1. What is E-Commerce?
Electronic commerce (e-commerce) is a general
term for any type of business, or commercial
transaction that involves the transfer of
information across the Internet. This covers a
range of different types of businesses from
consumer-based retail sites, like Amazon.com,
through auction and music sites like eBay or
MP3.com, to business exchanges trading goods
or services between corporations.

2. What is E-Commerce Cont’d?
• Electronic commerce is the use of
electronic communication to do business.
• E-commerce is not about technology.
• It is not a new business.
• E-commerce is a method for companies to
create and operate their business in new
and efficient ways.

3. What is E-Commerce Cont’d?
Most fundamentally, e-commerce
represents the realization of digital, as
opposed to paper-based or paperless ,
commercial transactions between
businesses, between a business and its
consumers, or between a government and
its citizens or constituent business.

4. From Traditional Commerce to
E-commerce
Opened avenues for
Sailing ships trade between buyers
and sellers. Ancient
times (thousands of
Printing press years ago)
Steam engine
Telephone

5. From Traditional Commerce to
E-commerce Cont’d
Wire transfers - used
Electronic Funds Transfer (EFTs) by banks
Businesses transfer
electronic data
Electronic Data Interchange (EDI) - data not re-keyed
- high implementation
cost, thus excluded
small businesses
Internet On-line shopping

6. Business Processes Suited to
Certain Type of Commerce
 E-commerce
 Sale/purchase of books & CDs, travel
services, investments and insurance services
 Online delivery of software
 Online shipment tracking

7. Business Processes Suited to
Certain Type of Commerce Cont’d
 E-commerce & Traditional
 Sale/purchase of automobiles and residential
real estate (e.g. do research online then buy
from a dealer or real estate agent)
 Online banking
 Roommate matching service

8. Business Processes Suited to
Certain Type of Commerce Cont’d
 Traditional
 Sale/purchase of impulse items for immediate use,
high fashion jewelry and antiques (personal
inspection required; prefer to touch, smell or examine
closely)
 Small denomination purchases and sales (since there
is not yet a standard for transferring small amounts of
money)

9. What Are the Advantages
(merits) of E-commerce?
 Increases sales, decreases cost
Increased sales
 Reach narrow market segments in geographically dispersed locations
 Create virtual communities
Decreased costs
 Handling of sales inquiries
 Providing price quotes
 Determining product availability
 Allows small businesses to have global customer base
 Reduced cost through electronic sales enquires, price quotes and order taking
 Provides purchasing opportunities for buyers (businesses can identify new
suppliers and partners)
 Increase speed and accuracy for exchanged information, thus reducing cost

10. What Are the Advantages of E-
commerce Cont’d?
 Business can be transacted 24hrs a day
 The level of detail of purchase information is selected by
user
 Digital products can be delivered instantly
 Tax refunds, public retirement and welfare support costs
less when distributed over the Internet
 Allows products and services to be available in remote
areas, e.g. remote learning

11. What Are the Advantages of E-
commerce Cont’d?
 If advertising is done well on the Web, it can get a firm’s
promotional message out to potential customers in every
country
 Using e-commerce sales support and order taking
processes, a business can:
– Reduce costs of handling sales inquiries
– Provide price quote

12. What Are the Advantages of E-
commerce Cont’d?
 It increases purchasing opportunities for buyers
 Negotiating price and delivery terms is easier
 The following cost less to issue and arrive securely and
quickly:
– Electronic payments of tax refunds
– Public retirement
– Welfare support

13. What Are the Disadvantages
(demerits) of E-commerce?
 Inability to sell some products (e.g. high cost jewelry and
perishable foods, although supermarkets like
www.Tesco.com, delivers to your home)
 The newness and evolution of the current technology
 Many products require a large number of people to
purchase to be viable
 High capital investment

14. What Are the Disadvantages of
E-commerce Cont’d?
 Difficulty in integrating current databases and transaction
processing systems into e-commerce solutions
 Cultural and legal obstacles
 Transmission of credit card details
 Some consumers resistant to change
 Laws are unclear
 Shipping profile: Products with a low value-to-weight
ratio that can not be efficiently packed and shipped are
unsuitable (use traditional commerce)

15. What Are the Disadvantages of E-
commerce Cont’d
 Perishable grocery products are much harder to
sell online
 It is difficult to Calculate return on investment
 Loss of ability to inspect products from remote
locations
 Rapid developing pace of underlying
technologies

16. The 1st Wave of E-commerce
 The 1st wave was from the
mid 1990s to 2003
 Dot-com boom (over
$100 billion in
investment): Rapid
growth from mid-1990s
to 2000
 Dot-com bust: in 2000
 Gloom years: 2000 –
2003 (over $200 billion
in investment)

17. Characteristics of the 1st Wave3
 It was primarily a U.S. phenomenon
 Web pages were in English
 Internet technologies were slow and inexpensive (e.g.
dial-up lines)
 Bar codes and scanners used to track parts (B2B and
Business processes)
 Email, tool for unstructured communication
 On-line advertising main revenue source

18. The 2nd Wave of E-commerce
 Beginning in 2003 e-
commerce has shown
signs of new life
 Companies like
Amazon.com (books),
and eBay.com who
survived the downturn
were beginning to show
profits
 Continuous growth of
B2C sales: 20-30% each
year since 2000

19. Characteristics of the 2nd Wave
 International scope where sellers do business in many
countries and languages
 Faster, cheaper connections (x20 faster), broadband at
home (although more expensive)
 Radio frequency ID devices and smart cards
 Fingerprint readers and retina scanners (biometric
technologies) used for tracking
 Email, integral part of marketing

20. Characteristics of the 2nd Wave
Cont’d
 E-commerce integral part of marketing and customer
contact strategy
 Some categories of on-line advertising, e.g. employment
services (job want ads) have replaced traditional
advertising outlets
 Problems
 Language conversions
 Currency conversions

21. Economic Forces
 Economics is the study of
how people allocate scare
resources
 Resources are allocated
through:
 Commerce
(markets)
 Government actions
(e.g. taxes)