Internet and Electronic

Commerce

Internet has emerged from academic researchers

Millions of users and they are ever increasing
Internet has found a new use in business
Internet is a global network of millions of smaller networks linked by
terrestrial and extra-terrestrial communication channels (E+S, 1998:p273)
Internet is often referred to as Net
Email is a most popular use of Internet

Zahid Hussain
OIS Session 7

 What is the origin of the Internet as we know

today??
The ARPANet ( Advanced Research Projects Agency,
A US Defence Department project)
The World Wide Web European Council for
Nuclear Research (CERN)

Monitored by :
Internet Engineering Task Force (IETF)
World Wide Web Consortium (W3C)
Zahid Hussain
OIS Session 7

Business Uses of Internet

Advertising and selling on line
Ansoffs Approaches (1990s) to Product Innovation
Establishing and consolidating existing products in
existing markets
Developing new products for existing markets
Introducing existing products to new markets
Developing new products for new markets
B2C (Business to Customer)
C2C (Customer to Customer)
B2B (Business to Business)
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OIS Session 7

G2C (Government to Customer)

Examples
B2C amazon, flipcart, ebay, online
reservations, banking services etc
C2C ebay, OLX, quikr, virtual communities
B2B IndiaMart.com, TradeIndia.com,
India.alibaba.com, exportersindia.com,
IndiaTradeZone.com,
G2C passport services, Income tax return,
Aadhar (UID), eSeva
Zahid Hussain
OIS Session 7

Web browsers
Various web browsers:

Netscape
Microsoft Explorer
Info seek
Mosaic
Hot Java
Zahid Hussain
OIS Session 7

Electronic Commerce
Definitions...

Electronic Commerce (EC) is where business transactions take place via

telecommunications networks, especially the Internet.
Electronic commerce describes the buying and selling of products, services, and
information via computer networks including the Internet.
The infrastructure for EC is a networked computing environment in business,
home, and government.
E-Business describes the broadest definition of EC. It includes customer service
and intrabusiness tasks. It is frequently used interchangeably with EC.
A global networked environment is known as the Internet
A counterpart within organizations, is called an intranet
An extranet extends intranets so that they can be accessed by business partners.
Zahid Hussain

OIS Session 7

Pure vs Partial Electronic Commerce

Dimensions for defining the types of commerce
the product (service) sold [physical / digital];
the process [physical / digital]
the delivery agent (or intermediary) [physical / digital]
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
Zahid Hussain
OIS Session 7

Virtual product

The Dimensions of Electronic

Commerce
Electronic
commerce areas

The core of
electronic commerce

Digital
Product

Virtual process
Digital process
Physical process

Physical
Product
Traditional
commerce
OIS Session 7

Physical
agent

Digital
agent

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Virtual delivery agent

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The Electronic Commerce Field

The next figure shows that the EC applications are supported by

infrastructures, and their implementation is dependent on four major
areas (shown as supporting pillars) people, public policy, technical
standards and protocols, and other organizations.
The EC management coordinates the applications, infrastructures, and
pillars. It also includes Internet marketing and advertisement.

Zahid Hussain
OIS Session 7

The Electronic Commerce Field

The next figure shows that the EC applications are supported by

infrastructures, and their implementation is dependent on four major
areas (shown as supporting pillars) people, public policy, technical
standards and protocols, and other organizations.
The EC management coordinates the applications, infrastructures, and
pillars. It also includes Internet marketing and advertisement.

Zahid Hussain
OIS Session 7

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Electronic Commerce Applications

Stocks Jobs On-line banking
Procurement and purchasing Malls On-line marketing and advertising
Home shopping Auctions Travel On-line publishing

People:
Buyers, sellers,
intermediaries,
services, IS people,
and management

Public
policy,
legal, and
privacy
issues

Technical standards
for documents,
security, and
network protocols
payment

Organizations:
Partners,
competitors,
associations,
government services

Infrastructure
(1)
Common business
services infrastructure
(security smart
cards/authentication
electronic payment,
directories/catalogs)

OIS Session 7

(2)
Messaging and
information distribution
infrastructure
(EDI, e-mail, Hyper Text
Transfer Protocol)

(3)
(4)
Multimedia content
Network infrastructure
and network
(Telecom, cable TV
publishing infrastructure
wireless, Internet)
(HTML, JAVA, World
(VAN, WAN, LAN,
Wide Web, VRML)
Intranet, Extranet)

Zahid Hussain
Management

A Framework for Electronic Commerce

(5)
Interfacing
infrastructure
(The databases,
customers, and
applications)

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Shopper/Purchaser

Seller/Supplier
Electronic commerce
network
(Infrastructure)

Product/service information request

Purchase request
Payment or payment advice

Response to information request

Purchase acknowledgment
Shipping notice
Purchase/service delivery (if online)
Payment acknowledgment

Electronic Market
(Transaction Handler)

OIS Session 7

Response to fulfillment request

Shipping notice

Payment remittance notice

Electronic transfer of funds

Payment approval
Electronic transfer of funds

Shopper/Purchasers Bank

Purchase fulfillment request

Purchase change request

Electronic transfer of funds

Transaction Handlers Bank

(Automated Clearing House)
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Electronic
Markets

Seller/Suppliers Bank

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The Benefits of
Electronic Commerce
Benefits to Organizations
Expands the marketplace to national and international markets
Decreases the cost of creating, processing, distributing, storing and
retrieving paper-based information
Allows reduced inventories and overhead by facilitating pull type
supply chain management
The pull type processing allows for customization of products and
services which provides competitive advantage to its implementers
Reduces the time between the outlay of capital and the receipt of
products and services
Supports business processes reengineering (BPR) efforts
Lowers telecommunications cost - the Internet is much cheaper than
value added networks (VANs)
Zahid Hussain
OIS Session 7

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Benefits to Customers

Enables customers to shop or do other transactions 24 hours a day, all year

round from almost any location
Provides customers with more choices
Provides customers with less expensive products and services by allowing
them to shop in many places and conduct quick comparisons
Allows quick delivery of products and services in some cases, especially with
digitized products
Customers can receive relevant and detailed information in seconds, rather
than in days or weeks
Makes it possible to participate in virtual auctions
Allows customers to interact with other customers in electronic communities
and exchange ideas as well as compare experiences
Electronic commerce facilitates competition, which results in substantial
discounts.
Zahid Hussain
OIS Session 7

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The Limitations of
Electronic Commerce
Technical Limitations of Electronic Commerce
Lack of sufficient systems security, reliability, standards, and
communication protocols
Insufficient telecommunication bandwidth
The software development tools are still evolving and changing rapidly
Difficulties in integrating the Internet and electronic commerce software
with some existing applications and databases
The need for special Web servers and other infrastructures, in addition to
the network servers (additional cost)
Possible problems of interoperability, meaning that some EC software
does not fit with some hardware, or is incompatible with some operating
systems or other components
Zahid Hussain
OIS Session 7

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Non-Technical Limitations
Cost and justification
The cost of developing an EC in house can be very high, and mistakes due to lack of
experience, may result in delays. There are many opportunities for outsourcing, but
where and how to do it is not a simple issue.
Security and Privacy
These issues are especially important in the B2C area, and security concerns are not
truly so serious from a technical standpoint. Privacy measures are constantly
improving too. Yet, the customers perceive these issues as very important and
therefore the EC industry has a very long and difficult task of convincing customers
that online transactions and privacy are, in fact, fairly secure.
Lack of trust and user resistance
Customers do not trust an unknown faceless seller, paperless transactions, and
electronic money. So switching from a physical to a virtual store may be difficult.

Zahid Hussain
OIS Session 7

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Non-Technical Limitations (cont.)

Other limiting factors are:

Lack of touch and feel online
Many unresolved legal issues
Rapidly evolving and changing EC
Lack of support services
Insufficiently large enough number of sellers and buyers
Breakdown of human relationships
Expensive and/or inconvenient accessibility to the Internet

Zahid Hussain
OIS Session 7

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Major Business Pressures

Market and
economic pressures

Strong competition
Global economy
Regional trade agreements (e.g. NAFTA)
Extremely low labor cost in some countries
Frequent and significant changes in markets
Increased power of consumers

Societal and
environmental pressures

Changing nature of workforce

Government deregulation of banking and other services
Shrinking government budgets subsides
Increased importance of ethical and legal issues
Increased social responsibility of organizations
Rapid political changes

Technological pressures

Rapid technological obsolescence

Increase innovations and new technologies
Information overload
Rapid decline in technology cost Vs. performance ratio
Zahid Hussain

OIS Session 7

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