Value Chain Management – BUSI 1330

Week 24:

Electronic Commerce

What is E-Commerce ?

By UNCITRAL Model Law on E-Commerce

* These include, but not limited to, such transaction as any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.

2

Commercial activities*using a data message generated, sent, received or stored

by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI),

e-mail, telegram, telex or telecopy’

Commercial activities*using a data message generated, sent, received or stored

by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI),

e-mail, telegram, telex or telecopy’

What is ICT?

3

Regulations Administrations Policies

Telecommunications(fixed & mobile)

Computer Mass Coms

Technologies Legislations

INTERNET

Pager

Telephone

Cable TV

Fax Machine

VCR

Cellular Telephone

Personal Computer

CD-ROM Drive

Wireless Data

Mobile Commerce

41 years

38 years

25 years

22 years

9 years

9 years

7 years

6 years

6 years

6 months

Time taken for products to reach 10 million customers

The world is speeding up.....

Sourcing OrderPlacing

Supply ChainManagement

Settlement

InformationQuotation requests/ITT’sQuotations/ TendersOrder Matching

Matched OfferOrder/ContractAcknowledgement /confirmation

Call-offsProgressingDeliveryConfirmation

BillingPaymentReceipting

Pre-Sales Post-Sales

Core Trading Process

Commerce: the company perspective...

Production/ service creation

Advantages of E-Commerce

• Deals struck 24/7

• IT allows a customer order to become a production, delivery, billing and accounting instruction (‘one key stroke once’).

• IT and communications allow integrated real-time working within business departments and across business partners.

‘Not for profit’ & Government

• Follow exactly the same processes

• ‘Settlement’ may not be with ‘clients’ or beneficiaries.

• ‘Supply’ may be free (unpaid charity workers) but must still be organised.

• Examples:– Tax returns, car licence– Charity shops

Growth in on-line consumer marketing

• Consumers driven by:– Effort of “Traditional Shopping” – changing

employment patterns e.g. Tesco on-line– 24/7 access– Increase in next-day delivery offers– Specialty items – homogeneous high streets– Increase in computing power/ internet

availability– Increased confidence in system reliability &

security

Growth in on-line business marketing

• Business customers driven by:– Instant access– Process cost reductions– Increase in next-day delivery offers– Global sourcing– Increase in computing power/ internet

availability– Systems integration (back office)

Growth in on-line business marketing

• Suppliers driven by– Cost reductions through systems integration (front

office to production to back office)– Cost reductions through sales force savings– Cost reductions through e-catalogue provision– Extended reach (small company can compete with

large without building global sales force)– Disintermediation (direct contact with customers)– Competitive forces (falling out-of-step) – requirements

of customers.

Online Marketing and ElectronicCommerce

• Most on-line marketing now uses internet/ web based interfaces (html etc.) although delivery may be via – the open web– closed (private) systems– specialist service suppliers (AOL) or even – ‘old fashioned’ private network Electronic

Data Interchange (EDI) systems)

• On-line can still integrate with telephony to provide hybrid systems.

A large business looks like:-

LargeBranches

CallCentres

HQ

CommercialSuppliers/Customers

Data Centre

BACS

InternationalOffices

FactoryBack Offices

TraditionalBranches

Mobile Sales

Virtual Private Network/Intranet/ Extranet

The Internet+

The Network becomes the Market Place

MajorSupplier Second

Tier Suppliers

The Public Network

SmallerCustomers

YourCompany’sVPN

VPN

VPN

Extranet

LargerCustomers

Sourcing OrderPlacing

Supply ChainManagement

Settlement

InformationQuotation requests/ITT’sQuotations/ TendersOrder Matching

Matched OfferOrder/ContractAcknowledgement /confirmation

Call-offsProgressingDeliveryConfirmation

BillingPaymentReceipting

Pre-Sales Post-Sales

B2B Collaborative Working

Core Trading Process

e-Commerce: the company perspective...

To gain competitive advantage, use five components (Porter strategies)

• Customer Acquisition

• Customer Purchase support

• Customer Fulfilment, inc. payment

• Customer Continuance and Support

• Customer Service Channel

Reasons why a company needs to be on-line:

• Expand market reach– global presence

• Shorter time to market (T2M)

• Visibility• Responsiveness• New Services• Data base• Strengthening

business relationships

• Cost-reduction• Increase efficiency• Provides flexibility• Channel conflicts• Customized offers• Measurable response• Alternative

media/message testing

On line Marketing Channels

• Electronic Presence– Corporate Website

Marketing Website Transaction Website

• Advertising Online- Place Ads in special sections of online services- Place Ads in certain internet newsgroups- Buy online Ads that pop up while consumers are surfing

(software to stop this is proliferating)

‘Pro-active’ use of the web

• Web page customisation (use of cookies/ preferences)

• Offer customisation• ‘Push’ advertising via e-mail (e-

permission V Spam)• Effective use of search engines

(Google).

Challenges of Online Marketers• How to sustain competitive advantage through

technology, superior service, brand & targeting• Limited consumer exposure & buying• Skewed user demographics & psychographics• Chaos & clutter• Security• Ethical concerns….

Ethical Concerns

• Computers permeate every aspect of our lives

• They perform life-critical tasks• Yet computer science is not regulated to

the extent of medicine, air travel, or construction zoning

• Much thought should be given to issues of ethics

Computer Crime & Security

• Some crimes are high tech versions of low tech problems (theft, fraud)

• Viruses and “trojan horses”• Hackers try to get into restricted systems

• Some solutions– effective use of passwords– antiviral software– firewalls– physical security

Health Concerns & the Environment

• People who spend too long at a computer and get too little exercise

• Ergonomic issues– radiation, eye strain,

repetitive motion damage

• Internet addiction• Disposal of old computer parts

Information Ownership

• Illegal software copying (pirating)

• Infringement copyright by copying of pictures or text from web pages

• Plagiarism by copying text from other sources when original work is expected

“Netiquette” and Hoaxes

• Inflammatory interchange of messages via internet (email, chat rooms, etc.)

• Chain mail

• Virus warning hoaxes

• “Spam” – unsolicited, bulk email

Internet Content & Free Speech

• Information on internet includes hate, violence, harmful information for children

• How much of this should be regulated

• Do filters solve problems or create more

• How reliable are web sites used for course work and research

Privacy

• U.S. Constitution, Amendments, and laws specify certain levels of privacy

• Databases containing personal information are easily stored, transmitted, and often available

• Does an employer have a right to monitor email messages

• Procedures and policies should be put in place and used by computer professionals

Benefits of On Line Marketing

• Convenience

• Abundance of information

• Interactive

• Immediate

• Private

• Value for money

• Systems Integration (cost saving)

• Reach• Time independent• Immediacy• Relationship

To Customers To Businesses

Summary of Concerns on the Internet

• Security• Reliability • Legal Issues• Copyright• Payment• Delivery

• Customer Acceptance• Loyalty• Pricing• Service• Competition• Channel Conflict

The Future

• Telecommuting

• Distance learning

• E-commerce

• Information availability

• Also … hazards