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Electronic Commerce

Introduction

-Mr. Indraka Udayakumara

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Course Outline

Introduction Networking Solutions and Issues

Internet / Extranet Messaging Techniques

Internet Security

Emerging E Commerce Technologies

Role of Software Agents In E-Commerce

Mobile commerce

Case studies discussion E Government Concepts

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Method of assessment

2 In-Class Tests 10% Project (PHP) 10%

mid-term Examination 20%

Final Examination 60%

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What is E Commerce?

Electronic Commerce (EC) is the process

of buying, selling, or exchangingproducts, services, and information viacomputer networks

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Electronic Market

place where shoppers and sellers meetelectronically

In electronic markets, sellers andbuyers

negotiate, submit bids,

agree on an order,

and finish the execution on- or off-line.

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Consumer Buying Model

1. Need Identification2. Product Brokering

3. Merchant Brokering

4. Negotiation5. Purchase and Delivery

6. Product Service and

Evaluation7. After-sale support

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The Dimensions of Electronic Commerce

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Pure Vs. Partial E-Commerce

Depends upon the degree of digitization

The transformation from physical to digital of: The product sold

The process

The agent

Brick-&-Motar organizations

Perform most of their business off-line

Selling physical products by means of physical agents

Click-&-Motar organizations Conduct some EC activities

Do their primary business in the physical world

Virtual (pure EC) organizations

Conduct business activities solely online

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E-Commerce Initiators

Brick-&-motar companies faceincreasing pressures in a competitivemarketing environment

Response is to introduce variety of e-commerce initiatives to improve,

Supply chain operations

Information

Customer service

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Classifications of E Commerce

Business-to-business (B2B) : EC model in which

all of the participants are businesses or otherorganizations

Business-to-consumer (B2C): EC model in whichbusinesses sell to individual end customers

Intra-business ( intra-organizational) :E-

commerce in which an organization uses EC

internally to improve its operations.

Consumer-to-business(C2B): individuals who usethe Internet to sell products or services toorganizations and /or seek sellers to bid onproducts or services they need

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Classifications of E Commerce

Mobile commerce (m-commerce)EC

transactions and activities conducted in awireless environment

Collaborative commerce (c-commerce): EC

model in which individual or groupscommunicate or collaborate online

E-government: Government-to-citizens

(G2C): EC model in which a governmententity buys or provides good, services, orinformation to businesses or individualcitizens

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B2C Business to Customer

This is focused on the use of a virtual

storefront on the Web Allows any Internet user to browse and

order goods or services from thestorefront's online catalog.

With "carts" (order forms) to drop yourgoods into and "checkouts" (paymentprocessing) to settle your bill with a credit

card. Security concerns

because of this transfer of credit card dataacross an unsecured public network.

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Intra Business

Takes the intranet beyond its popular role

as a corporate and product informationcentre.

Here the EC is strictly intra-company, and

payment processing is not an issue. The transfer of funds is purely an

accounting transaction

Business-within-business EC is asignificant new market opportunity forexisting and startup EC applicationvendors to exploit.

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B2B Business to Business

End-to-end business processes

such as fulfillment and procurement, are beingreengineered to function electronically

Many business application suppliers in theaccounting, supply-chain, and manufacturing

sectors are focusing their attention right now; it's also the area several new startups expect to

break into. Business-to-business EC is the catalystbehind the rise of the extranet, an intranet whoseboundaries extend beyond internal corporateusers to include external business partners, suchas customers and vendors.

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Revenue sources

Selling physical goods Running ads

Promote other peoples goods as an

affiliate Developing and selling your own

digital products

sell your services online

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The Limitations of EC

Technical limitations There is a lack of universally accepted standards

for quality, security, and reliability

The telecommunications bandwidth isinsufficient

Software development tools are still evolving

There are difficulties in integrating the Internetand EC software with some existing (especiallylegacy) applications and databases.

Special Web servers in addition to the networkservers are needed (added cost).

Internet accessibility is still expensive and/orinconvenient

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The Limitations of EC

Non-technical limitations

Security and privacy concerns

Lack of trust in EC

Lack of mature measurement methodology

Some customers like to touch and feel products Increasing amount of fraud on the internet

No proper government regulations

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The Benefits of EC

Benefits to Organizations Expands the marketplace to national and

international markets

Decreases the cost of creating, processing,distributing, storing and retrieving paper-based

information Allows reduced inventories and overhead by

facilitating pull-type supply chain management

The pull-type processing allows for customization ofproducts and services which provides competitive

advantage to its implementers Lowers telecommunications cost - the Internet is

much cheaper than value added networks (VANs)

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Enables consumers to shop or do other transactions 24

hours a day, all year round from almost any location Provides consumers with more choices

Provides consumers with less expensive products andservices by allowing them to shop in many places andconduct quick comparisons

Allows quick delivery of products and services (in somecases) especially with digitized products

Consumers can receive relevant and detailed informationin seconds, rather than in days or weeks

Makes it possible to participate in virtual auctions Allows consumers to interact with other consumers in

electronic communities and exchange ideas as well ascompare experiences

Facilitates competition, which results in substantial

discounts

Benefits of EC: To Customers

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Networked Organization

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Internet

It is a global mesh of computer networkssharing a common software standard calledTCP/IP.

Companies use the Internet for

promoting products

providing marketing information toregistered customers (surfers)

auctioning inventories servicing customers

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Intranets

different from the Internet in terms ofaccess

internal corporate networks which use thesame software standards as the Internet,

but are protected from unauthorized users byfirewalls.

Only authorized users have access

Utilizing the Internet as a backbone, anIntranet can span multiple locations

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Extranet

When a company gives access to its Intranetto select outside partners

Suppliers, distributors and other authorizedusers can then connect to a company's

intranet over the Internet Once inside, they can view data the

company makes available, such as

inventories, product promotion guidelinesand procurement policy

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Peer-to-Peer (P2P) E-commerce

Uses peer-to-peer technology, whichenables Internet users to share files andcomputer resources without having to gothrough a central Web server

Napster most well-known example untilput out of business for copyrightinfringement

Today, Kazaa is the leading P2P softwarenetwork

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Types ofWeb Sites

Marketing Web Site:

Engages consumers in an interaction that

moves them closer to a direct purchase

Provides information about the products

No online sales

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Types ofWeb Sites

Corporate Web Site:

Designed to build customer goodwill and

supplement other sales channels

Offers information to customers Builds closer customer relationships

Generates excitement about the company

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Ecommerce infrastructure

Information superhighway infrastructure Internet, LAN, WAN, routers, etc. telecom, cable TV, wireless, etc.

Messaging and information distributioninfrastructure

HTML, XML, e-mail, HTTP, etc. Common business infrastructure

Security, authentication, electronic payment,directories, catalogs, etc.

Web architecture Client/server model

N-tier architecture; e.g, web servers, applicationservers, database servers

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Web-based E-commerce Architecture

Client

Tier 1

Web Server

Tier 3Tier 2 Tier N

ApplicationServer

DatabaseServer

DMS

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Major ECMechanism

Forward auction: An auction that sellers use asa selling channel to many potential buyers; thehighest bidder wins the item.

Reverse auction: An auction in which onebuyer, usually an organization, seeks to buy a

product or a service, and suppliers submit bids;most common model for large purchase.

Electronic storefront: The website of a singlecompany, with its own Internet address, at

which orders can be placed. Electronic malls (cyber mall): A collection of

individual shops under one Internet address.

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System Design Issues

Good architectural properties Functional separation

Performance

Secure

Reliable

Available

Scalable

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Architecture: The Web Solution

Load balancing Stateless web servers

Robust back-end

storage LoadBalancer

Web Server

Data

Store

Web Server

Browser