Introduction to e-commerce

• e-commerce is conducting of business activities electronically over

computer networks.
• It includes any business transaction executed electronically between
• Companies
• Companies and consumers
• Consumers and consumers
• Public sector to citizens
• Public sector to public sector

• Business activities that are strong candidate for conversion to e-commerce

are ones that are paper based time consuming, and inconvenient for
customers
Business-to-Business e-commerce
• B2B e-commerce is a subset of e-commerce in which all the participants
are organizations.
• B2B e-commerce is a useful tool for connecting business partners in
virtual supply chain to cut resupply times and reduce costs.
Business-to-Consumer e-commerce
• B2C e-commerce is a form of e-commerce in which customers deal
directly with an organization and avoid intermediaries
• Used to sell directly to consumers, producers, or providers of consumer
products
• Used to eliminate the middlemen or intermediaries -disintermediation
• Squeezes costs and inefficiencies out of the supply chain and can lead to
higher profits for businesses and lower prices for consumers
• Tool for placing orders, internet enables shoppers:
• compare prices, features and value and to check other customers
opinions.
B2C e-commerce (continued)
• Reason for the growth in B2C e-commerce:
• Shoppers find many goods and services are cheaper when purchased online
• Shoppers have the ability to design to personalized product
• Effective use of social media networks by many companies looking to
reach consumers, promote their products and generate online sales
• Consumers researching products online but then purchasing those products
at a local brick and mortar store
• Such sales is called web-influenced sales
C2C e-commerce
• They used a third party to facilitate the process

•
e-Government
• The use of ICT to
• simplify the sharing of information,
• speed formerly paper based process
• improve r/ship between citizens and government
• Includes G2G, G2C, G2B each with different applications
• Mobile commerce
• Relies on the use of mobile devices such as tablets and smartphones, to
place orders and conduct business.
• Number of mobile Web sites worldwide is growing rapidly because the use
in wireless technologies
Advantages of electronic and mobile commerce

 Conversion to an e-commerce or m-commerce system enables

organizations to:
 Reach new customers. (Instagram advertising)
 Reduce the cost of doing business.
 Speed the flow of goods and information.
 Increase the accuracy of order processing and order fulfillment.
 Improve the level of customer services.
E-commerce challenges
 E-commerce challenges:
 Dealing with consumer privacy concerns (1/3 of all adults wouldn’t buy
online due to privacy concerns).
 Overcoming consumers’ lack of trust.
 Overcoming global issues (cultural, language, time and distance,
infrastructure, currency, and legal challenges).
Electronic & mobile commerce application
Manufacturing
 Electronic exchange: an electronic forum where manufacturers,
suppliers, and competitors buy and sell goods, trade market
information, and run back-office operation.
 Private exchanges: The owner uses the exchange to trade
exclusively with established business partners.
 Consortium-operated exchanges: Run by a group of traditionally
comparing companies with common procurement needs.
 Independent exchanges: Open to any set of buyers and sellers
within a given market
Electronic & mobile commerce application
Electronic & mobile commerce application
Marketing
 Market segmentation: the identification of specific markets to
target them with tailored advertising messages.
 In the past, market segmentation has been difficult for B2B
marketers because firmographic data (address, financials, number
of employees, industry classification code) was difficult to obtain.
 eXelate (a subsidiary of Nielson) Provides data as a service
solution that customers can use to access a database of more than
250 million business records.
Electronic & mobile commerce application
Advertising
 Mobile buying methods and impressions:
 Cost per thousand (CPM)
 Cost per click (CPC)
 Cost per action (CPA). (Youtubers)
 Three main measures of success:
 Number of users reached.
 Click-through rate (CTR).
 Number of actions users take.
Bartering
 With the economic downturn, many people and businesses.
Electronic & mobile commerce application
Retargeting
 An average of 74% of all online shopping carts are abandoned.
 Advertisers use retargeting to recapture those shoppers by using
targeting and personalized ads to direct shoppers back to a
retailer’s site.
Price comparison
 Mobile phone apps enable shoppers to compare prices and
products online.
 In some cases, shoppers can simply scan an item’s barcodes.
Electronic & mobile commerce application
Couponing
 less than 1% were redeemed.
 Shoppers can subscribe to mobile coupon aggregators.
 Mobile coupon redemption rate is expected to increase due to coupon
integration in social networks.
Investment & Finance
 The internet has revolutionized the world of investment and finance.
 The brokerage business adapted to the internet faster than any other arm of
finance.
Banking
 Online banking customers can: Check balances. Transfer money Pa bills.
Technology infrastructure required to support e-
commerce and m-commerce
• Successful implementation of e-business requires significant
changes to existing business processes and substantial investment
in IS technology.
• Technology components must be chosen carefully and integrated
to support large volume of transactions
• Poor website performance drives to abandon some e-commerce
sites in favor of those with better, more reliable performance
Cont’d…
Cont’d…
Hardware
 The Web servers require storage capacity and computing power depending on
• The software that must run on the server.
• The volume of e-commerce transactions that must be processed
 Successful e-commerce solutions are designed to be highly scalable.
 Key Website performance measure:
• Response time
• Transaction success rate
• System availability.
 Key decision for a new e-commerce company:
• Choosing whether to host its Web site or to enlist a third-party Web service provider.
Cont’d…
Web server software
 Fundamental services needed in Web server software:
• Security and identification
• Retrieving and sending Web pages.
• Web site tracking Web site development Web page development
E-commerce software
 Five core tasks that must be supported by e-commerce software:
• Catalog management
• Product configuration
• Shopping cart facilities
• E-commerce transaction processing
• Web traffic data analysis
Cont’d…
Mobile commerce hardware & software
 limitations of handheld devices that complicate their use:
• Screens are small
• Input capabilities are limited to a few button
• Less processing power and less bandwidth than desktop or laptop
computer.
• Operate on limited-life batteries
 For these reasons:
• Web developers must often rewrite Web applications so users with mobile
devices can access them.
Cont’d…
Electric payment system
 Authentication technologies are used by many organizations to confirm the identity of
a user requesting access to information assets.
 Digital certificate: an attachment to an e-mail message or data embedded in a Web
site that verifies the identity of a sender or Web site.
 Certificate authority (CA): a trusted third-party organization or company that issues
digitized certificates.
 Various measures are being implemented to increase the security associated with the
use of credit cards. Address verification system is a check built into the payment
authorization request: Compares the address on file.-
 Transport layer security (TLS): a communications protocol used to secure sensitive
data during e-commerce.
 Electronic cash: an amount of money that is computerized, stored, and used as cash
for e-commerce transactions.
 Credit, charge, debit, and smart cards are payment systems used for e-commerce.
Cont’d…
Transaction processing system
 It capture and process detailed data necessary to update the
organization’s records about fundamental business operations.
 Include order entry, inventory control, payroll, accounts payable
accounts receivable, general ledger, etc…..
 A TPS provides valuable input to:
 Management information system
 Decision support system
 Knowledge management system.
Traditional transaction processing methods and objectives

 Batch processing system: a form of data processing whereby

business transactions are accumulated over a period of time and
prepared for processing as a single unit or batch.
 Essential characteristic: the delay between an event and the
processing of the related transaction to up data the organization
records.
 For many applications its appropriate and cost effective
 Payroll and billing is typical done via batch processing
Online transaction processing (OLTP):
• a form of data processing where each transaction is processes
immediately without the delay of accumulating transactions into a
batch.
• At any time, the data in an online system reflects the current
status.
• Many organizations find the OLTP enables them to provide faster,
more efficient service.
• Used in like airlines, ticket agency etc
Cont’d…
Cont’d…
 Organizations expect their TPSs to:
 Capture, process, and update database
 Ensure that the data processed accurately and completely
 Avoid processing fraudulent transactions
 Produced timely user responses and report
 Reduce clerical and other labor requirement
 Help improve customer services
 Achieve competitive advantages.
Type of transaction processing system
Order processing system
 Processing flow begins with receipt of customer order, then finished
product inventory is checked to see if sufficient inventory is one
hand to fill the order.
Accounting system
 Must track the flow of data related to all the cash follows that affect
the organization.
Purchasing system
 System that support the purchasing business function.
 Inventory control, purchase order processing, receiving…
Transaction processing system for entrepreneurs and small
and medium-sized enterprise

 Many software packages:

 Provides integrated transaction processing system solutions for
small and medium-sized enterprises (SMEs).
 Are easy to install and operate with a low total cost of ownership.
Have an initial cost of a few hundred to a few thousand dollars.
Transaction processing activities
• Transaction processing cycle: the process of:
• Data collection
• Data editing
• Data correction
• Data processing
• Data storage
• Document production.
Transaction processing activities
 Data collection: capturing and gathering all data necessary to
complete the processing of transaction.
 Can be manual/automated via special input device.
 Cloud-based POS system provides a range of capabilities:
 Including advanced integration with digital loyalty programs, various
accounting tools, and the ability to generate gift cards and coupons.
 Source data automation: capturing data at its source and recording
it accurately in a timely fashion, with minimal manual effort and in an
electronic or digital form so that it can be directly entered into the
computer.
Transaction processing activities

• Point-to-point sale transaction processing system: The purchase of item at the

check-out stand updates a store’s inventory database an its database of
purchase.
Transaction processing activities
 Data editing: checking data for validity and completeness to
detect any problems.
 Data correction : re-entering data that was not typed or scanned
properly.
 Data processing : performing calculations and other data
transformations related to business transaction including:
 Classifying data.
 Sorting data into categories.
 Performing calculations.
 Summarizing results.
 Storing data in the organization's database for further processing.
Transaction processing activities
 Data storage: updating one or more database with new transaction.
 Document production : generating output records, documents, and
reports.
 Hard-copy paper reports.
 Displays on computer screen (soft copy).
 Results from one TPS can be input to another system.
 Most TPSs provides other useful management information's:
 Printed or on-screen reports that help managers and employees
 perform various activities.
 Reports showing current inventory.
 Reports required by local, state, and federal agencies
Part-II
Enterprise System
Enterprise System
 In large organizations, transaction processing is frequently accomplished
with large integrated system known as enterprise
 An enterprise system is central to individuals and organizations of all
sizes:
 Ensures that information can be shared across all business function and all
levels of management to support the running and manning of a business.
 It is a system central to the organization that ensures information can be
shared with authorized users across all business functions and at all levels
of management to support the running and managing of a business.
 The ultimate goal is to satisfy customers and provide significant benefits
by reducing costs and improving services.
Enterprise resource planning (ERP):
 a set of integrated programs that manages a company’s vital business
operations for an entire organization, even a complex, multisite, global
organization.
 Business procedure (recall): a set of coordinated and related activities that
takes one or more types of input and creates an output of value to the
customer of that procedure.
 Advantages of ERP:
 Improved access to quality data for operational decision making
 Elimination of cost, inflexible legacy system.
 Improvement of work processes
 Best practices: the most efficient and effective ways to complete a business process.
 Opportunity to upgrade and standardize technology infrastructure.
Customer relationship management
 It helps a company manage all aspects of customer encounters,
including marketing, sales, distribution, accounting, and customer
service.
 The goal of CRM is to understand and anticipate the needs of current
and potential customers.
 CRM is used primarily in sales, marketing, and service organizations.
 To capture and view data about customers and to improve
communications.
CRM
• CRM software: automates and integrates the functions of sales,
marketing, and service in an organization.
• Key features of a CRM system:
• Contact management
• Sales management Customer support
• Marketing automation
• Analysis Social networking
• Access by mobile devices
• Import contact data
Cont’d…
• Due to the popularity of mobile devices: Shoppers can easily compare
products and prices on their mobile phones.
• Shopper can also tweet their experiences with a brand to dozens of
friends.
• Most CRM systems can now be accessed via smartphones.
ERP Vs CRM
Product lifecycle management (PLM)
 It is an enterprise business strategy that creates a common repository of
product information and processes.
 Support the collaboration creation, management, dissemination, and use
of product, and package int definition information.
 Product lifecycle management (PLM) software: software that provides a
means for managing the data and processes associated with he various
phases of the product life cycle.
 The scope of PLM includes sales and marketing, research and
development, concept development, product design, prototyping and
assembly, delivery and product installation, services and support, and
product retirement and replacement.
• Scope of PLM software Using PLM software, organizations can manage the
data and processes associated with the various phases of the product life
cycle.
• Computer-aided design (CAD): The use of software to assist in the
creation, analysis, and modification of the design of a computer or
product.
• Computer-aided engineering (CAE): The use of software to analyze
the robustness and performance of components and assemblies.
• Computer-aided manufacturing (CAM): The use of software to control
machine tools and related machinery in the manufacture of
components and products.
• CAD, CAE, CAM software: In manufacturing, the model generated in
CAD and verified in CAE can be entered into CAM software, which then
controls the machine tool to manufacture the product.
• PLM business strategy: PLM powers innovation and improves
productivity.
• Discrete manufacturing: The production of distinct item, eg, autos,
airplanes, furniture, or toys that can be decomposed into their basic
components.
• Process manufacturing: The production of products that are the
result of a chemical process, eg, gasoline, and pharmaceutical drugs
that cannot be easily decomposed into its basic components.
Product lifecycle management
Overcoming challenges in implementing enterprise system
Tips for avoiding a failed implementation
• Assign a full-time executive to manage the project.
• Appoint an experienced, independent resource to provide project over-
sight and to verify and validate system performance.
• Allow sufficient time to transition from the old way of doing things to
the new system and new processes.
• Allocate sufficient time and money training people.
• Define metrics to access project well defined and contained to essential
business processes.
• Be wary of modifying the enterprise system software to conform to your
firm’s business practices.
Hosted software model for enterprise software

 Many business application software vendors are pushing the use

of the hosted software model for businesses:
 The goal is to help customers acquire, use, and benefit from the
new technology while avoiding much of the associated complexity
and high start-up costs.
 Using the hosted software model enables businesses to :
 Experiential with powerful software capabilities without making a major
financial investment.
 Avoid employing a full-time IT person to maintain key business
applications.
Hosted software model for enterprise software