E Commerce

Introduction To E-Commerce
Daniel F. Duran

Traditional Commerce and Electronic Commerce
Electronic commerce refers to business activities conducted using electronic data transmission via the Internet and the World Wide Web.

.The main elements of e-commerce are:
.Consumer-to-consumer
.Business-to-consumer
.Business-to-business
.Business-to-government
.The transactions and business processes that support selling and purchasing activities on the Web

.To many people, the term electronic commerce means shopping on the part of the Internet called the World Wide Web.

.Although consumer shopping on the Web was running about $50 billion per year in 2001 and is expected to exceed $350 billion by 2004, electronic commerce is much broader and encompasses many more business activities than just Web shopping.

Electronic Commerce

.Electronic Funds Transfers (EFTs) have been used by banks for many years.
n
.Electronic Data Interchange (EDI) occurs when one business transmits computer-readable data in a standard format to another business.

Electronic Data Interchange (EDI)

the standards based (ASC X12 and UN/EDIFACT) application to application transfer of business documents between computers and business partners

Electronic Commerce

Businesses who engage in EDI with each other are called trading partners.

.The standard formats used in EDI contain the same information that businesses have always included in their standard paper invoices, purchase orders, and shipping documents.

.Firms, such as General Electric and Wal-Mart, have been pioneers in using EDI to improve their purchasing process

EDI Delivery Systems

.VAN - Value Added Network
.a third-party entity facilitates the electronic exchange of information and payments between subscribers and their trading partners.

.Over 90% of Fortune 1,000 firms use EDI
.But only 5% of smaller firms do
.very secure - very mature
.often criticized as costly and technical
.the Internet - Web Based Communications System
.standards still being defined –
.has the potential to dramatically reduced costs
.noffers the opportunity to eliminate the third party intermediary.

Activities as Business Processes

.Business processes refer to the group of logical, related, and sequential activities and transactions in which businesses engage, including:
.Transferring funds
.Placing orders
.Sending invoices
.Shipping goods to customers

Advantages of Electronic Commerce

. Electronic commerce can increase sales and decrease costs.
. Web advertising reaches a large amount of potential customers throughout the world.
. The Web creates virtual communities for specific products or services.

. A business can reduce its costs by using electronic commerce in its sales support and order-taking processes.

. Electronic commerce increases sale opportunities for the seller.
. Electronic commerce increases purchasing opportunities for the buyer.

. Some business processes are difficult to be implemented through electronic commerce.
nReturn-on-investment is difficult to apply to electronic commerce.
. Businesses face cultural and legal obstacles to conducting electronic commerce.

International Electronic Commerce

. About 60 percent of all electronic commerce sites are in English, therefore many language barriers need to be overcome.
.The political structures of the world present some challenges.

. Legal, tax, and privacy are concerns of international electronic commerce.

The Role of Electronic Commerce

. Businesses and individuals can use electronic commerce to reduce transaction costs.

. Network economic structure – companies coordinate their strategies, resources, and skill sets by forming long-term, stable relationships with other companies and individuals based on shared purposes.