through which content is transmitted is analogous to the non-electronic world in which different types of products are stored in distribution centres before they are loaded onto various vehicles for transport Currently the most prevalent architecture that enables network publishing is the World Wide Web

Information Distribution The information content distributed over the network consists of text, numbers, pictures, audio and video However, the network does not differentiate among content as everything is digital, i.e. a combination of 1s and 0s Once content has been created and stored on a server, information distribution methods carry that content across the network The messaging vehicle is called middleware software

Impact of E-Commerce on Information Distribution Systems For the purposes of electronic commerce, existing messaging mechanisms must be extended to incorporate reliable, unalterable message delivery that is not subject to repudiation, to be able to acknowledge and give proof of delivery when required

Other Key Support Layers Public policy and technical standards are the two support pillars for all e-commerce applications and infrastructure Public policy related to e-commerce encompasses such issues as universal access, privacy and information pricing Technical standards dictate the specifics of information publishing tools, user interfaces and transport and they are essential to ensure compatibility across the entire network