1. Chapter 5 Electronic Commerce, Intranets, and Extranets
Dr. Hassan ismail

2. Chapter 5 Objectives Understand e-commerce and how it evolved
Understand e-commerce strategies
Understand the difference between intranets and extranets
Understand consumer-focused and business-focused e-commerce
Understand key e-commerce applications

3. Electronic Commerce Defined
E-Commerce
online exchange of goods, services, and money between firms, and between firms and their customers
More than just buying and selling:
Pre-sale events and marketing
After-sale customer service

4. Categories of E-Commerce
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)

5. Business-to-customer (B2C): Retailing of products and services directly to individual customers
Business-to-business (B2B): Sales of goods and services among businesses
Consumer-to-consumer (C2C): Individuals use Web for private sales or exchange

6. Electronic Commerce Information Flows

7. Internet and WWW Capabilities
Expanding market /Extended distribution channels
Multiple channels for attracting and serving customers
Round-the-clock service
Web sites available to consumers 24 hours a day
Wider customer base
Increase sales volumes, which saves consumers money
Closer relationships with customers

8. …Internet and WWW Capabilities
Real-time access to up to date information
Web site linked to corporate database
Mass customization
Tailoring products to a customers needs
Interactive communication
Improving firm’s image through responsiveness

9. …Internet and WWW Capabilities
Collaboration
Enhanced operational efficiency
Disintermediation
Cutting out the “middleman”
Reaching customers directly

10. Reduced transaction costs
- Disintermediation
traditional
Internet
Check bank account
$1.08
$0.13
$ $3.32
$ $1.10
Paying Bill
Manufacturer
Distributor
Retailer
Customer
Cost/
Sweater
$48.50
$40.34
$20.45

11. E-Commerce Business Strategies
Brick-and-mortar
Traditional, physical companies
Click-only (“virtual”) companies
Online only
Example: eBay
Click-and-mortar (or “Brick & Click”)
Both physical and virtual
Challenge: increased IS complexity

12. E-Commerce business strategies
Physical
Virtual
Click &
Mortar
Click only
Brick &
Mortar

13. How Electronic Data Interchange Works
Electronic Data Interchange (EDI):
Definition – EDI refers to the transmission of business documents between organizations via networks
Estimated $500 billion worth of goods per year
EDI: usually over value-added networks (VANs)

14. Wide variety of business documents Streamlines business processes
EDI Advantages
Wide variety of business documents
Streamlines business processes
Reduced document handling
Shortens time of business transaction
Reduces errors

15. Requires skilled technicians
… EDI Disadvantages
Disadvantages
Costly to implement
Costly to maintain
Requires skilled technicians
Often too costly for small or medium-sized companies

16. Intranet system architecture: Firewall
Hardware devices with special software that prevent unauthorized access
An intranet server is placed behind the firewall
Packets are never routed outside the firewall, but remain within the organizations network

17. Intranet Applications – B2B E-Commerce
Training
Application Integration
Enterprise Resource Planning (ERP)
Customer Relationship Management (CRM)
Sales Force Automation (SFA)
Online Entry of Information
Real-Time Access to Information
Collaboration

18. Functional Applications of Intranets
Figure 4-8

19. Extranet architecture – B2B E-Commerce
Connects two or more business partners
Like an intranet
Same software, hardware, and networking
Additional component:
Virtual Private Network (VPN)
Secure transmission of proprietary info

20. Extranet System Architecture
Virtual Private Network (VPN)
Authentication
Tunneling
A technology that encapsulates, encrypts, and transmits data over the Internet
A secure “tunnel” is created over the VPN connecting the two intranets
Confirms the identity of the remote user who is attempting to access information from the Web server

21. Extranet Applications in B2B E-Commerce
Supply Chain Management
Example: Dell Computers
Real-Time Access to Information
Example: CSX railroad
Collaboration
Example: Caterpillar

22. Enterprise Portals in B2B E-Commerce
Problem!: Some companies operate multiple extranets, each designed for particular business!!! Problem to manage, to maintain, to control, to monitor etc….
Solution: Enterprise Portals
Access points (or front doors) by which a business partner accesses secured, proprietary information from an organization
Advantages: reduce the maintenance cost, simplify the process of end-user, manageable, easy to control and monitor

23. Different types of enterprise portals
Distribution portals
Automate the business processes that occur before, during and after sales have been transacted between: supplier and customers.
Efficient tool for customers to mange all phase of the purchasing cycle, product information->order entry -> customer service.
Procurement portals
Automate the business processes that occur before, during and after sales have been transacted between: buyer and suppliers. Efficient tool for supplier.
Trading Exchanges
Electronic marketplaces run by 3rd-party vendors
Revenues are from commissions on each transaction:
Usage, association or by advertising revenues.

24. Enterprise Portals More buyers More Suppliers Trading Exchange
Procurement
Portals
Distribution
Portals

25. Business-to-Consumer Electronic Commerce
B2C: Focus on retail transactions between a company and end consumers.
Electronic retailing (e-tailing)
Is not limited by physical space restriction only! Store front exist in all kind of business
Advantages:
Conduct business anywhere at any time (24H - 7 days)
Price effectively by increasing the volume of sells and turning their inventory for often …

26. Stages of B2C E-Commerce
E-Information Disseminate information globally
E-brochure
Example: Ferrari
E-Integration
Consumer-driven access to information
Example: Allstate and Burlington Northern Santa Fe
E-Transaction
Interactive communication and transaction support
Example: eBay and Priceline.com

27. Formula for Electronic Commerce Success
The Rules for Web Site Success
1. Offer something unique
2. Web site must be aesthetically pleasing
3. Easy to use and fast
4. Motivate people to visit, stay, and return
5. Advertise your Web presence
6. Learn from your Web site