Chapter 1 Introduction

Introduction to Electronic Commerce
Objectives
In this chapter, you will learn about:
• What electronic commerce is and how it is

experiencing a second wave of growth with a new
focus on profitability
• Why companies now concentrate on revenue models
and the analysis of business processes instead of
business models when they undertake electronic
commerce initiatives
Objectives (continued)
• How economic forces have created a business
environment that is fostering the second wave of
electronic commerce
• How businesses use value chains and SWOT
analysis to identify electronic commerce
opportunities
• The international nature of electronic commerce
and the challenges that arise in engaging in
electronic commerce on a global scale
E-commerce
E-commerce is a method of buying and selling goods and
services online. The definition of ecommerce business can
also include tactics like affiliate marketing. You can use
ecommerce channels such as your own website, an
established selling website like Amazon, or social media to
drive online sales.
Electronic Commerce
 The first wave of electronic commerce occurred from
roughly 1995-2003 and included the advent of Amazon and eBay. It
was also during this time the Secure Socket Layer (SSL) technology
was introduced that made online transactions secure.
 The second wave of electronic commerce happened between 2004-
2009 and saw the rise of online communities and international
Internet usage.
 The third wave of electronic commerce started in 2010 and is still
going. This third wave has featured mobile users being targeted with
sophisticated marketing techniques utilizing the embedded GPS
(global positioning system) technology.
Electronic Commerce: The Second
Wave
• Electronic commerce (e-commerce)
– Businesses trading with other businesses and
internal processes
• Electronic business (e-business)

– Term used interchangeably with e-commerce
– The transformation of key business processes

through the use of Internet technologies
Categories of Electronic
Commerce
• Five general e-commerce categories:
 Business-to-consumer
 Business-to-business
 Business processes
 Consumer-to-consumer
 Business-to-government
The Development and Growth of
Electronic Commerce
• Electronic funds transfers (EFTs)
– Also called wire transfers
– Electronic transmissions of account exchange
information over private communications networks
• Electronic data interchange (EDI)

– Transmitting computer-readable data in a standard
format to another business
Advantages of Electronic
Commerce
• Electronic commerce can increase sales and
decrease costs
• 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 quotes.
Advantages of Electronic
Commerce (continued)
• 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 (withdrawal)
– Welfare support
Disadvantages of Electronic
Commerce
• E-Commerce industry, there are challenges,
much like any other sector. These challenges
include security, privacy, rules, and online
safety. There are also issues with taxes,
different cultures, and people feeling unsure
about shopping online.
• Cultural and legal obstacles also exist
Transaction Costs
• Transaction costs are the total costs that a
buyer and seller incur
• Significant components of transaction costs:
– Cost of information search and acquisition
– Investment of the seller in equipment or in the

hiring of skilled employees to supply products or
services to the buyer
Using Electronic Commerce to
Reduce Transaction Costs
• Businesses and individuals can use

electronic commerce to reduce transaction
costs by:
– Improving the flow of information
– Increasing coordination of actions

SWOT Analysis: Evaluating
Business Unit Opportunities
• In SWOT analysis:
– An analyst first looks into the business unit to

identify its strengths and weaknesses
– The analyst then reviews the operating

environment and identifies opportunities and
threats
Language Issues
• To do business effectively in other cultures a
business must adapt to those cultures
• Researchers have found that customers are
more likely to buy products and services from
Web sites in their own language
• Localization
– Translation that considers multiple elements of the
local environment
Culture Issues
• An important element of business trust is
anticipating how the other party to a
transaction will act in specific circumstances
• Culture:
– Combination of language and customs
– Varies across national boundaries
– Varies across regions within nations

Chapter 1 Introduction

Uploaded by

Copyright:

Available Formats

Chapter 1 Introduction

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 1 Introduction

Uploaded by

Copyright:

Available Formats

Introduction to Electronic Commerce

• What electronic commerce is and how it is

• Electronic business (e-business)

– The transformation of key business processes

• Electronic data interchange (EDI)

• Significant components of transaction costs:

– Cost of information search and acquisition

– Investment of the seller in equipment or in the

• Businesses and individuals can use

– Improving the flow of information

– Increasing coordination of actions

– An analyst first looks into the business unit to

– The analyst then reviews the operating

You might also like