E-commerce essentials

1.     What is e-commerce?

2.     How is e-commerce different from traditional commerce?

3.     What are the driving forces behind e-commerce?

4.     What are the key technology concepts behind the Internet?

5.     What are the key e-commerce questions for management?

 

WHAT IS E-COMMERCE?

1.1  Terminology

·       E-commerce

·       E-business

·       E-markets

·       Internet business

Teleshopping à EFT (70s) à EDI (80s)à e-shopping à e-commerce I (95-00) à e-commerce II (01-06)

 

1.2  Definition (Figure 1.1)

The use of the Internet and the Web to conduct commercial transactions that involve an exchange of value across organizational or individual boundaries in return for products and services

vs

the use of the Internet and the Web to conduct business activities

 

1.3  Types (Table 1.2)

1.  Relationship-based (Rayport and Jaworksi, 2001)

                        Business originating from …

                        Business                      Consumers
 

B2B

Purchasing & Procurement 

Supplier Management 

Inventory Management

C2B

Demand aggregator 

Cause-related advocacy group

B2C

Sales 

Consumer search 

FAQs 

Service & support

C2C

Auction 

Classified ads 

Games 

Jobs

 

2.  Technology-based

·       P2P

·       M-commerce

 

E-COMMERCE vs TRADITIONAL COMMERCE

2.1  7 features of e-commerce technology (Table 1.1)

1.  Ubiquity

2.  Global reach

3.  Universal standards

4.  Richness

5.  Interactivity

6.  Information density

7.  Personalization

 

e-commerce vs traditional commerce

Key elements

E-commerce

Traditional commerce

Technology

Enabler

Facilitator

Competitive edge

Speed

Differentiation

Accessibility

24 x 7

Limited time

Customer interface

Screen-to-face

Face-to-face

Customer interaction

Self-service

Seller influenced

Customization

One-to-one customization

Mass customization

Product promotion

Word of mouth

Merchandising & personal selling

Product characteristic

Commodity

Perishables, feel and touch

 

2.2  E-Commerce I vs E-Commerce II (Table 1.5)

 

DRIVING FORCES

3.1  Economics

1.     Lowering of costs

2.     Increasing competition

3.     Increasing consumer power: demand for speed, convenience, instant satisfaction, ....

 

3.2  Technology

    1.  Growth of the Internet (INTERconnected NETworks)

    2.  Emergence of the WWW

    3.  Ongoing advancement of IT

·       Internet II & Next Generation Internet Projects à GigaPOP, IPv6

·       Photonics (Table 3.5)

·       Wireless web

Ø     Internet telephony

Ø     Digital libraries

Ø     Distributed storage

Ø     Distance learning

Ø     Digital video

Ø     Video teleconferencing

Ø     Tele-immersion

Ø     M-commerce

 

3.2.1 Internet

3.2.1.1 History of the Internet (Figure 3.2)

•     ARPANET (1969-1990)

–      the U.S. Defense Department’s Advanced Research Projects Agency (ARPA) network for data sharing

•     NSFNET (1986-1995)

–   the National Science Foundation’s (NSF) national network for university communications 

•     Internet (1990) (Figure 3.3)

–    Business use of the Internet promotes the development of World Wide Web

 

Key technology concepts of the Internet

1.  Packet switching (Figure 3.4)

2.  TCP/IP (Figure 3.5)

3.  Client/Server computing (Figure 3.7)

 

4.1  Internet architecture

Level

Example

End user

You and me

Local access providers

Verizon, InsightCommunication

Internet access providers

AOL, MSN, CompuServe (Table 3.3)

Network access providers

MCI, Sprint, AT&T (Table 3.2)

Backbone

Fiber optics, routers, switches

 

Internet connection options

1.     Dial-up

2.     Digital Subscriber Line (DSL)

3.     Integrated Services Digital Network (ISDN)

4.     Cable

5.     T1

6.     T3

7.     Wireless

 

4.2  Internet protocol

a set of rules for formatting, ordering, and error-checking data sent across a network

·       TCP/IP (Transmission control protocol/Internet protocol) (Figure 3.6)

Layer

Specific Protocol

Application

HTTP, SMTP, FTP

Transport

TCP

Internet/Network

IP, Routing

Network Interface/Link

PPP (Point-to-Point IP), SLIP (Serial-Line IP)

·       TCP controls the assembly and reassembly of packets as they are transmitted over the Internet

·       IP handles the addressing details of each packet (IP address/URL)

IP address: 32-bit numeric address in dotted quad addressing format

Universal Resource Locator: hhhh://www.xxx.yyy

                              where hhhh: how to access a resource, e.g., http, ftp, telnet

                                          www: name of a specific computer

                                          xxx: subdomain

                                          yyy: top-level domain

Application Layer Protocols:

·       HTTP (hyper text transfer protocol): transfers and displays Web pages

·       SMTP (simple mail transfer protocol): requests mail delivery from a mail server, specifies the exact format of a mail message and how it should be administered

·       POP (post office protocol): retrieves and/or deletes e-mails from a mail server, provides support for multipurpose Internet mail extensions (MIME) which allows attachments of binary files to e-mails

·       IMAP (interactive mail access protocol): downloads, filters, organizes, deletes e-mails

·       FTP (file transfer protocol): transfers files between TCP/IP-connected computers

 

4.3 World wide web

A client/server system and a set of standards (markup languages) for storing, retrieving, formatting, and displaying information in a networked environment using graphical user interfaces and dynamic links to documents.

·       Global hypertext publishing

·       Universal readership

 

Web technology

•        Client ware

–       Browser, viewer, player, client computing

•        Server ware

–       Web server, scripting, page construction, image manipulation, transaction protection

•        Network ware

–       Router, gateway, hub, firewall, leased lines

•        Middle ware

–       Database, data warehouse

 

4.3.1  Web server

Web server

Originator

Apache: a patchy system

NCSA (National Center for Super Computing Applications), 1994

IIS (Internet Information Server)

Microsoft

NES (Netscape Enterprise Server)

Netscape

 

Web server functionalities

•        HTTP services

•        Security & authentication (SSL protocol)

•        FTP services

•        Searching (search engine vs intelligent agent)

–       Search engine comparison

•        Data analysis (access log analysis)

–       WebTrend’s log analyser

•        Site management (authoring, publishing, link checking)

–       NetMechanic’s site management tool

•        Application construction (HTML, CGI, API)

•        Content management (ODBC, ASP)

•        Site development

 

4.3.2  WWW standards: markup languages

·       SGML (Standard generalized markup language): a meta language used for defining other markup languages to describe and format electronic documents that are independent of software applications, devices, and machines.

·       HTML (Hyper text markup language): a document production language that uses a set of tags to define the format and style (headings, title bars, bullets, lines, ordered lists, graphics, tables, frames, …) of a document, i.e., how a page is displayed on the web.

·       XML (extensible Markup Language): a document definition language that uses paired start and stop tags to define the structure of the data to be displayed

 

KEY QUESTIONS FOR MANAGEMENT

 

Is your business right for e-commerce?

à Business Plans (Table 2.1)

1.     Why will customers buy from you?

2.     How will you make money?

3.     What is your market niche?

4.     Who are your competitors?

5.     What is your competitive advantage?

6.     How do you promote your products or services?

7.     What types of organizational structures are necessary?

8.     What kinds of managerial experiences and background are necessary?

 

B2C business models (Table 2.3)

1.  Portal

2.  E-tailer

3.  Content Provider

4.  Transaction broker

5.  Market creator

6.  Service provider

7.  Community provider