e-Commerce in Business

MNC202-M
1st Semester 2011
Nick Prinsloo
Topic 1: Introduction to e-Commerce
 Study Unit 1: Introduction to e-Commerce
Study Unit 1: Introduction to e-
Commerce
 Define the meaning of e-commerce
◦ e-Commerce or Electronic commerce:
 The use of electronic networks to exchange info,
products, service, and payments
 for commercial and communication purposes between
individuals (consumers) and businesses,
 between businesses themselves,
 between individuals themselves,
 within government, or between public and government
 Between business and government
Study Unit 1: Introduction to e-
Commerce
 Define the meaning of e-Commerce
◦ What are the 3 main components of e-Commerce?
 Business-to-consumer
 Business-to-business
 Transactions and selling processes which support
selling and purchasing activities on the web
Study Unit 1: Introduction to e-
Commerce
 Why should managers study e-Commerce?
◦ Key part of business
◦ Need for e-Commerce training grows daily
◦ Low success rate in e-business blamed on
inadequate training in area of management not IT
◦ Disadvantaged students who need to learn about
commercial value of internet as they will be
exposed to it in business
◦ e-Commerce brings with it a new mindset – we
need to rethink how we do business
Study Unit 1: Introduction to e-
Commerce
 What is the definition of e-Business
◦ A term which includes the streamlining of business
practices, the indication of back-end systems with
suppliers and customers, the electronic
management of stock, customer relationship
management (CRM) and a well designed front-end
in the form of a website or portal.
Study Unit 1: Introduction to e-
Commerce
 Give the definition for electronic data
interchange?
◦ EDI occurs when one business transmits computer
readable data in the standard format to another
business
◦ Businesses that engage in EDI with one another are
called trading partners
Study Unit 1: Introduction to e-
Commerce
 Explain why certain products are more suited
to electronic commerce than others?
◦ Products suitable for selling through e-Commerce:
 Office supplies, computers, airline transportation
(ticketing), books.
 What else?
◦ Products not suitable:
 Perishable foods, clothes – goods need to be examined
closely,
 What else?
Study Unit 1: Introduction to e-
Commerce
 What are the advantages & disadvantages of
electronic commerce?
◦ Advantages
 A better market offering
 Better profitability
 Create markets
 Improve information flow and cooperation
Study Unit 1: Introduction to e-
Commerce
 What are the advantages & disadvantages of
electronic commerce?
◦ Disadvantages
 Lack of knowledge and familiarity with e-Commerce
 Unprepared businesses
 Integration problems
 Security fears
 Unclear legal rules
 The undefined size and potential of the SA internet
market
Study Unit 1: Introduction to e-
Commerce
 What is the meaning of value chains in
electronic commerce?
◦ A value chain is a way of organising the activities
that each strategic business unit undertakes, these
include
 Identifying customers
 Designing products,
 Purchasing materials and supplies
 Producing or manufacturing product,
 Marketing or selling
 Delivering products
 After sales service and support
Study Unit 1: Introduction to e-
Commerce
 Explain the driving forces of electronic
commerce?
◦ Business Pressures that cause a business to change
– one way of responding to these pressures is e-
Commerce
Study Unit 1: Introduction to e-
Commerce
 Explain the driving forces of electronic
commerce?
◦ Business Pressures
 Market & Economic pressures
 Strong Competition
 The merging Global economy
 Regional trade agreements
 Extremely low labour costs in some countries (e.g. China)
 Frequent and significant changes in markets
 The increasing power of consumers
Study Unit 1: Introduction to e-
Commerce
 Explain the driving forces of electronic
commerce?
◦ Business Pressures
 Societal and Environmental Pressures
 The changing nature of the workforce
 Government deregulations
 The increasing importance of ethical and legal issues
 Shrinking government subsidies
 The growing social responsibility of business
 Rapid political changes
Study Unit 1: Introduction to e-
Commerce
 Explain the driving forces of electronic
commerce?
◦ Business Pressures
 Technological pressures
 Rapid technological obsolescence
 Increasing innovation and newer technologies
 Information overload
 The rapid decline in the cost of technology versus the
performance ratio
Study Unit 1: Introduction to e-
Commerce
 How should businesses respond to these
pressures?
◦ Strategic Systems
◦ Continuous improvement efforts (BPR)
◦ Business process re-engineering
 E-Commerce contributes to this process by:
◦ Reducing cycle time and time to market
◦ Empowerment of employees and collaborative work
◦ Knowledge management
◦ Customer focused approach
◦ Business alliances
Study Unit 1: Introduction to e-
Commerce
 Define the concept new economy (or
networked economy)?
◦ Intro of e-Commerce has opened new doors and
perspectives on some economic principles.
◦ To succeed in this new economy businesses need to
invest in entirely new business models with more
customer focus than ever before.
Study Unit 1: Introduction to e-
Commerce
 Define the concept new economy (or
networked economy)?
◦ Drivers of the New Economy
 PC
 Networks
 Global Telecommunication infrastructure
 Globalisation
 The internet
 The web
 e-Commerce
 IT / Information technology
 Knowledge management – Info turned into Knowledge
Study Unit 1: Introduction to e-
Commerce
 What are the 10 driving principles of the new
economy?
◦ Tangible Value
◦ Space dynamics
◦ Time
◦ Value of people
◦ New growth dynamics
◦ New determination of value
◦ New distribution dynamics
◦ New market dynamics
◦ New transaction dynamics
◦ New dynamics for the satisfaction of needs and desires
Topic 2: A Technical Perspective on
e-Commerce
 Study Unit 2: The Infrastructure for e-
Commerce
 Study Unit 3: Creating Web Pages
 Study Unit 4:Establishing an e-Commerce

store
Topic 2: A Technical Perspective on
e-Commerce
 Study Unit 2: The Infrastructure for e-
Commerce
Study Unit 2: The Infrastructure for
e-Commerce
 Understanding the Infrastructure on which
er-Commerce is built
◦ What is the Internet?
 A global network of computers networks
 World Wide Web = a way of organising and viewing
(standardised) the information that is shared across
internet
 The WEB sits “above” the internet
Study Unit 2: The Infrastructure for
e-Commerce
 Understanding the Infrastructure on which e-
Commerce is built.
◦ Internet
◦ NAP
◦ POP
◦ LAN
◦ ISP
Study Unit 2: The Infrastructure for
e-Commerce
Backbone

T3 line NAP INTERNET

ISP
Conventional phone,
digital subscriber or POP T1 line
cable modem line
(Telkom, Neotel,
Vodacom, MTN,
Cell-C, etc.)

LAN

HOME
BUSINESS
Study Unit 2: The Infrastructure for
e-Commerce
• What the...?
• Packet switching
• TCP/IP Architecture
• IP
• URL
• IP Address
• DNS
• HTTP
Study Unit 2: The Infrastructure for
e-Commerce
 Servers
◦ DNS
◦ Domain Names?
◦ Web Servers
 Client –server paradigm
 Web hosting
Study Unit 2: The Infrastructure for
e-Commerce
 Transfer Protocols
◦ HTTP
◦ Mail Protocols
 SMTP
 POP
 IMAP
 FTP
Study Unit 2: The Infrastructure for
e-Commerce
 Markup Languages
◦ HTML
◦ XML
Study Unit 2: The Infrastructure for
e-Commerce
 Intranet
 Extranet

◦ Public Networks
◦ Private Networks
◦ Virtual Private Networks (VPN)
Study Unit 2: The Infrastructure for
e-Commerce
 Internet Applications
◦ Electronic Mail
◦ Telnet
◦ FTP
◦ Mailing Lists
◦ Usenet Newsgroups
◦ Gopher
◦ WWW
◦ SET
Topic 2: A Technical Perspective on
e-Commerce
 Study Unit 3: Creating Web Pages
◦ Outcomes
 Define the meaning of host?
 Name some hosts
 Explain the 3 types of web hosting?
 What is the criteria used to evaluate an ISP for website
hosting?
 What are the 3 types of software solutions provided by
ISP’s
 What are the cost components of an e-commerce site?
Topic 2: A Technical Perspective on
e-Commerce
 Study Unit 3: Creating Web Pages
◦ Outcomes
 Explain the meaning of disciplined creativity?
 Components of a website?
 How should websites be designed?
 Critically analyse the design an composition of a website?
 set objectives of the website?
 Making website comply with business objectives
 Enhance the performance and usability of the site
 Common design problems
 Pre-testing phase of website
 Post-testing phase of website
Study Unit 3: Creating Web Pages
(3) Evaluation
Disciplined of the
Creativity Website

(1) Planning (4)

Creating Web
and design of Performance
Pages
a Website of the Website

(2)
(5) Common
Components
Website design
of a Website
problems
Study Unit 3: Creating Web Pages
 Steps in Planning a Website

Audience Domain Content Look

Information Information and Feel

Purpose Objective Web Implementation Web

Design Process Benefits Result
Statement Statement Specification Process Presentation
Study Unit 3: Creating Web Pages
Techy!
Grad
Students
Go getters

Upper Class Have access

Who?
Flash Target
Audience?
Seniors Need access

HTML / CSS Structure

Men
Ajax Middle Aged
Women
Web Site
Design
Brainstorm
Fits Most
Screens Professional
800 X 600 Blues
Central
Deep Blues
Size

No! Wide screen Grays

Colors

Black

Green Logo
Study Unit 3:
Section
Breakdown

Linking

Creating Web Pages

Layout
Structure

Navigation
tools

Right Info

Colour
Right detail The Content

Font
Right Size
COMPONENTS
OF A WEBSITE Text Size

Alignment
Look and Feel
(aesthetics)

Spacing

not consistent

Colour Contrast
Design
Elements
Background &
Forground

Images

Animations

Image Maps

Linking Pages
Study Unit 3: Creating Web Pages
 Evaluating a page
◦ Common web design problems
 Page from outer space
 Monster page
 Media overkill
 Uneven
 Meaningless links
Study Unit 3: Creating Web Pages
 What to take into account for testing
◦ Speed
◦ Reliability
◦ Platform Independence
◦ Media Accessibility
◦ Usability
◦ Must test on-line
Study Unit 3: Creating Web Pages
 Checklist for self-evaluation of website
◦ Sidebars
◦ Hyperlinks
◦ Colours
◦ Contrast
◦ Search facilities
◦ A site map
◦ Graphics
◦ Consistency
◦ Purposeful content
Topic 2: A Technical Perspective on
e-Commerce
 Study Unit 4:Establishing an e-Commerce
store
◦ What are the prerequisites for & preparatory steps
in setting up a shop on the internet
◦ How to analyze and plan banking, trading and
payment requirements
◦ Planning the launch of online shop
Study Unit 4:Establishing an e-
Commerce store
E-COMMERCE WORKFLOW DIAGRAM

Customer

Shipped Customer
Online order product Service

Credit card
transaction

Quality
Assurance

Customer
information
in database

Warehouse
Study Unit 4:Establishing an e-
Commerce store
 Prerequisites for setting up e-store
◦ Identify role players
◦ Feasibility study
◦ How will e-commerce fit in with existing business
structure
◦ Analyze customer needs, desires & expectations
Study Unit 4:Establishing an e-
Commerce store
 Determine banking requirements
◦ Get Internet merchant status at the bank
◦ Select method of receiving credit card purchases
 Obtain Digital Certificate
Study Unit 4:Establishing an e-
Commerce store
 Determine cost
◦ Site setup fee
◦ Annual maintenance fee
◦ Monthly hosting fee
◦ Domain registration
◦ Scanner for digital photo conversion
◦ Design & HTML help
◦ Merchant credit card setup fee
◦ Software
◦ ISP
◦ Disk space
Study Unit 4:Establishing an e-
Commerce store
 Planning development and launch of site and
shop
◦ Who will…?
 ...be responsible, organise, supervise, manage site
◦ Launch
 Submit to search engines
 Make site detectable with meta tags
 Advertise on other sites
 Conventional advertising
 Clever domain name usage – put on all corporate
printed material
 Use e-mail mailing lists to inform interested parties
Study Unit 4:Establishing an e-
Commerce store
 Basic functions and Features of Online
Trading Software
◦ Catalogue displays
◦ Shopping Cart
◦ Cookies
◦ Transaction processing (Virtual checkout counter)
◦ Database (used to populate store catalogue & keep
buyer information)
Study Unit 4:Establishing an e-
Commerce store
 Security on online payments
◦ SSL (secure sockets layer)
◦ TLS (Transport layer security)
◦ SET (Secure electronic transaction)
◦ 3D SET (developed by VISA 2000)
Topic 3: A Marketing Perspective on
e-Commerce
 Study Unit 5: Online Marketing Principles
 Study Unit 6: Special Applications of Online
Marketing
 Study Unit 7: Advertising Online
 Study Unit 8: e-Tailing
 Study Unit 9: eCRM and Online Branding
Study Unit 5: Online Marketing
Principles
 Outcomes
◦ Describe the “Market”
 In normal sense
 In terms of e-commerce
◦ Give an overview of the working of the model of e-
commerce consumer behaviour
◦ What are the general characteristics of internet
users
◦ What is the meaning of Market segentation
 Why is this NB for e-commerce
◦ One-to-one marketing on the internet
Study Unit 5: Online Marketing
Principles
 Outcomes
◦ What is Customer Relationship management (CRM)
 How can it be incorporated into e-commerce
◦ What are the differents tools that can be used in e-
commerce to enhance customer service
◦ Market research in e-commerce
Study Unit 5: Online Marketing
Principles
 The Market defined
◦ A market is usually a group of people with the need
to buy a product or service, the financial means to
buy it, the willingness to make the purchase and
the authority to do so.
 The business to business market
 The business to consumer market
 The electronic marketplace
 Micro
Environment

The Marketing Environment

Macro Environment
E-commerce consumer behaviour
INTERNAL INFLUENCING EXTERNAL INFLUENCING
FACTORS FACTORS

DECISION-MAKING PROCESS
STIMULI
Awareness of need, Gathering of Need fulfilment,
Product, information, Evaluation, Decision-
Distribution, satisfaction
Making, Action (Purchase),
Promotion, Price Post-purchase evaluation

E-COMMERCE CONTRIBUTIONS

Logistics, Technical
Support, Customer Service
Study Unit 5: Online Marketing
Principles
 Market Segmentation
◦ Demarcating the heterogeneous mass market into
more homogenous groups.
◦ Purpose: to analyse each group as a potential target
for which a particular marketing plan and strategy
can be formulated
◦ The various virtual communities that the internet
has helped create have become an ideal target
market for specific products and services.
◦ The virtual community is a gathering of people who
share a common interest
Study Unit 5: Online Marketing
Principles

 One-on-One Marketing on the Internet

 Customer Relationship Management (CRM)
 E-commerce customer service
 Tools to enhance customer service
 Market Research
Study Unit 6: Special Applications of
Online Marketing
 E-Mail
 Social Networks
 Search Engines
 Marketing Models

◦ Viral Marketing
◦ Affiliate Marketing
◦ Multiple Partners
◦ Selling up
 SMS Marketing
Study Unit 7: Advertising Online
 What are the benefits
 Terminology
 Banners
 E-mail
 How to market a website
 Cost benefit analysis
 How do we know if our online adverts are

effective
Study Unit 8: e-Tailing
 Retailing in e-commerce
 Business models
 Direct Internet Marketing
 Internet shopping process
Study Unit 9: eCRM and Online
Branding
 E-CRM
 Tools for building Customer relationships
 The meaning of branding
 Brand equity
 Ways of adding value onnline
 Brand communities
 Steps in online brand building
Topic 4: A Business Perspective on e-
Commerce
 Study Unit 10: Business-To-Business (B2B) e-
Commerce
 Study Unit 11: Special e-Commerce

Applications
Study Unit 10: Business-To-Business
(B2B) e-Commerce
 Explain advantages
 What is the B2B infrastructure
 B2B models
 Different B2B formats
 Supply chain
 B2B Management Components
 Meaning, benefits and implementation of ERP
Study Unit 10: Business-To-Business
(B2B) e-Commerce
 The meaning and Benefit of E-Procurement
 The meaning and benefit of E-Logistics
Study Unit 11: Special e-Commerce
Applications
 The E-Marketplace
 Portals
 Virtual Communities
 Auctions
Topic 5: A Management Perspective
on e-Commerce
 Study Unit 12: Managing Your e-Commerce
activities
Study Unit 12: Managing Your e-
Commerce activities
 Creating an e-Commerce business plan