Chapter 1: Electric commerce

e
c
o
m
m
eelectronic An introduction to e-Commerce outlining:
rcommerce
The three basic e-Commerce technologies
c strategy
technologies
and
The trading exchanges to which they apply

e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 1

 Definition of e-Commerce
e
c Formulating commercial transactions at a site
remote from the trading partner and then using
o electronic communications to execute that
transaction.
m The definition includes business to business and
m business to consumer transactions.

eelectronic Further definitions are given in Chapter 1,

rcommerce

Section 1.2. Many definitions are much broader
covering, for example, the commercial use of
c strategy
technologies
and
e-mail.

e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 2

 E-Commerce technologies
e
c Electronic

o Markets

m
m EDI Internet
Commerce

eelectronic
rcommerce

The three e-Commerce technologies are:

c strategy
technologies
and
Electronic Markets
Electronic Data Interchange
e
applications
Internet Commerce
E-Commerce David Whiteley/McGraw-Hill, 2000 3
 Electronic markets
e
c The use of information and communications
technology to present a range of offerings available
o in a market segment and hence enable:
the purchaser to compare the prices (and other
m attributes);
make a purchase decision.
m
eelectronic
The usual example of an electronic market is an
airline booking system.
rcommerce

There is the potential for new electronic markets to
c strategy
technologies
and
be created using Internet technologies.

e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 4

 Electronic Data Interchange (EDI)
e
EDI provides a standardised system for coding
c trade transactions so that they can be
communicated directly from one computer system
o to another.

m EDI removes the need for printed orders and

m invoices and avoids the delays and errors implicit in
paper handling.

eelectronic EDI is used by organisations that make a large

rcommerce

number of regular transactions. Examples are the
large supermarket chains and the vehicle
c strategy
technologies
and
assemblers which use EDI for transactions with
their suppliers.
e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 5

 Internet commerce
e
Information and communications technologies can
c also be used to advertise and make once-off sales
of a wide range of goods and services.
o
m This type of e-Commerce is typified by the
commercial use of the Internet. The Internet can,
m for example, be used for the purchase of books that
are then delivered by post or the booking of tickets

eelectronic
that can be picked up by the clients when they
arrive at the event.

rcommerce
It is to be noted that the Internet is not the only
c strategy
technologies
and
technology used for this type of service and this is
not the only use of the Internet in e-Commerce.
e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 6

 The trade cycle
e
c Conducting a commercial transaction involves the
following steps:
o Pre-Sale:
Search - finding a supplier
m Negotiate agreeing the terms of trade

m Execution:
Order
eelectronic
Delivery
Settlement:
rcommerce
Invoice
c strategy
technologies
and
Payment
After-sales, e.g. warrantee and service
e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 7

 Generic trade cycles
e
c The trade cycle varies depending on:
The nature of the parties to the transaction
o The frequency of trade exchanges
The nature of the goods or services being
m exchanged.

m Three generic trade cycles can be identified:

eelectronic
Regular, repeat transactions between
commercial trading partners (Repeat)
rcommerce
Irregular transactions between commercial

c strategy
technologies
and
trading partners (Credit)
Irregular transactions in once-off trading
e
applications relationships (commercial or retail) (Cash)
E-Commerce David Whiteley/McGraw-Hill, 2000 8
 Generic trade cycles
e
c Trade Cycle: Repeat Credit Cash

o Search

Negotiate
Pre-Sale

m Order
m Deliver
Execution

eelectronic Invoice
rcommerce

Payment
Settlement

c strategy
technologies
and After Sales After Sale
e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 9

 Electronic markets
e
c Emphasis on the search phase of the trade cycle
Typically an inter-organisational credit trade cycle
o Search
Negotiate
Pre-Sale

m Order
EM

Execution
m Deliver

Invoice

eelectronic
Payment
Settlement

rcommerce

After Sales After Sale

Limited applications airline seat bookings and

c strategy
technologies
and
financial sector the operation of the electronic
market is not necessarily in the vendors interests.
e
applications
See Chapter 7 for further discussion.
E-Commerce David Whiteley/McGraw-Hill, 2000 10
 Electronic Data Interchange
e Used for standardised, repeat, inter-organisational
c transactions
Search

o Negotiate
Pre-Sale

m Order
Deliver EDI
Execution

m Invoice

Payment
Settlement

eelectronic
After Sales After Sale

rcommerce

Notable users of EDI are vehicle assemblers,
component suppliers, and supermarkets (and other
c strategy
technologies
and
multiple retailers), ordering the goods to restock
their shelves.
e
applications
See Chapters 8 through 11 for further discussion
E-Commerce David Whiteley/McGraw-Hill, 2000 11
 Internet commerce
e
c Used for once-off transactions consumer or inter-
organisational transactions.
o Search
Negotiate
Pre-Sale

m Order
Internet
Execution

m Deliver

Invoice

eelectronic
Payment

After Sales
Settlement

After Sale

rcommerce
Can apply to Search, Execution / Settlement and /
c strategy
technologies
and
or After Sales.
Consumers pay at time of ordering businesses
e
applications
may have credit arrangements with the suppliers.
E-Commerce David Whiteley/McGraw-Hill, 2000 12
 e-Commerce in perspective
e
c e-Commerce is not appropriate to all business
transactions and, within e-Commerce, there is no
o one technology that can or should be appropriate to
all requirements.
m
m Electronic Markets

eelectronic
rcommerce
EDI Internet

c strategy
technologies
and
Comerce

e
applications

E-Commerce David Whiteley/McGraw-Hill, 2000 13

 Chapter 1 Exercise 1
e
c A European Union web site defines e-Commerce as:

o Electronic Commerce is a general concept

covering any form of business transactions or

m information exchange executed using information

and communication technology, between

m companies, between companies and their

customers, or between companies and public
administrations.
eelectronic
Electronic Commerce includes electronic trading of
goods, services and electronic material.
rcommerce

c strategy
technologies
and
List technologies and applications that could be
covered by this list and decide, in discussion, if they
e
applications are usefully/appropriately classified as
e-Commerce.
E-Commerce David Whiteley/McGraw-Hill, 2000 14
 Chapter 1 Exercise 2
e
c Earnest Higginbottom
Genuine Yorkshire Potted Beef

o Earnest Higginbottom started making Potted Beef in

Heckmondwike in 1876 and the company has been run on
m traditional lines ever since.

m Recently the business has started to change:

Traditional local outlets are being replaced by

eelectronic
supermarkets;
Native Yorkshire tykes living as far away as Liverpool and
Los Angeles are ringing in to ask how to get hold of a bit of
rcommerce

real potted beef.
Suppliers, such as the maker of the jars, use computerised
c strategy
technologies
and
ordering systems

e
applications Suggest where and in what form Higgies Potted Beef could
implement e-Commerce.
E-Commerce David Whiteley/McGraw-Hill, 2000 15