1. Chapter 1 In the Beginning

2. Awad –Electronic Commerce 1/e © 2002 Prentice Hall2 OBJECTIVES What is E-Commerce? Advantages & Limitations of E-Commerce Strategy in E-Commerce Value Chains in E-Commerce E-Commerce Integration In the Beginning: Objectives

3. Awad –Electronic Commerce 1/e © 2002 Prentice Hall3 WHAT IS E-COMMERCE? Electronic Presentation of Goods & Services Automated Customer Account Inquiries Online Order Taking & Payments Online Transaction Handling Automated Supply Chain Management Solutions In the Beginning: What is E-Commerce?

4. Awad –Electronic Commerce 1/e © 2002 Prentice Hall4 WHY E-COMMERCE? Digital Convergence Anytime, Anywhere, Anyone Changes in Organizations Make-up Widespread Access to IT Increasing Pressure on Operating Costs & Profit Margins Demand for Customized Products & Services Speed or Time Reduction In the Beginning: What is E-Commerce?

5. Awad –Electronic Commerce 1/e © 2002 Prentice Hall5 E-COMMERCE MYTHS Setting up a website is easy. E-Commerce is cheap when compared to purchasing a mainframe. E-Commerce means end of mass marketing. Everyone is doing it. E-Commerce is lucrative. E-Commerce is revolutionary. In the Beginning: What is E-Commerce?

6. Awad –Electronic Commerce 1/e © 2002 Prentice Hall6 E-COMMERCE MYTHS (Contd) Online retailing is always the low-cost channel. All products can be sold online using identical business models. Customers can be bought. Online firms face less pressure to grow and achieve economies of scale. Size is not important for online firms. The middleman is out. In the Beginning: What is E-Commerce?

7. Awad –Electronic Commerce 1/e © 2002 Prentice Hall7 ADVANTAGES OF E-COMMERCE Lower Cost Economical Higher Margins Better & Quicker Customer Service Comparison Shopping Productivity Gains In the Beginning: Advantages & Limitations of E-Commerce

8. Awad –Electronic Commerce 1/e © 2002 Prentice Hall8 ADVANTAGES OF E-COMMERCE (Contd) Helps People Work Together Creates Knowledge Markets Promotes Information Sharing, Convenience & New Customer Control Swapping Goods & Services Allows High Product Customization In the Beginning: Advantages & Limitations of E-Commerce

9. Awad –Electronic Commerce 1/e © 2002 Prentice Hall9 LIMITATIONS OF E-COMMERCE Security System & Data Integrity System Scalability Not Free-For-All Consumer Search In the Beginning: Advantages & Limitations of E-Commerce

10. Awad –Electronic Commerce 1/e © 2002 Prentice Hall10 LIMITATIONS OF E-COMMERCE (Contd) Fulfillment Customer Relations Types of Products Corporate Vulnerability Blueprint Development Risk In the Beginning: Advantages & Limitations of E-Commerce

11. Awad –Electronic Commerce 1/e © 2002 Prentice Hall11 STRATEGY IN E-COMMERCE Critical Success Factors for E-Commerce –Sound Strategy –Clear Aim –Promotion of Sell Cycle –Full Technology Utilization –Scalable & Integrated Business Process In the Beginning: Strategy in E-Commerce

12. Awad –Electronic Commerce 1/e © 2002 Prentice Hall12 SELL CYCLE IN E-COMMERCE In the Beginning: Strategy in E-Commerce Selling Process PhaseWhat You Want to Do AttractionAdvertising, Promotions ConversionEase of Use, Effective Presentation Service & SupportProduct Info/Status, Fulfillment PersonalizationSite Customization, Support SecurityTransaction, Authentication InfrastructureScalability, Availability, Hosting

13. Awad –Electronic Commerce 1/e © 2002 Prentice Hall13 VALUE CHAIN IN E-COMMERCE In the Beginning: Value Chains in E-Commerce Corporate Infrastructure HR Management Technology Development Procurement Inbound Logistics OperationsOutbound Logistics Marketing & Sales Service Primary Activities Support Activities

14. Awad –Electronic Commerce 1/e © 2002 Prentice Hall14 PRIMARY ACTIVITIES Inbound Logistics –Supply line of business Operations –Conversion of raw materials into finished products –Center of value chain where value-added occurs Outbound Logistics –Storing, distribution & shipping of final product In the Beginning: Value Chains in E-Commerce

15. Awad –Electronic Commerce 1/e © 2002 Prentice Hall15 PRIMARY ACTIVITIES (Contd) Marketing & Sales –Deals with ultimate customer Service –After-sale service to customer In the Beginning: Value Chains in E-Commerce

16. Awad –Electronic Commerce 1/e © 2002 Prentice Hall16 SUPPORT ACTIVITIES Corporate Infrastructure –Backbone of business unit Human Resources –Matching the right people to the right job Technology Development –Product & business processes improvement Procurement –Prerequisite for production In the Beginning: Value Chains in E-Commerce

17. Awad –Electronic Commerce 1/e © 2002 Prentice Hall17 E-COMMERCE INTEGRATION In the Beginning: E-Commerce Integration ElementINTERNETEXTRANETINTRANET E-Commerce Type Business-to- Consumer Business-to- Business Internal Procurement AccessUnrestrictedRestricted SecurityMinimalFirewalls & Restricted Access Payment Method Credit CardPredefined Credit Agreement Within Business Charges

18. Awad –Electronic Commerce 1/e © 2002 Prentice Hall18 SUPPLY CHAIN MANAGEMENT Reduces Cycle Times Raise Order Fulfillment Minimize Excess Inventory Improve Customer Service In the Beginning: E-Commerce Integration

19. Awad –Electronic Commerce 1/e © 2002 Prentice Hall19 INTRANET Low Development & Maintenance Costs Friendly Environment High Information Availability & Shareability Timely Information Easy Dissemination of Information In the Beginning: E-Commerce Integration

20. Chapter 1 In the Beginning