E-COMMERCE

And Supply Chain Information System

By: Tilahun L.

1
CHAPTER ONE: INTRODUCTION TO E-COMMERCE
Recently most commercial transactions still take place
through conventional channels.
Today, networking and the Internet are nearly
synonymous with doing business.
Firms’ relationships with customers, employees,
suppliers, and logistic partners are becoming digital
relationships.
Electronic business, designates the use of Internet and
digital technology to execute all of the activities in the
enterprise.
E-commerce is the use of the Internet and the Web to
transact business.

2
 • E-commerce applications began in the early 1970s with
Origin Of E-Commerce

such innovations as electronic transfer of funds.

However, the applications were limited to large
corporations and a few daring small businesses. Then
came electronic data interchange (EDI), which added
other kinds of transaction processing and extended
participation to all industries.
The early years of e-commerce were a period of
explosive growth and extraordinary innovation,
beginning in 1995 with the first widespread use of the
Web to advertise products. This period of explosive
growth was capped in March 2000 when stock market
valuations for dot.com companies reached their peak
and thereafter began to collapse. 3
  E-commerce is used everywhere in everyday life.
1.1 Definitions of E-commerce

It ranges from credit /debit card authorization, travel

reservation over a phone/ network, wire fund transfers
across the globe, point of sale (POS) transactions
In retailing, electronic banking, electronic insurance,
fund raising, political campaigning, on-line education
and training, auctioneering, on-line lottery, arranging
funeral services on-line.

4
 Cont.
E-commerce defined as the use of the Internet and the Web
to transact business.
Electronic commerce or e-commerce refers to a wide range of
online business activities for products and services.
E-Commerce is “any form of business transaction in which
the parties interact electronically rather than by physical
exchanges or direct physical contact.”
E-commerce is usually associated with buying and selling
over the Internet or conducting any transaction involving the
transfer of ownership or rights to use goods or services
through a computer-mediated network.

5
Cont’d...
 E-commerce is the use of electronic
communications and digital information
processing technology in business
transactions to create, transform, and
redefine relationships for value creation
between or among organizations, and
between organizations and individuals.

6
E-Business vs E-commerce
E-business: includes all electronic–based
information exchanges within or between companies
and customers.
They have created intranets to help employees
communicate with each other and access information
found in the company’s computers.
E-business: involves the use electronic platforms-
intranets, extranets and Internet to conduct a
company’s business.
In contrast ,e-commerce involves buying and selling
processes supported by electronic means, primarily
the Internet
7
Cont.
 E-markets are market-spaces rather than physical
marketplaces. Sellers use e-markets to offer their
products and services online.
Sellers use e-markets to offer their products and
services online.
E-business involves business processes spanning the
entire value chain: electronic purchasing and supply
chain management, processing orders electronically,
handling customer service, and co-operating with
business partners.

8
Unique Features of E-commerce
Ubiquity:
E-commerce is ubiquitous, meaning that is it
available just about everywhere, at all times.
In traditional commerce, a marketplace is a
physical place you visit in order to transact.
E-commerce technology liberates the market
from being restricted to a physical space and
makes it possible to shop from your desktop, at
home, at work, or even from your car using
mobile commerce.
9
Cont’d…
Global Reach:
 E-commerce technology permits commercial transactions
to cross cultural and national boundaries far more
conveniently and cost effectively than is true in traditional
commerce.
 As a result, the potential market size for e-commerce
merchants is roughly equal to the size of the world’s online
population.
It is accessed by any one from any demographic group;
age, income, race, gender, religion, etc.

10
Cont’d…
Universal Standards: shared by all nations around the
world.
Richness: The Internet and the Web can deliver, to an
audience of millions, “rich” marketing messages with
text, video, and audio, in a way not possible with
traditional commerce technologies such as radio,
television, or magazines.

11
Cont’d…
Interactivity ፡Unlike any of the commercial
technologies of the twentieth century, with the
possible exception of the telephone, e-commerce
technologies are interactive, meaning they allow for
two-way communication between merchant and
consumer.
Information Density: the total amount and quality of
information available to all market participants,
consumers, and merchants alike.

12
Cont’d…
Personalization/Customization:
 E-commerce technologies permit personalization:
Merchants can target their marketing messages to specific
individuals by adjusting the message to a person’s
name, interests, and past purchases.
 The technology also permits customization changing
the delivered product or service based on a user’s
preferences or prior behaviour.

13
 Advantages of E-Commerce

1.Being able to conduct business 24 x 7 x 365

2. Access the global market place: unlike traditional
communications methods, users are not charged
according to the distance over which they are
communicating.
3. Speed
4. Market space: The market in which web-based
businesses operate is the global market.
5. Opportunity to reduce costs: The Internet makes it
very easy to 'shop around' for products and services
that may be cheaper or more effective than we might
otherwise settle for 14
Cont’d…
6. Computer platform-independent: Customers are
not limited by existing hardware systems.
7. Efficient applications development environment:
'In many respects, applications can be more efficiently
developed and distributed because they can be built
without regard to the customer's or the business
partner's technology platform.
8. Allowing customer self service and 'customer
outsourcing‘.
9. Stepping beyond borders to a global view

15
Disadvantages and limitations of E-commerce

Time for delivery of physical products

Physical product, supplier & delivery uncertainty
Perishable goods
Limited and selected sensory information
Returning goods
Privacy, security, payment, identity, and contract

16
Cont’d….
Defined services & the unexpected:
E-commerce is an effective means for managing the
transaction of known and established services, that is,
things that are everyday. It is not suitable for dealing with
the new or unexpected
Personal service:
 Although some human interaction can be facilitated via
the web, e-commerce cannot provide the richness of
interaction provided by personal service.
Size and number of transactions:
E-commerce is most often conducted using credit card
facilities for payments, and as a result very small and very
large transactions tend not to be conducted online.
17
18