E-Business and E-Commerce Jack G. Zheng May 23rd 2008 MIS Chapter 5

Introduction What is e-commerce Electronic commerce (e-commerce) is any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services.* Or simply, buying and selling on the Internet (Web) What is e-business Electronic business (e-business) is any process that a business organization conducts over a computer-mediated network.* Any business processes (activities) include both internal and external, transactional and non-transactional It covers e-commerce * See

E-Commerce Models B2C (business to consumer) The most well known B2B (business to business) The largest segment (12 times more than B2C) C2C (consumer to consumer) Auction sites such as ebay.com C2B (consumer to business)? Not well implemented Usually means buyer-centered reverse auction priceline.com

E-Commerce Growth E-Commerce Growth in the USA

Organization Individual E-Activity? E-Society? GovernmentCommunity EmployeeConsumerMember Non-profit Company Resident /Non-resident Education Student

B2C E-Commerce (e-Tailer) Styles Pure plays No physical stores Amazon, Dell, E*Trade … Click(s)-and-mortar Retailers which has both an Internet presence and physical stores (or retail agent) In contrast to brick-and-mortar M-Commerce M for mobile – using mobile devices like cell phone, PDA, or laptop

Advantages and Problems of B2C AdvantagesProblems For consumers For businesses

What is likely to be sold online? Commodity-like products Product features are uniform and standard; look and feel is not important Are the following commodity like products? Books? Electronics? Computer (parts)? Furniture? Clothes? Shoes? Grocery? (Webvan case study)Webvan Why did it fail? Are there opportunities for online grocery? What are the ways to succeed?

Digital Products Digital products (information products): software, video, music, e- book, articles, reports, news … They dont have physical appearance They are easy to be mass-customized and personalized They can be delivered at the time of purchase Fixed cost is high while marginal cost is close to zero The distribution of information products is expected to change dramatically in future They have global reach They foster disintermediation Information product medium is less important Unbundling: only pay for the part you want Micro-payments

How B2B is different from B2C? MRO (maintenance, repair and operation materials) Indirect materials Materials that are necessary for running a business, but do not directly contribute to the primary business activities For example, office supplies Direct materials Directly used in manufacturing or service Critical to their business

How B2B is different from B2C? Transaction is Contracted Regular, continuous and repeated Large amount More procedures Billing and payment is Regular, continuous and repeated Usually separate from delivery Large amount More procedures

B2B Automation B2B has the need to be automated by computer systems Save cost (human labor) Save time (lead time) There is the need to integrate computer systems and processes from both parties EDI (Electronic Data Interchange) XML and Web Services

EDI (1) EDI is the direct computer-to-computer transfer of transaction information in standard business documents, in a standard format Computer-to-computer exchange Over a telecommunication network (VAN, or the Internet)

EDI (2) Standard business document Formal business document, such as request for quotation and purchase order (ANSI X12)ANSI X12 Standard format A fixed, predefined format that both computer system can understand EDI replaces paper documents processing, thus shortens purchase/supply cycle lower labor costs

E-Commerce Payment Systems B2C/C2C Credit cards and smart cards (cash cards) Electronic check (electronic transfer) Financial cybermediary (online payment service) PayPal Electronic Bill Presentment and Payment (EBPP) systems Digital wallet B2B Financial EDI (FEDI), which directly involves banks

Good Resources E-Stats from US Census CIO.com eCommerce Center Web security