Electronic Commerce


E-commerce Benefits and Challenges


For the Consumer –

•      Quicker access to goods and services (and info about goods and services)

•      Reduced traveling to stores

•      Potential access to products anywhere in the world

•      Improved government services through e-government


For Businesses -

•      Access to larger customer base

•      New distribution and sales channels

•      Reduced sales expenses (commissions, paper processing)

•      Creation of sustainable niche markets

•      24X7 Business hours

•      Creation of consumer communities

•      New sales channels such as virtual auctions


Challenges for Businesses



Business Models


Porter’s Value Chain

Raw materials -> inbound logistics -> production -> outbound logistics -> sales


Supply chain

Supplier -> supplier -> supplier -> production

Example:  Ford Motor and three tier suppliers


Demand chain

Production – wholesaler – retailer – customer

Example:  Book publishing


E-commerce/IT impact on the value chain



New Business Models


Where’s the money?



Technical Models of E-commerce


  1. Text-only – “brochureware”

Simple presentation of sales information – product catalogs

Example application – Real estate listings

Technical requirements – hypertext links between documents (“pages”), web server with enough memory for the “pages” being stored and accessed


  1. Interactive sites

Items are not only displayed, but sales are possible

Example application – amazon.com, Dell computer

Technical requirements – link from web server to product database and customer database, credit check, inventory and shipping systems



Example:  Dell Computer – In order to successfully build-to-order, a web order needs to go to

·        Accounting – credit card verification

·        Production – assigned to worker pod and tracked

·        Inventory – J.I.T systems plus inventory controls

·        Supply chain – co-vendors like HP printers, and suppliers like Intel need consumption data

·        Shipping – UPS and FedEx systems handoff required

·        Marketing – record of customer purchase and configuration


  1. Personalized site

Appearance of the site is customized based on past behaviors and practices

Example:  MyYahoo

Technical requirements – cookies, multiple page formats, behavioral tracking



External Requirements (national and international):

•      Electronic payment systems – bank support

•      Internet access

•      Logistics

•      Legal supports for business – contract laws

•  Sufficient income

•  Appropriate buying habits and attitudes

•  Honest government



Means of Security