E commerce

What’s
Electronic
Commerce?
“A modern business methodology ... to cut costs while
improving the quality of goods and services and increasing
the speed of service delivery.”

Evolution of E-Business
• The evolution of interconnections between different
computing nodes: This allowed the provision of specialized
functions such as e-mail and file transfer
services.
•
The introduction of the World Wide Web: This allowed the
creation of hyperlinked web pages that could be accessed
through browsers. This has facilitated the process of
information retrieval and dissemination on the internet, and
accelerated the growth of it explosively.

• The integration of the client-side web pages with backend
applications, databases, and payment gateways: This
allowed the development of integrated e-commerce systems
for order processing, payments, and dynamically updated
information on web pages.

• The integration of mobile computing technologies and web-
based applications:
This looks set to enable ubiquitous access to the Internet and
mobile e-commerce.
• Three-layer model consisting of the existing market space, the
three pillars of e-commerce (electronic information, electronic
relationships, and electronic transactions)

Introduction
• Commerce is a basic economic activity involving trading or the
buying and selling of goods
• As we enter the electronic age, an obvious question is
whether these commercial transactions and business
functions can be carried out electronically.
• In general, this means that no paperwork is involved, nor is
any physical contact necessary.

• Integrating the frontend and backend applications with
the business process.
• An effective means to improve a value chain, which is
used to link various functional activities (i.e. production,
marketing, finance, etc.) of a company.
• In general, e-commerce helps to facilitate information
flow across the value chains and to reduce the associated
transaction costs. It is also of interest to look at e-
commerce from the point of view of relationship. At its
root, every business needs to maintain three types of
relationship: the relationship with its customer, the
relationship with its business partners (e.g. suppliers),
and the relationship with its employees

E-Commerce & Physical
Commerce

Scope
• Today, no company can afford to ignore e-commerce
• In recent years, many models, frameworks, and thoughts
towards building a comprehensive picture of e-commerce are
evolving.

International Nature of E-
Commerce
• Because the Internet connects computers all over the world,
any business that engages in electronic commerce instantly
becomes an international business.
• When companies use the Web to improve a business process,
they are automatically operating in a global environment.
• The key issues that any company faces when it conducts
international commerce include trust, culture, language,
government, and infrastructure.

Language Issues
• Most companies realize that the only way to do business
effectively in other cultures is to adapt to those cultures. The
phrase “think globally, act locally” is often used to describe
this approach.
• The first step that a Web business usually takes to reach
potential customers in other countries, and thus in other
cultures, is to provide local language versions of its Web
site. This may mean translating the Web site into another
language or regional dialect.

Cultural Issues
• An important element of business trust is anticipating how the
other party to a transaction will act in specific circumstances.
• For example, a potential buyer might like to know how the
seller would react to a claim by the buyer that the seller
misrepresented the quality of the goods sold.
• Part of this knowledge derives from the buyer and seller
sharing a common language and common customs. Buyers
are, for example, more comfortable doing business with
sellers they know are trustworthy.

Culture and Government
• Cultural conditions, in some cases, lead to government
controls that can limit electronic commerce development.
• The censorship of Internet content and communications
restricts electronic commerce because it prevents certain
types of products and services from being sold or advertised.
• Further, it reduces the interest level of many potential
participants in online activities. If large numbers of people in a
country are not interested in being online, businesses that use
the Internet as an information and product delivery channel
will not develop in those countries.

Infrastructure Issues
• Businesses that successfully meet the challenges posed by
trust, language, and culture issues still face the challenges
posed by variations and inadequacies in the infrastructure that
supports the Internet throughout the world.
• Internet infrastructure includes the computers and
software connected to the Internet and the communications
networks over which the message packets travel.
• Local connection costs through the existing telephone
networks in many developing countries can be very high

Business-to-consumer (B2C)
• In this case, the seller is a business organization
whereas the buyer is a consumer.
• This emulates the situation of physical retailing and
so it is commonly called electronic retailing.
• Typically, electronic stores are set up on the internet
to sell goods to the consumers.
• The Business drives the specification of the product
and the customer chooses whether or not to buy a
pre-fabricated product. An example of this in
traditional commerce is purchasing clothes “off the
rack.

Business-to-Business (B2B)
• In this case, both the buyer and the seller are
business organizations
• there are three types of systems, namely, buyer-oriented
system, seller-oriented system, and virtual marketplace
• In many situations, it is related to supply chain management.
For example, the Virtual Bookstore needs to order books from
various publishers. The ordering process can be accomplished
by using electronic data interchange.

Consumer-to-Consumer(C2C)
• This refers to situations where both the seller and the buyer
are consumers
• With the advent of e-commerce, on-line auctions provide an
effective means for supporting C2C e-commerce
• VBS can provide on-line auction services for customers to sell
used books to other customers through the VBS web site. In
addition, a virtual community can be
formed.

Consumer-to-business(C2B)
• This is a new form of commerce in which a consumer specifies
the requirements to a business
• Business provides a product that meets the requirements
• These requirements could be as simple as an acceptable price,
or could involve considerable customization of an existing
standard product, or creation of a new product.
• An example of this in the traditional commerce setting is a
“made to measure” tailor.

Business-to-Government(B2G)
• Businesses and government agencies can use central Web
sites to exchange information and do business with each other
more efficiently than they usually can off the Web
• For example, a Web site offering B2G services could provide
businesses with a single place to locate applications and tax
forms for one or more levels of government

• B2G may also include e-procurement services, in which
businesses learn about the purchasing needs of agencies and
agencies request proposal responses.
• B2G networks provide a platform for businesses to bid on
government opportunities which are presented as solicitations
in the form of RFPs

Government-to-Business(G2B)
• Government uses B2G model website to approach business
organizations. Such websites support auctions, tenders and
application submission functionalities.

Government-to-Citizen(G2C)
• Government uses G2C model website to approach citizen in
general.
• Such websites support auctions of vehicles, machinery or any
other material.
• Such website also provides services like registration for birth,
marriage or death certificates.
• Main objectives of G2C website are to reduce average time for
fulfilling people requests for various government services.

Examples
• Amazon.com: B2C
E-commerce site in general and internet bookseller in
particular. It is a typical example of B2C e-commerce in which
a business sells already manufactured products to the
consumers directly on the internet.
• Books are listed under different sections for ease of searching.
This resembles organizing books in different bookshelves in a
physical bookstore. Furthermore, a search facility is available
for searching books according to user input.

• Amazon.com makes use of data mining techniques to promote
the selling of books.
This is done by suggesting books to the customer based on the
books in the shopping cart and the buying pattern of other
customers with a similar profile.

• After shopping, consumers check out the books and pay by
credit cards, Net banking, Debit Cards in most cases. Books are
sent by mail or courier, whichever the customer prefers.
• Besides books, Amazon.com has now become a superstore

• EBay: C2C
Provides the world’s largest online trading
service by means of online auctions
• Basically, a user places an item on the eBay
Web site for bidding. Other interested members then
bid for it before the deadline Where the English auction
system is used, the highest bid wins.
• A consumer can sell to other consumers by means of
online auctions, they participate in the buying and selling
of a wide range of items, including books, stamps, coins,
music, etc.

• Trading Process Network: B2B
• General Electric’s Trading Process Network
(TPN)(www.tpn.geis.com)is an internet based trading network
for buyers and sellers to carry out B2B e-commerce on the
Internet.
•
Unlike B2C e-commerce, it is buyer-driven rather than seller-
driven. That
means, a buyer submits a request to the system and then
respective sellers respond
to the request.

• In TPN, a typical purchase cycle (from the buyer’s perspective) is described as
follow
• Step 1: A buyer determines the requirements, prepares the Request For
Quotation, and searches for potential suppliers (sellers)
Step 2: The buyer submits the RFQ and invites potential suppliers to respond.
•
Step 3: Suppliers obtain the RFQ for processing.
•
Step 4: Interested suppliers bid for the request accordingly.
•
Step 5: The buyer and suppliers can negotiate the bids online.
•
Step 6: Finally, the buyer selects the best bid and completes the purchase.
Quotation (RFQ),and searches for potential suppliers (sellers)

• Priceline :C2B
• Introduces a novel e-commerce application called the “demand
collection system
• It allows consumers to “name the price” and hence it is consumer
driven not seller driven
• According to the above definition, this is a C2B e-commerce
application. Suppose that you want to buy an air-ticket. You can
provide Priceline with your travel requirements (e.g. how many
tickets you want to buy, departure/return date, departure/arrival
city etc), the desirable price, and your credit card number. Then
Priceline will try to find an airline that can meet your requirements.
After finding a match, Priceline will buy the ticket(s)for you with
your credit card.

Ecommerce Scenarios
• Retailing-
In the main form of traditional retailing, when we want to buy
something, we need to visit physical shops.
Very often, we may not be able to buy the best product in the
market because we can visit only a few shops near our home or
our office

• With e-commerce, shopping can be done at any time by using
our fingertips instead of our “feet”
• Furthermore, the geographical barrier becomes a blur. A shop
located in another country and a shop next to your home are
both “one finger-click’ away.
• By using search engines, we can quickly select and
compare different brands of products around the world. For
some products such as software and music, we can even
download the goods instantly.

• Servicing-
The classified advertisement has always been the most popular
channel for selling used items (e.g. used car)
Tens or even hundreds of interested buyers contact you by
telephone. As you can communicate with them only one at a
time, it is difficult for you to negotiate the best price.
Even after all the items have been sold, you may still receive calls
from potential buyers.

• With e-commerce, a more effective channel is emerging: the
on-line auction for facilitating this kind of C2C commerce
transaction.
• By means of an on-line auction, not only can the seller reach a
large number of potential buyers, but he can also find the best
price in the market.

• Publishing-
The traditional publishing industry is based on a mass production
model. Thus, there are only a few newspapers available and the
format, layout, and news selection of these are done by the
editorial staff.
The degree of detail and slant on a particular
news item is also fixed by the reporter or editorial staff.

By and large, the only choice the reader has is to select a
particular newspaper.
Once that is done he has to put up with the editorial layout and
reporters’ choices, even though these might not coincide with his
own interests.

• E-commerce makes personalization possible at very little extra
cost.
• Let us imagine that we have a web-based newspaper system
available. Each reader can specify his/her favourite newspaper
template.
• Information can then be filled into the personalized template
accordingly from the databases.
• With personalization, electronic newspapers will be published
according to customers’ preferences

Effect of E-Commerce in Supply
Chain Management
• In its most common forms, traditional supply chain
management is supply driven
• One disadvantage of this model is that distributors may keep
an unnecessary inventory
• In order to overcome this, many manufacturers have
introduced Just-in-Time(JIT)supply systems.

• These systems have some element of ‘pull” in them in the
sense that the manufacturer’s
estimates of his needs for supplies in a short time horizon are
used to determine purchases from suppliers, and suppliers
must meet these orders within a specified time frame.
• There may be a lot of paper based information involved.

• With E-Commerce, this whole process becomes demand
driven as controlled by the end consumer.
• That means, goods are now “pulled” down the chain by the
customers.
• Thus, “supply chain management” becomes more
“demand chain management.” This makes JIT production
management and mass customization possible.

Product and Service
Digitization
• The major mechanisms for buying and selling on the Internet
are electronic catalogues. Electronic auctions, and online
bartering
• Electronic catalogues consist of a product database, directory
and search capabilities and a presentation function.
• A market mechanism by which sellers place offers and buyers
make sequential bids, and prices are determined dynamically
by competitive bidding is known as Electronic Auctions
• Electronic battering. The exchange of goods or services
without a monetary transaction.

Electronic catalogs can be
classified according to three
dimension:
• The dynamic of the information presentation.
• The degree of customization.
• The degree of integration with other business process or
features.

Types of Electronic Auctions:
• 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.

Online Advertising
• Improves traditional forms of advertising in a number of ways:
• can be updated any time at minimal cost
• can reach very large numbers of potential buyers all over the
world
• sometimes cheaper
• Can be interactive and targeted to specific interest groups and
/ or to individuals.
• It makes sense to move advertising to the Internet, where the
number of viewers is growing .

Shortcomings:
• Most of which relate to the difficulty in measuring the
effectiveness and cost-justification of the ads.

Advertising Methods
• Banners: Electronic billboards, which typically contain a short
text or graphical message to promote a product or a vendor.
• Keyword banner: Banner advertising that appears when a
predetermined word is queried from a search engine.
• Random banner: Banner advertising that appears randomly.
• Pop-up ad: An advertisement that is automatically launched
by some trigger and appears underneath the active window.

Some Advertising Issues and
Approaches
• Unsolicited Advertising: Spamming is the indiscriminate
distribution of electronic ads without permission of the
receiver.
• Permission marketing: Method of marketing that asks
consumers to give their permission to voluntarily accept
online advertising and e-mail.
• Viral Marketing: Virtual marketing refer to online ’’word-of-
mouth’’ marketing. The main idea is to have people forward
message to friends, suggesting that they ‘’check this out’’
• Interactive Advertising and Marketing: The term interactive
points it the ability to an individual, to gather and remember
that person’s responses, and to serve that customer based on
his or her previous unique responses.

Other forms of Internet
advertising
• There are many issues related to the implementation of
Internet advertising: how to design ads for the Internet, where
and when to advertise, and how to integrate online and offline
ads.
• Permission marketing. Traditional telemarketers contact
consumers without their permission, frequently when the
consumers are busy or are eating dinner.
• This does not leave consumers with a positive feeling, nor
does it put them in the mood to buy the product or service
being marketed

Service Industries Online
• Selling books, toys, computers, and most other products on
the Internet may reduce vendors’ selling costs by 20 to 40
percent
• Further reduction is difficult to achieve because the products
must be delivered physically.
• Only a few products (such as software or music) can be
digitized to be delivered online for additional savings.
• On the other hand, delivery of services, such as buying stocks
or insurance online, can be done 100 percent electronically,
with considerable cost reduction.

• Therefore, delivery of services online is growing very rapidly,
with millions of new customers added annually.
• The major online services to be discussed here are banking,
trading of securities (stocks, bonds), job matching, travel, and
real estate.
• Electronic banking, also known as cyberbanking, virtual
banking, home banking, and online banking, includes various
banking activities conducted from home, a business, or on the
road instead of at a physical bank location.

• Electronic banking has capabilities ranging from paying bills to
securing a loan. It saves time and is convenient for customers
• For banks, it offers an inexpensive alternative to branch
banking
• Electronic banking offers several of the benefits such as
expanding the customer base and saving the cost of paper
transactions.
• Electronic bill payments. Mostly, people prefer to pay monthly
bills, such as telephone, utilities, credit cards, and cable TV,
online.
• The recipients of such payments are even more enthusiastic
about such service than the payers, since online payments
enable them to significantly reduce processing costs.

• The following are the major existing payment systems in
common use: automatic payment of mortgages; automatic
transfer of funds to pay monthly utility bills; paying bills from
online banking account; merchant-to-customer direct billing;
and use of an intermediary to aggregate bills into one payable
Web site.

• Online securities trading. An online trade typically costs
between $3 and $30, compared to an average fee of $100
from a full-service broker and $35 from a discount broker.
• There is no waiting on busy telephone lines.
• Furthermore, the chance of making mistakes is small because
there is no oral communication with a securities broker in a
frequently very noisy physical environment.
• Orders can be placed from anywhere, any time, and you can
find on the Web, by yourself, a considerable amount of
information regarding investing in a specific company or in a
mutual fund

• The online job market. The Internet offers a perfect
environment for job seekers and for companies searching for
hard-to-find employees.
• The online job market is especially effective for technology-
oriented jobs.
• However, there are thousands of companies and government
agencies that advertise available positions in all types of jobs,
accept resumes, and take applications via the Internet.

• Travel. The Internet is an ideal place to plan, explore, and
economically arrange almost any trip.
• Potential savings are available through special sales,
comparisons, use of auctions, and the elimination of travel
agents.
• Services are also provided online by all major airline vacation
services, car rental agencies, hotels, and tour companies.
• Online travel services allow you to purchase airline tickets,
reserve hotel rooms, and rent cars. Most sites also support an
itinerary-based interface, including a fare-tracker feature that
sends you e-mail messages about low-cost flights to your
favorite destinations

• Real estate. Real estate transactions are an ideal area for e-
commerce
• you can view many properties on the screen, saving time for
you and the broker
• you can sort and organize properties according to your criteria
and preview the exterior and interior designs of the
properties, shortening the search process
• you can find detailed information about the properties and
frequently get even more detail than brokers will provide
• homebuilders now use virtual reality technology on their Web
sites to demonstrate three-dimensional floor plans to
potential home buyers.

MARKETRESEARCH,ADVERTISING,AND
CUSTOMERSERVICE
• Conducting successful commerce requires several support
activities. Most notable are advertising, customer service, and
understanding of consumers and their behavior
• It is important to find out who are the actual and potential
customers.
• Look at factors that inhibit shopping, and more. Merchants
then can prepare their marketing and advertising strategies,
based on this information

• Online purchasing constitutes a fundamental change for
customers. If the customer has previously used mail-order
catalogs or television shopping, the change will not be so
drastic
• But moving away from a physical shopping mall to an
electronic mall may not be simple. Furthermore, shopping
habits keep changing as a result of innovative marketing
strategies
• Finding out what specific groups of consumers (such as
teenagers or residents of certain geographical zones) want is a
major role of market research. This dividing of markets into
specific groups is called segmentation.

• However, even if we know what groups of consumers in
general want, each individual consumer is very likely to want
something different.
• A major advantage of EC is its ability to customize products,
services, advertisements, and customer service at a
reasonable cost. This is referred to as personalization.

INFRASTRUCTURE AND E-COMMERCE
SUPPORT SERVICES
• For e-commerce applications to succeed, it is necessary to
provide them with all the needed support,
• This is not a simple task because of the large number of issues
to be considered and the large number of companies and
government agencies that may be involved.
• E-commerce transactions must be executable worldwide,
without any delay or mistake. Some transactions involve
several trading partners, requiring a more complex
infrastructure. Second, electronic payment issues must be
addressed

• Payments need to be secure, convenient, fast, and inexpensive
to process.
• order fulfillment and related logistics must be in place. Several
other services ranging from Web site content to security are
needed.
• appropriate planning and strategy that considers legal,
technological, and other requirements is necessary

• E-commerce infrastructure requires a variety of hardware,
software, and networks
• The major components are networks, Web servers, Web
server support and software, electronic catalogues, Web page
design, construction software, transactional software, and
Internet access components
• special software and sometimes hardware is needed for
conducting auctions, e-procurement, and m-commerce.

• Order Fulfilment-When a company sells direct to individual
customers it is involved in various order fulfillment activities. It
must:
• 1. Quickly find the products to be shipped, and pack them.
• 2. Arrange for the packages to be delivered speedily to the
customer’s door.
• 3. Collect the money from every customer, either in advance,
by COD, or by individual bill.
• 4. Handle the return of unwanted or defective products.

Business to Consumer E-
commerce Applications:

Web Catalog Revenue Models
• Many companies sell goods and services on the Web using an
adaptation of a mail-order catalog revenue model that is more
than 100 years old
• In this traditional catalog-based retail revenue model, the
seller establishes a brand image, and then uses the strength of
that image to sell through printed information mailed
to prospective buyers
• Companies can take this catalog model online by replacing or
supplementing their print catalogs with information on their
Web sites. When the catalog model is expanded this way,
it is often called the Web catalog revenue model.

• Customers can place orders through the Web site or by telephone.
• This flexibility is important because many consumers are still
reluctant to buy on the Web
• In the first few years of consumer electronic commerce, most
shoppers used the Web to obtain information about products and
compare prices and features, but then made their purchases by
telephone.
• Although these fears are less prevalent today, most companies that
use the Web catalog revenue model successfully do give customers a
way to complete the payment part of the transaction by telephone
or by mail.

• Types of businesses using the Web catalog revenue model
include
• Sellers of computers and consumer electronics
• Books
• Music & Videos/Movies
• Luxury Goods
• Clothing
• Gifts

• The leading computer manufacturers, including Apple, Dell,
Gateway, Hewlett-Packard, and Sun Microsystems, have had
great success selling on the Web.
• All of these companies sell a full range of products—from
small notebook computers to large server computers—
to individuals, businesses, and other organizations through
their Web sites.
• Having more than one way to reach customers is often a good
idea for companies.
• Each different pathway to customers is called a marketing
channel.

• Companies find that having several marketing channels lets
them reach more customers at less cost.
• For example, it is expensive to stock a large number of
different items in a physical store, so a company such
as Best Buy will stock the most popular items in its stores but
will sell a wider variety of items (including those that are not
in high demand at every one of its retail locations) on its web
site
• By having two marketing channels (retail store and Web site),
Best Buy reaches more customers and offers more products
than it could using either channel alone.

Order Planning in E-Commerce
in B2C model
• What happens when a customer contacts you and asks for a
product that he wants immediately and you discover that your
warehouse doesn't stock it at that moment?
• And if this happens after the item has been logged in as a
confirmed order? Are you able to respond in a timeframe
that's suitable to your customer?
• customer orders drive a supply chain in B2C model. A primary
requisite for any e-commerce business is that it employs
systems that manage orders and inventory levels efficiently.
• Disparate order processing can lead to serious gaps in demand
and fulfilment.

• Inventory management is the set of activities involved in
ensuring that items needed for the business to run are always
available in optimal quantities.
• This means that there should neither be too much purchased
nor too little, but just the amount required with adequate
backup.
• Especially for e-commerce stores, the need to juggle
customers across multiple channels and provide service and
updated websites 24 hours a day is a constant challenge.
• Some best practices for managing inventory across multiple
channels are

• Keep Core and Non-Core Products Separate: Simply put, core
products are those products that a business absolutely does
not want to face a shortage of. Non-core products then form
everything else that a business carries or uses. A good
example of this is items that are sold during a specific season
or a holiday.
• Leverage JIT Inventory Management: JIT or Just-In-Time is an
inventory management strategy used to increase efficiency
and decrease waster. This is achieved by receiving required
goods only when they are needed
• It becomes vital to use a strong inventory management
application or software to ensure that demand and order
information is available in real-time.

• Improve Forecasting: As mentioned above, accurate
forecasting is the key to successful inventory management.
When a retailer knows that the customer needs, where it is
needed and in what quantity, they will be in a better position
to meet the customer’s expectation without needing to
stockpile beyond a certain point.
• To achieve better forecasting, the business needs to be able to
conduct market research, observe market demand models,
analyze demand patterns and understand required stock
levels.

Cost Estimation and Pricing
• Before setting the pricing, there must be a complete study of
cost estimation.
• Pricing is the bridge between customer needs and company
capabilities.
• Pricing at the individuals order level depends on
understanding the value to the customer that is generated by
each order, evaluating the cost of filling each order.

Order Generation Process
• 1. Analyze business data to build order profiles
• Collecting and analyzing order data from software systems to
fuel informed management decisions on staffing allocation
and system layout is an important step in preparing for
seasonal and peak demand patterns.
• Historical data can show order profiles, explain customer
preferences, identify the most profitable SKUs, forecast labor
needs and organize categories of fast and slow movers.
• The empirical benefit of this information is obvious, but
actually extracting it can be challenging, even for large
companies with enterprise resource planning (ERP) solutions
and warehouse management systems (WMS).

General Buying Cycle
1. Acknowledging the need
2. Awareness
3. Research
4. Consideration (the short list)
5. Evaluation
6. Purchase
7. Applications
8. The Experience

Order Selection &
Prioritization
• Customer Service representatives are also often responsible
for choosing which orders to accept and which to decline.
• Not all customer orders are created equal. Some are simply
better for the business than others
• The desirable orders are those that fit the company’s
capabilities and offer healthy profits
• Companies put effort into order selection and link it to their
business strategy to make more money, regardless of
production capacity

• Companies handle order prioritization, how they decide which
orders to execute faster

Order Scheduling
• During Order scheduling, the prioritized orders get slotted into
actual production, or operation sequence.
• This task is difficult because of different functional
departments, Sales, customer service, operations/production,
may have conflicting goals.
• The result is lack of interdepartmental coordination

Order Fulfillment & Delivery
• During Order fulfillment and delivery phase the actual
provision of the product or service is made
• Order fulfillment involves multiple functions and locations.
• Different parts of an order may be created in different
manufacturing facilities or orders may be manufactured in one
location, warehoused in second location, and installed in third.
• In service operations, it can mean sending individuals with
different talents to the customer’s site

Order Billing & Account
Payment
• After the Order has been fulfilled, and delivered, billing is
typically handled by the finance staff
• The billing function is designed to serve the needs and
interests of the company, not the customer
• Often, customers don’t understand the bill they receive, or
they believe it contains inaccuracies
• The bill may not be inaccurate, but it is usually constructed in
a way more convenient for the billing department than the
customer

Post Sales Service
• This phase plays an increasingly important role in all the
elements of a company
• Profit equation, customer value is determined
• Depending on the specifics of business, it can include such
elements as physical installation of a product, repair and
maintenance, customer training, equipment upgrade, etc
• Because of the information conveyed, post sales service can
affect customer satisfaction and company profitability for
years

Customer Oriented E-
Commerce
• Consumer oriented E-Commerce’s time has come
• Cost of processing many types of financial and retail
transactions has increased rapidly.
• It is imperative to develop ways to handle those transactions
• Competition in retailing has increased to a level that only
those organizations that can provide superior customer
services, which in turn require sophisticated transaction
management will continue to develop and prosper

• Consumers are demanding more services and greater
convenience in their banking and shopping activities
• Technology is in place to process electronic transactions at
faster speeds more easily and at less cost than we can process
paper transaction

Desirable Characteristics of an
Electronic Marketplace
• Critical mass of buyers and sellers : The electronic market
should be the first place customers go and find the products
and services they need
• Opportunity for independent evaluations and customer
dialogue : provision for customers to enter notes on which are
the best products and more customer value
• Negotiation and Bargaining : money, terms & conditions,
delivery dates, etc
• New Products & Services: New product launch, innovative
marketing

• Seamless interface: Information should flow seamlessly from
one source to another
• Recourse for disgruntled buyers: resolving disputes among
buyers and sellers, product returns and cancellation

Need for B2B E-Commerce
• To Service today’s complex business world, companies must
develop a strategy that allows them to take maximum
advantage of latest trends in technology
• Successful companies have implemented focussed e-business
strategies to build cutting edge technologies that serve and
retain customers, manage suppliers and integrate selling
chains most efficiently

• The people who buy products for businesses are also
consumers, and they’re used to E-Commerce in their daily
lives.
• Advertising and other communications for the B2B market had
to be as high quality as consumer marketing to get noticed.
• Few could argue that traditional purchasing methods are as
efficient as E-Commerce.
• Paper is eliminated, as are delays. Errors from multiple
handling of orders are reduced.

• Information is available to buyers 24 hours a day
• Buyers can make their purchases anywhere – on the shop
floor, on the road or even at home – via mobile platforms.
• There are companies who are using the speed and efficiency
of online sales to capture business from less-agile
competitors.
• Buyers already know eCommerce from their consumer
experiences, and they welcome new simplicity in their work
lives

B2B Business Models
• Net marketplaces
– E-distributor
– E-procurement
– Exchange
– Industry consortium
• Private industrial network
– Single firm
– Industry-wide

B2B Models: E-distributor
Version of retail and wholesale store, goods and indirect goods
• Owned by one company seeking to serve many customers
• Revenue model: Sales of goods

B2B Models: E-procurement
• Creates digital markets where participants transact for indirect
goods – B2B service providers, application service providers
(ASPs)
• Revenue model: – Service fees, supply-chain management,
fulfillment services

B2B Models: Exchanges
• Electronic digital marketplace where suppliers and purchasers
conduct transactions
– Usually owned by independent firms whose business is making
a market
– Usually serve a single vertical industry
Revenue model: Transaction, commission fees
• Create powerful competition between suppliers
• Tend to force suppliers into powerful price competition;
number of exchanges has dropped dramatically

B2B Models: Industry
Consortia
• Industry-owned vertical digital marketplace that serve specific
industries (e.g., automobile, chemical)
• More successful than exchanges
– Sponsored by powerful industry players
– Strengthen traditional purchasing behavior
Revenue model: Transaction, commission fees

Private Industrial Networks
• Digital network used to coordinate among firms engaged in
business together
• Typically evolve out of company’s internal enterprise system
• Example: Walmart’s network for suppliers
• Cost absorbed by network owner and recovered through
production and distribution efficiencies

Applications: Dell business
model
• Orders for computers are placed with Dell by telephone or through the Internet.
• Through a process just-in-time (or lean) manufacturing, waste is reduced and
productivity improved by only having the required inventory on hand when it is
actually needed for manufacturing.
• This reduces lead times and set up times for building a computer.
• Dell only orders the parts for a computer when it has a firm (and in the case of
non corporate orders, prepaid) order.
• Dell operates with little in-process and no finished goods inventory: Products are
shipped as soon as they are manufactured.
• This approach also enables Dell to forego having brick and mortar store fronts
with inventory that must be kept on the books or that might become obsolete,
thereby significantly reducing overhead.
• Items that are not built by Dell are shipped directly to the customer by the
manufacturer.
• These features help Dell to reduce the costs of production and sales.
• This process allows Dell to custom design systems for its customer within certain
parameters as well as to offer a range of items rather than a single system.

Applications: Cisco business
model

Cisco Business Model
• This successful network communications manufacturer
receives approximately 90% of its orders over the Internet.
• The orders are routed to contract electronics manufacturers
who build the products to Cisco’s specifications.
• Not only are the majority of Cisco’s orders received over the
web, but 70% to 80% of their customer service requests are
also dealt with online.

Electronic Data Interchange
• Electronic data interchange (EDI) is a computer-to-computer
transfer of business information between two businesses that uses a
standard format of some
kind.
• The two businesses that are exchanging information are trading
partners. Firms that exchange data in specific standard formats are
said to be EDI compatible
• The business information exchanged is often transaction data;
however, it can also include other information related to
transactions, such as price quotes and order status inquiries.

• Most B2B electronic commerce is an adaptation of EDI or is based
on EDI principles.
• Several large companies decided to mount a major effort to create a
set of cross-industry standards for electronic components,
mechanical equipment, and other widely used items.
• The American National Standards Institute (ANSI) has been the
coordinating body for standards in the United States since
1918. ANSI does not set standards itself, but it has created a set of
procedures for the development of national standards and it
accredits committees that follow those procedures.

• In 1979, ANSI chartered a new committee to develop uniform EDI
standards. This committee is called the Accredited Standards
Committee X12 (ASC X12).
• The ASC X12 committee meets three times each year to develop and
maintain EDI standards.
• The committee and its subcommittees include information systems
professionals from more than 800 businesses and other
organizations. Membership is open to organizations and
individuals who have an interest in the standards. The administrative
body that coordinates ASC X12 activities is the Data Interchange
Standards Association (DISA).

How EDI Works
• Although the basic idea behind EDI is straightforward, its
implementation can be complicated, even in fairly simple
business situations.
Scenario
• consider a company that needs a replacement for one of its
metal-cutting machines. This section describes the
steps involved in making this purchase using a paper-based
system, and then explains how
the process would change using EDI. In both of these
examples, assume that the vendor uses
its own vehicles instead of a common carrier to deliver the
purchased machine

Paper-Based Purchasing
Process
• The buyer and the vendor in this example are not using any
integrated software for business processes internally; thus,
each information processing step results in the production of a
paper document that must be delivered to the department
handling the next step
• Information transfer between the buyer and vendor is also
paper based and can be delivered by mail, courier, or fax.

EDI Purchasing Process
• The mail service has been replaced with the data
communications of an EDI network, and the flows of paper
within the buyer’s and vendor’s organizations have been
replaced with computers running EDI translation software

Approaches to EDI Service
• Trading partners can implement the EDI network and EDI translation
processes in several ways. Each of these ways uses one of two basic
approaches: direct connection or
indirect connection.
• The first approach, called direct connection EDI, requires each
business in the network to operate its own on-site EDI translator
computer
• These EDI translator computers are then connected directly to each
other using modems and dial-up telephone lines or dedicated leased
lines.
• Dedicated leased-lines are expensive and modems and dial-up
telephone lines are slow and not very reliable, only a few companies
still use direct connection EDI

• Instead of connecting directly to each of its trading partners, a
company might decide to use the services of a value-added
network
• a value-added network (VAN) is a company that provides
communications equipment, software, and skills needed to
receive, store, and forward electronic messages that contain
EDI transaction sets.
• To use the services of a VAN, a company must install EDI
translator software that is compatible with the VAN. Often,
the VAN supplies this software as part of its operating
agreement.

• To send an EDI transaction set to a trading partner, the VAN
customer connects to the VAN using a dedicated or dial-up
telephone line and then forwards the EDI-formatted
message to the VAN
• The VAN logs the message and delivers it to the trading partner’s
mailbox on the VAN computer
• The trading partner then dials in to the VAN and retrieves
its EDI-formatted messages from that mailbox
• This approach is called indirect connection EDI because the trading
partners pass messages through the VAN instead of connecting
their computers directly to each other

Advantages of Indirect EDI
• Users need to support only the VAN’s one communications
protocol instead of many possible protocols used by trading
partners.
The VAN records message activity in an audit log. This VAN
audit log becomes an independent record of transactions; this
record can be helpful in resolving disputes between trading
partners.
• The VAN can provide translation between different transaction
sets used by trading partners (for example, the VAN can
translate an ASC X12 set into a UN/EDIFACT set).
• The VAN can perform automatic compliance checking to
ensure that the transaction set is in the specified EDI format.

Disadvantages
• One major issue is cost. Most VANs require an enrolment fee,
a monthly maintenance fee, and a transaction fee.
• The transaction fee can be based on transaction volume,
transaction length, or both.

EDI Payments
• Some EDI transaction sets provide instructions to a trading partner’s
bank.
• These transaction sets are negotiable instruments; that is, they are
the electronic equivalent of checks
• All banks have the ability to perform electronic funds transfers
(EFTs), which are the movement of money from one bank account to
another.
• The bank accounts involved in EFTs may be customer accounts or
the accounts that banks keep on their own behalf with each other.
• When EFTs involve two banks, they are executed using an
automated clearing house (ACH) system, which is a service that
banks use to manage their accounts with each other

EDI on the Internet
• As the Internet gained prominence as a tool for conducting business,
trading partners using EDI began to view the Internet as a potential
replacement for the expensive leased lines and dial-up connections
required to support both direct and VAN-aided EDI
• Companies that had been unable to afford EDI began to look at the
Internet as an enabling technology that might help them sell to large
customers that demanded EDI capabilities from their suppliers.
• The major roadblocks to conducting EDI over the Internet initially
were concerns about security and the Internet’s general inability to
provide audit logs and third-party verification of message
transmission and delivery

• As the basic TCP/IP structure of the Internet was enhanced
with secure protocols and other encryption schemes
businesses worried less about security issues
• Because EDI transactions are business contracts and often
involve large amounts of money, the issue of nonrepudiation
is significant
• Nonrepudiation is the ability to establish that a particular
transaction actually occurred. It prevents either party from
repudiating, or denying, the transaction’s validity or existence
•

• In the past, the nonrepudiation function was provided either
by a VAN’s audit logs for indirect connection EDI or a
comparison of the trading partners’ message logs for direct
connection EDI
• Recently developed EDI protocols now address the
nonrepudiation issue.

• EDI on the Internet is called Internet EDI or Web EDI. It is also
called open EDI because the Internet is an open architecture
network
• EDI exchanges occur over the Internet using EDIINT (Electronic
Data Interchange-Internet Integration, also abbreviated EDI-
INT), which is a set of protocols for the exchange of data (EDI,
XML, and other formats) over the Internet.
• Most EDIINT exchanges today are encoded using the AS2
(Applicability Statement 2) specification, which is based on the
HTTP rules for Web page transfers, although some companies
are using a more secure specification, AS3 (Applicability
Statement 3)

• Wal-Mart, for example, currently requires all of its vendors to
use EDI following the EDIINT protocol transmitted using AS2.
EDIINT using AS2 or AS3 provides secure transmission, which
resolves concerns most companies had about using EDI on the
Internet.
• Also, AS2 and AS3 return a secure electronic receipt for each
transmission to the sender, which resolves the issue of
nonrepudiation.

EDI Architecture
• The architecture of EDI is divided into 4 layers-
1. Application Layer
2. Standards Translation Layer
3. Transport Layer
4. Physical Network Layer

Application Layer
• The first layer of EDI defines the business applications that are
used by EDI
• This layer of EDI translates business application into request
for quotes, purchase orders, acknowledgement and invoices.
For every company this layer is specific and also for the
software that company uses.
• The application layer also called the semantic layer. The
Semantic layer describes the Business application that is
driving EDI

Standard Layer
• This layer of EDI architecture defines the structures of the
business form and some content which are related with the
application layer
• This layer of EDI has no meaning without application layer so
we can say that EDI applications and standard layer are
interlinked.

Transport Layer
• EDI transport layer is a non electronic/ Electronic way of
sending the business form from one company to another
company
• This way may be registered mail, postal services or private
career, telecommunications, fax ,e-mails etc.

Physical Layer
• The physical layer of EDI also called the infrastructure layer
• This layer defined the component communication path for EDI
data transaction
• What are the structure of e-commerce supported EDI in which
information can be build and what are the communication
established over which EDI data transfer from one customer to
another customers.

EDI Standards
• There are many EDI document standards but what do they all
mean and where are they used?
• ANSI ASC X12
• EANCOM
• UN/EDIFACT
• HIPAA
• ODETTE
• RosettaNet
• SWIFT

Web Advertisements in B2B
• Online advertising campaigns play a critical role in fuelling the
sales cycle for B2B companies
• As you’re building out campaign themes across online and
other marketing avenues, streamline all available digital assets
to get that true cross-channel integration. Your audience is
(hopefully!) going to take multiple actions throughout their
path to a sale, so account
• Some Web sites offer advertisers the opportunity to sponsor
all or parts of their sites. These site sponsorships give
advertisers a chance to promote their products, services, or
brands in a more subtle way than by placing banner or pop-up
ads on the sites (although some sponsorship packages include
a certain number of banner and pop-up ads).

SEARCH ENGINE POSITIONI NG A ND
DOM AI N NAM E S
• Potential customers find Web sites in many different ways. Some site
visitors are referred by a friend or click a link on a referring Web site.
Others are referred by an affiliate marketing partner of the site.
• A search engine is a Web site that helps people find things on the
Web. Search engines contain three major parts.
• The first part, called a spider, a crawler, or a robot (or simply
bot), is a program that automatically searches the Web to find Web
pages that might be interesting to people.
• When the spider finds Web pages that might interest search engine
site visitors, it collects the URL of the page and information
contained on the page.

• The spider returns this information to the second part of the search engine to be
stored. The storage element of a search engine is called its index or database.
• The index checks to see if information about the Web page is already stored
• It determines whether to update the page information. The index is designed to
allow fast searches of its very large amount of stored information.
• The third part of the search engine is the search utility. Visitors to the search
engine site provide search terms, and the search utility takes those terms and
finds entries for Web pages in its index that match those search terms.
• The search utility is a program that creates a Web page that is a list of links to
URLs that the search engine has found in its index that match the site visitor’s
search terms. The visitor can then click the links to visit those sites.

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