Unit One: Overview of E-Commerce
Learning Objectives:
Upon completing this unit, you should be able to
Describe the basic concepts of e-commerce
Understand the scope of e-commerce
Explain the advantages and disadvantages of e-commerce
Describe the elements of e-commerce
Explain the marketing implication of internet properties
Explain the 6Cs of internet
1.1 The Meaning and The Scope of E-Commerce
The meaning of e-Commerce
E-Commerce can be defined as using the power online networks, computer
communications and digital interactive media to reach your marketing
objectives. E-commerce will not replace traditional forms of marketing
anyway. Instead, it will both add to and subtract from today's marketing mix.
It will add more interactivity. But it will subtract costs. It will add more
customer choices. But it will remove marketing's dependence on paper. It
will add "information value" to products and services. But it will take away
barriers to starting a business or extending a business into international
markets. And most importantly, it will turn upside down some old notions we
have held of what marketing is all about.
The Scope of E-commerce
The scope of e-commerce is vast. But, all activities in the internet are
important for company and end users. Electronic commerce or e-commerce
is a term popularized by the advent of commercial services on the internet.
Internet-commerce is however, only one part of the overall sphere of e-
commerce. The commercial use of the Internet is perhaps typified by once-
off sates to consumers. Other types of transactions use other technologies.
Electronic Markets (EMs) are in use in a number of trade segments with an
emphasis on search facilities, and Electronic Data Interchange (EDI) for
regular and standardized transactions between organizations. The
mainstream of e-Commerce consists of these three areas; these are
represented as a diagram in Figure 1.1 and outlined in a little more detail
below.
E-commerce ; Definition: E-commerce (electronic commerce) refers
specifically to the buying and selling of goods and services over the internet.
It encompasses all online transactions between businesses and consumers
(B2C), businesses and businesses (B2B), consumers and consumers (C2C),
and more.
E-Business Definition: E-business (electronic business) encompasses a
broader range of online business activities beyond just buying and selling. It
includes all aspects of running a business online, such as supply chain
management, customer relationship management, and online marketing.
E-market
1. Definition: E-market (electronic marketplace) refers to online
platforms that facilitate the buying and selling of goods and services
between multiple buyers and sellers. E-markets serve as
intermediaries that connect consumers with various vendors
o Business websites;
Search Engine;
Email;
Online newsletters/e-zines;
Online catalogues;
Online press releases;
Online surveys;
Online customer service;
Banner advertising;
Affiliate marketing.
Mobile telephone marketing;
Online Community (Friendster, YouTube) - new
Web Log (Blog) - new
1.2 Benefit of E-commerce
Advantages of E-commerce
Some of the advantage of e-commerce can be listed in the following manner:
A. E-commerce offers bottom-line benefits that tie in directly to the demands
placed on the organization trying to make a transition into the new
economy.
B. E-commerce can save money and help you stretch your marketing
budget. Electronic versions of catalogs, brochures, and specification
sheets do not have to be printed, packaged, stored, or shipped. These can
be updated online, and hence, you need not have to send them back to
the printer for changes. This saves a lot of money.
C. E-commerce can save time and cut steps from the marketing process.
Marketers no longer have to wait for one of their sates representatives to
give them the desired information. They can get it online on their own. E-
mail allows you to exchange information with potential buyers quickly. It
helps you get your message out to the market sooner, with online
brochures, catalogues and so on.
D. E-commerce gives customers another way to buy, while enabling them to
take control of the purchasing process. Today, customers want more.
They want more information about the products they buy, more input into
the product itself, and support after the sale. Smart marketers can
leverage the inherent interactivity of online communications by
encouraging the customer to get engaged in making decisions about the
product. They can choose the color, select the shipping method, and
place the purchase order themselves. The more you can get the customer
involved in the process of customizing the product and the selling process
to meet their particular needs, the more likely it is that you will get the
sale.
E. E-commerce can be information-rich and interactive. It appeals to
information- hungry buyers and analytical buyers. It allows buyers and
current customers to search and locate the information they need quickly.
F. E-commerce can offer you instant international reach and indeed, online
networks have created an instant global community. E-commerce erases
the time and distance barriers that get in the way of conducting business
transactions with customers in other countries.
G. E-commerce can lower barriers to entry and offer equal opportunity for
access. When you are doing business online, distinctions related to the
ethnic background or gender or even the sizes of business do not seem to
matter as much. The online world is a great leveler. And e-commerce
helps to lower many of the marketplace barriers that have held some
would-be entrepreneurs from full participation in the free market system.
H. E-commerce can be continuously available. One of the best attributes of
an online information server is that it is always on the job, twenty-four
hours a day, 365 days a year.
1.3 Elements of E-commerce
Global Reach and Value of the WWW
The Internet facilitates interactivity among channel members and final consumers:
B2C means that businesses can communicate and interact with final consumers.
B2B means that businesses can efficiently communicate and interact with other businesses.
B2B2C means that businesses can communicate and interact with each other regarding joint
consumer ventures.
C2C means that individuals can interact and communicate globally with others connected to
the Web.
The internet is the underlying infrastructure that connects computers
and devices globally
The web is a system of interlinked hypertext documents and multimedia
content that is accessed via the internet
World Wide Web (WWW): The web is accessed from the client machine
using a web browser; at the time of writing the two most popular
browsers are Microsoft Internet Explorer and Netscape Navigator. The
web page to be viewed is specified by its web address, the uniform
resource locator (URL), e.g. [Link]; the URL contains the
addressing information needed to derive the IP address of the server that
holds the web page.
E-Mail: Accessing e-Mail requires a mail client program; this may be a
facility of the web browser or a separate software package. Incoming e-
Mails are downloaded from a post-box (file) on the sewer and outgoing e-
Mails are sent to the server for onwards transmission. Each e-Mail has to
include the address of the recipient, e.g. [Link]@[Link]
(the name is fictitious); the second part of the e-Mail address (following
the’@’) is the domain name and is used on the mail server to derive the IP
address.
Internet Service Provider: Access to the Internet, for members of the
public and small organizations, is via an Internet Service Provider (ISP).
The user provides the client computer and uses a modem to connect to
the ISP’s server. Telecom providers and cable companies are increasingly
providing digital services and open-all-the-time connections which give
increased speed and convenience of access.
The ISP provides access to the web, an e-mail address and very possibly user
space for the client to set up their own home page. Some ISPs specialize in
hosting business sites with services designed to meet the need of that
market. The provision of Internet services has become very competitive and
users have taken to shopping around for the best package. Users of the
service get the ISP’s home page displayed when they log on which gives the
service provider the opportunity to create revenue from advertising and
hosting links to commercial sites; many ISPs. In Ethiopia the internet service
provider is EthioTelecom.
Server: The server is a computer system linked into the Internet and that
can be accessed by the clients. The server may run a number of
applications; Internet server applications include:
Web Server: Software that takes requests from client browsers searches
the web and passes back the resultant pages to the browser. The server
software will support TCP/IP. The server will, very probably, store a
number of home pages that are available to local users and other Internet
users.
Mall Server: Software that acts as a ‘post office’ for the e-Mail system.
Mail created on the client sites is passed to the appropriate post-box
within the system or sent out over the Internet to its intended destination.
Mail from outside is stored in post-box files and uploaded to the users’
machine when requested by the mail client. As with the web server, the
mail server uses TCP/IP for its Internet transmissions.
Intranets: An intranet is a private network that is accessible only to the
members of an organization. It is used to share information, resources,
and tools within the organization.
. USED TO SHARE as staff manuals, internal telephone directories and
office notices. Their advantage is that they are (hopefully) always readily
available and that they can be easily updated. Intranet systems can
include application systems where scripting languages give access to
databases and the use of a browser gives easy access throughout the
organization.
Extranets: An extranet is a private network that allows controlled access
to external users, such as business partners, suppliers, or customers. It
extends the capabilities of an intranet to include external stakeholders.
Webmaster: The Webmaster is responsible for the provision of web
services for the organization. Responsibilities include setting up and
maintaining the server software and the home page for the organization.
Where staff within the organization can provide their own web content the
webmaster will probably set the standards so that the organization can
ensure a professional appearance and consistent ‘look and feel’ for its
users.
Unit Summary
E-commerce is the process of using online network, computer
communication and digital interactive media to reach marketing objectives.
E-commerce is not the replacement of the traditional marketing rather plus
or minus to the traditional marketing.
The scope of e-commerce is vast. The three major areas that e-commerce
coverare electronic markets, electronic data interchange and internet
commerce.
E-commercehas both advantages and disadvantages. The advantages of e-
commerce include: offer bottom-line benefits, save time and money, cut step
of marketing process, and gives customers another way of buying, global
information rich and interactive reach, lower barrier to entry and offer equal
opportunity, and continuously available 7x4 or 365 days.
On the other hand,e-commerce is not suitable for all products, newness and
rapid change in technology, difficulty to determining return on investment in
advance, difficulty of integrating existing databases and transaction
processing software designed to transforming traditional commerce in to a
software that enable e-commerce cultural and legal obstacles in conducting
e-commerce and the like are some of the disadvantage of [Link]
conduct e-commerce, we need certain information technology resources
such as software, hardware, cables, people, WWW, e-mail, internet service
provider, server, intranet, extranet, webmaster and governance of internet.
Intranet: enhance the value proposition to customers reduce operational
inefficiencies within the organization, stream line supply chain, increase
connectivity, make every thing fast and eliminate [Link] six-Cs
framework (intranet toolkit) that explain how internet adds value to
marketing activities are commerce, content, communication, connectivity,
community and computing.
Learning Activity-1
Answer the following Questions.
1. Define e-commerce?
2. Discuss the scope of e-commerce
3. List out and define the elements of e-commerce.
4. Discuss how internet adds value to the marketing activities?
5. Describe the advantage and disadvantage of e-commerce.
6. Assume you are the Marketing Officer of ABC Company. Assume also
your company is currently engaged in traditional way providing goods
and services to its customers. Assume further the management
committee of your company planned to market online. You are one of
the management committee. The committee appoints you to identity,
and report information technology resources required to enter in to e-
commerce [Link] what you should include in your report.
7. Is e-commerce completely replace the traditional way of marketing?
Justify your answer.