Branch : MCA : page YEAR/ECOMMERCE/Unit 1.pdf · Branch: MCA Subject: E-commerce Department of...

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Department of Computer Applications, RGCET

UNIT I

Reduced cost to buyers from increased competition in procurement, as

more suppliers are able to compete in an electronically open marketplace

Reduced costs to suppliers by electronically accessing on-line databases

of bid opportunities, by on-line abilities to submit bids, and by on-line

review of awards.

Reduced errors, time and overhead costs in information processing by

elimination requirements for reentering data.

Reduced inventories, as the demand for goods and services are

electronically linked through just-in-time-inventory and integrated

manufacturing techniques.

Increased access to real time inventory information, faster fulfillment of

orders, and lower costs due to the elimination of paperwork.

Reduced tome to complete business transactions, specifically reduced

time from delivery to payment.

Reduced overhead costs through uniformity, automation and integration

of management processes which enable flatter, wider, and more efficient

processes.

Better quality of goods as specifications are standardized and competition

increases; also, better variety through expanded markets and the ability to

produce customized goods.

Creation of new markets through the ability to easily and cheaply reach

potential customers.

Easier entry into new markets, especially geographically remote markets,

as the playing field becomes more even between companies of different

sizes and locations.

Faster time to market as business processes are linked, elimination time

delays between steps and the engineering of each sub process within the

whole process.

1. List and discuss the benefits of E-commerce. (7) /(15)

(May ‘11) (May ’10) (Dec ’08)

OR

Point out the benefits of E-Commerce. (15)(May ’08)

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New business opportunities, Businesses and entrepreneurs are

continuously on the look out for new and innovative ideas as viable

commercial ventures; electronic commerce provides such opportunities.

Optimization of resource selection as businesses build cooperative teams

to better tailor capabilities, to work opportunities to increase chances of

success, to share economic success, to share economic successes more

broadly , and to give the customer a mix of capabilities more precisely

meeting the customer‘s requirements.

Increased access to a client base: Identifying and locating new client and

new markets is not trivial task since it involves analysis, product

marketing, and consumer base testing; electronic commerce can alleviate

this challenge.

Improved product analysis as businesses are able to perform product

analyses and comparisons and report their findings on the Internet and

on-line.

Improved market analysis:. The large and increasing base of Internet

users can be targeted for the distribution of surveys for an analysis of the

marketability of a new product or service-idea. Surveys can reach many

people with minimal effort on the part of the surveyors. Once a product

is already marketed, business can examine the level of customer

satisfaction

Wider access to assistance and to advice form experts and peers. Users

can utilize the Internet obtain expert advice and get help

Rapid information access:. Accessing information on-line and over the

internet is faster (on most occasion) than transmissions via fax or

transfers via courier services. Business can access information from

countries around the world and make interactive connections to remote

computer systems

Rapid interpersonal communications. Contacting other individuals

through e-mail provides a new method of business communication. E-

mail has both the speed of telephone conversations and the semi

permanence of regular mail.

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Email can be sent from nearly anywhere there is an internet service or

(dial up) access.

Business persons or travelers on the go can keep in touch with the office

or site.

Wide scale information dissemination. One can place documents on

servers on the internet and make them accessible to millions of users.

Creating web documents and web sites improves the availability of the

documents to a client base larger than the circulation of many major

newspapers.

Cost effective documents transfer:. Transferring on-line documents ver

the internet takes a short period of time, particularly if they are text –

based (rather than multimedia based); this can save money on regular

mail or courier services.

Internet access providers do not charge by the raw number of bytes

transferred across their links, unlike other commercial information

services.

Definition:

EDI is defined as the interorganization exchange of documents in

standardized electronic form directly between computer applications.

Example:

The typical business documents include purchase orders, invoices, and

material releases.

The key aspects of EDI are,

The utilization of an electronic transmission medium rather than the

transfer of physical storage media such as paper, magnetic tapes and

disks.

Use of structured, formatted messages based upon agreed standards.

Relatively fast delivery of electronic documents from sender to

receiver.

Direct communication between applications.

2. What is EDI? Illustrate its usage in business transaction.(15) (May ‘10)

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Information flow without EDI

Electronic Data Interchange

EDI provides a standardised system for coding trade transactions so that

they can be communicated directly from one computer system to another.

EDI removes the need for printed orders and invoices and avoids the

delays and errors implicit in paper handling.

EDI is used by organisations that make a large number of regular

transactions. Examples are the large supermarket chains and the vehicle

assemblers which use EDI for transactions with their suppliers.

Computer readable forms for business documents such as invoices,

purchase orders, delivery notes needed in B2B e-commerce so that e-documents

can be exchanged.

Information flow with EDI

Essential to eliminate manual data entry, which is error prone

Essential to agree on common formats for commonly used forms.

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Exchange of electronic data between companies using precisely defined

transactions.

Set of hardware, software, and standards that accommodate the EDI

process.

Inter Process Communication (Computer to Computer) Of Business

information in a standardized form.

Communicates information pertinent for Business transactions between

Govt. Small Business, and banks.

Electronic data interchange (EDI) standard gives specifications for

commonly used standard business forms

Currently two standards are available for EDI forms

It is possible to adapt these standards for documents which use XML for

specification.

EDI Specification

Defines several hundred transaction sets corresponding to each type of

business document such as invoice, purchase order etc.

Defines data segments - corresponding to groups of data elements such as

purchase order line.

Defines data elements - which are individual fields such as price, quantity

etc

EDI Standards

ANSI X.12 standard proposed by American National Standards Institute

EDIFACT (Electronic Data Interchange For Administration Commerce

and Trade) standardized by United Nations Economic Commission for Europe

for international trade

EDIFACT used in India for government transactions - customs, central

excise etc.

Seller – Buyer Transactions

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EDI Semantic layer

Application Level services

EDI Standard layer

EDIFACT business form standards

ANSIX12 Business form standards

EDI Transport layer

Electronic Mail X 435, MIME

Point to Point FTP TELNET

World Wide Web HTTP

Physical Layer Dial up lines, Internet, I-way

3. Explain EDI Architecture

EDI’s Goal:To enable easy and inexpensive communication of structured

information throughout the corporate community.

EDI can facilitate integration among dispersed organizations.

To reduce the amount of data capture and transcription.

EDI ARCHITECTURE:

– Supplier‘s proposal sent electronically to purchasing organization.

And Electronic contract approved over network.

– Supplier manufactures and packages goods, attaching shipping

data recorded on a bar code.

– Quantities shipped and prices entered in system and flowed to

invoicing program; invoices transmitted to purchasing organization.

– Manufacturer ships order.

– Shipment notice EDI transaction sent.

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– Purchasing organization receives packages, scans bar code, and

compares data to invoices actual items received.

– Payment approval transferred electronically.

– Bank transfers funds from purchaser to supplier‘s account using

electronic fund transfer (EFT)

–

WORKING PRINCIPLES OF EDI

4.WHAT IS EDI? What is the benefits of Open EDI over EDI?(15)(Dec ’08)

ELECTRONIC DATA INTERCHANGE (EDI)

Definition:

EDI is defined as the interorganization exchange of documents in standardized

electronic form directly between computer applications.

Example:

The typical business documents include purchase orders, invoices, and

material releases.

EDI’s Goal:

To enable easy and inexpensive communication of structured information

throughout the corporate community.

EDI can facilitate integration among dispersed organizations.

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To reduce the amount of data capture and transcription.

The key aspects of EDI are,

The utilization of an electronic transmission medium rather than the

transfer of physical storage media such as paper, magnetic tapes and disks.

Use of structured, formatted messages based upon agreed standards.

Relatively fast delivery of electronic documents from sender to receiver.

Direct communication between applications.

EDI Benefits:

Businesses can secure many benefits when utilizing EDI.

Monetary savings are obtained by automating existing business

procedures.

Cost saving arise in relation to the preparation, postage and handling of

mainstream transaction or in secondary but expensive areas such as the

preparation and dispatch of application for approval by a regulatory

authority or other reporting functions.

The elimination of rekeying the data.

With EDI, business documents transit automatically from the sender‘s

business application to the receiver‘s application.

EDI also eliminates other paper- handling tasks.

With EDI, organizations exchange business documents more quickly,

resulting in a shorter business cycle.

EDI can positively impact customer service factors, such as the incidence

of errors and the timeliness of deliveries.

The pre-transaction cost savings, benefits can arise from reduced

exceptions handling.

A significant amount of staff‘s time is traceable to errors in original data

capture and to the detection, investigation, adjustment and rework of

erroneous transactions.

OPEN EDI

Performing E-commerce activities through internet (open

networks ) is known as open EDI.

THE RELEVANCE OF INTERNET TO E-COMMERCE

The Internet allows people from all over the world to get

connected inexpensively and reliably.

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As a technical infrastructure, it is a global collection of

networks, connected to share information using a common set of

protocols.

Also, as a vast network of people and information, the Internet

is an enabler for e-commerce as it allows businesses to showcase

and sell their products and services online and gives potential

customers, prospects,

Business partners access to information about these businesses

and their products and services that would lead to purchase.

BASIC ISSUES OF EDI/ADVADVANTAGES OF EDI:

BENEFITS of OPEN EDI:

There are number of benefits to supporting EDI on the internet

The key benefit relates to the cost of transferring EDI messages on the

internet compared to transferring these messages on a VAN

Internet access providers charge an average of about $30.00 per month

for a SLIPP/PPP account that gives users can access number and

unlimited hours of internet connect time.

If a business needs higher throughput because it is sending large

volumes of EDI data, then it can secure a dedicated 56-kbps frame-

relay connection to the internet for about $450.00 per month.

So, as businesses make the transition from VANs to the internet, they

could see the cost of transmitting data reduced by 90 percent of the

typical VAN charges over the short term.

A transition to the internet will allow a more cost-effective movement

of large files.

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5. MIGRATION TO OPEN EDI

Performing E-commerce activities through internet (open

networks ) is known as open EDI. THE RELEVANCE OF INTERNET TO E-COMMERCE

The Internet allows people from all over the world to get

connected inexpensively and reliably.

As a technical infrastructure, it is a global collection of

networks,connected to share information using a common set of

protocols.

Also, as a vast network of people and information, the Internet

is an enabler for e-commerce as it allows businesses to showcase

and sell their products and services online and gives potential

customers, prospects,

Business partners access to information about these businesses

and their products and services that would lead to purchase.

Before the Internet was utilized for commercial purposes,

companies used private networks-such as the EDI or Electronic

Data Interchange-to transact business with each other.

That was the early form of e-commerce. However, installing

and maintaining private networks was very expensive.

With the Internet, e-commerce spread rapidly because of the

lower costs involved and because the Internet is based on open

standards. It appears that the Internet and the transition to what is called by

some open EDI will change the economics of EDI by

reducing setup and rollout costs.

To the extent that interoperability of networks increases the

usability of EDI by making more potential trading partners

available and accelerates the number of companies engaging in

electronic commerce, it will directly stimulate the growth of EDI.

APPROACH:

The development of open EDI enables several types of rollout strategies.

Generally, users can be classified into two groups.

1). The first group is composed of users who are not currently EDI users.

2). The second group is composed of companies currently using EDI,

generally through

The services of either private networks or VANs.

This present three migration paths to users:

A nonuser becoming a private networks/VAN user. Up to this

time, this migration path has been the only route open to users.

Current EDI users who wish to make a transition to open EDI.

A non-EDI user who can make a direct transition to open EDI.

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The factors driving migration are as follows:

The cost of using EDI service

The demands of customers

The opening up of market opportunities

BENEFITS:

There are number of benefits to supporting EDI on the internet

The key benefit relates to the cost of transferring EDI messages on

the internet compared to transferring these messages on a VAN

Internet access providers charge an average of about $30.00 per

month for a SLIPP/PPP account that gives users can access

number and unlimited hours of internet connect time.

If a business needs higher throughput because it is sending large

volumes of EDI data, then it can secure a dedicated 56-kbps

frame-relay connection to the internet for about $450.00 per

month.

So, as businesses make the transition from VANs to the internet,

they could see the cost of transmitting data reduced by 90 percent

of the typical VAN charges over the short term.

A transition to the internet will allow a more cost-effective

movement of large files.

MECHANICS:

Companies can send EDI transactions across the internet in two

ways.

1. The first way is via the File Transfer protocol(FTP)

2. The second is via e-mail.

Most Internet EDI implementations use e-mail because it is

relatively more secure and requires less administration.

With e-mail, the trading partners do not have to be concerned

about login IDs, passwords, directory names, or file names.

FTP requires the user to administer a login ID and password for

each trading partner.

The trading partners must also agree on directory names and file

names before they can exchange EDI data via FTP.

Another issue of using e-mail for EDI data concerns e-mail sent via the

Simple Mail Transfer Protocol(SMTP).

SMTP software can corrupt EDI data within an e-mail message

since it treats the EDI data as printable text.

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EDI line-termination characters may be corrupted and spaces may

be added to or deleted from the EDI data

Multipurpose Internet Mail Extensions (MIME) can solve this

problem because it supports context data by encoding it as text.

RFC 1767 specifies how to send an EDI interchange within an

SMTP/MIME message.

The EDI interchange is placed within a MIME body part and the

MIME object specifies the content type for each body part.

Content types have been defined for many EDI standards.

CHALLENGES:

EDI users can utilize encryption and digital signatures to ensure

secure EDI transmissions across the internet.

In the area of authentication, the sender‘s address can be easily

forged in an SMTP message.

Internet EDI applications should not depend solely on this field to

identify the trading partners.

They should also utilize the address fields within EDI messages

and possibly use digital signatures.

Electronic Commerce with WWW/Internet

Introduction

Electronic commerce opportunity is buying and selling through the Internet or

through a VAN that provides gateway to the internet.

The much electronic commerce arising through the WWW promise to change

the way business operates at many level

E-commerce can be said to consist of:

• E-tailing or "virtual storefronts" on Web sites with online catalogs,

sometimes gathered into a "virtual mall"

• As a place for direct retail shopping, with its 24-hour availability, a global

reach, the ability to interact and provide custom information and ordering,

and multimedia prospects, the Web is rapidly becoming a multibillion

dollar source of revenue for the world's businesses. A number of

businesses already report considerable success.

6. List the facts of E-Commerce with WWW and explain it. (15) (Nov ’09)

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• Electronic Commerce includes the following:

Business-to-Business

Business-to-Consumers

Consumer-to-Consumer

• Revenue opportunities for web commerce include

1. Technical and consulting services

2. Merchandising products/information

3. Transport Services

4. Directory Services

5. Content creation

6. Subscriptions

7. Access Services

8. Advertising Services

9. Hosting of Web sites

• The internet marketing channel is interactive, global and offers consumers and

business customers access to information rarely, if ever available in other

marketing channels.

• Communication among employees and between employees and customers,

suppliers and distribution channel partners.

• The use of internet , as an interoperable technology, promise to lower the cost

of data transport for many users, to open up a much larger market, and to

facilitate changes in electronic relationship as needed.

• A company that decides to market on the Internet , some of the activities in

reference to web-based commerce include the following:

1. Market development

2. Business development

3.Market intelligence

4.Comarketing

5.Education

Opportunities

1.Generation of a client base

2.Ability to undertake product analysis

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3.Ability to undertake market analysis

4. Expert advice and help

5.Ability to recruit new employees

6.Rapid information access

7.Wide-scale information dissemination

8.Rapid communication

9.Cost-effective document transfer

10.Support of peer communication

On-Line web selling

There are 4 ways that web commerce can be undertaken over the

internet

1.Toll-free or other telephone numbers

2.Shopping clubs

3.Off-line ordering and paying

4.On-line credit card entry

Virtual malls

The combination of the home PC and the Internet is marking on-line

services and shopping easier to implement

Advertising

Organization that provide well-know Web sites have come to realize

that it is possible to charge a recurring fee to companies wishing to have pointers to

their own information placed before the public.

Home banking and financial services

As it become easier for consumers to do network-based banking, the

competition in tradition banking services will become more intense

Catalog publishing

Many organizations have built home pages that incorporate

electronic catalogs listing the products and services the company has to offer

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Interactive ordering

An increasing number of early adopter companies, however do allow

interactive ordering of their goods by implementing secure credit card payments over

the internet

Customer services and technical support

The internet is being used by many companies to provide customer

services and technical support functions.

Business can provide software fixes to their customers via Internet e-

mail, FTP or Web servers

Business information research

Companies can utilize the internet to do reach on competitors and to

find other business information.

Gathering timely market intelligence is critical for nay business

Search engines

It provide database on a variety of topics including arts, business and

economy, computer and the internet, education, entertainment, government, health,

news, recreation, references, regional information science, social science and culture

Direct marketing

Direct marketers use the Internet to disseminate e-mail advertising

their product and services.

7. What is WWW? Give enabling technologies of the WWW. (8) Nov ’ 07

Explain any five Internet Tools. (15) Nov ‘10

Internet and WWW Tools.

1. The World Wide Web

The web is nothing more than a collection of files stored at locations

throughout the world.

These files are written using a special language known as the Hypertext

Markup Language (HTML).

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A file written using this language will contain text which forms the

information content of the file, together with instructions which define how

the text is to be displayed;

For example, HTML contains a facility whereby blocks of text are specified to

be displayed as bullet points.

The user of the World Wide Web employs a program known as a browser.

When the user wishes to read a file on the World Wide Web they will inform

the browser of its address on the web and the browser will fetch the file.

The browser will then examine the contents of the page and will determine

from the HTML in the file how it is to be displayed;

For example, it might meet some HTML which switches the display of the

material from one font to another font.

A file which is downloaded into a browser is known as a web page.

The computer that holds web pages is known as a web server.

The collection of pages which are linked by some theme – for example, they

may be pages which all belong to the same retail company – is known as a

website.

Each page that is downloaded into a browser will have references to other

pages expressed as hyperlinks.

For example, a page belonging to a book retailer will have hyperlinks to the

various sections of the site which deal with different types of books.

Hyperlinks can refer to pages within the same site or can refer to pages within

another site; for example, an online magazine might refer to other online

magazines which are part of the same publisher's stable.

It represents a page from a site run by a British consumer organization.

There are hyperlinks embedded in the site in the main parts of the text (these

are underlined) and hyperlinks in the left-hand side of the page in the shaded

square.

The description above of the World Wide Web is a bare bones one which was

true about eight years ago: web pages can now contain a wide variety of media

including audio files, video files, graphics and even programs which can

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execute while the browser is being viewed.

Without the World Wide Web e-commerce would be barely possible: it

provides a standard interface to a variety of documents, products, services and

software.

2.FTP

The acronym FTP stands for the File Transfer Protocol. It provides the facility

whereby files can be downloaded into a computer from another computer in

the

internet.

Although there are a number of utilities for file transfer most users now

employ browsers for this via FTP links.

There are a number of utilities which enable you to load anything from clip art

to

the latest updates for operating systems.

Many of these utilities are very primitive: they use a simple command line

interface which lets you log in to the computer which holds the files, and then

enables you to use simple textual commands to identify the files to be

downloaded.

However, there are now a large number of sophisticated FTP programs which,

for example, allow you graphically to show the structure of the file system on

the remote computer, use drag and drop to download files and resume

processing when transfer is interrupted by a network hang-up. web documents

can also contain FTP links which also enable the downloading of files.

FTP is the mainstay of commercial companies who sell electronic products; it

is a simple facility which has been found on the internet since its inception in

the 1980s.

3.Email

This is one of the most ubiquitous technologies on the internet and, along with

the

World Wide Web is the most used.

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When you write an email you use a program known as a mailer. When the

email is completed it is sent via a number of computers known as email

servers and via a number of other intermediate computers before it reaches its

destination where it is read.

In e-commerce applications email is a subsidiary, but important technology.

It is used as the transport medium for mailing lists, for enabling customers to

communicate with a company, for sending documents and data to customers

and for keeping customers up to date about current products and services.

Mailers are sometimes known as mail user agents while mail servers are

sometimes known as mail transfer agents.

4. Newsgroups

A newsgroup is a collection of internet users who are interested in a particular

topic.

The topic may be a technical one, for example the LINUX operating system,

or a recreational one such as fly fishing.

Members of a newsgroup send messages associated with a particular issue

such as the date of release of the next version of LINUX or the efficacy of

using certain files on certain rivers. Each message – known as a posting – will

contain the user's thoughts on the topic.

Once posted these thoughts are responded to by other users. For example, one

user may say that they have got solid information that the next version of

LINUX will be released

Next week. The collection of responses to a posting and the original posting is

known as a thread.

Newsgroups can be moderated or unmoderated.

If a newsgroup is moderated a member will examine each posting and

determine whether it should be posted.

There are a number of reasons why postings are rejected: one major reason is

that it is not relevant to the area that a newsgroup covers; another reason is

that the posting is abusive to another user.

There are no restrictions on posting to unmoderated newsgroups.

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Newsgroups are accessed by using a special purpose software utility known as

a newsreader; although there is an excellent search site known as Deja.com which

allows access to newsgroups.

Newsgroups are normally employed by ordinary users of the internet and have

not really been associated with e-commerce.

However, a number of companies are beginning to wake up to their potential.

For example, a number of software companies assign staff to read the postings

in newsgroups which are devoted to one of their products in order to field any

questions which might arise about them:

It provides a good impression to future and present customers if a company

will provide help about a product without, for example, users having to ring a

high tariff phone line.

Other companies are also beginning to embed newsgroup technology into their

web pages in order to create customer feedback groups which enable them to

decide on future upgrades and new products.

5. Mailing lists

Mailing lists are groups of users who have some interest in common, for

example

they may all be network professionals.

Such a list is used by organizations or individuals to inform the members of

topics of interest to them.

For example, my local cinema has a mailing list of cinema goers who have

bought season tickets

. It emails everyone on the list with the titles of those films which are to be

shown in the coming week and notifies them of any special ticket offers.

While there are many uses for mailing lists within companies there are also

plenty of uses in ecommerce.

For example, a mailing list can be used to inform current customers of any

new products or services that are being offered. Most mailing lists are

automatically maintained by specialized software.

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Such software allows someone to subscribe to a mailing list or drop out of a

mailing list by just sending a simple email message to the software; for

example, often all that is needed to subscribe to a mailing list is a single line

email containing the message.

This will result in the user who sent the email being added to the list of users

associated with the mailing list.

TELNET

Telnet is a utility that allow users to log into a remote system just as

though they were logging in to a local system

Once logged in, the users have the same access to the system as though

they logged in from a terminal attached directly to the system.

Telnet and rlogin are probably the most powerful tools a hacker has.

WAIS

o Wide Area Information Server

WAIS allows users to search for a specific data they are interested in

WAIS searches documents in a list of servers for one or more keywords and

reports back to the user which documents, if any, have occurrences of

keywords.

WAIS is used in conjunction with world wide web servers

E-COMMERCE DEFINITION

Sharing business information, maintaining business relationships and conducting

business transactions using computers connected to a telecommunication network

is called E-Commerce

BASIC CONCEPTS:

Electronic commerce encompasses several methods of connecting buyers

and sellers, including advertising, product, demonstrations, catalogs, and

directories.

An electronic marketplace, therefore, is the digital environment or locale

where a marketer presents these promotional messages and where a potential

8. Write advantages and disadvantages of E-commerce. (10) Nov’07

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buyer can purchase a marketer‘s products or services and request more

information.

Electronic Commerce encompasses one or more of the following

o EDI o EDI on the internet o E-mail on the internet o Shopping on the world wide web o Product sales and services sites on the web o Electronic banking or funds transfer o Outsourced customer and employee care operations

Electronic Commerce o Automates the conduct of business among enterprises, their

customers, suppliers and employees-anytime, anywhere. o Creates interdependencies between your company’s value chain and

those of your suppliers and customers.

The benefits of e-commerce can be seen to affect three major stakeholders:

Organizations, Consumers and Society.

Benefits of e-commerce to Organizations

International marketplace: What used to be a single physical marketplace

located in a geographical area has now become a borderless marketplace

including national and international markets.

By becoming e-commerce enabled, businesses now have access to people all

around the world. In effect all e-commerce businesses have become virtual

multinational corporations.

Operational cost savings: The cost of creating, processing, distributing, storing

and retrieving paper-based information has decreased.

Mass customization: E-commerce has revolutionized the way consumers buy

goods and services.

The pull-type processing allows for products and services to be

customized to the customer‘s requirements.

In the past when Ford first started making motor cars; customers could

have any colour so long as it was black.

Now customers can configure a car according to their specifications

within minutes on-line via their website.

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Enables reduced inventories and overheads by facilitating ‗pull‘-type

supply chain management – this is based on collecting the customer order and

then delivering through JIT (just-in-time) manufacturing.

This is particularly beneficial for companies in the high technology

sector, where stocks of components held could quickly become obsolete within

months.

For example, companies like Motorola (mobile phones), and Dell (computers)

gather customer orders for a product, transmit them electronically to the

manufacturing plant where they are manufactured according to the customer‘s

specifications (like colour and features) and then sent to the customer within a

few days.

Lower telecommunications cost:

The Internet is much cheaper than value added networks (VANs) which

were based on leasing telephone lines for the sole use of the organization and its

authorized partners.

It is also cheaper to send a fax or email via the Internet than direct dialing.

Digitization of products and processes: Particularly in the case of software and

music/video products, which can be downloaded or e-mailed directly to

customers via the Internet in digital or electronic format?

No more 24-hour-time constraints: Businesses can be contacted by or contact

customers or suppliers at any time.

2. Benefits of e-commerce to Consumers

24/7 access: Enables customers to shop or conduct other transactions 24

hours a day, all year round from almost any location. For example, checking

balances, making payments, obtaining travel and other information.

In one case a pop star set up web cameras in every room in his house, so that

he could check the status of his home by logging onto the Internet when he

was away from home on tour.

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More choices: Customers not only have a whole range of products that they

can choose from and customize, but also an international selection of

suppliers.

Price comparisons: Customers can ‗shop‘ around the world and conduct

comparisons either directly by visiting different sites, or by visiting a single

site where prices are aggregated from a number of providers and compared.

Improved delivery processes: This can range from the immediate delivery

of Digitized or electronic goods such as software or audio-visual files by

downloading via the Internet, to the on-line tracking of the progress of

packages being delivered by mail or courier.

An environment of competition where substantial discounts can be found or

value added, as different retailers vie for customers. It also allows many

individual customers to aggregate their orders together into a single order

presented to wholesalers or manufacturers and obtain a more competitive price

(aggregate buying).

3. Benefits of e-commerce to Society

Enables more flexible working practices, which enhances the quality of life for a

whole host of people in society, enabling them to work from home.

Not only is this more convenient and provides happier and less stressful working

environments, it also potentially reduces environmental pollution as fewer people

have to travel to work regularly.

Connects people: Enables people in developing countries and rural areas to

enjoy and access products, services, information and other people which

otherwise would not be so easily available to them.

Facilitates delivery of public services: For example, health services available

over the Internet (on-line consultation with doctors or nurses), and filing taxes

over the Internet through the Inland Revenue website.

Other benefits of e-commerce generally include:

• E-commerce allows people to carry out businesses without the barriers of time

or distance. One can log on to the Internet at any point of time, be it day or night

and purchase or sell anything one desires at a single click of the mouse.

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• The direct cost-of-sale for an order taken from a web site is lower than through

traditional means (retail, paper based), as there is no human interaction during the

on-line electronic purchase order process. Also, electronic selling virtually

eliminates processing errors, as well as being faster and more convenient for the

visitor.

• E-commerce is ideal for niche products. Customers for such products are

usually few. But in the vast market place i.e. the Internet, even niche products

could generate viable volumes.

• Another important benefit of E-commerce is that it is the cheapest means of

doing business.

• The day-to-day pressures of the marketplace have played their part in reducing

the opportunities for companies to invest in improving their competitive position.

A mature market, increased competitions have all reduced the amount of money

available to invest. If the selling price cannot be increased and the manufactured

cost cannot be decreased then the difference can be in the way the business is

carried out. Ecommerce has provided the solution by decimating the costs, which

are incurred.

• From the buyer’s perspective also ecommerce offers a lot of tangible

advantages.

1. Reduction in buyer‘s sorting out time.

2. Better buyer decisions

3. Less time is spent in resolving invoice and order discrepancies.

4. Increased opportunities for buying alternative products.

• The strategic benefit of making a business ‘e-commerce enabled’, is that it

helps reduce the delivery time, labour cost and the cost incurred in the

following areas:

1. Document preparation

2. Error detection and correction

3. Reconciliation

4. Mail preparation

5. Telephone calling

6. Data entry

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7. Overtime

8. Supervision expenses

• Operational benefits of e-commerce include reducing both the time and

personnel required to complete business processes, and reducing strain on other

resources.

It‘s because of all these advantages that one can harness the power of ecommerce

and convert a business to e-business by using powerful turnkey e-commerce

.0solutions made available by e-business solution providers.

Limitations of e-commerce to Organizations

Lack of sufficient system security, reliability, standards and

communication

protocols:

There are numerous reports of websites and databases being hacked

into, and

security holes in software. For example, Microsoft has over the years issued

many

security notices and ‗patches‘ for their software.

Several banking and other business websites have experienced

breaches in security where ‗a technical oversight‘ or ‗a fault in its

systems‘ led to confidential client information becoming available to

all.

Electronic data interchange using EDI is expensive for small businesses

Security of internet is not very good - viruses, hacker attacks can

paralyze e-commerce

Privacy of e-transactions is not guaranteed

Limitations of e-commerce to Consumers

Computing equipment is needed for individuals to participate in the

new ‗digital‘ economy, which means an initial capital cost to

customers.

A basic technical knowledge is required of both computing equipment

and navigation of the Internet and the World Wide Web.

Cost of access to the Internet, whether dial-up or broadband tariffs.

Lack of security and privacy of personal data: There is no real control

of data that is collected over the Web or Internet. Data protection laws

are not universal and so websites hosted in different countries may or

may not have laws which protect privacy of personal data.

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Physical contact and relationships are replaced by electronic processes:

Customers are unable to touch and feel goods being sold on-line or

gauge voices and reactions of human beings.

A lack of trust because they are interacting with faceless computers

Limitations of e-commerce to Society

Breakdown in human interaction: As people become more used to

interacting electronically there could be an erosion of personal and

social skills which might eventually be detrimental to the world we

live in where people are more comfortable interacting with a screen

than face to face .Social division

There is a potential danger that there will be an increase in the

social divide between technical haves and have-nots – so people who

do not have technical skills become unable to secure better-paid jobs

and could form an underclass with potentially dangerous implications

for social stability.

Reliance on telecommunications infrastructure, power and IT skills,

which in developing countries nullifies the benefits when power,

advanced telecommunications infrastructures and IT skills are

unavailable or scarce or underdeveloped.

Wasted resources: As new technology dates quickly how do you

dispose of all the old computers, keyboards, monitors, speakers and

other hardware or software?

Facilitates Just-In-Time manufacturing: This could potentially cripple

an economy in times of crisis as stocks are kept to a minimum and

delivery patterns are based on pre-set levels of stock which last for

days rather than weeks.

Difficulty in policing the Internet, which means that numerous crimes

can be perpetrated and often go undetected.

E- COMMERCE MARKET PLACE TECHNOLOGIES:

While many technologies can fit within the definition of "Electronic commerce,"

the most important are:

Electronic data interchange (EDI)

Bar codes

Electronic mail

Internet

World Wide Web

10. Enumerate and discuss the pros and cons of electronic market place technologies.

(15) (Nov ’09)

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Product data exchange

Electronic forms

Online networks and services

Screen phones

Kiosks

CD-ROM and hybrids

Interactive television

Web TV

Interactive Banking

Electronic Data Interchange (EDI):

EDI is the computer-to-computer exchange of structured business information in

a standard electronic format. Information stored on one computer is translated by

software programs into standard EDI format for transmission to one or more

trading partners. The trading partners‘ computers, in turn, translate the

information using software programs into a form they can understand.

Bar Codes:

Bar codes are used for automatic product identification by a computer. They are a

rectangular pattern of lines of varying widths and spaces. Specific characters (e.g.

numbers 0-9) are assigned unique patterns, thus creating a "font" which

computers can recognize based on light reflected from a laser.

The most obvious example of bar codes is on consumer products such as

packaged foods. These codes allow the products to be scanned at the check out

counter. As the product is identified the price is entered in the cash register, while

internal systems such as inventory and accounting are automatically updated.

The special value of a bar code is that objects can be identified at any point

where a stationary or hand held laser scanner could be employed. Thus the

technology carries tremendous potential to improve any process requiring tight

control of material flow. Good examples would be shipping, inventory

management, and work flow in discrete parts manufacturing.

Electronic Mail

Messages composed by an individual and sent in digital form to other recipients

via the Internet.

Internet

The Internet is a decentralized global network of millions of diverse computers

and computer networks. These networks can all "talk" to each other because they

have agreed to use a common communications protocol called TCP/IP. The

Internet is a tool for communications between people and businesses. The

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network is growing very, very fast and as more and more people are gaining

access to the Internet, it is becoming more and more useful.

World Wide Web

The World Wide Web is a collection of documents written and encoded with the

Hypertext Markup Language (HTML). With the aid of a relatively small piece of

software (called a "browser"), a user can ask for these documents and display

them on the user‘s local computer, although the document can be on a computer

on a totally different network elsewhere in the world. HTML documents (or

"pages," as they are called) can contain many different kinds of information such

as text, pictures, video, sound, and pointers, which take users immediately to

other web pages. Because Web pages are continually available through the

Internet, these pointers may call up pages from anywhere in the world. It is this

ability to jump from site to site that gave rise to the term "World Wide Web."

Browsing the Web (or "surfing the Net") can be a fascinating activity, especially

to people new to the Internet. The World Wide Web is by far the most heavily

used application on the Internet.

Product Data Exchange

Product data refers to any data that is needed to describe a product. Sometimes

that data is in graphical form, as in the case of pictures, drawings and CAD files.

In other cases the data may be character based (numbers and letters), as in the

case of specifications, bills of material, manufacturing instructions, engineering

change notices and test results.

Product data exchange differs from other types of business communications in

two important ways. First, because graphics are involved users must contend

with large computer files and with problems of compatibility between software

applications. (The difficulty of exchanging CAD files from one system to another

is legendary.) Second, version control very quickly gets very complicated.

Product designs, even late in the development cycle, are subject to a great deal of

change, and because manufacturing processes are involved, even small product

changes can have major consequences for getting a product into production.

Electronic Forms

An electronic form is a technology that combines the familiarity of paper forms

with the power of storing information in digital form. Imagine an ordinary paper

form, a piece of paper with lines, boxes, check-off lists, and places for signatures.

To the user an electronic form is simply a digital analogue of such a paper form,

an image, which looks like a form but which appears on a computer screen and is

filled out via mouse, and keyboard. Behind the screen, however, lie numerous

functions that paper and pencil cannot provide.

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Those extra functions come about because the data from electronic forms are

captured in digital form, thus allowing storage in data bases, automatic

information routing, and integration into other applications.

Online networks and services:

On-line services provide access to information, entertainment, communications,

and transactions services. The public switched telephone network is the typical

distribution system; cable networks, satellite, wireless networks, and the unused

portion of other specialized networks.

Advantage:

On-line networks allow users to search content and conduct transactions typically

using a GUI. The main advantage of on-line networks is their ability to offer

timely, updated information; communications capabilities, such as electronic

mail, bulletin boards, and real-time chat; and supplementation of core materials

with limited multimedia.

CD-ROMs and hybrids:

The multimedia and storage capabilities of CD-ROMs and the growth in the

penetration of CD-ROM drives in both businesses and home PC are the reasons

sought to use the CD-ROM as a marketing vehicle in the recent past.

CD-ROMs can store large amounts (650 MB or more) of data, in text and/or

graphical form. In addition, the CD-ROM provides the ability add sound, photos,

and full-motion video to a marketing interaction beyond what is offered by the

on-line medium.

Advantage:

CD-ROM medium over on-line and the internet. First CD-ROMs can store a

large amount of data, making them a good portable medium for storing large

databases of products, as well as for storing multimedia material.

Disadvantage:

Consumers at large are still relatively unfamiliar with Pc technology for buying

goods and services, compared to the use of other home appliances, such as the

telephone and television. It is also limited by the fact that it is a time-static

medium, meaning once the disk is pressed, the information is cannot be updated.

Screen phones:

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It is similar to regular telephones but has advanced features, such as credit card

readers, small screens, and keypads that can be used for a variety of interactive,

transactional, and information services. As business needs are determined, it is

necessary to establish the technological feasibility of various E-commerce plans

that could meet the needs. The starting point should be a clear sense of what

functions each E-commerce technology can provide to improve business

functioning.

Interactive television and video dial tone :

Interactive television if available, enables consumers to view advertising about

specific products and place orders through the television screen using a remote

control and a special set-top box attached to the cable television line into the

home.

It has a vast potential audience.

Due to the success of home shopping network marketers are conviced that

consumers feel comfortable purchasing products in this manner.

Interactive television is delivered via broadband networks and can support the

highest qulity multimedia marketing and advertising information of any other

medium.

Narrowcasting the advertisements to the subscribers based on their viewing

habits.

Web TV:

A new technology by name web TV is yet another vehicle for Ecommerce

It is a fusion of technologies.

Intercasting is a technology developed by Intel that interwines WWW pages with

TV broadcasts.

With it video producers can backup their real time broadcasts with al the

resources of the Internet.

For Eg. Advertisers could offer viewers the opportunity to purchase their

products or obtain more information about them.

It is a medium that combines the digital power of the PC, the global interactivity

of the Internet, and the rich programming of television.

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Interactive Banking :

Many banks are offering another form of electronic commerce known as

interactive banking.

This generally refers to the methods that allow their customers to conduct some

of their bank business over the phone or with a a PC using a Touch tone

telephone, customers can check their account balances, pay bills , order

statements and so forth.

Home banking has been offered for over a decade with mixed results.

Interactive banking offers interest-bearing checking, direct deposit and electronic

bill payment over the web.

We summarize these in the below given table:

Most Powerful Functions of Each E-commerce Technology

Technology Business Value

EDI 1. Integration of incoming and outgoing

structured data into other applications (e.g., use of

customer orders to schedule production)

2. Lowers cost when transaction volume is high

3. Eases communication with many different

trading partners (customers, suppliers, vendors)

Bar Code 1. Locate and identify material

2. Integrate location and identification

information with other applications and data bases

(e.g., bar codes inserted at loading dock can be

integrated into an advance ship notice EDI

transaction).

Electronic mail 1. Free-text queries to individuals or groups

2. Share information via simple messages

3. Share complex information (via attachments)

4. Collaboration across distance (by making it

easier to communicate and share information)

World Wide Web 1. Present information about company

2. Search for information from a large number of

sources

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3. Electronic commerce -- buy/sell products and

services

4. Collaboration, information sharing among

selected users within or without a company

Product Data

Exchange

1. Accurate product details transmitted to trading

partners

2. Oversight of trading partners design work

3. Collaborative engineering across distance

Electronic Forms 1. Managing processes when human oversight,

approvals, or information input needs to be combined

with standard elements of information (e.g., catalogue

data)

2. Tracking progress in a process where many

people are involved doing different activities

3. Integrating human input data with automated

data

4. bases or applications

5. Electronic commerce (through integration

with the WWW and internal systems)

CLASSIFICATION

Classifying e-commerce is by identifying the partners directly involved in the

transaction. An informal version of this frame work is being loosely applied in

the use of the terms business-to-business (B-to-B), business-to-consumer (B-to-

C) and consumer-to-consumer (C-to-C). But what exactly does this mean?

The framework that is summarized in Figure 1 identifies a range of relationships

based on the party that initiates the transaction and the party that accepts the

transaction. The party originating the e-commerce trans-action also includes the

facilities for initiating and fulfilling it. For example in the case of B-to-C, a

business sets up a website that invites and enables consumers to buy their

products and then fulfils the purchase. But the consumer actually initiates the

11. Explain E-Business model based on relationship of transaction types. (7)

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transaction by requesting and then accepting the purchase. So there are a number

of exchanges that take place between the parties before the transaction is

completed and fulfilled.

MAINLY CLASSIFIED AS: BUSINESS TO BUSINESS (B2B)

BUSINESS TO CUSTOMER (B2C)

CUSTOMER TO CU STOMER (C2C)

Fig 1. Classification of e-commerce by transaction partners

1. Approaches:

A Business Model is the method of doing business by which a company

can sustain itself, that is generates revenue.

The Business Model spells out how a company makes money by

specifying where it is positioned in the value of chain.

Example Radio and TV aired free.

2. Models and Methodologies:

Although there are many different ways to categorize e- business models,

they can be broadly categorized as

(1) E- business Model based on the relationship of transaction parties

(2) E- business Model based on the relationship of transaction types

E- Business Model based on the relationship of transaction parties

Business Business

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B2C : Sells products or services directly to customers, e.g. amazon.com

B2B : Sells products or services to other business, or brings multiple

buyers and sellers together in a central market place, e.g. Chemdex.com

B2G: Business selling to local, state and federal agencies, e.g. iGov.com

C2C : Consumers sell directly to other consumers, e.g. ebay.com

C2B : Consumers fix price on their own, which business accept or

decline. E.g. Priceline.com

B2B B2C

Fig: Relation between B2B and B2C

B2C:

How B2C works

Visiting the virtual mall

Customer registration

Customer buys the product

Merchant process the order

Credit card is processed

Operations management :e.g. quality management

Shipment or delivery

Customer receives

Raw

Material

Producer

Manufact

urer

Distributor Retailer Consumer

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After sales service

Benefits of B2C

Inexpensive cost

Big Opportunities

Globalization

Reduced operational coast

Customer convenience

Knowledge management

Barriers of B2C

You can see but you can not touch, feel and smell

Digital Photographs are not color accurate

Consumer expects high service standards

Trusting the company/brand

Financial security

Personal Data

B2B:

How B2B works: Tools and techniques

Use of pricing as a tool

Use of application service provider Model

Use of generic Model which are known for efficiency as well as

personalized attention to various business customers

Use of Comparison shopping

B2B Transaction Model

B2B Storefronts: Provide business with purchase, order fulfillment and

other value added services. E.g. Staples.com

B2B vertical Markets: Provide a trading community for specifying

industry. E.g. HotelResource.com

B2B aggregators: Provide a single marketplace for business purchasing

for multiple suppliers egChemdex.com

B2B trading hubs: Provide a market place for multiple vertical markets.

E.g. VerticalNet.com

B2B Post and browse Markets: Provide Marketplace where participants

post buy and sell opportunities e.g. CATEX.com

B2B auction markets: Provide a market place for buyers and sellers to

enter competitive bids and contracts e.g. FreeMarkets.com

B2B fully automated exchanges: Provide a market place for the automatic

matching of standardized buy and sell contracts. E.g. PaperExcange.com

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Benefits of B2B

Direct interaction with customers

Focused sales promotion

Building customer loyalty

Scalability

Savings in distribution cost

E- Business Model based on the relationship of transaction types

This business model is usually controlled by two parameters namely Control and

value Integration. Based on these five types of transaction can be identified:

Brokerage:

Aggregator : Connects buyers and sellers

Info-mediary: Provides information e.g. yahoo.com

Community:

Value chain: portals e.g. yahoo.com

SECURE SOCKET LAYER (SSL):

Secure Socket Layer, SSL; was introduced by Netscape, then standardized,

became TLS –Transport Layer Security, RFC 2246.

– Typical example: Web browsers and other Client sever architectures (RDBMS,

for example).

– Provides encryption and authentication.

– Services can easily be configured on top of SSL, w/o requiring much

knowledge of it.

It is a whole new layer of protocol which operates above the Internet TCP

protocol and below high-level application protocols.

WHAT SSL CAN DO?

• SSL uses TCP/IP on behalf of the higher-level protocols.

• Allows an SSL-enabled server to authenticate itself to an SSL-enabled

client;

• Allows the client to authenticate itself to the server;

• Allows both machines to establish an encrypted connection.

What Does SSL Concern?

12. Write short notes on the following: (Nov ’10)

a) Electronic Data Interchange. (5)

b) Screen Phones. (5)

c) Secure sockets layer. (5)

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• SSL server authentication.

• SSL client authentication. (optional)

• An encrypted SSL connection or Confidentiality. This protects against

electronic eavesdropper.

• Integrity. This protects against hackers.

• SSL includes two sub-protocols: the SSL Record Protocol and the SSL

Handshake Protocol.

• Record Protocol -- defines the format used to transmit data.

• Handshake Protocol -- using the Record protocol to exchange messages

b/t an SSL-enable server and an SSL-enable client.

The exchange of messages facilitates the following actions:

Authenticate the server to the client; Allows the client and server to select a

cipher that they both support; Optionally authenticate the client to the server; Use

public-key encryption techniques to generate share secrets; Establish an

encrypted SSL connection.

How does SSL Work?

• How a client and a server create a secure connection?

• The SSL protocol uses RSA public key cryptography for Internet

Security.

• Public key encryption uses a pair of asymmetric keys for encryption and

decryption.

• Each pair of keys consists of a public key and a private key. The public

key is made public by distributing it widely; the private key is always kept secret.

• Data encrypted with the public key can be decrypted only with the private

key, and vice versa.

The SSL handshake is now complete. The server and the client use the session

keys to encrypt and decrypt the data they send to each other and to validate its

integrity.

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13. Describe the commerce Net Activities and goals. (8) (May 10)

o CommerceNet is the leading industry consortium, dedicated to

accelerating the growth of Internet commerce and creating

business opportunities for members.

o CommerceNet sees itself as serving as the prototype for an open

twenty-first-century Internet-based organization.

o CommerceNet and its members are developing elements of the

infrastructure model for the future support of web commerce.

o This is achieved through development, implementation, and

expansion of the technical and institutional protocols required to

impact electronic commerce to all worldwide markets.

o Launched in Silicon Valley in 1994, CommerceNet has grown to

over 200 member companies and organizations worldwide.

o CommerceNet pioneered web commerce by legitimizing the

Internet as a place for business, developing key elements of the

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infrastructure such as security and payment, and fielding pilot

demonstrations.

o CommerceNet is a not-for-profit market and business

development organization, with the mission of accelerating the

growth of Internet commerce and creating business opportunities

for its members.

o The organization approaches issues from a multidisciplinary

perspective encompassing technology, business process, and

regulatory policies.

o CommerceNet operates as a virtual organization, relying heavily

on the expertise and resources of its members as well as other

industry associations.

o Members of CommerceNet include leading U.S. computer

companies, VANs, Telcos, on-line services, money center banks,

and credit card processors.

o During 1996, in partnership with Nielsen, CommerceNet

produced the first definitive survey documenting the explosive

growth of the Internet marketplace; the recontact follow-up

Nielsen/ CommerceNet survey become available August 1996.

o CommerceNet was involved, directly or indirectly, in the

formation of many promising internet startups, including Cyber-

Cash, I/Pro, Internet Shopping Network, Netscape, Open market,

Saqqara, and Terisa Systems.

o CommerceNet and its members developed and demonstrated the

first security and payment protocols for the World Wide Web,

paving the way for securing transactions. They are working on

protocols for efficiently searching multiple directories and

catalogs.

o CommerceNet organized more than 10 pilots to demonstrate the

bottom-line potential of Internet commerce.

Four synergistic goals to ensure a successful transition:

Developing the infrastructure to support mass-market Internet-based

commerce on a global scale

Jump-starting key vertical markets

Engaging business in many more industries and geographic regions

Creating a conducive legal and regulatory environment The members of CommerceNet includes

a. Leading US computer companies

b. VAN

c. Telcos

d. On-line services.

e. Money center banks.

f. Credit card processors.

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CommerceNet is helping the industry converge on a standard architecture

by endorsing key protocols and APIs and certifying the conformance and

interoperability of its members‘ products.

It is also organizing global communities of interest around important

vertical markets.

CommerceNet focuses on large international service industries such as

finance, publishing, and shipping, as well as on manufacturing industries such as

electronics, automobiles, and software, with international supply networks.

CommerceNet does most of its work through its task forces, SIGs (special

interest groups).

R & D performed by CommerceNet laboratories.

CommerceNet Activities and Goals:

1. Advocacy

Promoting a legal and regulatory environment that fosters global

commerce.

CommerceNet engages business and government in a constructive

dialogue on issues such as trade, tariffs, taxation, privacy, and

copyrights.

2. Business outreach

Providing business decision makers with real-time knowledge to

assist them in developing their Internet commerce strategies.

CommerceNet provides executive briefings, seminars,

conferences, and consulting services.

3. Vertical industry solutions

Jump-starting key e-commerce by linking communities of interest

involved in vertical market segments such as financial or health

care services, manufacturing supply chains, or retail inventory

management.

4. E-commerce infrastructure (E—co system)

Defining an open architecture and populating it with interoperable

network and e-commerce services from multiple vendors that

enhance the basic reliability, performance, and security of the Net

and provide essential services such as payments, directories, and

EDI.

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14. THE ELECTRONIC COMMERCE ENVIRONMENT

E-Commerce technologies:

The three e-Commerce technologies are:

Electronic Markets


Internet Commerce

(i) The Virtual Corporation:

Electronic commerce goes hand in hand with changes that

are occurring in corporation. The 1990s have seen the rise

of a new form of industrial organization—the networked

firm, sometimes known as the virtual organization.

The virtual company is based on a network-centric

paradigm

Use of communication mechanisms enables the virtual

firm to focus on core competencies, to engage outsourcing

of noncritical administrative functions, and to make use of

pools of specialized subcontractors.

Interorganizational communications networks in order to

exchange data and information in the day-to-day

management and operations of business.

It allows the organization to leverage information and

communication resources with all its constituencies,

including employee, customers, bankers, government

agencies, suppliers, advertisement agencies, and the public

When an organization does business electronically, it can

do business from anywhere and to anywhere, 24 hours a

day, 7 days week.

Electronic

Markets

Internet

Comerce

EDI

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This transforms a company into a virtual organization

because, electronically, it is located wherever employees,

suppliers, and customers need to conduct business and

without time boundaries,

In fact, according to proponents, electronic commerce is

now a corporate survival issue.

Today, the network is the channel of goods distribution

Just as in the past access to physical distribution channels

was important, today having a global-reach network is

becoming a critical business survival issue.

Naturally, that network does not have to be wholly owned

by the corporation.

Successful companies for turn-of-the century environments

Organization structure of the past 1960: Data processing

Organization structure of the past 1970: Infromation reporting

Organization structure of the late 1980: Planning & management

Information

Organization structure of the late 1990: Electronic commerce

Today the network is the channel of goods distribution. Just as in the past access

to physical network is becoming a critical business survival issue. Naturally that

network does not have to be wholly owned by the corporation

That network may be comprised of:

1. Traditional enterprise network

2. An intranet

3. The internet

4. Other intercompany specialized network

5. Inter national extension

Internet technology can be used both for external application and internally there

are clear synergistic opportunity that can positively influences electronic and web

commerce

What makes a virtual corporation successfully is the scope, reach; compatibility

and transparency of the corporation networking infrastructure .Networking and

networking management are the critical enablers of e-commerce

Networking enables moving the power of information to the point of sales or

services to achieve, among other goals, unlimited, transparent access to critical

business applications.

Companies with ubiquitous, reliable and interoperable network are creating new

business models that impact their industries

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For example: Hewlett-Packard

(ii) The electronic marketers

Electronic marketers are defined as companies that market their

products and services to other business or consumers through

private online network, commercial on-line services such as

prodigy and America online

The tools used are the internet , CD-ROM telecommunication-

enhanced CD-ROM, interactive television and Web TV and

floppy disk media.

These marketers are faced with the challenge of creating a critical

mass of customer for their CD-ROM, internet, or on-line

electronic marketplaces

Electronic commerce frees retailers and consumers from many

store constraints.

It changes the dynamic in terms of cost, reach, options, or speed.

The use of information and communications technology to present

a range of offerings available in a market segment and hence

enable:

the purchaser to compare the prices (and other attributes);

Make a purchase decision.

The usual example of an electronic market is an airline

booking system.

There is the potential for new electronic markets to be created using

Internet technologies.

(iii) The catalyst of electronic and web commerce

The growth of the Internet in terms of people accessing it is now

being viewed as one of the greatest transformation in society in the past

25 years.

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Even the growth and impact of the PC was not as strong, in the

view of some observers.

The internet is an aggregation of networks connecting computers

which is seen as one network by the user.

The Internet, defines in terms of size and reach, is the largest, most used data

network of all. There are three components to the internet today

2. a multitude of access/delivery sub networks all over the country

3. a dozen or so national interconnected backbones

4. thousands of private and/or institutional networks

The key to the internet potential is its ability to interactively

communicate information.

Large database which previously were available only to firms with

their own enterprises network and computing facilities can now be easily

accessed over the network

New fee-based information services and electronic publications

are becoming popular as they add value to the internet

Available communication apparatus

Electronic commerce clearly depends on the availability of reliable,

inexpensive and ubiquitous connectivity. In this context there are 5 relevant

elements

1.Organization own enterprise network which house appropriate

information usually beyond the organization firewall apparatuses

2.The public –switched telephone network. This is generally constituted

of local exchange carriers and competitive LECs at the local level and a

multitude of Interexchange Carriers at the national backbone level

3.The Internet .AS described this consists of ISPs and NSPs and provides

a large inter enterprise infrastructure

4. On-line network such as America Online which utilize their own

communication and information facilities. They can be accessed by dial-up or

private lines and now have access to the Internet

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5.Specialized industry network, such as those to support EDI

15. BASIC WEB COMMERCE CONCEPTS

E-COMMERCE Definition:

Sharing business information, maintaining business relationships and

conducting business transactions using computers connected to a

telecommunication network is called E-Commerce .

Electronic commerce encompasses several methods of connecting buyers

and sellers, including advertising, product, demonstrations, catalogs, and

directories.

An electronic marketplace, therefore, is the digital environment or locale

where a marketer presents these promotional messages and where a potential

buyer can purchase a marketer‘s products or services and request more

information.

Electronic Commerce encompasses one or more of the following

o EDI o EDI on the internet o E-mail on the internet o Shopping on the world wide web o Product sales and services sites on the web o Electronic banking or funds transfer o Outsourced customer and employee care operations

Electronic Commerce o Automates the conduct of business among enterprises, their

customers, suppliers and employees-anytime, anywhere. o Creates interdependencies between your company’s value chain and

those of your suppliers and customers.

The capabilities required for internet/web commerce

Enable buyers to inquire about products

Enable sellers to advertise products

Enable financial organizations to serve as intermediates to accept

payment authorization

Enable sellers to notify the logistics organizations electronically to

deliver the goods

The tools are electronic but the application is commerce Commerce is not accounting or decision support or any other internally

focused function Commerce is externally focused on those with whom you do business

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Commerce is doing business, not reporting on it or sending messages about it.

The following is the list of the objectives of this electronic commerce initiative,

as quoted from President Clinton’s memorandum addressed to the heads of

executive departments and agencies of the U.S government.

Exchange procurement information, such as solicitations, offers,

contracts, purchase orders, invoices, payments, and other contractual documents, electronically between the private sector and the federal government to the maximum extent practical.

Provide businesses, including small, disadvantages, and women owned businesses, with greater access to federal procurement opportunities.

Ensure that potential suppliers are provided simplified access to the federal government electronic commerce system

Employ nationally and internationally recognized data formats that serve to broad and ease the electronic interchange of data.

Use agency and industry systems and networks to enable the government and potential suppliers to exchange information and access federal procurement data.

WHAT ARE THE KEY DRIVERS?

It is important to identify the key drivers of e-commerce to allow a

comparison

between different countries. It is often claimed that e-commerce is more

advanced in the USA than in Europe.

These key drivers can be measured by a number of criteria that can

highlight the stages of advancement of e-commerce in each of the respective

countries. The criteria that can determine the level of advancement of e-

commerce are summarised in

Table 1.1 and can be categorised as:

1. Technological factors – The degree of advancement of the telecommunications

infrastructure which provides access to the new technology for business

and consumers.

2. Political factors – including the role of government in creating government

legislation, initiatives and funding to support the use and development of e-commerce and information technology.

3. Social factors – incorporating the level and advancement in IT education and

training which will enable both potential buyers and the workforce to understand and use the new technology.

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4. Economic factors – including the general wealth and commercial health of the nation and the elements that contribute to it. Since a distinction has been made in this book between e-commerce and e-business for consistency, the key drivers of e-business are also identified.

These are mainly at the level of the firm and are influenced by the macro-

environment and e-commerce, which include:

Organisational culture – attitudes to research and development (R&D); its

willingness to innovate and use technology to achieve objectives.

Commercial benefits – in terms of cost savings and improved efficiency that

impact on the financial performance of the firm.

Skilled and committed workforce – that understands, is willing and able to

implement new technologies and processes.

Requirements of customers and suppliers – in terms of product and service

demand and supply.

Competition – ensuring the organisation stays ahead of or at least keeps up

with competitors and industry leaders.

These key drivers for the implementation of e-business can be put

into the context of the classic economic equation of supply and demand

Elements of e-commerce

Qualities for successful market place:

Utilities and existing customer base

Makes an existing market place more effective

Brings together the communities

Easily accessible, wide distribution

Offers decision support information

Ability to close the sale

Security issues of e-commerce

Secure payments – Digi cash, e-cash

Secure transactions (SEPP, SET)

Message transfer, confidentiality, authentication

S-HTTP, SSL

Size of electronic market place

E-Commerce technologies:

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The three e-Commerce technologies are:

Electronic Markets


Internet Commerce

E-Commerce in perspective:

Electronic markets:

The use of information and communications technology to present a

range of offerings available in a market segment and hence enable:

the purchaser to compare the prices (and other attributes);

Make a purchase decision.

The usual example of an electronic market is an airline

booking system.

There is the potential for new electronic markets to be created

using Internet technologies.

Electronic

Markets

Internet

Comerce

EDI

Electronic

Internet Comerce

EDI

Markets

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The usual example of an electronic market is an airline booking system.

There is the potential for new electronic markets to be created using

Internet technologies.

WEB COMMERCE GOING FORWARD

o Web commerce on the Internet will no doubt be growing at a rapid

pace over the next few years. Businesses that pursue Web

commerce at this formative time place themselves in a position to

benefit in the near future; at the same time there are some risks.

o Transaction security is one of the open issues. Solutions and open

specifications have been proposed. The time has come to start

implementing 20-yeat-old encryption technology for general

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network transmission and evolving transaction standards (e. g

SET ) for business transactions.

o Business will need to use encryption and digital signature

techniques to ensure that proprietary customer information is

protected.

o When organizations establish web servers as extensions of their

enterprise/internet networks, rather than relying on an isolated

and/or ISP-provided server, these organizations also need to

protect the rest of the internal network with packet filters,

firewalls, proxies, and bastion methods.

o Open EDI provides a less-expensive alternative to electronic

commerce than traditional EDI systems based on proprietary

protocols and closed user groups.

o The lowering of barriers to entity into electronic commerce in

general and web commerce in particular will make it

economically feasible for many new businesses to enter the

market.

o Specifically, interoperability will lower barriers to entry by

increasing the number of participants in electronic markets,

thereby lowering the cost per transaction.

The commerce Net Consortium has established an Electronic Data

Interchange interest Group to promote the development and use of EDI

technologies over the Internet with the following goals:

Define an architecture that links buyers, sellers, and service

providers through the Internet as well as proprietary networks

Develop a set of electronic commerce services for use in the

commercial and government sector.

Enable the expansion of EDI technologies in ways that make it

economical and practical for all type of organizations and

individuals to use the EDI-Based services.

EXAMPLES:

The cost of merging EDI with in-house databases and paying for

private value-added networks, which ensure some level of secure

transmissions, has kept small businesses from using EDI.

Various companies are now putting in place internet-based

systems for EDI.

GE‘s Trade Web is one such system.

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GE takes care of all the EDI-related hardware and software- a

potentially complicated and expensive undertaking- and requires

only that the client have a computer, internet access and a web

browser.

Trade web converts all EDI transactions, such as purchase orders

and invoice acknowledgments, to forms-based web documents.

Electronic Data Interchange (EDI):




delays and errors implicit in paper handling







delays and errors implicit in paper handling.




Internet commerce:

Information and communications technologies can also be used to

advertise and make once-off sales of a wide range of goods and services.

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This type of e-Commerce is typified by the commercial use of the

Internet. The Internet can, for example, be used for the purchase of books 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.

It is to be noted that the Internet is not the only technology used for this

type of service and this is not the only use of the Internet in e-Commerce.

Information and communications technologies can also be used to

advertise and make once-off sales of a wide range of goods and services.

This type of e-Commerce is typified by the commercial use of the

Internet. The Internet can, for example, be used for the purchase of books 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.

It is to be noted that the Internet is not the only technology used for this

type of service and this is not the only use of the Internet in e-Commerce.

Internet:

– A collection of computers that speak a common language TCP/IP.

• The computers are all connected to each other.

• Information can pass from one computer to another

through several other computers.

• World Wide Web (Web):

– A collection of multimedia hypertext documents that reside on

computers and that can be accessed by other computers on the Internet.

• Started as a US government project in 1969.

• The purpose was to create a net that can function even if one center is

destroyed in a military attack.

– ―Hub and spokes‖ can be useless if the hub is destroyed.

– Network can continue to be functional even if some nodes are

destroyed, as long as information can pass through other nodes.

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E-commerce can be said to consist of:

• E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes

gathered into a "virtual mall"

As a place for direct retail shopping, with its 24-hour availability, a global reach,

the ability to interact and provide custom information and ordering, and

multimedia prospects, the Web is rapidly becoming a multibillion dollar source

of revenue for the world's businesses. A number of businesses already report

considerable success.

• The gathering and use of demographic data through Web contacts

In early 1999, it was widely recognized that because of the interactive nature of

the Internet, companies could gather data about prospects and customers in

unprecedented amounts -through site registration, questionnaires, and as part of

taking orders. The issue of whether data was being collected with the knowledge

and permission of market subjects had been raised.

• Electronic Data Interchange (EDI),

EDI is the exchange of business data using an understood data format. It predates

today's Internet. EDI involves data exchange among parties that know each other

well and make arrangements for one-to-one (or point-to-point) connection,

usually dial-up.

• E-mail and fax and their use as media for reaching prospects and established

customers (for example, with newsletters)

E-commerce is also conducted through the more limited electronic forms of

communication called e-mail, facsimile or fax, and the emerging use of telephone

calls over the Internet. Most of this is business-to-business, with some companies

attempting to use e-mail and fax for unsolicited ads (usually viewed as online

junk mail or spam) to consumers and other business prospects. An increasing

number of business Web sites offer e-mail newsletters for subscribers. A new

trend is opt-in e-mail in which Web users voluntarily sign up to receive e-mail,

usually sponsored or containing ads, about product categories or other subjects

they are interested in.

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• Business-to-business buying and selling

Thousands of companies that sell products to other companies have discovered

that the Web provides not only a 24-hour-a-day showcase for their products but a

quick way to reach the right people in a company for more information.

• The security of business transactions

Security includes authenticating business transactions, controlling access to

resources such as Web pages for registered or selected users, encrypting

communications, and, in general, ensuring the privacy and effectiveness of

transactions. Among the most widely-used security technologies is the Secure

Sockets Layer (SSL).

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