COMP 2113 Introduction to Electronic Commerce Richard Henson

COMP 2113 Introduction to Electronic Commerce Richard Henson University of Worcester February 2008

Introduction to E-commerce n Objectives: Ø Describe the traditional supply chain Ø Define electronic commerce and explain new options for trading that have become available through e-commerce Ø Distinguish between B 2 C and B 2 B Ø Identify and explain design features of web pages that can be used by businesses Ø Categorise websites into one of several different types

What is Commerce? n Historically… Ø associated with the activities directly involved with trading n Other activities also involved in running a business!!! Ø e. g. marketing… management… n More recently, term used more broadly, to encompass all the activities in the “supply chain”

Activities involved in Commerce? n In groups of 3 or 4, compose a list of activities associated with businesses. . .

The Supply Chain Identify need for product Develop product Provide after-sales support Customer buys product Make product Gives customer information on other/new products Market product downstream upstream

Activities involved in Ecommerce? 1. In the same group, compose a list of activities specifically associated with ecommerce. . . (i. e. buying online)

Activities involved in Ecommerce n Some examples: Ø electronic activities that promote the organisation’s products Ø electronic distribution of information about those products Ø on-line ordering Ø on-line payment Ø “intelligence” collected electronically about customer buying behaviour

E-commerce and E-business n n E-commerce is concerned with the storage, processing and communication of electronic information through the supply chain E-business is concerned with using software to replace manual procedures within a particular area of the supply chain Ø e. g. procurement (buying) Ø therefore actually part of e-commerce… n Neither of these are particularly new…

B 2 B, B 2 C, B 2 E n Broadly three types of online transaction that could be regarded as part of doing business: Ø Business sells to another business (B 2 B) Ø Business sells to the consumer (B 2 C) Ø Business communicates with its employees (B 2 E) n n Many organisations will use B 2 B to get raw materials And use B 2 C (direct sales, possibly cutting out the vendor) to market their products

E-commerce definitions n n Almost as many definitions as there are ecommerce text books! One popular definition or e-commerce: “doing business, making use of electronic communications media” More accurate definition of e-commerce includes on-line marketing and after-sales support as well as buying and selling on-line Communication of information relating to business transactions can occur through any digital media, not only via the Internet

Evolution of “doing business” n n n Pre-18 th century: all products made individually by hand, sometimes to customer requirements, mostly taken to “market” 18 th/19 th century: business transformed by inventions such as spinning jenny that allowed processes to be automated 20 th: Mass production revolutionised business 20 th: Distribution enabled products to be delivered to customers anywhere in the world 21 st: Internet Economy – products themselves customised to meet customer requirements

Is E-commerce that new? n Not for transactions between businesses… Ø Larger companies have used EDI (Electronic Data Exchange) and EFT (Electronic Funds Transfer) since the early 1980 s, if not earlier… Ø But… many smaller companies continued to use traditional methods because of the high cost of using computers and telephone lines n Completely new for business to consumer transactions, because consumers have only quite recently been able to acquire the technology to participate

B 2 B e-commerce n One business (seller) communicates information relating to ordering and payment electronically with another business (buyer) Ø either by private telecoms link Ø Or via a secure Internet channel Telecoms link Business A - seller Business B - buyer

B 2 C e-commerce n n Business markets products via website and the Internet Business communicates information relating to ordering and payment electronically directly to the customer via secure Internet line Secure Internet link E-Business - seller Consumer - buyer

Activities involved in B 2 B ecommerce (1) Business develops a good working relationship with its suppliers n Suppliers provide secure access to parts of their information systems to check on product availability, etc. n Supplier Business

Activities involved in B 2 B ecommerce (2) n Business provides secure access to parts of its information systems to ease communication with suppliers business n n supplier Suppliers send invoices Business can make payment electronically

Internet E-commerce (B 2 C) the revolution! n Post 1995: direct business to consumer transactions (B 2 C e-commerce) Ø impossible before this date because consumers simply didn’t possess the technology Ø technology that makes B 2 C possible had been building for at least 10 years Ø Leapt into the public domain in 1996 (US), two years later (UK) Ø now sometimes (increasingly? ) the case that consumers have more technology in their homes (including small networks) than the small business.

Differences in activities involved in B 2 B and B 2 C e-commerce n Over to you again…

Who should use e-commerce? n n Anyone… Ø who has something to sell Can benefit by having a potential world market, 24 hours a day, 365 days a year! Must FIRST… be aware of the set up, running costs and implications of selling Internationally in this way… Many UK businesses choose only to deal with UK customers… http: //www. imrg. org

Technologies involved in the development of e-commerce n This is NOT a module about technology… Ø but e-commerce couldn’t have happened without it Ø fascinating to briefly focus on the gradual them earth shatteringly fast developments of the 1980 s and 1990 s n Technologies at the end of the 70 s: Ø VERY large & expensive computers Ø Software to replace manual processing of paper documents: » Order processing systems » Stock control systems

Technologies involved in the development of e-commerce 1. Digital processing and storage technologies: • • • 2. faster, more efficient, more powerful CPUs faster, more compact, computer memory result – the “home” computer Development of digital communications technologies & secure digital networks • networks became digital • Internet provided connectivity

Technologies involved in the development of e-commerce 3. Network Software became standardised • • communications protocols Applications such as EDI, EFT 4. Development of secure analogue-digital computer-computer communications through public networks • digital Home computer could hook up to digital Internet via sound-based telephone network

Technologies involved in the development of e-commerce Development of User-friendly humancomputer interfaces 5. • • allowed non-computer professionals to use “home” computers effectively Examples: • • Windows & Windows applications Internet browsers for viewing web pages

Technological Revolution It just happened that all these technologies came to maturity at just the right time… n The Internet now became accessible through Tim Berners-Lee’s wonderful invention n ØThe World Wide Web… ØIn Tim’s own words: http: //www. bcs. org/server. php? show=nav. 8997

Requirements for a Website offering B 2 C e-commerce n n Provide access to company marketing 24 hours and day, 7 days a week, anywhere in the world Need to: Ø look good (company/product image, etc. ) Ø be quickly downloadable (downfall of boo. com? ) Ø be up to date Ø provide useful product information n Should give the customer an opportunity to buy… [otherwise, not really e-commerce!]

How much do people use Ecommerce Websites? n Recent UK figures for online sales: Ø “For 2005 as a whole, it calculated that spending over the internet in the UK totalled £ 19. 2 bn, 32% more than 2004 Ø Shoppers spent £ 4. 98 bn online during the 2005 Christmas period, compared with £ 3. 3 bn for the same time a year earlier, according to ecommerce trade body IMRG Ø Some 24 million UK consumers shopped online in 2005, spending on average £ 816 each during the year, and £ 208 in the run-up to Christmas. Ø IMRG now forecasts that e-commerce will grow by 36% in 2006, with sales worth £ 26 bn” » Figures: http: //news. bbc. co. uk/1/hi/business/4630472. stm

Producing Websites for B 2 C e-commerce n n n A Website “on the net” consists of a number of files held on an Internet server Can use software that makes uploading files as easy as transferring files between folders Web pages themselves not difficult to produce Ø don’t need to be a programmer Ø but you do need to have an eye for design…

Websites for B 2 C e-commerce n Plenty of development environments available that can: Øwork with business logic Øuse software to generate the code for you » even for sites that work with remote databases! n Navigation through the site is all important Øpages must link together in a coherent way. . .

Shopping website categories n Several possibilities in order of increasing complexity/functionality: Ø“Small Ad” on a page on another website Ø“Billboard” web page Ø“Cyberbrochure” of linked pages ØDetailed Product Information ØPortal Ø“Virtual shopfront” n Each type can now be scrutinised. . .

E-Commerce website types: “small ad” Most basic solution n Example website: n Øprovides basic company information Øshould also include telephone number and address Øcan also be the basis for e-commerce by including an e-mail address that can be used to make orders

E-Commerce website types: “billboard” n n n Use of a whole web page allows more detailed information to be included User can become interactive through use of a HTML form to send an email to a contact Unique URL: Ø Emails and stationary (letters/faxes/business cards) can include the URL of the website in their “signatures” to advertise the existence of the web site to contacts/customers Ø The site can be made accessible to search engines in a focused way through use of keywords n Example: musicians site Rod Pooley - Organist

E-Commerce website types: “Cyber brochure” n n n Much larger undertaking than a billboard Information sheets, brochures and general information about the business and its products/services Includes items that point to other web-based sources and information Gives businesses greater coverage and a higher profile Example Web site: Ø Left Bank – riverside complex in Hereford

E-Commerce website types: “Local Portal” Gateway to other sites n Can be used with cyberbrochure type n Provides a way into the web, and could be used as a user “home page” n Example website: n ØChadds - department store in Hereford » links to related websites » local & community news/information

E-Commerce website types: “International portal” Sells space for advertising goods and services - national or international n Has a facility to search the web n Øallows directed advertising Øif user is searching on a keyword relating to a type of product or service, particular advertising banners may flash up on the screen n Example website: BBC web site

E-Commerce website types: Virtual Storefront n n A full e-commerce implementation Provides combinations of: Ø Full information about the company (cyber brochure approach) Ø Links to other local/international) sites and search engines (Portal approach) Ø On-line ordering of products and services Ø Secure on-line payment systems n Example website: Ø Amazon. co. uk

E-Commerce website types: “subscription only” n Members/customers only site Ø make money by offering service not products n Username/password only available by: Ø subscribing to an on-line magazine Ø filling in an on-line form n An increasing number of sites are requiring payment before subscription is allowed… Ø e. g. Information Finders like 192. com Ø e. g. Business Travel

Next Week n The technologies that drive e-commerce: Ø computers Ø networks & the Internet Ø Browsers & servers Ø web pages Ø web applications