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 exchanging
products, services, and information via
computer networks

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Electronic Market
 place where shoppers and sellers meet
electronically
 In electronic markets, sellers and
buyers
 negotiate,
 submit bids,
 agree on an order,
 and finish the execution on- or off-line.

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Consumer Buying Model
1. Need Identification
2. Product Brokering
3. Merchant Brokering
4. Negotiation
5. Purchase and Delivery
6. Product Service and
Evaluation
7. 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 8
E-Commerce Initiators
 Brick-&-motar companies face
increasing pressures in a competitive
marketing 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 other
organizations
 Business-to-consumer (B2C): EC model in which
businesses 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 use
the Internet to sell products or services to
organizations and /or seek sellers to bid on
products or services they need
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Classifications of E Commerce
 Mobile commerce (m-commerce)—EC
transactions and activities conducted in a
wireless environment
 Collaborative commerce (c-commerce): EC
model in which individual or groups
communicate or collaborate online
 E-government: Government-to-citizens
(G2C): EC model in which a government
entity buys or provides good, services, or
information to businesses or individual
citizens
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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 the
storefront's online catalog.
 With "carts" (order forms) to drop your
goods into and "checkouts" (payment
processing) to settle your bill with a credit
card.
 Security concerns
 because of this transfer of credit card data
across an unsecured public network.
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Intra – Business
 Takes the intranet beyond its popular role
as a corporate and product information
centre.
 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 a
significant new market opportunity for
existing and startup EC application
vendors to exploit.
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B2B – Business to Business
 End-to-end business processes
 such as fulfillment and procurement, are being
reengineered to function electronically
 Many business application suppliers in the
accounting, 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 catalyst
behind the rise of the extranet, an intranet whose
boundaries extend beyond internal corporate
users to include external business partners, such
as customers and vendors.

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Revenue sources

 Selling physical goods

 Running ads
 Promote other people’s 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 is
insufficient
 Software development tools are still evolving
 There are difficulties in integrating the Internet
and EC software with some existing (especially
legacy) applications and databases.
 Special Web servers in addition to the network
servers are needed (added cost).
 Internet accessibility is still expensive and/or
inconvenient
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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 of
products 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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Benefits of EC: To Customers
 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 and
services by allowing them to shop in many places and
conduct quick comparisons
 Allows quick delivery of products and services (in some
cases) especially with digitized products
 Consumers can receive relevant and detailed information
in 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 as
compare experiences
 Facilitates competition, which results in substantial
discounts 19
Networked Organization

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Internet
 It is a global mesh of computer networks
sharing a common software standard called
TCP/IP.
 Companies use the Internet for
 promoting products
 providing marketing information to
registered customers (surfers)
 auctioning inventories
 servicing customers

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Intranets
 different from the Internet in terms of
access
 internal corporate networks which use the
same software standards as the Internet,
 but are protected from unauthorized users by
firewalls.
 Only authorized users have access
 Utilizing the Internet as a backbone, an
Intranet can span multiple locations

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Extranet
 When a company gives access to its Intranet
to select outside partners
 Suppliers, distributors and other authorized
users 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 guidelines
and procurement policy

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Peer-to-Peer (P2P) E-commerce
 Uses peer-to-peer technology, which
enables Internet users to share files and
computer resources without having to go
through a central Web server
 Napster most well-known example until
put out of business for copyright
infringement
 Today, Kazaa is the leading P2P software
network

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Types of Web 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 of Web 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 distribution
infrastructure
 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, application
servers, database servers

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Web-based E-commerce Architecture

Tier 1 Tier 2 Tier 3 Tier N

DMS

Client
Web Server Application Database
Server Server

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Major EC Mechanism
 Forward auction: An auction that sellers use as a
selling channel to many potential buyers; the
highest bidder wins the item.
 Reverse auction: An auction in which one
buyer, 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 single
company, 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
Browser
 Stateless web servers
 Robust back-end
storage Load
Balancer

Web Server Web Server

Data
Store
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