e-commerce and IT law: Introduction to Electronic Commerce

Electronic Commerce

Objectives:

•Differences between e-commerce and traditional commerce
•Advantages and disadvantages of using e-commerce to conduct business
•International nature of e-commerce
•Fostering of e-commerce through economic forces
•Utilizing value chains


What is Electronic Commerce?

•or “e-commerce”
•The marketing, buying and selling of products and services on the Internet
•Used everywhere in everyday life e.g. ?
•E-business = connecting critical business systems directly to customers, vendors, and suppliers via the Internet, Extranet and Intranets


Types of e-commerceEFT and EDI:

•Electronic Funds Transfers (EFT)
–Used by the banking industry to exchange account information over secured networks
•Electronic Data Interchange (EDI)
–Used by businesses to transmit data from one business to another


Traditional Commerce:

•The exchange of valuable objects or services between at least two parties
•Includes all activities that each party undertakes to complete the transaction
•Barter system eventually gave way to the use of currency


Activities as Business Processes:

•The activities in which businesses engage as they conduct commerce are often referred to as Business Processes.
–Transferring funds
–Placing orders
–Sending invoices
–Shipping goods to customers


E-Commerce Drivers:

•Digital convergence
•Anytime, anywhere, anyone
•Changes in organizations
•Increasing pressure on operating costs and profit margins
•Demand for customized products and services


E-commerce Myths:

•Setting up a Web site is easy
•E-commerce is cheap.
•E-commerce means end of mass marketing.
•Everyone is doing it.
•Online retailing is always the low-cost channel.
•Build it and they (customers) will come.


Advantages of Electronic Commerce:

•Increased sales
–Reach narrow market segments in geographically dispersed locations
–Create virtual communities
•Decreased costs
–Handling of sales inquiries
–Providing price quotes
–Determining product availability
•Better customer service
•Quick comparison shopping


Disadvantages of Electronic Commerce:

•Loss of ability to inspect products from remote locations
•Rapid developing pace of underlying technologies
•Difficult to calculate return on investment
•Cultural and legal impediments
•Security, system and data integrity problems
•Customer relation problems


International Electronic Commerce:

•Language barriers must be overcome
•Political structures
–Currency conversion
–Tariffs and import/export restrictions
•Legal, tax and privacy concerns


Economic Forces andElectronic Commerce:

•Transaction Costs
–The total of all costs that the buyer and seller incur as they gather information and negotiate a purchase-sale transaction
•The “Market”
–Potential sellers must come in contact with potential buyers
–A medium of exchange must be available


Transaction Costs:

•Brokerage fees
•Sales Commissions
•Information search and acquisition
•Investment in equipment
•Hiring of skilled employees


Role of Electronic Commerce in Economy:

•Reduces transaction costs
–Improves information flow
–Increases coordination of actions
•Improvement of existing markets
•Creation of new markets


Value Chains inElectronic Commerce:

Defined as the way of organizing the activities undertaken to design, produce, promote, market, deliver, and support the products or services a business sells.


Value Chain Primary Activities:

•Identify customers
–Market research, customer satisfaction surveys
•Design
–Concept research, engineering, test marketing
•Purchase materials and supplies
–Vendor selection, quality and timeliness of delivery
•Manufacture
–Fabrication, assembly, testing, packaging
•Market and sell
–Advertising, promotion, pricing, monitoring sales and distribution channels
•Deliver
–Warehousing, materials handling, monitoring timeliness of delivery
•Provide after-sale service and support
–Installation, testing, maintenance, repair, warranty replacement, replacement parts


Value Chain Support Activities:

•Finance and administration
–Accounting, bill payment, borrowing, regulations, compliance with laws
•Human resources
–Recruiting, hiring, training, compensation, benefits
•Technology development
–Research, development, improvement studies, maintenance procedures


Role of Electronic Commerce in Value Chains:

•Reducing costs
•Improving product quality
•Reaching new customers or suppliers
•Creating new ways of selling existing products


Categories of E-commerce:

•Business-to-consumer (B2C), on the Internet
•Business-to-business (B2B), on the Internet and Extranet
•Business-within-business, on the Intranet
•Business-to-Government (B2G)
•Customer-to-Customer (C2C)
•Mobile Commerce (M-Commerce)


The Internet and World Wide Web:

•The Internet is a large system of interconnected networks that spans the globe
•The World Wide Web (WWW) is part of the Internet and allows users to share information with an easy-to-use interface


Origins of the Internet:

•Developed by the U.S. Department of Defense in the early 1960s
•The world’s telephone companies were early models for networked computers
•Researchers at universities were connected in 1969

New Uses for the Internet:

•E-mail
–The ability to send messages to one or many across the Internet
•File Transfer Protocol (FTP)
–The ability to transfer data files from one computer to another
•Telnet
–The ability to remotely logon to another computer
•World Wide Web (WWW)
–The ability to access information using a common interface
•Videoconferencing
–The ability to use video across the Internet for conferencing purposes
•Multimedia
–The ability to use video, audio, and animations across the Internet