The Digital Firm: E-

Commerce and
Telecommunications

1
 What is Commerce
 Traditional commerce may be defined as:

The exchange or buying and selling of commodities;

2
 E-Commerce
 E-commerce (electronic commerce or EC) is the buying
and selling of goods and services on the Internet. In
practice, this term and e-business are often used
interchangeably. For online retail selling, the term e-
tailing is sometimes used.
 Aspects of e-commerce include:
 E-tailing or "virtual storefronts" on websites with online
catalogs.
 The gathering and use of demographic data through
Web contacts.
 Electronic Data Interchange (EDI), the business-to-
business exchange of data.
 email, instant messaging and social networking as media
for reaching prospects and established customers.
 Business-to-business buying and selling.
 The security of business transactions.
3
 What is E-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.
E-commerce includes retail shopping, banking, stocks and bonds
trading, auctions, real estate transactions, airline booking, movie
rentals—nearly anything you can imagine in the real world. Even
personal services such as hair and nail salons can benefit from e-
commerce by providing a website for the sale of related health
and beauty products, normally available to local customers
exclusively.

4
 What is E-Commerce Contd.
 In summary, e-commerce is the
 use of electronic communication to do business
 Specifically, the transfer of information (transactions), over
the Internet
 Some people use the term e-business to refer
to all the categories of e-commerce
 E.g. IBM defines e-business as:
 The transformation of key business processes through the
use of internet technologies

5
 Advantages of E-commerce
 Increases sales, decreases cost
 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

6
 Advantages of E-commerce
 Contd.24hrs a day
Business can be transacted
 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

7
 Disadvantages 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

8
 Disadvantages of E-commerce
Contd.
 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)
9
 E-commerce Categories
 There are five general e-commerce categories:
 Business to Consumer (or B2C) e-commerce
 Business to Business (or B2B) e-commerce
(sometimes called e-procurement)
 Business processes that support buying and selling
activities
 Consumer-to-consumer (or C2C) e-commerce
 Business-to-government (or B2G) e-commerce

10
 B2C e-commerce
 Description
 Businesses sell products or services to
individual customers (consumers)
 Example
 Walmart.com sells merchandise to
consumers through its Web site
 Web site
 www.walmart.com

11
 B2B E-commerce
 Description
 Businesses sell products or services to other
businesses
 Example
 Grainger.com sells industrial supplies to
large and small businesses through its Web
site
 Web site
 www.grainger.com

12
 Business Processes
 Description
 Businesses and other organisations maintain and
use information to identify and evaluate customers,
suppliers and employees (and to support buying,
selling hiring, planning and other activities). More
and more this information is being shared
 Example
 Dell Computer uses secure internet connections to
share current sales and forecasts with suppliers
who use it to plan their production, therefore they
deliver the right quantities of components at the
right time

13
 C2C e-commerce
 Description
 Participants in an online marketplace can buy and
sell goods with each other
 Example
 Consumers and businesses trade with each other
on eBay.com
 Web site
 www.ebay.com

14
 B2G e-commerce
 Description
 Business sell goods or services to
governments and government agencies
 Example
 Cal-Buy portal for businesses that want to
sell online to the State of California
 Web site
 www.pd.dgs.ca.gov/calbuy/default.htm

15
 E-commerce Categories
Example
 You are a computer manufacturing company who
performs the following activities on the Internet:
 Sells computers to individuals (B2C)
 Purchases parts (e.g. hard drives, power supplies
etc.) from a supplier (B2B)
 Hires staff, manage customer accounts, advertise,
etc. (Business processes)
 Sells computers to the Government to be used in
schools (B2G)
 On eBay.com individuals buy and sell this brand of
computers (C2C)

16