*Chapter 1: Electric commerceAn introduction to e-Commerce outlining:The three basic e-Commerce technologiesThe trading exchanges to which they apply

"The happiest people don't necessarily have the best of everything; ..............................They just make the best of everything they have !!"

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Internet Applications and E-Commerce Lecture No.1 *

*Definition of e-CommerceFormulating commercial transactions at a site remote from the trading partner and then using electronic communications to execute that transaction.

In Simple Words:

Electronic commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services and information via computer networks including the internet.

The definition includes business to business and business to consumer transactions.

E-Commerce ClassificationA common classification of EC is by the nature of transaction:Business-to-business (B2B): electronic market transactions that take place between organizations.Business-to-consumer (B2C): retailing transactions with individual shoppers typical shopper at Amazon.com is a consumer.Consumer-to-consumer (C2C): consumer sells directly to consumers, examples - individuals selling in classified ads, auction sites allowing individuals to put up items for auction e.g. e-bay*

EC ClassificationConsumer-to-Business (C2B): individuals who sell products or services to organizations and those who seek sellers and conclude a transaction.Intra-business (organizational) EC: all internal organizational activities involving exchange of goods, services or information, selling corporate products to employees, online training and cost reduction activities.Non-business EC: academic institutions, not-for-profit organizations, religious/social organizations and government agencies using EC to improve their operations, customer service and reduce expenses.

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What is the Web ?The Web is a protocol that uses the internet as the communication structure.The web links documents stored in computers that communicate on the internet. Based on Hypertext Transfer Protocol (HTTP) - native protocol of WWW designed for making web page requests.

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BasicsWeb client- machine that initiates internet requestWeb server machine that services internet requestBrowser - software at the client side to interact with web dataIntranet an internal network of computers confined to a single place Extranet when two or more intranets are connected with each other, they form an Extranet e.g. VPN (Virtual Private Network)Internet a global network of networks.*

Side Effects of http transfers A record is left of all web transactionResides in log files generated at the serverGood news : user data recorded Bad news: what about user privacy?Common log file (CLF) format identity, date, request, status etc. *

What is a network?A network can be anything from a simple collection of computers at one location connected through a connectivity media to the internet (a global network of networks)Local Area Network (LAN) is a server-based network confined to a particular area/placeMost LANs consist of many clients and a few servers

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Who and Why should use the Internet?Every organization needs to consider whether it should have an Internet presence and, if so, what should be the extent. Key factors are:1-How many existing or potential customers are likely to be Internet users? search costs for the product or service are reasonably (even moderately) high.2-what is the information intensity of a company's products and services? An information-intense product is one that requires considerable information to describe it completely. e.g. what is the best way to describe a CD?Why should Use Internet?To reduce risks like:1- Demand Risk e.g. Typewriter Market2-Innovation Risk i.e. response to customers demand for innovative products 3-Inefficiency Risk i.e. to lower costs by distributing more information electronically

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Internet Presence Grid: Model for Determining which companies should be using internet?*Prime Candidate

*E-Commerce technologiesThe three e-Commerce technologies are:Electronic MarketsElectronic Data Interchange - EDIInternet Commerce

Electronic

Markets

Internet

Commerce

EDI

*Electronic marketsThe use of ICTs (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 Data Interchange (EDI)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.

*Internet commerceInformation 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, e.g. 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.

*The trade cycleConducting a commercial transaction involves the following steps:Pre-Sale:Search - finding a supplierNegotiate agreeing the terms of tradeExecution:OrderDeliverySettlement:InvoicePaymentAfter-sales, e.g. warrantee and service

*Generic trade cyclesThe trade cycle varies depending on:The nature of the parties to the transactionThe frequency of trade exchangesThe nature of the goods or services being exchanged.

Three generic trade cycles can be identified:Regular, repeat transactions between commercial trading partners (Repeat)Irregular transactions between commercial trading partners (Credit)Irregular transactions in once-off trading relationships (commercial or retail) (Cash)

*Generic trade cycles

Trade Cycle:

Cash

Credit

Repeat

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

*Electronic marketsEmphasis on the search phase of the trade cycleTypically an inter-organisational credit trade cycle

Limited applications airline seat bookings and financial sector the operation of the electronic market is not necessarily in the vendors interests.

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

EM

*Electronic Data InterchangeUsed for standardised, repeat, inter-organisational transactions

Notable users of EDI are vehicle assemblers, component suppliers, and supermarkets (and other multiple retailers), ordering the goods to restock their shelves.

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

EDI

*Internet commerceUsed for once-off transactions consumer or inter-organisational transactions.

Can apply to Search, Execution / Settlement and / or After Sales.Consumers pay at time of ordering businesses may have credit arrangements with the suppliers.

Search

Negotiate

Order

Deliver

Invoice

Payment

After Sales

Pre-Sale

Execution

Settlement

After Sale

Internet

*e-Commerce in perspectivee-Commerce is not appropriate to all business transactions and, within eCommerce, there is no one technology that can or should be appropriate to all requirements.

Electronic

Internet

Comerce

EDI

Markets

Amazon.com has relatively few employees and no retail outlets; and yet, it has a higher market capitalization than Barnes & Noble, which has more than one thousand retail outlets. Nonetheless, Barnes & Noble is fighting back by creating its own Web-based business. In this way, the Internet may spawn hybrid business strategiesthose.

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Amazon.com, Inc. is a US-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc., as of January 2010.[3]Jeff Bezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. The company was originally named Cadabra, Inc.The name Amazon.com was chosen because the Amazon River is the largest river in the world, and so the name suggests large size.Revenue US$ 24.509 billion (2009)Employees 31,200 (2010) [2]

2 "Company Profile for Amazon.com Inc (AMZN)". http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=1485834&highlight=. Retrieved 2010-11-02.3 "amazon.com". amazon.com. 2009-09-09. http://www.amazon.com. Retrieved 2010-08-29.

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Thanks to Allah*

Suggested BooksE-commerce Strategy, Technologies and Applications by David WhiteleyElectronic Commerce (4th edition) by Gary P. SchneiderElectronic commerce A Managerial Perspective by Turban et al.

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