E-Commerce Basics

Chapter One:

Understanding the New Internet Economy

Topics covered in this chapter..

Electronic Commerce Basics The Internet and World Wide Web Brief History of the Internet and WWW Who’s online now? Business in the New Economy E-Business Adv. and Disadv. E-Business Models

I. Electronic Commerce Basics Traditional Commerce vs. Electronic Traditional Commerce vs. Electronic

Commerce:Commerce:

– Traditional Commerce: where buyers and sellers come together in a marketplace to exchange goods, services,and payments.

• Brick and Mortar Marketplaces: Physical Storefronts

I. Electronic Commerce Basics

Traditional Commerce vs. Electronic Traditional Commerce vs. Electronic Commerce:Commerce:

– Electronic Commerce: Buying and selling products and services over a telecommunications network.

• Electronic marketplace or marketspace

II. When Did Electronic Commerce Begin?

Developed late 1960’s -1970’s– Banking IndustryBanking Industry used “EFT”,

Electronic Fund Transfer, to transfer funds from bank to bank.

– Large BusinessLarge Business began to use “EDI”, Electronic Data Interchange, when conducting business between their suppliers on private web networks called VANS (Value Added Networks). Too expensive for small and medium sized businesses to set up.

III. What is the Internet? What is a network?

– A group of two or more computers linked by cable or telephone lines. A “server computer” is linked to this group to allow access to shared files, printers, programs.

III. What is the Internet? (-cont.) What is the Internet?

– Public access to many worldwide networks which connect many small private networks.

– The rules for computers communicating on the internet worldwide networks are called “Protocols”. Internet protocol is TCP/IP, Transmission Control Protocol/Internet Protocol. “Rules of the Net”

IV. History of the Internet Internet started late

1960’s– US Department of

Defense -Military Networks called ARPNET

– Researchers at Colleges used this network to share research amongst universities

By mid to late 1980’s– Military created their

own separate internet network called MILNET.

– National Science Foundation used military internet and created their own-NSFnet.

IV. History of the Internet By 1989

– The internet was called the “Networks of Networks”

– In order for businesses to connect to this internet network, cables or phone modems were needed.

– Since this was expensive, at the time, small and medium sized companies connected through a HOST or Internet Service Provider, ISP

V. The World Wide Web is Founded in 1989!

Tim Berners-Lee inventor of the WWW.– Wanted to improve

information sharing on the internet through his concept of hypertext.

– The hypertext format allowed computers to retrieve documents much more easily.

– He called this hyperlink system the WWW.

VI. What Advantages Did the WWW Give Users?

World Wide Web hypertext technology allowed for– The introduction of “Web Servers” to

internet networks.– Hyperlink information through text or

picture.– The creation of “WEB” pages – It allowed web pages to contain text,

graphics,video, and audio.

VII. Who’s online? Internet Demographics

•Internet access increased in one year, 1999 to 2000, from 171 million people online to 378 million people online.

•The internet is the fastest growing industry in world history.

VIII. E-Business and the New Economy

New Internet Economy has created a new economic environment for business.– Reduced limitations for medium and small

businesses to operate online– Limitations of space and time are

disappearing– Businesses are open 24 hours/7days a week– Geographic limitations are disappearing– Mass customization vs Mass production

IX. Advantages of E-Business

Sellers Increased sales Decreased transaction

costs Open 24hr/7days Ability to reseach target

customers worldwide Global Markets Increased speed and

accuracy of transactions

Buyers Wider product

availability Personalized buying

options Shop 24/7days Easy comparison

shopping Quick delivery Participate in auctions

X. Disadvantages of E-Business

Sellers Rapid changes in

technology Insufficient bandwidth Software integration

difficulties for e-business Global market

issues:language, currency, legal issues

Shortage of skilled technical workers

Buyers Security concerns

regarding payment Lack of trust in an e-

business that is unfamiliar

Lack of “touch and feel” of product.

WWW. FORSALE.COM

XI. E-Business ModelsBusiness to Business to ConsumersConsumers

Business to Business to BusinessBusiness

Consumers to Consumers to ConsumersConsumers

Business to Business to GovernmentGovernment

Consumer to Consumer to BusinessBusiness