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COMP344
Introduction to E-commerce
Week 1
Yan Wang
E6A 339
yanwang@ics.mq.edu.au
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Outline

E-commerce

E-business

Examples of e-commerce

Types of e-commerce
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What is e-commerce?
The marketing, buying, and selling of products
and services on the Internet. [Awad]
The process of buying, selling, or exchanging
products, services, and information via computer
networks. [Turban et al, p3]
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What is e-commerce?
From a communication perspective, e-commerce
is the ability to deliver products, services,
information, or payments via networks such as
the Internet and World Wide Web.
From an interface perspective, e-commerce
involves various information and transaction
exchanges: business-to-business, business-to-
consumer, consumer-to-consumer, etc.
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What is e-commerce?
From a business process perspective, e-commerce
includes activities that directly support commerce
electronically by means of networked connections.
Within business (manufacturing, inventorying,
operation) and business-to-business processes
(supply-chain management) are managed by the
same networks as business-to-consumer.
From an online perspective, e-commerce is an
electronic environment that makes it possible to
buy and sell products, services, and information
on the Internet.
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What is e-commerce?
From a structural perspective, e-commerce
involves various media: data, text and web pages.
As a market, e-commerce is a worldwide network.
A local store can open a Web storefront and find
the world at its doorstep.
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Why is e-commerce? [Awad]
Some drivers promote e-commerce
Digital convergence. Digital devices can now
communicate with one another. The Internet made it all
possible.
Anytime, anywhere, anyone. This means that anyone
can communicate with the e-merchant or e-shop online 24
hours a day, 7 days a week, from anywhere in the world.
Changes in organizations. Knowledge workers at the
lower level in the organization can now take on
responsibilities that once were relegated to lower or junior
managers. A trend also is developing toward owners and
managers across departments to develop a chain of
relationships that adds value to the enterprise. It also helps
downsize large organizations. 8
Why is e-commerce? [Awad]
Increasing pressure on operating costs and profit
margins. Global competition and the proliferation of
products and services worldwide have added unusual
pressure to keep a close watch on operating costs and
maximize profit margins.
Demand for customized products and services.
Todays customers are expecting higher quality and better
performance regarding products and services.
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What is e-business? (Turban et al, p3)
A broader definition of EC, which includes not
just the buying and selling of goods and
services, but also servicing customers,
collaborating with business partners, and
conducting electronic transactions within an
organization.
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What is e-business? (Awad, p4)
In contrast to e-commerce, e-business is more
encompassing.
It connects critical business systems directly to
customers, vendors, and suppliersvia the Internet.
It means to use electronic information to boost
performance and create value by forming new
relationships between and among businesses and
customers.
So, it goes beyond an e-commerce Web site to affect
all aspects of business, from strategy and process to
trading partners and the ultimate consumers.
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What is e-business? (Awad, p4)
In contrast, e-commerce means the
commerce with anyone, anytime and
anywhere.
It emphasizes new business opportunities
that result in greater efficiency and more
effective transactions.
EC is relatively narrow, but more technical.
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Advantages of E-commerce [Awad, p12]
Lower Cost, economical
Higher Margins
Better and Quicker Customer Service
Quick Comparison Shopping
Teamwork
Information Sharing, Convenience, and
Control
Allows High Product Customization
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Limitations of E-commerce
Security and Trust
System and Data Integrity
System Scalability
E-Commerce Is Not Free
Product Search is not efficient
Products People Wont Buy Online
etc.
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A Framework for E-commerce
[Turban et al, p6]
Lee, p. 6, figure
infrastructure
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Examples of E-commerce
Internet Advertisement
Internet Shop
Internet Bank
Internet Auction
Internet Gambling
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Examples of E-commerce
Internet
Server
Client
The Overview of the Client/Server
Database
Client
Client Client
Client
Client
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Internet Advertisement
The most common money making method on the
Internet is to establish a popular web site, where other
parties are willing to advertise on the web site.
For example, you can provide an Internet search engine
for Internet surfers to search some specific information
in a fast manner.
Your web site may then receive a number of hits per day
and could therefore become an ideal place for
advertising. How much money you can make is
dependent upon how popular your site is.
This kind of money making methods may not require
complex client/server, but you need to have bright
marketing thinking to find a hot topic for your site.
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Internet Shop
With the growth of the Internet, there are more
and more on-line shops available in the Internet.
An Internet shop functions like a normal shop,
where you buy goods by cash, cheque, or credit
card.
Most Internet shops use credit card based
payment systems. That is, you pay your goods
by sending your credit card information to the
vendor through a secure channel provided by the
Internet shop.
Go and select one or several items.
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Internet Shop
A typical credit card based Internet shopping
protocol is as follows:
1. Merchant: advertise its goods on a web page.
2. Client: log on the merchant's page and selects
one or several items.
3. Client: send his or her payment token that
contains his or her credit card information via a
secure channel.
4. Merchant: Verify the information in the
payment token. If it is okay, sends the item(s)
to the client.
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Internet Shop
Of course, the security and fairness are the key
issues to enable a payment.
In the most of Internet shops, the transmission
security is fine - it is based on SSL, but the
merchant knows full information about customers'
credit cards.
It is possible for us to create an Internet
shopping system, where the merchant is not able
to get the information about its customers' credit
cards.
In such system, an on-line bank checks credit
card information for the merchants.
A well-known such protocol is SET.
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Internet Shop
The Figure shows
a credit card
based Internet
shop
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Internet Shop
Goods can be paid by digital-cash (e-cash)
The digital cash has been used in some countries. Based on
cryptography, we can make a digital cash. A digital cash system
works as follows.
1. Client: open a normal account at a bank.
2. Client: withdraw e-cash from the bank through an Internet
access. The bank deducts the client's account.
3. Merchant: advertises its goods on its web page.
4. Client: select her purchase item(s).
5. Client: load her e-cash into the window on the Merchant's page
and clicks OK.
6. Merchant: validate the e-cash and delivers the goods
7. Merchant: deposit the e-cash
8. Bank: check the validation of the e-cash and updates the
merchant's account.
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Internet Banking
More and more banks now consider the Internet
banking as a "must go" way to further reduce
banking cost.
However, many people are still cautious about
Internet banking due to security fears.
If security becomes better and better, more people
will start to use the Internet as a faster and more
convenient way of banking.
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Internet Banking
Internet banking has many advantages over
conventional banking and telephone banking.
Conventional banking may be the safest way to
banks as you are talking to an actual person.
Hoverer, there are long lines and you might
have to drive a long way just to get to a branch.
Telephone banking may be much quicker than
conventional banking but listing to the long line
of instructions can really give you a headache.
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Internet Banking
In the end, If security is reassured, Internet
banking is the way to go.
An Internet Banking system is a
client/server system.
The bank is the server who provides the
banking service.
When a customer opens the client page on
a banking site, what he or she can do is
dependent on the service provided. The
one or several services could be available.
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Internet Banking
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Internet Banking
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Internet Banking
They include
Checking your account balance.
Transferring your money from one
account to the other.
Doing digital cash transaction:
Withdraw digital cash
Deposit digital cash
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Internet Auction
An Internet action system is a client/server system.
The action server provides the service for bidders to
submit their bids. A typical Internet bidding
protocol looks like:
1. Auction Server: provide auction information on the
Web.
2. Bidder: cast its bid to the server via a secure
channel.
3. Auction Server: open bids after the bidding time is
over and announces the highest bid (seller-oriented
auction).
4. Bidder: send its payment to the Server via a secure
channel.
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Internet Auction
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Internet Auction
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Internet Gambling
Internet gambling is very much dependent
upon the electronic commerce.
The most on-line gambling systems use
the existing electronic commerce
protocols.
Therefore, an Internet gambling server
must provide two basic services, i.e.,
game service and e-commerce service.
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Internet Gambling
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M-Commerce
m-commerce or w-commerce are terms for
mobile or wireless e-commerce
GSM (Global System For Mobile
Communication ) - 2G
GPRS (General Packet Radio Service ) 32 - 48
kbps - 2.5G
WAP (Wireless Application Protocol) is
emerging technology based on WML - 2.5G
WAP is a set of communication protocols to
standardise the way that wireless devices can
be used for Internet access
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M-Commerce
3G 2M/s, 384k/s or 144k/s in outdoor,
indoor or moving environments
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M-Commerce
These areas utilise m-commerce:
Financial services: customers can use
hand held devices to access accounts, pay
bills
Telecommunications: service changes,
bill payments and account reviews can be
conducted from a hand held device
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M-Commerce
Service Retail: allows customers to pay
for services on the fly
Pilot schemes in Scandinavia allow for
consumers to use their mobile phones to pay
for unattended car parking, soft drinks in
vending machines
Information Services: delivery of
financial news, sports figures and traffic
updates to a mobile device
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P-Commerce
Pervasive Commerce
a new trend of new trend
a handheld device with Wi-Fi enabled, such as PDA,
will become cheaper and more popular
with handphone
with bluetooth
with RFID (Radio Frequency Identification) reader
each product can have a RFID tag attached, which
stores the products information
The PDA can obtain the products info and
communicate with the server of the shop for more info
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P-Commerce
wiki
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Types of E-Commerce?
There are nine segments to e-commerce:
B2B Business to Business
B2C Business to Consumer
C2C Consumer to Consumer
C2B Consumer to Business
B2G Business to Government
C2G Consumer to Government
G2B Government to Business
G2G Government to Government
G2C Government to Consumer
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Whats B2B E-Commerce? [Awad
chapter 11]
B2B
Both sellers and buyers are business
organizations
Involves complex procurement,
manufacturing, planning collaboration,
payment terms and performance
agreements
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B2B Entities
Selling
Company
ERP
Buying
Company
Order
Fulfillment
Deliverer
ERP: Enterprise Resources Planning
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B2B Entities
Enterprise Resource Planning (ERP) is a term used to refer to a
system that links individual applications (for example, accounting
and manufacturing applications) into a single application that
integrates the data and business processes of the entire e-business.
By Napier et al, pp 309
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B2B Entities (cont.)
Purchasing Company
Focus on procurement in terms of reduced
purchase prices and cycle time
The buying company announces a request for
purchase of a certain product on its Web site, and
the participating suppliers in the B2B network
send their bids.
Selling Company
Focus on marketing and sales.
Each seller has its unique catalog, pricing policy,
and discount schedule.
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B2B Entities (cont.)
Intermediating Service Provider
Focus on ensuring order fulfillment
Such a service provider mediates between
the buying company and the supplier
(seller), usually for parts and unique
products.
J IT Deliverer
Focus on just-in-time delivery
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B2B Entities (cont.)
Web-based Platform
Focus on Internet, Intranet, and Extranet
Tools of B2B
Focus on Electronic Data Interchange (EDI)
and software agents
Back-End Technical Support
Focus on Enterprise Resource Planning
(ERP)
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Advantages
Save money on purchases that are
negotiated instantly
Replacing earlier purchasing
bureaucracy with online links improves
efficiency
J ust-in-time environment minimizes
inventory sitting in the warehouse
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Supply Chain (Awad, p337)
Process of moving goods from customer
order through the raw materials,
supply, production, and the distribution
of products to the customer
Benefits
Reduced inventory, higher sales, improved
ability to customize products for different
business buyers, and reduced production
cost
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Supply chain relationships in B2B
Supply chain process consists of a
number of interrelated subprocesses
and roles
acquisition of materials from suppliers
processing of a product or service
packaging it and moving it to distributors
and retailers
purchase of a product by the end
consumer
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A simple supply chain (Turban, Chapter 8)
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A simple supply chain (Awad, Chapter 11)
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B2B Models
Supplier-oriented B2B
A supplier invites customers to order
product via its electronic market store
Forward auction
Buyer-oriented B2B
A buyer uses the Internet by opening a
marketplace on its own server and opening
the window for suppliers to do the bidding
Reverse auction
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B2B Integration Challenge
B2B Integration
Deals with spanning independent businesses,
each with its own set of applications and users
Interoperates with heterogeneous systems
without being tied to one specific system
technology
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B2B Integration
Solutions
Via a Web site as a front-end for
information sharing among partners
Extract information from one partners
application convert it into a format
amenable for transmission via EDI
For two companies to use common
technology to coordinate data exchange
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What is B2C?
Business-to-Consumer
It is also called e-retailing
B2C EC includes retail transactions of
products and services from business to
individual shoppers.
Amazon.com
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What is C2C?
In C2C, consumers sell directly to other
consumers.
Examples include selling residential
property, cars and so on.
Peer-to-Peer technique used in C2C.
eBay.com
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What is C2B?
consumer-to-business
www.priceline.comis this type of
business
Developed the reverse auction model
where bidders set their price for items and
a seller decides whether to supply them
Buyer-oriented
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E-government?
G2B, government to business
G2C, government to individual citizens
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Government to Government G2G
Particularly important in Australia using
the Internet to communicate between
federal and state governments
Australia has an office for government
Online OGO
http://www.ogo.com.au/index.html
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E-Business Systems: Intranets
Intranet
Extranet
Internet
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References
Awad, Chapters 1, 11
Lawrence, Chapters 1, 6