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Electronic Commerce

Session-01

Skyline Business School


Content for session-01

• Course structure
– Objective
– Pedagogy
– Content
– Case studies

• Introduction to E-Commerce
– Changing Global dimension
– Evolution of commerce – towards “E” medium
– E-Commerce categories
– E-Commerce ‘fitment’ analysis
– SWOT analysis
– Benefits of e-commerce
– Conclusion
Course Structure
• Objective: Develop a good understanding of E-commerce concepts. At the end of the
course, the students will attain familiarity with:
– Evolution of e-commerce
– The advantages and limitations of various e-commerce models
– Role of e-commerce as a business enabler and transformer
– Technologies components in e-commerce
– Management, regulatory and security issues in e-commerce

• Pedagogy:
– 12 sessions – having classroom lectures, quizzes and case study presentations.
– The lectures will cover the concepts, developments, issues and principles of electronic
commerce.
– The quizzes will test the understanding of class room discussions and reinforce the learning.
– The case studies (group project - presentation and report) will analyze and discuss some real
life examples.
– Class participation and discussion is strongly encouraged.

• Text Book:
– Gary P. Schneider (Annual Edition) - Electronic Commerce. Thomson Learning.
Course syllabus

TOPICS Ch.
1 E-Commerce Fundamentals
Introduction to -Commerce
E 1
Internet and world wide web 2
Payment systems 12
2 Business strategies
Selling on web– revenue models and strategies 3
M arketing on web 4
B2B strategies 5
W eb Auctions, Virtual Communities, W eb portals 6
3 Technologyawareness
W eb Server hardware & Software 8
Electro nic Commerce software 9
4 Regulatory and Security Issues
Environment -international, legal, ethical and Tax issues 7
Security threats in-commerce
e 10
Implementing -commerce
e security 11
5 M anagement perspective
-Planning for E
-Commerce 13
Case studies
• Introduction :

– This is a group exercise. Each group will consist of about 4 students.


– Every group will be assigned a case study from the text book / or, any other source as agreed with the instructor.
– The cases are from well known global companies and will focus on e-commerce examples both success stories and
failures. (Success stories such as leveraging technology for value creation - increasing reach, cost rationalization,
increasing profitability, expanding products and services, improving communication with stakeholders etc. Failures
such as unrealistic business models, poor implementation, mismatch of strategy with market requirements etc. )
– The group should research, analyze and prepare a report of their assignment. The write up should be crisp and not
exceed two pages.

• Report Format :

– The Header
– Line-1 - “SBS-Case Study – E-Commerce Jan-May 2009”
– Line-2 – “Title of the Case”
– The Footer :
– Group Id, Members name and roll number
– Content
– Background of the case, issues identified, outcome of analysis

• Presentation :
– The group will also make a presentation of about 10-12 slides. The presentation will summarize the background of
case with issues analyzed and will be followed with a brief discussion. Each group will have about 15 minutes.
– The case studies will be presented in class from sixth session onwards (about 30 minutes will be allocated to discuss
two cases per class, i.e. 15 minutes per group).
Introduction to E-Commerce
• Changing Global dimension
• Evolution of commerce – towards “E” medium
• E-Commerce categories
• E-Commerce ‘fitment’ analysis
• SWOT analysis
• Benefits of e-commerce
• Conclusion
International commerce

• With most of the economies opening up, Global


commerce has become borderless and seamless.
One can procure anything from anywhere in the
world – with most of the transaction activities
completed in a flash, irrespective of distance.

• Let us understand the changing trends…………


Changing Trends

Increased Competition,
New Players erosion of margins

New cost structures Rapid response to industry


changes

Client sophistication and


switching Evolving business models

Regulatory changes Markets more contestable

Explosion of Technology Technology driven efficiency


buildup
A New Competitive Landscape
Innovation in products and
services

24X7 Any time anywhere

ENHANCING
WHOLESOME VALUE Increase consumer
convenience
TO CUSTOMERS

Reduce processing cost

Reduce turn around time


What is Driving the Changes?

Globalisation
Customers can reach out
anywhere in the world to get the
best value for money.

Consumerism Future Deregulation


consumer value physical outlets replaced
providers with business
by retailers and new
the best price, Environment traders;
advice, brand
and convenience
win wallet share TECHNOLOGY
Age of the consumer

Organizatio
Organizatio
n of TODAY
ns of
must
YESTERDAY
transform
as

• Product Focused • Consumer Focused


• Location Centric • Anytime, Anywhere
• Transaction Services Centric • Information Centric
Guiding model of e-commerce
Businesses (organizations) have always used the prevailing and
emerging technologies to help fulfill their missions

Business

Marke
t

Customer Technology
Early days examples
Commerce (Traditional & E-Commerce)

• Commerce refers to all the activities around the purchase and


sales of goods or services.
– Marketing, sales, payment, fulfillment, customer service

• Electronic commerce is doing commerce – fully or partially -


with the use of computers & networks.

• E-Commerce results in transformation of business processes


through the use of technology.
Evolution
• 1970s: Electronic Funds Transfer (EFT)
– Used by the banking industry to exchange account information over
secured networks, also called wire transfers

• Late 1970s and early 1980s: Electronic Data Interchange (EDI)


for e-commerce within companies
– Used by businesses to transmit data from one business to another

• 1990s: the World Wide Web on the Internet provides easy-to-


use technology for information publishing and dissemination
– Cheaper to do business (economies of scale)
– Enable diverse business activities (economies of scope)
Fast Forward…to new age
• Networked computers, today’s prevailing technology, have
become the most influential technology in civilization’s history.

• Negates the importance of the “boundaries” associated with


time, space, and size.

• Facilitates instantaneous communications.

• Allows an organization of any size to exchange information at


the speed of light, with anyone, anywhere, anytime.
Growth in E-Commerce
E-Commerce categories
• B2B Transactions conducted between businesses on the Web,
(business to business)
– Supplier, inventory, distribution, payment management,
– Financial management, purchasing products and information

• B2C Consumer shopping on the Web,(business to consumer)

• C2C Auctions, matrimonial

• B2G Tax payments (Business to Government)


• C2G Tax and Utility service payments (Customer to Government)
E-Commerce categories
Integrating “E” in business
• All e-commerce categories are not appropriate in various
environment and typ of business.

• Blind use of “E” can not ensure success – It needs to be properly


mapped to create value.

• We need to identify business processes which needs to be


integrated with E-Business

– Purchasing Raw materials


– Raw materials – t0 – finished goods
– Transportation & Logistics
– Hiring and training manpower
– Marketing of products and services
– Sales order management
E-commerce applications
• Supply chain management
• Video on demand
• Remote banking
• Procurement and purchasing
• Online marketing and advertisement
• Home shopping
• Auctions
Business suitability
The first step of E-commerce
How should an organization use e-commerce (strategic level)?

Organization Organization E-Strategy


Mission Strategy

What resources does an organization need to implement e-commerce?


What are the feasibility issues that must be considered?
The first step of E-commerce

Example:

Organization’s Mission
Maximize long term value for all stakeholders (note- not
shareholders)

Organization’s Strategy
Develop an effective and efficient global operation

IT Strategy
Use e-commerce to create a global value chain (front and
back office)
The stakeholders

Government

Customers Competitors
Community

Employees Organization Owners

Managers Creditors

Suppliers
Feasibility issues

1.
Technological

5. 2. Legal
Economic Mission
Culture &
Politics!!
4. Schedule 3.
Operational
SWOT Analysis
Strength – Weakness – Opportunity – Threat

STRENGTH / WEAKNESS –

• We need to identify what we are good at, and,


what our weak spots are.

OPPORTUNITY / THREAT –

• In the market, what opportunities we have, to


leverage our strength.
• what threats we face in the market, that needs to
be guarded against.
Dell - SWOT Analysis
STRENGTH -
• Sells directly to customers
• Cost below competitors

WEAKNESS –
• Weak relationship with Retailers

OPPORTUNITY -
• Consumers want one stop shopping
• Consumers know what they want
• Consumer’s growing comfort with internet

THREAT –
• Competitors have stronger brand name
• Competitors have better relation with retailers
Why e-commerce?
Efficiency Building & Effectiveness

Enhance Revenues
(increase reach, market communication)

Reduce Costs
(transactions, production, support – purchase &
procurement, inventory management, Sales &
marketing)

of ase
! !!
Pr cre
its
Improve Business Process

In
(Turn around time, controls, tracking, Customer
service)

Guard against Competition


Why e-commerce?
Value enhancement

Appropriate Products (Digital - software, music, ebooks,


movies – instant delivery)

Improve established products – digital delivery


(online gaming)

Develop new products (GIS, satellite navigation)

th
ow
Gr
Advantages of Electronic Commerce

• Increased sales
– Reach narrow market segments in geographically dispersed
locations
– Create virtual communities
• Decreased costs
– Handling of sales inquiries
– Providing price quotes
– Determining product availability
• Being in the space – from 19K websites in 1995,
today we have more than 100M websites globally.
Disadvantages of Electronic Commerce

• Loss of ability to inspect products from remote


locations
• Rapid developing pace of underlying technologies
• Difficult to calculate return on investment
• Cultural and legal impediments
The process of e-commerce
1. Attract customers
– Advertising, marketing
1. Interact with customers
– Catalog, negotiation
1. Handle and manage orders
– Order capture
– Payment
– Transaction
– Fulfillment (physical good, service good, digital good)
1. React to customer inquiries
– Customer service
– Order tracking
E-commerce Technologies
• Internet • Access security
• Mobile technologies • Cryptographic security
• Web architecture • Watermarking
• Component programming • Payment systems
• Data exchange
• Multimedia
• Search engines
• Data mining
• Intelligent agents
Infrastructure for E-commerce
• The Internet
– system of interconnected networks that spans the globe
– routers, TCP/IP, firewalls, network infrastructure, network protocols
• The World Wide Web (WWW)
– part of the Internet and allows users to share information with an
easy-to-use interface
– Web browsers, web servers, HTTP, HTML
• Web architecture
– Client/server model
– N-tier architecture; e.g., web servers, application servers, database
servers, scalability
Web-based E-commerce Architecture

Tier 1 Tier 2 Tier 3 Tier N

DMS

Client
Web Server Application Database
Server Server
System Design Issues
• Good architectural properties
– Functional separation
– Performance (load balancing, web caching)
– Secure
– Reliable
– Available
– Scalable
Payment Systems
• Role of payment
• Cash
– properties: wide accept, convenient, anonymity, untraceability, no
buyer transaction cost
• Online credit card payment, Smart Cards
– Secure protocols: SSL, SET
• Internet payment systems
– Electronic cash, digital wallets
• Micro-payments
• Wireless devices
Summary

1. Changing global market dynamics

2. Commerce – negotiated exchange of goods and services.

3. Electronic commerce – using technology to do commerce and associated activities


efficiently, increase profit, reduce cost, improve reach, improve customer service, reduce
errors, improve cycle time.

4. Electronic commerce enables – anytime, anywhere global market participation.

5. While planning e-commerce implementation we must have proper analysis of all issues
and nature of fit between business model and electronic medium.

6. Various analysis methods are – revenue model analysis, business process analysis,
SWOT analysis – for initiating e-commerce.

7. In order to participate in cross border commerce, we must also be familiar with other legal
and cultural issues.
Thank You

Skyline Business School