1. CS5038 The Electronic Society
Lecture 2: Overview of Electronic Commerce
Lecture Outline
Definitions
Perspectives
Variations
Business Models
Pressures on businesses
Responses of businesses
The Networked Business
Benefits
Problems

2. E-Commerce Definitions
E-commerce : Any kind of transaction done partly or completely over a network
Business-to-business (B2B) - online transactions (e.g. purchases) with other businesses
Interorganisational Information System (IOS) – information between organisations; used for collaborative commerce
Business-to-consumer (B2C) - online transactions between businesses and consumers
Business-to-employee (B2E) - information and services made available to employees online
Consumer-to-consumer (C2C) - online transactions between consumers
Peer-to-Peer (P2P) – exchange games, DivX videos, MP3 music
Consumer-to-Business (C2B) – consumers seek sellers (Priceline.com) or sell services to organisations
Intrabusiness (Organisational) EC – internal to organisation, intranet
Business-to-Employees (B2E) – subset of Intrabusiness
Government-to-Citizens (G2C) – services and information to citizens
Exchange – buyers and sellers; dynamic pricing; matching services
Exchange-to-Exchange (E2E) – system to connect exchanges
Quantas
Business-to-business (B2B)
E-marketplace member
Joined Airnew Co.—links major airlines with suppliers
Fuel
Fuel services
Light maintenance services
Catering
Business-to-customer (B2C):
Online booking
Wireless communications – arrival departures on mobile
Business-to-employee (B2E):
Online training
Online banking
IOS EDI/Internet

3. Electronic Commerce Terms
EC defined from these perspectives
Communications
E-delivery: Goods, services, information, payments
Business process
Automate business transactions and workflow
Service
Cut service costs, improve quality and speed
Online
Buying, selling and other services on internet
Collaborations
Inter- and intraorganisational
Community
Gather to learn, transact, communicate

4. Variations Pure vs. Partial EC: based on the degree of digitisation of
Product
Process
Delivery agent
Traditional commerce: all dimensions are physical
Pure EC: all dimensions are digital
Partial EC: all other possibilities include a mix of digital and physical dimensions
Internet vs. Non-Internet EC
VANs – value added network
LANs – local area network
Vending Machine
Click and Mortar

5. Dimensions of E-Commerce
Prentice Hall, 2002

6. Business Models
A method of doing business by which a company can generate revenue to sustain itself.
Name your price – priceline.com
Find the best price – hotwire.com
Dynamic brokering – getthere.com
Affiliate marketing – amazon.com
Electronic tendering systems – gxs.com
Online auctions – ebay.com
Customization and personalization – dell.com
Electronic marketplaces and exchanges – e-steel.com
Supply chain improvers – productbank.com.au
Collaborative commerce
Where is the company positioned in the value chain?

7. Rappa’s Business Models
Brokerage – exchange, trading community, aggregator
Advertising – portals, sponsorship banners
Infomediary
Recommender - users provide recommendations on products, e.g.
Registration - session tracking of users, allows greater targeting of advertising, e.g.
Merchant - retail
Manufacturer – eliminate middleman
Affiliate – online referrals for commission
Community – voluntary contributors, regular visitors
Subscription – high value content
Many companies changed to subscription models in last two years
Utility – pay by byte

8. Example: ORBIS Corp. TRANSFORM Prentice Hall, 2002 Top is old way
Bottom: Orbis is facilitator for new way
Prentice Hall, 2002

9. Major Business Pressures
Market / Economy
Society / Environment
Strong competition
Global economy
Regional trade agreements (NAFTA)
Low labor cost in some countries
Frequent changes in markets
Increased power of consumers
Changing nature of workforce
Deregulation of services
Shrinking subsidies
Ethical and legal issues
Social responsibility of E-bus.
Rapid political changes
Technology
Rapid technological obsolescence
Increase innovations and new technologies
Information overload
Rapid decline in technology cost vs. performance ratio

10. Organizational Responses
Strategic systems (e.g. FedEx tracking system) – strategic advantage
Continuous improvement efforts
Customer Relationship Management (CRM) – maximum value proposition to customer – online help, product information, tools
Total Quality Management (TQM) - ongoing refinements in response to continuous feedback
Business process reengineering (BPR) - major innovations
Business Alliances
Virtual Corporation - Joint Venture for time-limited mission
Keiretsu - Long term alliance of manufacturers, suppliers and finance corporations
Cooperation in E-markets – purchasing consortia
Continuous improvement efforts
Dell – electronic orders move immediately to JIT assembly
BPR = major innovations
IT Support
Reducing cycle time and time to market
Business process time = cycle time (product to customer)
Idea to market
Empowerment of employees and collaborative work
Decentralised decision making, employees access info to make quick decisions
IT Support
Reducing cycle time (=business process time) and time to market
Empowerment of employees and collaborative work
Supply chain improvements: speed and efficiency
Mass customisation

11. Intranet/Extranet Intranet Extranet
Corporate LAN (Local Area Network) or WAN (Wide …)
Uses Internet technology
Open, flexible connectivity
Limited to authorised employees
Secure behind firewall
Extranet
Links Intranets in different locations
Security required – Virtual Private Network (VPN)
Information travels through encrypted tunnels between Intranets
Quiz 6

12. The Networked Business: Internet, Intranet, Extranet

13. Benefits of E-Commerce
To Organizations
To Consumers
Expands the marketplace
Decreases the cost (less paper)
Pull-type supply chain management
Customisation = competitive advantage
Less time between outlay of capital and receipt of products and services
Supports BPR efforts
Open 24 hours a day
More choices
Better prices
Quick delivery
Product information in seconds
Interact with other consumers
Facilitates competition
Pull-type - Reduced inventories and overhead
3rd world – learn professions, get degree, communities get uncensored news
To Society
Work at home  less traveling  less traffic and pollution
Lower prices benefit less affluent people
Third world and rural areas access products otherwise unavailable
Public services at a reduced cost and improved quality

14. Problems With E-Commerce
Technical Problems
Insufficient telecommunication bandwidth
Difficult to integrate Internet EC software with some existing applications and databases
Additional cost of infrastructure
Software development tools are still evolving
Standards (security, reliability, communication) are still evolving
Interoperability problems
Cost Problems
Developing EC in house can be expensive and may result in delays.
Difficult to justify - intangible benefits are difficult to quantify.
E.g. customer relationship management (CRM)
Non-technical problems are more serious…
These problems relatively easy to overcome

15. Problems With E-Commerce (contd.)
Security and Privacy
B2C - Hard to convince customers that online transactions are secure
Customers do not trust:
Unknown sellers, Paperless transactions, Electronic money
Other limiting factors
Switching from a physical to a virtual store may be difficult
Lack of touch and feel online
Channel conflict
Unresolved legal issues
Rapidly evolving and changing EC
Lack of support services
Insufficiently large number of sellers and buyers
Expensive and/or inconvenient accessibility to the Internet
Quiz 1 here

16. Quiz 2 here Summary Definitions – B2C, B2B, B2E
Perspectives – communications, business process, services
Variations – Pure v. partial
Business Models and Rappa’s models
Pressures on businesses – market, technology, society
Responses of businesses – BPR, alliances, IT support
The Networked Business - Internet, Intranet, Extranet
Benefits – organisations, consumers, society
Problems – technical and non-technical
Quiz 2 here