E – COMMERCE

Text Books:
1.Frontiers of electronic commerce – Kalakota, Whinston, Pearson

2. E-Commerce, S.Jaiswal – Galgotia

 Introduction

 It is a general concept covering any form of business transaction or

information exchange executed using information and communication
technologies (ICT’s)

 It includes electronic trading of goods, services and electronic material.

 It takes place between companies, between companies and their customers, or

between companies and public administrations.

They can be classified by application type:

1. Electronic Markets
 Present a range of offerings available in a market segment so that the
purchaser can compare the prices of the offerings and make a purchase
decision.
Example: Airline Booking System

L1.1
 Introduction

2. Electronic Data Interchange (EDI)

 It provides a standardized system
 Coding trade transactions
 Communicated from one computer to another without the need for printed
orders and invoices & delays & errors in paper handling
 It is used by organizations that a make a large no. of regular transactions
Example: EDI is used in the large market chains for transactions with their
suppliers

3. Internet Commerce
 It is use to advertise & make sales of wide range of goods & services.
 This application is for both business to business & business to consumer
transactions.
Example: The purchase of goods that are then delivered by post or the booking
of tickets that can be picked up by the clients when they arrive at the event

L1.2
 Introduction

Scope of E-Commerce:
 Internet e-commerce is one part of the overall sphere of e-commerce. See in
Fig.

L1.3
 Electronic Commerce and the trade cycle

 It can be applied to all, or to different phases of the trade cycle

 The trade cycle various depending on
 The nature of the organizations
 Frequency of trade between the patterns to the exchange
 The nature of goods and services being exchanged

 Trade cycle support

1. Finding goods and services (referred to as a search & negotiation)
2. Placing the order, taking delivery & making payment (execution and
settlement)
3. After sales activities such as warrantee, services etc.
 Electronic Commerce and the trade cycle

 The three generic trade cycles can be identified

1. Regular, repeat transactions (repeat trade cycle)

2. Irregular transactions, where execution & settlement are separated (credit

transactions)

3. Irregular transactions where execution & settlement are combined (cash

transactions)
See in fig.
Electronic Commerce and the trade cycle
 Electronic Commerce and the trade cycle

Electronic Markets:
 It increases the efficiency of the market

 It reduces the search cost for the buyer & makes it more likely that buyer will
continue the search until the best buy is found

 It exist in commodity, financial markets & they are also used in airline
booking system

 It is irregular transaction trade cycle.

See in fig.
Electronic Commerce and the trade cycle
 Electronic Commerce and the trade cycle

Electronic Data Interchange:

 Applications are sending test results from the pathology laboratory to the
hospital or dispatching exam results from exam boards to school
 It is used trade exchanges
 Users are vehicle assemblers, ordering components for the supermarkets
 It is used for regular repeat transactions
 It takes quite lot of work to set up systems
 It is part of schemes for just-in-manufacture and quick response supply
 Mature use of EDI allows for a change in the nature of the product or service
 Mass Customization is such an example
See in Fig.
Electronic Commerce and the trade cycle
 Electronic Commerce and the trade cycle

Internet Commerce:
 The first stage
 Advertising appropriate goods and services
 Internet sites offer only information & any further steps down the trade cycle
are conducted on the telephone
 The Second stage
 An increasing no. of sites offer facilities to execute & settle the transaction
 Delivery may be electronic or by home delivery depending on the goods and
services
 The final stage
 After-sales service
 On-line support & On-Line services.
See in Fig.
Electronic Commerce and the trade cycle
 Generic Framework of Electronic Commerce
Electronic Commerce Applications

transactions, and network protocols

documents, multimedia contents, business
Technical standards for electronic
Supply Chain Management Online Marketing and Advertising
Procurement & Purchasing Online Shopping
development, and privacy issues
Public policy, legal, economical

Audio and Video on Demand Online Financial Transaction

Entertainment and Gaming Education and Research

Common Business Services Infrastructure

(Security/Authentication, Electronic Payment, Directories/Catalogs)

Multimedia Content & Network Publishing Infrastructure

(Digital Video, Electronic Books, World Wide Web)

Messaging & Information Distribution Infrastructure

(EDI, E-Mail, HyperText Transfer Protocol)

Information Superhighway Infrastructure

(Telecom, Cable TV, Wireless, Internet)
 Electronic Commerce Framework

 E-Commerce application will be built on the existing technology infrastructure

 A myriad of computers
 Communication networks
 Communication software
 Common business services for facilitating the buying and selling process
 Messaging & information distribution as a means of sending and retrieving
information
 Multimedia content & network publishing, for creating a product & a means to
communicate about it
 The information superhighway- the very foundation-for providing the high
way system along which all e-commerce must travel
 Electronic Commerce Framework

 The two pillars supporting all e-commerce applications & infrastructure

 Any successful e-commerce will require the I-way infrastructure in the same
way that regular commerce needs
 I-way will be a mesh of interconnected data highways of many forms
 Telephone,wires,cable TV wire
 Radio-based wireless-cellular & satellite
 Movies=video + audio
 Digital games=music + video + software
 Electronic books=text + data + graphics + music + photographs + video
 In the electronic ‘highway system’ multimedia content is stores in the form of
electronic documents
 These are often digitized
 Electronic Commerce Framework

 On the I-way messaging software fulfills the role, in any no. of forms: e-mail,
EDI, or point-to-point file transfers
 Encryption & authentication methods to ensure security
 Electronic payment schemes developed to handle complex transactions
 These logistics issues are difficult in long-established transportation
 Anatomy of E-Commerce applications

E-Commerce applications are:

1. Multimedia Content for E-Commerce Applications

2. Multimedia Storage Servers & E-Commerce Applications
i. Client-Server Architecture in Electronic Commerce
ii. Internal Processes of Multimedia Servers
iii. Video Servers & E-Commerce
3. Information Delivery/Transport & E-Commerce Applications
4. Consumer Access Devices
See in Fig.
 Anatomy of E-Commerce applications

Multimedia Content for E-Commerce Applications

 Multimedia content can be considered both fuel and traffic for electronic
commerce applications.
 The technical definition of multimedia is the use of digital data in more
than one format, such as the combination of text, audio, video, images,
graphics, numerical data, holograms, and animations in a computer
file/document. See in Fig.
 Multimedia is associated with Hardware components in different networks.
 The Accessing of multimedia content depends on the hardware capabilities
of the customer.
 Anatomy of E-Commerce applications

Multimedia Storage Servers & E-Commerce Applications

 E-Commerce requires robust servers to store and distribute large amounts of
digital content to consumers.

 These Multimedia storage servers are large information warehouses capable of

handling various content, ranging from books, newspapers, advertisement
catalogs, movies, games, & X-ray images.

 These servers, deriving their name because they serve information upon
request, must handle large-scale distribution, guarantee security, & complete
reliability
 Anatomy of E-Commerce applications

i. Client-Server Architecture in Electronic Commerce

 All e-commerce applications follow the client-server model
 Clients are devices plus software that request information from servers or
interact known as message passing
 Mainframe computing , which meant for “dump”
 The client server model, allows client to interact with server through
request-reply sequence governed by a paradigm known as message
passing.
 The server manages application tasks, storage & security & provides
scalability-ability to add more clients and client devices( like Personal
digital assistants to Pc’s. See in fig.
 Anatomy of E-Commerce applications

ii. Internal Processes of Multimedia Servers

 The internal processes involved in the storage, retrieval & management of
multimedia data objects are integral to e-commerce applications.

 A multimedia server is a hardware & software combination that converts raw

data into usable information & then dishes out.

 It captures, processes, manages, & delivers text, images, audio & video.

 It must do to handle thousands of simultaneous users.

 Include high-end symmetric multiprocessors, clustered architecture, and
massive parallel systems.
 Anatomy of E-Commerce applications

iii. Video Servers & E-Commerce

The electronic commerce applications related to digital video will include
1. Telecommunicating and video conferencing
2. Geographical information systems that require storage &
navigation over maps
3. Corporate multimedia servers
4. Postproduction studios
5. shopping kiosks.
 Consumer applications will include video-on-demand.
 The figure which is of video–on demand consist video servers, is an link
between the content providers (media) & transport providers (cable
operators)
 Anatomy of E-Commerce applications

Information Delivery/Transport & E-Commerce Applications

 Transport providers are principally telecommunications, cable, & wireless
industries.
Transport Routers
Information Transport Providers Information Delivery Methods
 Telecommunication companies long-distance telephone lines;
local telephone lines
 Cable television companies Cable TV coaxial, fiber optic &
satellite lines
 Computer-based on-line servers Internet; commercial on-line
service providers
 Wireless communications Cellular & radio networks;
paging systems
 Anatomy of E-Commerce applications

Consumer Access Devices

Information Consumers Access Devices

 Computers with audio & video Personal/desktop computing
capabilities Mobile computing
 Telephonic devices Videophone
 Consumer electronics Television + set-top box Game
systems
 Personal digital assistants (PDAs) Pen-based computing, voice-
driven computing
 E-Commerce Consumer applications

 People needs entertainment on demand including video, games, news on-

demand, electronic retailing via catalogs etc.
 Currently now we are taking the video on-demand.
 Why most companies betting heavily on this?
1. 93 million homes have television
2. Americans spend nearly half their free time watching television
3. Every evening, more than one-third of the population is in front of a television
4. sight, sound, and motion combine to make television a powerful means of
marketing
 E-Commerce Consumer applications

1. Consumer Applications and Social Interaction:

 Lessons from history indicate that the most successful technologies are
those that make their mark social
 In 1945, in U.S no one had TV. By 1960 about 86percent of households did
 Now contrast with Telephone. Bell invented the telephone in 1876 and
by1940, 40% of U.S. households and by 1980 about 95-98 percent of
households connected
 Penetration was slower for Telephone than for TV because of the effort
needed to set up the wiring infrastructure
 E-Commerce Consumer applications

 The impact of both was good on business, social, consumer behavior and
entertainment habits
 Radio began in 1960, and by 1989, almost 3 decades later, just 319 radio
stations followed the news format
 In 1994, their number exceeded 1000

What do Consumers Really want?

1. They want quality and cost of service
2. If a new system requires more steps to do essentially the same things,
consumers may resist it
3. Some people fit that mold, but most of public prefers to lay back and just
watch television and let someone else do the work of figuring out the
sequence of television programming
 E-Commerce Consumer applications

 What are Consumers willing to spend?

1. According to the video on-demand, consumers get the cable bill at basic
charge they will buy
2. If it is doubled they will not buy and at the service provider economics will
increased then network operators might look to advertises to fill the gap

 Delivering products to Consumers

1. Packing and distribution must be considered
2. Blockbuster video collects the information and shows the typical consumer
3. Spends $12 a month on home video expenditures
4. Go to video store to select video on limited budget and has time to kill
5. Only periodically expends a large sum of money
 E-Commerce Consumer applications

Consumer Research and E-Commerce

Consumer opinion about interactive television is
 46% be willing to pay
 39% want video phone calls
 63% would pay for movies on-demand
 57% would pay for Television shows on-demand
 78% said their worry about it is that they will pay for something that they
previously received free of charge
 64% are think it make it harder for viewers to protect privacy
 41% are tell that it is too confusing to use
 E-Commerce Organization applications

Changing business Environment

1. The traditional business environment is changing rapidly
2. Many companies are looking outside and within to shape business strategies
3. These activities include private electronic connections to
customers,suppliers,distributors,industry groups etc
4. The I-superhighway will expand this trend so that it allow business to
exchange information
See in fig.
 E-Commerce Organization applications

E-Commerce and the retail Industry

1. Conditions are changing in the “new economy” with respect to the retail
industry
2. Consumers are demanding lower prices, better quality, a large selection of in-
season goods.
3. Retailers are filling their order by slashing back-office costs, reducing profit
margins, reducing cycle times. buying more wisely and making huge
investments in technology
4. Retailers are in the immediate line of fire and were first to bear the brunt of
cost cutting
 E-Commerce Organization applications

Marketing and E-Commerce

1. E-commerce is forcing companies to rethink the existing ways of doing target
marketing and even event marketing.
2. Interactive marketing is in electronic markets via interactive multimedia
catalogs
3. Users find moving images more appealing than still image and listening more
appealing than reading text on a screen
4. Consumer information services are a new type of catalog business
 E-Commerce Organization applications

Inventory Management and Organizational Applications

1. With borders opening up and companies facing stiff global competition
2. Adaptation would include moving to computerized, “paperless” operations to
reduce
3. Once targeted business process is inventory management, solutions for these
processes go by different names
4. In manufacturing industry they’re known as just-in-time inventory systems, in
the retail as quick response programs, and in transportation industry as
consignment tracking systems
 E-Commerce Organization applications

Just-in-Time (JIT) Manufacturing

1. It is viewed as an integrated management system consisting of a number of
different management practices dependent on the characteristics of specific
plants
2. The first principle is elimination of all waste (time,materials,labour &
equipment)
3. The following management practices are focused factory, reduced set-up
times, group technology, total productive maintainance,multifunction
employees, uniform workloads, IT purchasing,kanban total quality control &
quality circles
 E-Commerce Organization applications

Quick Response Retailing (QR)

1. It is a version of JIT purchasing tailored for retailing
2. To reduce the risk of being of out of stock, retailers are implementing QR
systems
3. It provides for a flexible response to product ordering and lowers costly
inventory levels
4. QR retailing focuses on market responsiveness while maintaining low
levels of stocks
5. It creates a closed loop consisting of retailer, vendor, & consumer chain,&
as consumers make purchases the vendor orders new deliveries from the
retailer through its computer network
See in fig.
 E-Commerce Organization applications

Supply Chain Management

1. QR and JIT address only part of the overall picture
2. Supply Chain Management (SCM) is also called “extending”, which means
integrating the internal and external partners on the supply and process chains
to get raw materials to the manufacturer and finished products to the consumer
3. It includes following functions
 Supplier management: The goal is to reduce the number of suppliers and get
them to partners
 Inventory management: The goal is to shorten the order-ship-bill cycle. When
a majority of partners are electronically linked, information faxed or mailed
 Distribution management: The goal is to move documents (accurate data)
related to shipping
 E-Commerce Organization applications

 Channel management: The goal is to quickly disseminate information about

changing operational conditions ( technical,product,and pricing information)
to trading partners
 Payment management: The goal is to link company and the suppliers and
distributors so that payments can be sent and received electronically
 Financial management: The goal is to enable global companies to manage
their money in various foreign exchange accounts
 Sales force productivity: The goal is to improve the communication flow of
information among the sales, customer & production functions
In sum, the supply chain management process increasingly depends on electronic
markets
 E-Commerce Organization applications

Work group Collaboration Applications:

1. A internetwork that enables easy and inexpensive connection of various
organizational segments
2. It is to improve communications and information sharing and to gather and
analyze competitive data in real-time
3. Videoconferencing, document sharing and multimedia e-mail, are expected
to reduce travel and encourage telecommuting
4. Improves the distribution channel for documents and records to suppliers,
collaborators and distributors