E-Commerce/MCS-510 Chapter 1 date: 04-03-2012

e-Commerce Overview of the Course

(Updated on 04-03-2012)

1. About the course: This course is unit elective course. There will be 30 lectures
(each 50 min) in total.

2. Assessment: Out of the total marks (50/Credits 2) 20% marks are allocated for in
course assessment or class work (that is, lab reports, assignments, class tests, ora l presentation etc.) and the remaining 80 % marks are reserved for the final examination. The duration of unit course is 2.5 hours (while for 1 unit it is 4 hours). For the in course assessments I will give only one assignments (which is also to be presented) that weigh 20 % of the total assessments.

3. Recommended Books : There will be no one particular books for this course. The
following reference are being recommended to follow: (1) (2) (3) (4) (5) Web search (e.g. Amazon.com) Jeffrey F Rayport and Bernard J Jaworski e-Commerce P.T. JOSEPH, E-Commerce: A Managerial Perspective Kalakota and Winston,Frontiers of Electronic Commerce SAMS, Teach Yourself-Beginning e-Commerce with Visual basic, ASP, SQL Server 7.0 and MTS (6) SAMS, Teach Yourself E-Commerce Programming with ASP.

*(7) Electronic Commerce- NCC Education Limited. 4. Assignment: Design and Document an interactive Commercial Website for any
commercial firm [Note: Try to include the best possible features of e-Commerce]. Submit this at least one month before the exam. Marks: 20% of the total assessment.

Abu Sayeed Chowdhury Teacher IST & Deputy Secretary, M/o Commerce email:sadmansadif@hotmail.com

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012

e-Commerce
Chapter1 -Introduction [ lect-1,2,3]

1.An Overview
1.1 What is e-Commerce: e-Commerce refers to the process of buying or selling
products or service over an electronic network. The most popular medium in which e-Commerce is conducted is the internet. It combines a range of process such as : Electronic Data Interchange (EDI) Electronic mail (E-mail) World Wide Web (WWW) Internet Applications Network Applications. [XXXX Basically e-Commerce involves the sale or purchase of goods or services over computer mediated networks. These goods or services may be ordered though these networks, but payment for them and the ultimate delivery of the goods and services may be conducted on or off line. Some analyst define e-commerce as simple buying and selling over electronic networks; and use e-business (buzzword) to refer to these wider range of supporting business activities that can be conducted over such networks.] **There are three basic components to every e-commerce solution: Communications Standards Software

1.2 Existing Barriers:

Security Tariffs Legal issues You can see but you cannot touch, feel and smell : The internet is good at displaying color images of (e.g. handicrafts items in an online catalogue or web page but cannot do what any buyer almost instinctively does in a retail shop, or when examining a sample. Digital photographs are not color accurate: By their nature digital photographs are not color accurate. While this is a factor for consumers, it is even more critical for retail buyers (B2B), who are unlikely to place a major order on the strength of digital images alone, but who may order a sample for further queries. Consumers expect high service standards: Consumers expect high standards of service from retailers and by extension online retailers. Consumers will expect B2C business rapid delivery, effective means of redress (if the product is faulty, the customer wants an easy way of returning it and getting a replacement or refund), efficient back-up services. 2

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Trusting the company/brand: customers are increasingly wary of ordering from companies or shops unknown to them 'at home', especially since it can be hard to measure a company's worth or effectiveness. Financial Security: Customers have legitimate concerns about using their credit /debit cards to make online payments, especially internationally. Personal data: Increasingly consumers are becoming aware of the amount of personal data, which is held about them.

1.3 Difference between e-Commerce and e-Business

e-Commerce: e-Commerce covers out-ward facing process that touch customers, suppliers and external partners including sales, marketing, order taking, delivery, costumer service, purchasing of raw materials and supplies for production and procurement of indirect operating expense items such as office supplies. E-business includes e-commerce but also covers internal process such as production, inventory management, product development, risk management, finance and knowledge management and human resources. E-business strategy is more complex and focused on internal process and aimed at cost savings and improve efficiency, productivity and cost savings.

1.3.1 e-Commerce vs. e-Business

Compared with e-Commerce, e-Business is a more generic term; it refers not only to information exchanges related to buying and selling but also to servicing customers and collaborating with business, distributors and suppliers. E-Business encompasses sophisticated business-to-business interactions and collaboration activities at a level of enterprise applications and business processes.

1.4 Different Types of e-Commerce

1.4.1 L-Commerce: Location-Commerce (L-Commerce) is the practice of using technologies which provides location information, such as Global Poisoning System (GPS) for business purposes. An example of L-commerce would be to allow cell phone users to find the nearest restaurant to their current location. [The term is based on internet technology (e-commerce), based on mobile technology (m-commerce) or based an voice technology (v-commerce) L-commerce: Location commerce (L-commerce) is an evolving marketing and commercial technology that is a min of mobile commerce and context computing.

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 L-commerce is based on the exploitation of the potential customers proximity to the market places by first identifying their presence by some identification mechanism electronically and sending a message to their mobile phones thereby in a way extending the shops physical area even before they enter the buying areas. 1.4.2 M-Commerce: Mobile Commerce is the buying a selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistance (PDAs). Known as next generation e-commerce mcommerce enables users to access the internet without needing to find a place to plug in. The emerging technology behind m-commerce which is based on the Wireless Application Protocol (WAP) has made far greater strides in Europe where mobile devices equipped with web ready micro-browsers are much more common than in the united states. Internet-Commerce: Broad term covering all commercial activity on the internet including auctioning, placing orders , making payments, transferring funds and collaborative with trading partners. Internet commerce is not a synonym of e-commerce but one of its sub-sets V-commerce: Voice-commerce use voice recognition to allow voice activated services including telephone dialing, internet browsing and email retrieval. Intra-business Commerce: An organization uses EC internally to improve its operation. A special case is known as B2E(Business to its Employees). Electronic Auction: is just like a ordinary auction except that transaction takes place over the internet. It is a special case of automated negotiations. Auctions are formalized trading procedures in which the trading partner's interaction is governed by specific trading rules. In this auction there is little or no human intervention. Characteristics of e-Business: e-Business is about integrating external company process with an organization's internal business process: collaborative product development; collaborative planning, forecasting and replenishment, procurement and order management operations and logistics.

1.4.3

1.4.4 1.4.5 1.5

1.6

1.7 Customer Relationship Management (CRM) systems : front-office systems that help the enterprise deal directly with their customers. CRM integrates & automates customer-serving processes within a company (personal information gathering & processing and self service throughout the supplying company in order to create value for the customer). 1.7Enterprise Resource planning systems (ERP) : Management information systems that integrate & automate many of the business practices associated with the operations or production aspects of a company. An ERP system includes: Production : Manufacturing resource planning and execution process Buying a product : procurement process Sales of products and services : Customer order management process. 4

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Costing, paying bills and collecting : Financial/management accounting and reporting process. 1.9 Supply Chain Management (SCM) : A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials; transformation of these material into intermediate and finished products. A supply chain essentially has three main parts, the supply, manufacturing and distribution. 1.10 Knowledge Management: Knowledge regarding markets, products, processes, technologies & organizations that a business owns that enable its business processes to generate profits. Also includes the subsequent planning and control of actions.

1.11 Electronic

Retailing : Storefronts and malls Business-To-Consumer-B2C

For generations home shopping form catalogs has flourished and television shopping channels have attracted millions of shoppers. However, these methods have drawbacks: Both methods can be expensive; paper catalogs are sometimes not up-todate; and television shopping is limited to what is shown on the screen at any given time. Electronic retailing (e-tailing) is the direct sale of products through electronic storefronts or electronic malls, usually designed around an electronic catalog format and or auctions. o Electronic Storefronts. Hundreds of thousands of products through electronic storefronts or electronic malls, usually designed around an home depot, the sharper image or wal-mart. o electronic mall, also known as a cybermall or e-mall, is a collection of individual shops under one interment address. The basic idea of an electronic mall is the same as that of a regular shopping mall to provide a one-stop shopping place that offers many products and services.

1.12Electronic Retailing: Storefronts and Malls E-tailing Issues-B2C

The concept of retailing and e-tailing implies the sale of goods and/or service to individual customers. The following are the major issues faced by e-tailers that may be handled and supported by IT tools: Resolving channel conflict: A firms distribution channels compete with each other and with the firm. Resolving conflicts within click-and-mortar organizations: When an established company decides to sell direct online, it may create a conflict within its existing

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 operations in areas such as pricing, services, allocation of resources and logistical support. Organizing order fulfillment and logistics : E-tailers face a difficult problem of how to ship small quantities to a large number of buyers. Determining viability and risk of online e-tailers : How long does a company operate while losing money and how will it finance the losses. Identifying appropriate revenue models : It is necessary to identify appropriate revenue/business models.

e-Commerce
Chapter1 -Introduction [ lect-2, date19-3-2004]

1.5 History of E-Commerce:

In 1950s companies began to use computers to store and process internal transaction records By 1960s businesses that engaged large volume of transaction had began exchanging transaction information on punched card In 1968 Transportation Data Co-ordination Committee (TDCC ) was formed by some companies In 1979 ANSI (American National Standards Institute) chattered a new committee to develop uniform EDI (Electron Data Interchange) In 1987 UN publish its first standards under the title EDI

2.Traditional and Electronics Business Transaction:

The business process are broadly divided into five main categories namely: Market product and services Sell and deliver products and services Process payments Manage relationship Manage the enterprize 2.1 Traditional Commerce vs e-Commerce Items Sales Channel e-Commerce Enterprize Internet Consumer Traditional Commerce Manufacturer Wholesaler Retailer Consumer

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Sales Hour /Region Entire world 24x7 Restricted area Restricted sales hour Market space (store) Sale based on display Market survey and salesman Require information reentry One way marketing to consumer Delayed support for customer Dissatisfaction Time different for catching customer needs large

Sales place/method

Customer information acquisition

Marketing activity Customer support

Market space (Network) Sale based on information Any time acquisition through internet Digital Data without no re-entry 1:1 Marketing via bidirectional communication Real time support for customer Dissatisfaction Real time acquisition of customer needs small

capital

3. Types of E-Commerce:
E-commerce can be divided into primarily three catagories (1) Business to consumer(B2C): Where enterprizes sell directly to the customer, often cutting out (disinter mediating ) wholesalers or bricks and mortars retail outlets. B2C is the most commonly understood form of internet business (www.amazon.com). The most successful trading has been with standard products such as CDs, Books, Software, downloadable music etc. (2) Business to Business (B2B): it is larger, growing faster. This includes procurements of raw materials and supplies, liaison with contractors, sales channels, servicing customers, collaborating with partners, integrated management with data and knowledge. (3) Business to Government(B2G): Here business trade directly with government offices and agencies for public procurement (e.g. supplies for hospitals, school and other government contracts. (4) Consumer to consumer (C2C): Online transaction between private individuals. (5) Consumer to business(C2B):

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012

4. Benefits of E-Commerce
The benefits of e-Commerce are many and many. Some of them include: (1) 24X7 operation: Round the clock operation is an expensive proposition in the brick and mortar world while it is natural in the click and conquer world (2) :Global reach: The net being inherently global, reaching global customers is relatively easy on the net compared to the world of bricks (3) Cost of acquiring serving and retaining customers: It is relatively cheaper to acquire new customers over the net. Thanks to 24 X 7 operation and its goal reach. Through innovative tools of push technology to retain customers, loyalty with minimal investments. (4) An extended enterprise is easy to build: In todays world every enterprise is a part of the connected economy; as such you need to extend your enterprise all the way to your suppliers and business partners like distributers, retailers and ultimately you end customers. Internet provides an effective (often less expensive) way to extend your enterprise beyond the narrow confines of your own organization. Tools like enterprize resource planning (ERP) ,supply chain management (SCM) and customer relationship management (CRM), can easily be deployed over the net permitting amazing efficiency in time needed to market, customer loyalty, on time delivery and eventually profitability. (5) Dis-intermediation: Using the net one can directly approach the customers and suppliers, cutting down the number of level sand in the process, cutting down the costs. (6) Improved customer service to your clients: It results in higher satisfaction and more sales (7) Power to provide the best of both the worlds: It enhances traditional along with internet tools. [XXX*** The impact of e-Commerce to business can be huge. E-commerce can transform the way products and services are created, sold and delivered to the customers. It can also change the way in which the company works with its partners. The followings are well established benefits of e-commerce: Improved productivity :Using e-commerce, the time required to create, transfer and process a business transaction between trading partners is significantly reduced. Furthermore human errors like duplication of records are largely eliminated with the reduction of data entry and re-entry in the process. This improvement in speed and accuracy plus the acess to document and information, will result in increase in productivity. Cost savings: The cost savings stem from efficient communication, quicker turnaround and closer access to market. Streamlined business process: Use of internet and with automation of business process can make business more efficient Better Customer service: Customer can enjoy the convenience of shopping at any our and anywhere in the world. 8

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Opportunities for new business: Business over the internet have global customer reach. There are endless possibilities for business to exploit and expand their customer base.]

4.1 Benefits of e-Commerce to Organization Expands the Marketplace to national and international market Decrease 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 Reduces the time between the outlay of capital and the receipt of product and services Supports Business process re-engineering (BPR) efforts Lowers telecommunication cost- the internet is much cheaper than value added networks (VANs)

4.2 Benefits of e-Commerce to Consumers Enables consumers to shop or do other transaction 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 consumers to interact with other consumers n electronic communities and exchange ideas as well as experiences Facilitates competition which results in substantial discounts Allows quick delivery of products and services (in some cases) especially with digitized products Consumers can receive relevant and detail information in seconds rather than in days or weeks Makes it possible to participate in virtual auction 4.3 Benefits of e-Commerce to Society Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution Allows some merchandise to be sold at lower prices benefiting less affluent people Enable people in third world countries and rural areas to enjoy product and services which otherwise are not available to them 9

E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Facilitates delivery of public services at reduced cost, increases effectiveness and or improve quality

4.4 Disadvantages: Some disadvantages because of newness of e-Commerce. If ecommerce matured they will perhaps remove. Inadequate inspection facility Security legal issues 4.5 Technical Limitations to e-commerce Lack of sufficient system security, reliability, standards and communication protocols Insufficient telecommunication bandwidth The software development tools are still evolving and changing rapidly Difficulties in integrating the internet and e-commerce software with some existing application and data base The need for special web servers and other infrastructures, in addition to the network servers (additional cost) Possible problems of inter operability, meaning that some EC softwares does not fit with some hardware, or is incompatible with some operating systems or other components 4.6 Non- Technical Limitations to e-commerce Cost and Justification - The cost of developing an EC in a house can be very high . Security and privacy Lack of trust and user resistance Channel conflict Other limitations factors are: -Lack of touch and feel online etc

(8) What are the reasons to put a company on a website? 1. To establish a presence: To be a part of the internet community and show that you are interested in serving them. 2. To network 3. To make business information available 4. To serve your customers 5. To heighten public interest
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E-Commerce/MCS-510 Chapter 1 date: 04-03-2012

6. To release time sensitive materials 7. To sell things 8. To make pictures sound and film files available 9. To reach a high desirable demographic market 10.To answer frequently asked questions 11.To stay in contact with Sale people 12.To open international markets 13.To create a 24 hour service 14.To make changing information available quickly 15.To allow feedback from customers 16.To test market new services and product 17.To reach the media 18.To reach the education and youth market 19.To reach the specialized market 20.To serve your local market.

(9) Describe the difference between e-commerce and e-business

e-Business vs e-Commerce e-Commerce e-Commerce describes the process of buying, selling, transferring, or exchanging products, services, and or information via computer networks including the internet. e-Commerce can take several forms depending on the degree of digitization(the transformation from physical to digital). The degree of digitization relates to: The product (service) sold The process The delivery agent (or intermediary) e-Business: Compared with e-Commerce, e-Business is a more generic term; it refers not only to information exchanges related to buying and selling but also to servicing customers and collaborating with business partners, distributors and suppliers. E-Business encompasses sophisticated B2B interactions and collaboration activities at a level of enterprise applications and business process. Characteristics of e-Business e-Business is about integrating external company with an organizations internal business process:

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E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 Collaborative product development Collaborative planning, forecasting and replenishment Procurement and order management Operations and logistics

(10)

Describe the main ingredients of e-business solution

1. Web: Website act as the pioneer role in e-commerce 2. Customer relationship management system (CRM): front office that help enterprise deal directly with their customers. CRM integrates and automates customer serving process within a company. 3. Enterprize Resource Planning System (ERP): Management Information system that integrate and automate many of the business practices associated with the operations or production aspects of a company. An ERP system includes: Production: Manufacturing resource planning and execution process Buying a product: Procurement process Sales of products and services: Customer order management process Costing, paying bills and colleting: financial/management accounting and reporting process 4. Supply Chain Management (SCM): A supply chain is a network of facilities and distribution option that performs the function of procurement of materials; transformation of these materials into intermediate and finished product & distribution of these finished products to customer. A supply chain has three essentially main parts: the supply, manufacturing and distribution. 5. Knowledge Management (KM): Knowledge regarding markets, products, processes, technologies and organization that a business owns that enable its business process to generate profits. Also include the subsequent planning and control of actions. (12) Overview of implementation stage of e-Commerce in Bangladesh:
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E-Commerce/MCS-510 Chapter 1 date: 04-03-2012 M/o Commerce, Ministry of Information and Communication and Planning Commission jointly implementing the e-commerce in Bangladesh There is e-Commerce committee headed by commerce secretary Ministry of Information and Communication is working for enacting a law regarding Electronic Transaction act Online order from foreign buyer has started www.registrarofcompniesbangladesh.com here registration of joint stock company started as online Online non-financial transaction has started by all bank from 31-7-2002 Intra-bank transaction started from 31-7-2003 Some bank already started credit card system in a limited way(e.g. JB)

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