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ECT 250: Survey of eCommerce Technology


2. Survey and define the key technology drivers of. eCommerce including network, software, and hardware components. ... ( LL Bean) Decrease Costs ... – PowerPoint PPT presentation

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Title: ECT 250: Survey of eCommerce Technology

ECT 250 Survey of eCommerce Technology
David A. Schmelzer
Course Objectives
  • Provide history, present state and future outlook
  • for eCommerce and the internet.
  • 2. Survey and define the key technology drivers
  • eCommerce including network, software, and
    hardware components.
  • 3. Review eCommerce infrastructures including
  • architecture models, security payment systems.
  • 4. Describe the general process of web design
    and development including tools and required
  • Identify business models surrounding eCommerce
    including marketing strategies.
  • Explore international, ethical and tax issues
    surrounding eCommerce.
  • Provide experience in basic skills in web page
    authoring using Microsoft Frontpage.

Course Requirements
  • Perform assigned readings.
  • Completion of five homework assignments all
    posted to a website.
  • Midterm exam closed book.
  • Final exam open book project posted on a
  • In class group exercises.

Class Resources
  • ECT250 Course Site (
  • Everything you need can be found here
  • Announcements
  • Homework Assignments
  • Lecture Textbook Notes
  • Readings Class Schedule
  • Syllabus Class Policies
  • ECT250 Forum Instructor Contacts
  • Course On Line Link (where grades are)

Class Resources
  • Course Online(http//
  • Recorded Lectures
  • Location of Grades
  • Lecture Textbook Notes
  • Responsibility of student to print for class
  • Textbook
  • Instructor
  • Allow 24 hours for return of eMail
  • Use work phone or eMail for emergencies
    (procrastination on your part doesnt constitute
    an emergency on mine)
  • Available for lab work after class or by

Class Policies
  • Homework Submission
  • Exams
  • Participation
  • Grading Weights and Schedule
  • Class Notes
  • Readings
  • Plagiarism
  • Incomplete

Discussion Forumhttp//
  • Questions or clarifications on homework
  • and admin issues pertinent to entire class.
  • Additional information and links on current
  • topics in eCommerce .
  • During instructor office hours, open chat for
  • students not able to travel to Loop.
  • Distance learning class participation
  • Used to explore concept of web enabled
  • communication and community.
  • Please allow 24 hours for responses.

Introduce Yourself
  • In two to three minutes tell us
  • Your name
  • Your major
  • What level you are at (freshman, etc)
  • Computer background (what programs, languages)
  • Work
  • Is class elective or requirement
  • What interests you about eCommerce
  • What you want to get out of the class

Week One Topics
  • What is eCommerce?
  • Electronic commerce prior to the Internet
  • Comparison to Traditional Commerce
  • Buyers Sellers Viewpoint
  • Business processes
  • Fundamental business goals
  • Why eCommerce?
  • Seven Unique Features of eCommerce Technology
  • Appropriateness of eCommerce
  • The Internet What Was, Is and Shall Be.
  • Publishing on the Web for Homework 1.

What is eCommerce?
  • In its broadest definition, eCommerce is
    digitally enabled
  • commercial transactions between and among
  • and individuals.
  • Digitally enabled means, for the most part,
  • that occur over the Internet and World Wide
  • Commercial transactions involve the exchange of
  • (e.g. money) across organizational or individual
  • boundaries in return for products and services.
  • Differentiated from eBusiness which is digitally
  • transactions and processes within a firm,
  • Information Systems controlled by the firm.
    Doesnt involve
  • commercial transactions across organizational

Components of eCommerce
  • Major components of eCommerce
  • B2B Business to Business. Largest segment with
    about 700B of all total 12 Trillion in
  • Types include inter-business exchanges,
    e-distributors, B2B service providers,
    matchmakers and infomediaries
  • B2C Business to Consumer. Much smaller with on
    65B in 2001(est).
  • Buzzwords Internet pureplay-located only on the
    web. Clicks and Mortar-both web and physical

Components of eCommerce
  • Major components of eCommerce (continued)
  • C2C Consumer to Consumer. Individuals selling
    to each other through online market maker
    ( Estimated at 5B in 2001.
  • P2P Peer to Peer. Allows iNet users to share
    files and resources directly without having to go
    thru a central web server. Napster is the most
    prevalent example.
  • M-Commerce Mobile commerce. Use of wireless
    digital devices (Palm Pilots, cell phones) to
    conduct transactions. Just emerging but expected
    to grow rapidly.

Electronic Commerce Not New
Banks have used electronic funds transfers
(EFTs), also called wire transfers, for
decades. Businesses have been engaging in
electronic data interchange (EDI) since the
1960s. EDI occurs when one business transmits
computer readable data in a standard format to
another business. Drawbacks to mass adoption by
business was high cost of implementation
expensive, proprietary software, hardware, leased
telephone lines. EDI now adapting to the
Internet at a much lower cost. Estimates of 1
Trillion in transactions on the Internet by 2003.
Technology and Business (Commerce)
Business drives Technology Technology Enables
Business To understand how Technology enables
Business, or Commerce, we must review traditional
commerce. Once activities, or business processes
in traditional commerce are identified, we can
consider how they can be improved through
technology Technology is not a panacea! Knowing
when and when not to apply technology to business
problems is the key.
Origins of commerce
Origins of commerce predate recorded
history. Commerce is based on the specialization
of skills. Instead of performing all services
and producing all goods independently, people
rely on each other for the goods and services
they need. Example In early times, the local
shaman would cast a spell or intercede with the
gods in exchange for food and tools. This is
called barter.
Traditional commerce
Money has replaced bartering, but the basic
mechanics of commerce remain the same one member
of society creates something of value that
another member of society desires. Commerce is
a negotiated exchange of valuable objects or
services between at least two parties and
includes all activities that each of the parties
undertakes the complete the transaction.
Views of commerce
  • Commerce can be viewed from at least two
    different perspectives
  • The buyers viewpoint
  • The sellers viewpoint
  • Both perspectives illustrate that commerce
    involves a number of distinct activities, called
    Business Processes.

Business Processes
  • Business processes are the activities that firms
    engage in as they accomplish a specific element
    of commerce
  • Examples include
  • Transferring funds
  • Placing orders
  • Sending invoices
  • Shipping goods to customers

The Buyers perspective
  • From the buyers perspective, commerce involves
  • the following activities
  • Identify a specific need
  • Search for products or services that will satisfy
  • the specific need
  • Select a vendor
  • Negotiate a purchase transaction including
  • delivery logistics, inspection, testing, and
  • acceptance
  • Make payment
  • Perform/obtain maintenance if necessary

The Sellers perspective
  • From the sellers perspective, commerce involves
  • the following activities
  • Conduct market research to identify customer
  • needs
  • Create a product or service to meet those needs
  • Advertise and promote the product or service
  • Negotiate a sales transaction including delivery
  • logistics, inspection, testing, and acceptance
  • Ship goods and invoice the customer
  • Receive and process customer payments
  • Provide after sales support and maintenance

Why eCommerce?
The Internet and eCommerce are new technologies
to help businesses increase profits. So why are
there no special textbooks or courses on TV
Commerce, Radio Commerce, Railroad Commerce
or Highway Commerce? These are also
technologies that have had profound impact on
business in the 20th century and account for more
commerce than eCommerce. Simply put, eCommerce
technologies are more powerful than any of the
other technologies we have seen in the 20th
Unique Features of eCommerce Technology
  • The features the set eCommerce Technology apart
    from others used in traditional commerce are
  • Ubiquity internet/web technology is available
    everywhere at work, home and elsewhere via
    mobile devices.
  • Marketplace extended beyond traditional
  • Marketspace is created, available 24/7/365
  • Customer convenience increased, costs reduced.

Unique Features of eCommerce Technology(continued
  • Global Reach the technology reaches across
    national boundaries, around the earth.
  • Commerce enabled across cultural and national
    boundaries seamlessly.
  • Potential customer reach extended.
  • Reduces barriers to markets.

Unique Features of eCommerce Technology(continued
  • Universal standards there is one set of
    technology standards, namely internet standards.
  • Promotes technology adoption
  • Reduces costs of adoption

Unique Features of eCommerce Technology(continued
  • Richness Video, Audio, graphical and text
    messages are possible.
  • Integration to a more powerful marketing message
    and customer experience

Unique Features of eCommerce Technology(continued
  • Interactivity the technology allows active user
  • Consumers engage in dynamic dialog
  • Experience adjusted to the individual based on
  • Customer becomes co-participant in the process of
    delivering goods to the market.

Unique Features of eCommerce Technology(continued
  • Information Density - the technology reduces
    information costs and increase quantity and
  • Information processing, storage and communication
    costs drop dramatically.
  • Accuracy and timeliness improve greatly.
  • Information becomes plentiful, cheap and

Unique Features of eCommerce Technology(continued
  • Personalization/Customization the technology
    reaches allows personalized messages to be
    delivered to individuals as well as groups.
  • Commerce enabled across cultural and national
    boundaries seamlessly.
  • Potential customer reach extended.
  • Reduces barriers to markets.

Fundamental Business Goals
The fundamental goal of a business is to earn a
profit. Performing business processes in the
most efficient way possible furthers this
goal. Firms are increasingly interested in
eCommerce because it can help increase
profits. All the advantages of eCommerce can be
summarized in one statement eCommerce can
Increase Sales and Decrease Costs.
Examples of eCommerceEnabling Business Goals
Increase Revenues A company is able, through
publishing its catalogs online, to reach more
customers for the same costs as printing and
mailing its catalogs. (LL Bean) Decrease
Costs The same company can provide more timely
product information by updating its catalog
online, than by mailing its catalog four times a
It is important to identify which business
processes can be streamlined using eCommerce
technologies. It is equally important to realize
that some processes make effective use of
traditional commerce and cant be improved upon
using technology. Technology is not a panacea.
Using it when it is not necessary or helpful can
be a costly mistake.
Well-suited for eCommerce
  • Business processes that are well-suited for
  • commerce
  • Sale/purchase of new books and CDs
  • Online delivery of software
  • Advertising and promotion of travel services
  • Online tracking of shipments
  • The business processes that are especially
  • to eCommerce include Commodity items.
  • A Commodity is a product or service that has
  • become so standardized and well-known that
  • cannot detect a difference in the offerings of
  • sellers and decide to buy based on price.

Best for Traditional Commerce
  • Business processes that are well-suited to
  • commerce
  • Sale/purchase of high fashion clothing
  • Sale/purchase of perishable food products
  • Small-denomination transactions
  • Sale of expensive jewelry and antiques
  • Exceptions?
  • In general, products that buyers prefer to touch,
  • or otherwise closely examine are difficult to
    sell using
  • eCommerce.

Questionable cases
  • Would eCommerce or traditional commerce work
  • best for the following activities?
  • Sale/purchase of rare books
  • Browsing through new books
  • Sale/purchase of shoes
  • Sale/purchase of collectibles (trading cards,
  • plates, etc.)

Combinations of both
  • Some business processes can be handled well using
  • a combination of electronic and traditional
  • Sale/purchase of automobiles
  • Online banking
  • Roommate-matching services
  • Sale/purchase of investment/insurance products
  • Consumers can research products online and make
  • transactions in person.
  • In any business problem it is good practice to
    weigh the
  • advantages and disadvantages of a particular
  • Evaluating the application of eCommerce
    technology is no
  • Different.

Advantages of eCommerce
  • For the seller
  • Increases sales/decreases cost.
  • Makes promotion easier for smaller firms.
  • Can be used to reach narrow market segments.
  • For the buyer
  • Makes it easier to obtain competitive bids
  • Provides a wider range of choices
  • Provides an easy way to customize the level of
  • detail in the information obtained
  • Allows anonymity and less pressure to buy.

Advantages of eCommerce II
  • In general
  • Increases the speed and accuracy with which
  • businesses can exchange information.
  • Electronic payments (tax refunds, paychecks,
    etc.) cost less to issue and are more secure.
  • Can make products and services available in
  • remote areas.
  • Enables people to work from home, providing
  • scheduling flexibility.

Disadvantages of eCommerce
  • Some business processes are not suited to
    eCommerce, even with improvements in
  • technology.
  • Many products and services require a critical
  • mass of potential buyers (e.g. online grocers).
  • Costs and returns on eCommerce can be
  • difficult to quantify and estimate.
  • Cultural impediments People are reluctant to
  • change in order to integrate new technology.
  • The legal environment is unclear and full of
  • conflicting laws regulation has not kept up.

The Internet
  • What Was.
  • What Is.
  • And What Shall Be.
  • But First..

What is the Internet?
The Internet is defined as a loosely configured
global wide area network. A network is the
means of connecting computers together. The
Internet includes more than 31,000 different
networks in over 100 different countries. It
currently has about 115 million hosts. Since
each host can include multiple computers, its
difficult to estimate total number of computers
connected to the internet.
The Internet EvolutionThe Innovation Phase 1961
Milestones Early 1960s - Given the rise of both
the nuclear age and communism (cold war), the
Department of Defense became concerned that a
nuclear attack could destroy computer systems
required to run their weapons systems. 1961
Leonard Kleinrock (MIT) publishes paper on
packet switching networks. The enabling
technology for the internet is conceived. 1962
to 1963 J.C.R. Licklider (MIT) writes memos
calling for a Galactic Network of computers.
He becomes head of Advanced Research Project
Agency Network Development for Department of
Defense. The vision of a global network is
The Internet EvolutionThe Innovation Phase 1961
- 1974
Milestones (Chapter 3 p109-113) 1972 - eMail
invented. First killer app of internet
born. 1973 - Ethernet and Local Area Networks are
invented. Client-server computing is
invented. 1974 Open Architecture networking
and Transmission Control Protocol/Internet
Protocol (TCP/IP) concepts are presented. TCP/IP
enabled a single open protocol to potentially
connect any of thousands of disparate local area
networks with a common addressing scheme to send
and deliver data.
The Internet EvolutionThe Institutional Phase
1980 - 1993
Milestones 1980 DOD adopts TCP/IP as standard
protocols. The single largest computing
organization in the world adopts and legitimizes
TCP/IP and packet switching networks 1980
Personal computers invented. PCs represent
enabling technology for millions of people to
connect to the internet. 1983 DOD creates
separate military network (MILNET). ARPANET
contains only civilian university traffic. Idea
of Civilian internet is born.
The Internet EvolutionThe Institutional Phase
1980 - 1993
Milestones 1983 Telnet and File Transfer
Protocol (FTP) deployed on internet as new
killer apps. 1989 A world wide network of
hyperlinked documents is proposed based on a
common language called Hyper Text Markup
Language (HTML). The concepts of an internet
supported service called the World Wide Web is
born. 1993 First graphical Web Browser
(Mosaic) is invented. Mosaic made it easy for
ordinary users to connect to HTML documents
anywhere on the Web.
The Internet EvolutionThe Commercialization
Phase 1994 - Present
Milestones 1994 National Science Foundation
(NSF) report plans development of an
Information Superhighway supporting research,
education, commercial and private
interests. 1995 NSF privatizes internet
backbone and turns control over to major
carriers ATT, Sprint, GTE and UUNet as primary
Network Access Providers (NAP). The fully
commercial civilian internet is born. 1995 Jeff
Bezos starts First major early
entry onto WWW as an internet pure play.
The Internet EvolutionThe Commercialization
Phase 1994 - Present
Milestones 1996 to 2000 Amount of venture
capital backing Internet start-up companies
grows from 3.1 to 72.4 Billion. Huge run up
of stock market based on demand for new internet
stocks going public in Initial Public Offerings
(IPOs). Countless internet entrepreneurs become
(paper) millionaires from stock options. 2001
to Present Reality sets in as dot com companies
mount huge losses. Demonstration of faulty
business models. VC money dries up, many
internet companies go broke, stock market slides.
The Growth of the Internet
  • The Internet has grown, and (most probably) will
  • continue to grow, at high rate
  • Year Internet Hosts
  • 1969 4
  • 1979 188
  • 1989 159,000
  • 1993 2,056,000
  • 1996 21,819,000
  • 1999 56,218,000
  • 93,047,785
  • (est) 115,000,000

Factors behind growth
  • Some of the Main factors that led to the surge in
    popularity of the Internet
  • The web-like ability to link from site to site
    enabled through HTML and HTTP.
  • The ease of use provided by the browsers
    graphical user interface.
  • The growth of personal computers and local area
    networks that could be connected to the
  • The TCP/IP standard and packet switching.

Evolution of Web Programming
A Different Perspective
E-Commerce I 1995-2000
  • Characteristics (Table 1.5 p32)
  • Technology driven
  • Revenue growth emphasis
  • Venture capital financing
  • Ungoverned
  • Entrepreneurial
  • Disintermediation (p.26)
  • Perfect markets (p.26)
  • Pure online strategies
  • First mover advantages (p.26)

E-Commerce II 2001-2006
  • Characteristics (Table 1.5 p32)
  • Business driven
  • Earnings/Profit emphasis
  • Traditional financing
  • Stronger Regulation
  • Large traditional firms
  • Strengthening intermediaries
  • Imperfect markets, brands, network effects(p.26)
  • Mixed clicks and bricks strategies
  • Strategic follower strength

And What Shall Be
  • Pundits and experts have a variety of opinions.
  • areas, however, that will continue to grow,
    albeit at a slower
  • pace(and as much venture capital!?!)
  • mCommerce Mobile computing
  • Broadband higher speed lines for both business
    and individuals as infrastructure matures.
  • B2B Integration of web front ends to back
    office mission critical systems to allow more
    access by customers.
  • TCP/IP v6.0 and the X-Internet The Xtended
    internet, a wider variety of devices hooked up to
    the internet televisions, appliances, etc.
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