E-business and E-commerce

Electronic business or e-business is the use of ICT (Information Communications Technology ) to improve business (from the use of email to facilitate administrative procedures in buying and selling through the Internet). Electronic commerce or e-commerce is where business transactions take place via electronic communication networks, especially the Internet.

E-business Vs E-commerce
The main difference between them is that e-commerce defines interaction between organizations and their customers, clients, or constituents. On the other hand, e-business is broader term that also encompasses an organizations internal operations. Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet, where e-Business describes the broadest definition of EC. It includes buying and selling of products and services, servicing customers, collaborating with business partners, and conducting other intra-business tasks.

E-Business concepts
E-business defined from the following perspectives: Communications: delivery of goods, services, information, or payments over computer networks or any other electronic means Commercial (trading): provides capability of buying and selling products, services, and information on the Internet and via other online services

E-Business concepts (cont.)

Business process: doing business electronically by completing business processes over electronic networks, thereby substituting information for physical business processes Service: a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery

E-Business concepts (cont.)

Learning: an enabler of online training and education in schools, universities, and other organizations, including businesses Collaborative: the framework for inter- and intraorganizational collaboration Community: provides a gathering place for community members to learn, transact, and collaborate

Types of e-business
Business-to-business (B2B)
Business that sells products or provides services to other businesses

Business-to-consumer (B2C)
Business that sells products or provides services to end-user consumers

Consumer-to-consumer (C2C)
Consumers sell directly to other consumers

Types of e-business (cont.)

Business-to-government (B2G)
Government buys or provides goods, services or information to/from businesses or individual citizens

Evolution of e-business
Electronic data interchange (EDI) - electronically transfer routine documents (application enlarged pool of participating companies to include manufacturers, retailers, services) 1970s: innovations like electronic funds transfer (EFT) - funds routed electronically from one organization to another (limited to large corporations) 1990s: the Internet commercialized and users flocked to participate in the form of dot-coms, or Internet start-ups

Business-to-employee (B2E)
Information and services made available to employees online

Mobile commerce (m-commerce)

E-commerce transactions and activities conducted in a wireless environment

Electronic Commerce
Is an online process of developing, marketing, selling , delivering, servicing ad paying for products and services. The web browser and client server architecture and networks hypermedia databases on world wide web serve as technology platform for e-commerce among customers. It means different things to different people It can be perceived as cut down costs while improving quality and increasing the speed of delivery of goods. Ability to sell and purchase products and services on computer networks A solution to office automation and quick business transactions

A tool to improve inter business communication through easy and accurate interaction and information interchange.

Why has e-commerce become so popular

Low set up cost : Any body can easily set up website, instead making large showrooms for products Global Free Market : service is available both for big and small organizations. Global Access : Anybody sitting any where can get information Availability of Technology : Since same technology like internet is used through out the world business can easily be conducted c. b. a.

Objectives of e-commerce
Processes to streamline procurement Cutting down of procurement costs Cutting down of procurement time i.e., Just-inTime management

Use of competitive processes Competitive edge over competitors by making virtual teams with suppliers May lead to large quantities of high quality product

Multiple Opportunities :Multiple activities can be carried out on internet eg. variety of transactions can be provided all under one roof.

Conduct distant businesses Create new services and businesses Help expand horizons of business and service Acquire latest technologies and improvements

Categories of e-commerce

A. Business to Consumer Commerce: Formerly, whatever was sold in

the market, consumers had to buy that but today the scenario has changed. Nowadays, the customers give their specifications and the manufacturers try and supply products according to these

A. Business to Consumer Commerce B. Business to Business Applications C. Internal Business Processes

specifications. In fact it is because of choosy customers, more and more variety has to be offered. Therefore business houses have set up attractive electronic marketplaces to entice the consumers. Business houses may be remotely located geographically but they have to have the ability to retain the customers, therefore they have to optimise on factors like performance, service efficiency, personalisation, socialisation and offering of incentives. Some key factors which have led to the success of Electronic Marketing are: Price Attractiveness, Attractive Websites,
Electronic Payments. Personalisation.

5. New Technology Products: Launching of new products is faster

using EC because of two reasons: (i) advertising is instant, and (ii) success or failure is known quickly.

1. Price Attractiveness: 2. Attractive Websites:

3.

6. Electronic Catalogs: These help in providing more information and

arise a simple way to find products. A brief comparison between traditional and e-Catalogs is given below.

Electronic Payments:. 4. Personalization:

B. Business to Business (Inter organisational EC):

Organisations use EC not only to interact better with their customers, for better coordination within the organisation but also for inter organisation relationships. A few of these business applications are: iii. Channel Management: The use of open networks has enhanced inter business communication. No time or labour costs have to occur to obtain accurate information. Communication on the Internet is multipoint to multipoint, therefore, participants can limit themselves to their field of interest

i.

Supplier Management: Here the main objective is to provide

purchase managers with better control over purchasing habits. The number of suppliers is reduced and business relationships are strengthened thus making strong virtual teams leading to reduced processing costs and cycle time.

Distribution Management: As a result of EDI (Electronic Data iv Interchange) purchase orders, bills, shipping notices, all contain accurate and sufficient data and are transmitted as shipping documents.
v. Payment Management: Electronic payments ensure that payments can be made between suppliers and organisations quickly, thus reducing insecurities and lower processing costs.

ii.

Inventory Management: The purpose of EC is to lower the inventory levels by reducing "out of stock" circumstances and over stuffing of inventory. Again lead times are reduced so that the order-ship-bill cycle is reduced.

Financial Management: EC has enabled global companies to vi. manage their money in various foreign exchange accounts.
vii. Sales Force Management: Communication and flow x>f information among the sales, customer service and production functions have improved.

e-commerce in industry
C. Internal Business Processes or Intra-organisational EC: The purpose behind intra organisational EC is to help a company maintain relationships which are critical to delivering superior customer services. Many inter-networked enterprises are customer driven and market driven. In such organisations, constant monitoring and evaluation of customers, suppliers, and competitors data is compiled from their websites and discussion groups. The feedback received is used to shape the organisation's strategies in term of product design, advertising, customer services, etc. EC facilitates managers to communicate using video conferencing, e-mail> and bulletin boards so that information is better. disseminated and right decisions can be made.
Entertainment/Multimedia Industry
The ability to transmit voice, video, and data over an open network with a common infrastructure has had a dramatic effect on entertainment and Multimedia industries.

Publishing
The nature of e-commerce and the Internet itself make it attractive to publishers of all sizes for several reasons like low barriers to entry, an abundance of market niches and potential business models and similar technology available to everyone.

Banking Industry
Tlie services of e-commerce affect retail and investment banking.

Information/Computer Industry
Changes in retailing, R&D and supply-chain management have the potential to benefit this industry significantly.

Airlines/Travel Industry
To this end, e-commerce applications and products have been focused on the distribution of travel products such as airline tickets, hotel rooms, and related services.

E Commerce
Electronic business transactions involving money are "eCommerce" activities. First e-commerce is a business transaction (buying or selling) on a secure link over the Internet. It only entails your company and the ultimate buyer (your customer). Not much else is done in a typical e-commerce transaction. You are simply using the Web and it's resources to effectively conduct and execute a business transaction E-commerce is doing commerce using electronic technology such as intranets, extranets, and the Internet.Simply put, e-commerce can be thought of as buyers buying and sellers selling through electronic technology. Every business is both a buyer and a seller of goods or services and can potentially use ecommerce in one or both of those capacities. However, two important parts of e-commerce follow: Integration of buy and sell transactions Payment processing that takes place over the Internet using electronic, back-end systems For example, a local government that allows payment of taxes or fines over the Internet is conducting ecommerce. Associations that allow members to register and pay dues over the Internet are conducting ecommerce.

E Business
Electronic business transactions involving flow of information using technology are eBusiness activities. Ebusiness goes far beyond ecommerce or buying and selling over the Internet, and deep into the processes and cultures of an enterprise. It is the powerful business environment that is created when you connect critical business systems directly to customers, employees, vendors, and business partners, using Intranets, Extranets, ecommerce technologies, collaborative applications, and the Web. E-business includes internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings.

E Commerce
In e-commerce, information and communications technology (ICT) is used in inter-business or interorganizational transactions (transactions between and among firms/organizations) and in business-to-consumer transactions (transactions between firms/organizations and individuals).

E Business
In e-business, on the other hand, ICT is used to enhance ones business. It includes any process that a business organization (either a for-profit, governmental or non-profit entity) conducts over a computer-mediated network. A more comprehensive definition of e-business is: The transformation of an organizations processes to deliver additional customer value through the application of technologies, philosophies and computing paradigm of the new economy. An e-business strategy is also more difficult to execute, with four directions of integration: vertically, between Web front- and back-end systems; laterally, between a company and its customers, business partners, suppliers or intermediaries; horizontally, among e-commerce, enterprise resource planning (ERP), customer relationship management (CRM), knowledge management and supply-chain management systems; and downward through the enterprise, for integration of new technologies with radically redesigned business processes.

Ecommerce happens when a consumer buys a ticket online or buys something from the art shop and pays for it either when they receive the product or directly online at the time of ordering. It happens when an organisation pays another organisation for supplies via its website. Ecommerce refers specifically to paying for goods and services

ebusiness covers the full range of business activities that can happen, or be assisted, via email or the Web.

E Commerce
Electronic commerce (eCommerce) is commerce via interconnected electronic networks. Multiple users (buyers and sellers) use electronic networks to transmit information (e.g., credit card information, membership information, and order requests) that can facilitate the purchase of goods or services.

E Business
An eBusiness is one which is implementing fundamentally reworked business processes internally and externally to take advantage of information to compete in the digital marketplace. Until recently, the electronic networks have consisted of direct point- to-point communications or interactions through a third-party value added network (VAN). But, with the growth of the Internet and the World Wide Web, a new channel has emerged offering global access at a fraction of the cost, drastically expanding the opportunities for eBusiness.

Why has e-commerce become so popular

Low set up cost : Any body can easily set up website, instead making large showrooms for products Global Free Market : service is available both for big and small organizations. Global Access : Anybody sitting any where can get information Availability of Technology : Since same technology like internet is used through out the world business can easily be conducted

Electronic commerce or ecommerce is a term for any type of business, or commercial transaction, that involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge. Ecommerce allows consumers to electronically exchange goods and services with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the near future the boundaries between "conventional" and "electronic" commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet.

Some examples of the types of processes and relationships that can be affected by eBusiness are: Supply Chain Management (SCM) and supplier processes: electronically linking with suppliers to automate procurement, ordering, inventory control and payment processing. Customer Relationship Management (CRM) and customer-service processes: using electronic networks to provide marketing, sales, order and payment processing, and customer support Enterprise Resource Planning (ERP) and internally focused processes: automating "back office" functions such as operations, finance, and personnel management.

Multiple Opportunities :Multiple activities can be carried out on internet eg. variety of transactions can be provided all under one roof.

Objectives of e-commerce
Figure 1-8 Three pillars of electronic commerce
a. Processes to streamline procurement Cutting down of procurement costs Cutting down of procurement time i.e., Just-inTime management

PROCESSES

b.

Use of competitive processes Competitive edge over competitors by making virtual teams with suppliers May lead to large quantities of high quality product

ELECTRONIC INFORMATION

ELECTRONIC RELATIONSHIPS

ELECTRONIC TRANSACTIONS

c.

Conduct distant businesses Create new services and businesses Help expand horizons of business and service Acquire latest technologies and improvements

EXISTING MARKET SPACE

Some benefits of Conducting business on the internet , broad range of benefits are mentioned below:
Ease of access and global reach: There is a consensus that the world wide web is an ideal mechanism for providing relevant information to the public globally. It allows organization to publicize their products and services at minimal cost just by putting information in form of a web page. Low cost of advertising medium: Cost of advertising is low and more information can be given on the product and the services. Low barriers to entry: Small or large firms alike have the same opportunity to be on the WWW and conduct business. Perceived image enhancer : Several companies have to have their presence on the internet as their competitors are already on the net. Without there reputation can be transmitted and they will be perceived as laggards in employing state of art technologies.

Electronic Commerce: Dimensions

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

Electronic Markets
A market is a network of interactions and relationships where information, products, services, and payments are exchanged. The market handles all the necessary transactions. An electronic market is a place where shoppers and sellers meet electronically. In electronic markets, sellers and buyers negotiate, submit bids, agree on an order, and finish the execution on- or off-line.

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 paperbased information The processing allows for customization of products and services which provides competitive advantage to its implementers

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

Benefits to Customers (cont.)

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

Benefits to Society
Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution Enables people in World countries to enjoy products and services which otherwise are not available to them Facilitates delivery of public services at a reduced cost,increases effectiveness, and/or improves quality

The 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)

Non-Technical Limitations
Cost and justification

Non-Technical Limitations (cont.)

Lack of trust and user resistance (4%)
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. Many unresolved legal issues

Lack of support services Breakdown of human relationships Expensive and/or inconvenient accessibility to the Internet

ACCT 540 eCommerce Payment Methods

Facts

Methods
Credit cards Smart cards

Issues
1. What are the methods for making Internet payments? 2. What are the important enabling technologies? 3. Why do accountants care?

The viability of any business depends on its ability to 1) collect payment for goods & services sold and 2) make payment for goods & services purchased. Payments made and received need to be on time, in the proper amount, and to/from the appropriate party.

Debit cards Electronic cash

Methods
Smart Cards
Cards
Have microprocessor and storage unit Need a special reader attached to computers More durable, less expensive

Methods
Smart Cards- Types
Memory smart cards less processing, used for simple storage, like holding spending money Microprocessor smart cards - additional feature of greater storage and processing capabilities Contactless smart cards for wave-bys as in transportation applications

Use Electronic Purse - the monetary value stored on the microprocessor Open Transaction Platform protocol by Funge Systems

10

Methods
Disposable Credit Cards
Work like an imprest account
Set up prior for exactly the purchase amount Requires an extra step over the smart card

Methods
Electronic or Digital Cash
Prepaid, stored value for electronic purchases Embossment process
Add value to a coin from a users account Not record information linking user to coin

Merchants never see the true credit card number Developers

American Express Discover

Used primarily for anonymity

PayPal (not anonymous), DigiCash (anonymous)

11