1. Introduction to Electronic Commerce
Chapter 1
Introduction to Electronic Commerce

2. Traditional Commerce and Electronic Commerce
To many people, electronic commerce = shopping on the part of the Internet called the World Wide Web.
Consumer shopping on the Web = about US$50 billion per year in 2001 and is expected to exceed US$350 billion by 2004
E-commerce is much broader and encompasses many more business activities than just Web shopping.

3. Traditional Commerce and Electronic Commerce
Electronic commerce - business activities conducted using electronic data transmission via the Internet and World Wide Web.
3 main elements of e-commerce :
Business-to-consumer = B2C
Business-to-business = B2B
Transactions and business processes that support selling and purchasing activities on the Web
4th category = consumer-to-consumer = C2C

4. Electronic Commerce

5. Electronic Commerce Examples :
Electronic Funds Transfers (EFTs) - used by banks for many years.
Electronic Data Interchange (EDI) occurs when one business transmits computer-readable data in a standard format to another business.

6. Electronic Commerce
Businesses who engage in EDI with each other = trading partners.
Standard formats used in EDI - same information that businesses have always included in their standard paper invoices, purchase orders, and shipping documents.
General Electric and Wal-Mart - pioneers in using EDI to improve their purchasing process.

7. Value Added Network (VAN)
Value added network = independent firm that offers connection and EDI transaction forwarding services to buyers and sellers engaged in EDI.
VANs - responsible for ensuring the security of transmitted data.
VANs - charge a fixed monthly fee plus a per-transaction charge to subscribers.

8. Activities as Business Processes
Business processes = group of logical, related, and sequential activities and transactions in which businesses engage, including:
Transferring funds
Placing orders
Sending invoices
Shipping goods to customers

9. What is the difference between traditional commerce and electronic commerce?

10. Comparing Traditional Commerce and Electronic Commerce

11. What type of business processes are suitable for :
Electronic
Traditional commerce
Electronic & traditional commerce

12. Business Process Suitability to Type of Commerce

13. Electronic Commerce
Commodity item – product or service that is hard to distinguish from the same products or services provided by other sellers, making them especially well suited to electronic commerce.
Shipping profile – collection of attributes that affect how easily a product can be packaged and delivered.

14. Advantages of Electronic Commerce
Electronic commerce - increase sales and decrease costs.
Web advertising - reaches a large amount of potential customers throughout the world.
Web - creates virtual communities for specific products or services.

15. Advantages of Electronic Commerce
Business - can reduce costs by using electronic commerce in sales support and order-taking processes.
Electronic commerce - increases sale opportunities for the seller.
Electronic commerce - increases purchasing opportunities for the buyer.

16. Disadvantages of Electronic Commerce
Some business processes - difficult to be implemented through electronic commerce.
Return-on-investment - difficult to apply to electronic commerce.
Businesses - cultural and legal obstacles to conducting electronic commerce.

17. International Electronic Commerce
About 60 percent of all electronic commerce sites are in English - many language barriers need to be overcome.
Political structures of the world present some challenges.
Legal, tax, and privacy are concerns of international electronic commerce.

18. Transaction Costs
Transaction costs = total of all costs that a buyer and a seller incur as they gather information and negotiate a purchase-sale transaction.
Another significant component of transaction costs = investment a seller makes in equipment or in the hiring of skilled employees to supply the product and services to the buyer.

19. Economic Forces and Electronic Commerce

20. Economic Forces and Electronic Commerce

21. The Role of Electronic Commerce
Businesses and individuals - use electronic commerce to reduce transaction costs.
Network economic structure – companies coordinate their strategies, resources, and skill sets by forming long-term, stable relationships with other companies and individuals based on shared purposes.

22. The Role of Electronic Commerce
Virtual companies – when strategic partnerships occur between companies operating on the Internet.
Electronic commerce - make network economic structures, which rely on information sharing, and are much easier to construct and maintain.

23. The Role of Electronic Commerce

24. Value Chains
Electronic commerce includes so many activities and transactions that it can be difficult for managers to decide where and how to use it in their businesses.
One way to focus on specific business processes as candidates for electronic commerce - break the business down into a series of value-adding activities that combine to generate profits and meet other goals.

25. Value Chains
A strategic business unit = one particular combination of product, distribution channel, and customer type.
A value chain = a way of organizing the activities that each strategic business unit undertakes to design, produce, promote, market, deliver, and support the products or services it sells.

26. Strategic Business Unit Value Chains

27. Strategic Business Unit Value Chains
The support activities of a value chain for a strategic business unit include:
Finance and administration
Human resources
Technology development

28. Industry Value Chains
Value system describes the larger stream of activities into which a particular business unit’s value chain is embedded.
Industry value chain (IVC) refers to value systems.
IVC is used to identify opportunities for cost reduction, product improvement, or channel reconfiguration.

29. SWOT Analysis: Evaluating Business Unit Opportunities
Most electronic commerce initiatives add value by either reducing transaction costs , creating some type of network economics effect, or a combination of both.
In SWOT analysis, you list the strengths and weaknesses of the business unit and then identify opportunities presented by the markets of the business unit.

30. SWOT Analysis: Evaluating Business Unit Opportunities

31. The Internet and World Wide Web
Internet - large system of interconnected computer networks that spans the globe.
Internet - supports , online newspapers and publications, discussion groups, games, and free software.
World Wide Web - includes an easy-to-use standard interface for accessing Internet resources.

32. Origins of the Internet
Early 1960s - U.S. Department of Defense started research on networking computers.
Its researchers developed a multiple channels network.
Defense Department used this network model to connect four mainframe computers at different locations.

33. New Uses for the Internet
a researcher wrote a program that could send and receive messages over the network.
was born and became widely used.
The network software includes:
File Transfer Protocol (FTP)
User’s News Network (Usenet)

34. Commercial Use of the Internet
companies used the PC to construct their networks.
1980s - National Science Foundation (NSF) funded network services.
NSF permitted two commercial services.
Early 1990s - Internet started to serve the global resource accesses.

35. Growth of the Internet
NSF further eased its restriction on Internet commercial activity.
Privatization of the Internet was substantially completed.
New structure of the Internet was based on four network access points (NAPs).
Internet service providers (ISPs) sell Internet access rights directly to customers.

36. Growth of the Internet, 1991 - 2001

37. Development of Hypertext
1960s - Ted Nelson described his page-linking system hypertext.
Nelson published a book about a global system for online hypertext publishing and commerce.
Berners-Lee of CERN developed the code for a hypertext server program and made it available on the Internet.

38. HTML
Hypertext server - a computer that stores files written in the hypertext markup language (HTML).
HTML - a language that includes a set of codes (or tags) attached to text.
Hypertext link - points to another location in the same or another HTML document.

39. Web Browser and Markup Languages
Web browser - a software interface that lets users browse HTML documents.
HTML is based on the Standard Generalized Markup Language (SGML).
eXtensible Markup Language (XML) allows users to define new meanings for its commands in Web pages.

40. Graphical User Interface
Graphical user interface (GUI) - a way of presenting program control functions and program outputs to users.
Web browsers include:
Mosaic
Netscape Navigator
Microsoft Internet Explorer

41. Growth of the World Wide Web

42. URL Uniform Resource Locator
Unique address of a web page or file on the Internet
Case-sensitive

43. http hypertext transfer protocol
Protocol – rules
Communication using links

44. Domain name http://domain-name.top-level-domain/last-section
Address of the ISP
Domain names are registered
Ongoing fee is paid for each domain name

45. Directories and file names that specify a particular web page
Last section
Directories and file names that specify a particular web page

46. Top-level Domain Represent the purpose of the organization of entity
.com
.gov
.edu
.org
.net
May be a two-letter country code

47. Browser
Netscape Communicator
Microsoft Internet Explorer

48. Browser
Used to explore the Internet
Dials the ISP
Display web pages

49. Browser Parts of the screen

50. Browser Functions and Features
Browser display window
Displays contents of web page from each Internet site visited
Screen limits how much of the site you can view at a time. The page can be scrolled using the scroll bar to see its entire contents
Status line – progress of data being transferred and other messages

51. Browser Functions and Features
Welcome banner on title bar
Browser logo – animation indicates you are in the process of moving to a new site
Hot list
Bookmark
Favorites
Store your favorite URLs
Browser control panel – menus and buttons

52. Browser Menus and Buttons
Pull-down menu
Buttons
Convenient shortcuts for commonly used functions
Click button rather than locate command from pull-down menu