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Electronic Commerce Transactions


Electronic Commerce Transactions Week 11 Objectives What is e-commerce Implementing transactions over the internet Managing security risk Tools for implementing e ... – PowerPoint PPT presentation

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Title: Electronic Commerce Transactions

Electronic Commerce Transactions
  • Week 11

  • What is e-commerce
  • Implementing transactions over the internet
  • Managing security risk
  • Tools for implementing e-commerce
  • Consumer and business markets for e-commerce

What is e-commerce
  • The sharing of business information, maintaining
    business relationships, and conducting business
    transactions by means of telecommunication
  • E-business denotes a broad holistic concept
    encompassing internet related technologies on
    business functions, from human resource
    management to marketing to corporate strategy

Aspects of Traditional Electronic Commerce
Fulfillment Cycle step (business-to-business) Conventional Shopping Traditional mail order (multiple single-medium channel) Electronic commerce (single multimedia channel)
Evaluate suppliers and product options Shops, showrooms Magazines, flyers Portals, intermediaries, online catalogues
Select specify product Pick off shelf, take to counter Order form, letter Online form, e-mail
Send order to supplier - Fax, mail, telephone E-mail, EDI
Supplier checks inventory - Printer form Online database
Generate invoice - Printed form EDI or via credit card
Ship product - Shipper Shipper or online distribution
Confirm receipt Printed form Printed form E-mail
Schedule payment Printed form Printed form EDI, online database
Transfer payment EFT-POS Mail (cheque), telephone (credit card) EDI, EFT
Relative Significance of E-commerce in Different
Category Country
Superpower United States
Contender Germany, United Kingdom, Japan, Canada
Gateway Singapore, Benelux, Hong Kong
Sprinter Scandinavia/Nordic countries
Straggler France, Australia, Italy, South Korea, Spain
A History of E-commerce
  • Electronic Data Interchange the exchange, using
    digital media, of standardized business documents
    such as purchase orders and invoices between
    buyers and sellers
  • Financial EDI an aspect of the electronic
    payment mechanism involving transfer of funds
    from the bank of a buyer to a seller

Level of E-commerce Sophistications
Level Characteristics
Primitive Static web pages or brochurweare Searchable site with dynamic pages such as online catalogue Integration with operational databases, e.g. inventory searching, package tracking, job posting Customer transaction through the Internet, e.g. selling products and services, buying and selling shares, applying for loans
Advanced Full electronic commerce (i.e. integrated fulfillment cycle of ordering, shipping, billing)
Reasons for the Growth in E-commerce
  • Increase in demand for choice (product depth,
    global reach, price choices)
  • Demand for information (detailed product
    information, inventory, inventory, order status)
  • Demand for interactive, online support
  • Avoidance of travel and parking difficulties for
    consumer e-commerce
  • Elimination of time constraints (that is, opening
    hours or delays between placing an order and

Benefits of E-commerce
  • Lower purchasing overhead especially for small
    value and repeat orders
  • Greater choice (greater product depth and global
  • Faster fulfilling cycle time (ordering, shipping,
  • Greater ability to supply information (inventory,
    order status, etc.)
  • Lower cost than EDI
  • Ease of swapping between suppliers greater than
    with EDI

Benefits for suppliers
  • A global reach, leading to more orders
  • Reduced administration overhead (paperwork
    automation leading to a lower cost for each order
  • Reduced asset requirement (physical properties
    for companies with a retail network)
  • Integration between back office and online
    shopping activities
  • Integration of online shopping activities with
    database marketing
  • Less need for distribution via channel (disinter
  • Reduced working capital (inventory)

E-commerce Enablers
  • Internet standards
  • Bandwidth development
  • World Wide Web
  • Diversification and proliferation of internet
  • Development of off the shelf e-commerce products

Inhibitors to E-commerce
  • Technophobia
  • Security fears
  • Technology not user friendly
  • Poor performance leading to slow download
  • Inertia of habitual conventional shopping and
  • Internet access still limited
  • Entrenched interests (for example, distributors
    who may be bypassed)

Payment system requirements
  • Be secure
  • Be easy for buyer and seller to use and
  • Be straight forward for banks to administer
  • Be scalable across different currencies and to
    different denominations
  • Have a low costs for implementing transactions

Consumer Payment Systems
  • Purchasers
  • Merchants
  • Certified Authority (CA)- body that issues
    digital certificates that confirm the identity of
    purchasers and merchants
  • Banks
  • Electronic token issuer dependent on digital
    certificates for security

Non-credit of Pre-paid Systems
  • Digital, virtual or electronic cash
  • Microtransactions or micropayments such as
  • Debit cards
  • Smartcards

Post-paid or Credit-based Systems
  • Digital/electronic cheques
  • Credit cards such as Visa or MasterCard

Requirements for Security Systems
  • Authentication
  • Privacy and confidentiality
  • Integrity
  • Non-repudiability
  • Availability

Methods of Increasing Security
  • Encryption
  • Secret-key (symmetric) encryption
  • Public-key (asymmetric) encryption
  • Digital signatures
  • Identifies individuals using public key
  • Certificate and certificate authorities (CA)
  • Secure Electronic Transaction

Constraints on Selecting an E-commerce Solution
  • Cost
  • Quality of service
  • Performance of service
  • Downtime
  • Security
  • Cards supported
  • Currencies supported
  • Time taken to set up an account

Constraints on Selecting an E-commerce Solution
  • Transaction method
  • Traditional (phone/fax/mail)
  • E-mail
  • Online transaction
  • Number of products required
  • Volume of sales
  • Shopcreator Stall supports up to 10 products
  • IBM \Home page creator supports 15-500 items
  • BT StoreFront supports a small to medium number
    of products

Constraints on Selecting an E-commerce Solution
  • Cost of product
  • Configurability
  • Personalization facilities
  • Integration with back-end systems
  • Integration with stock control system to
    determine availability is vital
  • Integration with stock control system will allow
    price and product information changes to be
    updated rapidly
  • Integration with adequate fulfillment services
  • Integration with e-mail to conform order to

Consumer Business Markets for E-commerce
  • Business-to-business
  • Familiarity with the technology
  • Account selling
  • Consumer markets
  • Acceptable Internet access mechanisms
  • Payment mechanisms perceived as convenient and
  • An attractive and usable media interface

The Commercial Environment for E-commerce
  • Legal status of banks
  • Non banks are subject to less scrutiny and
  • Non-banks are at a competitive advantage as they
    do not carry the costs of the high level of
  • Non-banks do not report to central bank which
    leads to uncertainty and instability in the money
  • Tariffs and taxation
  • Value added Tax charged depending on location of
    supplier and consumer
  • Export and import tax implications
  • Services attract VAT according to where the
    supplier is located

Contracts consumer protection
  • Location and identity of supplier and in case of
    contracts requiring payment in advance his
  • The main characteristics of the goods or services
  • The price of goods or services
  • Delivery costs
  • The arrangement of payments, delivery or
  • The existence of right of withdrawal
  • The cost of using the means of distance
    communication, where it is calculated other than
    the basic rates
  • The period for which the offer or price remains
  • The minimum duration of the contract and whether
    the contracts for the supply of goods are to be
    permanent or recurrent
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