MIS 6453 – Spring 2006
Electronic Commerce
eCommerce and its
Infrastructure
Instructor: John Seydel, Ph.D.
Student Objectives
Define eCommerce and eBusiness
Compare and contrast the first and
second waves of ecommerce
Discuss the role of eCommerce, along
with advantages, disadvantages, and
challenges
Discuss the global nature of eCommerce
Understand the basic network concepts
that enable the Internet
Describe what happens when a web page
is delivered to a browser
Discuss the contents of a typical HTML
document
eCommerce Foundations
Definitions, categories, etc.
Evolution of eCommerce
Doing business on the Web
Planning for success
International aspects
Recall the Recurrent Themes
of the eCommerce Literature
Business is business
The rules have changed
Guidelines for ecommerce sites
Tools available for ecommerce
Consider
ATM
Mail order
Information replaces inventory
Product enhancement through service and
information
Evolution (adjustment, maturing, concentration)
Move to b2b
Traditional firms move online
Electronic Commerce
Electronic Commerce (eCommerce):
Businesses trading via the Internet, eMail,
EDI, etc. with other consumers and with
other business entities
Electronic Business (eBusiness):
Term used interchangeably with e-
commerce
The transformation of key business
processes through the use of Internet
technologies
Electronic Commerce
Categories
Elements of Electronic
Commerce
Online Sales in B2C and B2B
eCommerce: First Wave
Dominant influence of U.S.
businesses
Extensive use of the English
language
Low bandwidth data transmission
technologies
Unstructured use of email
Over reliance on advertising as a
revenue source
eCommerce: Second Wave
Future of electronic commerce will
be international in scope
Language translation and handling
currency conversion problem will
need to be solved
eMail will be used as an integral
part of marketing and customer
contact strategies
Business Models, Revenue
Models, and Business
Processes
Business model: a set of
processes that combine to yield a
profit
Revenue model; used to
Identify customers
Market to those customers
Generate sales to those customers
Business processes: can
determine whether or not
ecommerce venture will be viable
A Quick Look at Business
Processes
Merchandising: combination of store
design, layout, and product display
knowledge
Sales of commodity items
Hard to distinguish from the same products
or services provided by other sellers
Features have become standardized and
well known
Shipping
Profile: collection of attributes that affect
how easily a product can be packaged and
delivered
High value-to-weight ratio: can make overall
shipping cost a small fraction of the
Advantages of eCommerce
Can increase sales and decrease costs
If advertising is done well on the Web, it can
get a firm’s promotional message out to
potential customers in every country
Using ecommerce sales support and order-
taking processes, a business can
Reduce costs of handling sales inquiries
Provide price quotes
Increases purchasing opportunities for buyer
Negotiating price and delivery terms is easier
The following cost less to issue and arrive
securely and quickly
Electronic payments of tax refunds
Public retirement
Welfare support
Disadvantages of
eCommerce
Perishable (e.g., grocery) products
are much harder to sell online
Difficult to
Calculate return-on-investment
Integrate existing databases and
transaction-processing software into
software that enables ecommerce
Cultural and legal obstacles also
exist
The Role of eCommerce
Expand exposure of businesses to potential
consumers (including other businesses)
Facilitate commerce between businesses and
consumers (including other businesses
Reduce transaction costs by
Improving flow of information
Increasing coordination of actions
Capitalize on network effects
Law of diminishing returns: most activities yield less
value as the amount of consumption increases
Network effects
As more people or organizations participate in a
network
Value of network to each participant increases
Other . . . ?
Value Chain for a Strategic
Business Unit
Industry Value Chain for a
Wooden Chair
SWOT Analysis Questions
Results of Dell’s SWOT
Analysis
International Nature of
eCommerce
Companies with established reputations
Often create trust by ensuring that
customers know who they are
Can rely on their established brand names
to create trust on the Web
Customers’ inherent lack of trust in
“strangers” on the Web is logical and to
be expected
Key global issues that must be
addressed
Language
Language & Culture Issues
Language:
To do business effectively in another culture, a
business must adapt to that culture
Researchers have found that customers are more
likely to buy products and services from Web sites in
their own language
Localization: translation that considers multiple
elements of local environment
Culture
Important element of business trust -- anticipate how
the other party to a transaction will act in specific
circumstances
Culture
Combination of language and customs
Varies across national boundaries
Varies across regions within nations
Infrastructure Issues
Internet infrastructure includes
Computers and software connected to Internet
Communications networks over which message
packets travel
Organization for Economic Cooperation and
Development (OECD)
Statements on information and communications
policy
Deals with telecommunications infrastructure
development issues
Flat-rate access system
Consumer or business pays one monthly fee for
unlimited telephone line usage
Contributed to rapid rise of U.S. electronic commerce
Targets for technological solutions: paperwork
and processes that accompany international
Typical International Trade
Transaction
A Closer Look at
Infrastructure Aspects
Networking concepts
How web pages work
Languages for the Web
Markup basics
Packet-Switched Networks
Local area network (LAN): network of computers located
close together
Wide area networks (WANs): networks of computers
connected over greater distances
Circuit: combination of telephone lines and closed switches
that connect them to each other
Circuit switching: centrally controlled, single-connection
model
Packets
Files and e-mail messages on a packet-switched network that
are broken down into small pieces
Travel from computer to computer along the interconnected
networks until they reach their destinations
Routing packets
Routing computers: computers that decide how best to forward
packets
Routing algorithms
Rules contained in programs on router computers that determine
the best path on which to send packet
Router-based Architecture of
the Internet
Internet Protocols
Protocol: collection of rules for formatting,
ordering, and error-checking data sent across
a network
Rules contributing to success of Internet
Independent networks should not require any
internal changes to be connected to the network
Packets that do not arrive at their destinations must
be retransmitted from their source network
Router computers act as receive-and-forward
devices
No global control exists over the network
TCP/IP
TCP
Controls disassembly of a message or a file into
packets before transmission over Internet
Controls reassembly of packets into their original
formats when they reach their destinations
IP Addressing
Internet Protocol version 4 (IPv4): uses a 32-bit
number to identify computers connected to
the Internet
Internet Protocol version 6 (IPv6)
Protocol that will replace IPv4
Uses a 128-bit number for addresses
Domain names
Sets of words assigned to specific IP addresses
Top-level domain (or TLD): rightmost part of a
domain name
Internet Corporation for Assigned Names and
Numbers (ICANN): responsible for managing domain
names and coordinating them with IP address
registrars
Top-Level Domain Names
Let’s Dissect a URL
Consider:
http://clt.astate.edu:80/jseydel/mis6453/ho6453.htm#te
xt
Includes:
Protocol (assumed to be HTTP)
Host computer name (www?)
TLD
Port (assumed to 80)
Folder names
Filename.filetype (unless default)
Target within document
Browser/Server Interaction
Three Tiered Internet
Database Access
Architecture
Input / Processing / Output
(Program code: VB, Java, . . . )
Input Process/Progra Output
(data) m
Browser
XHTML file (text) &/or Web page(s)
Server
Rich: includes programming, markup, pointers to files, . . .
Collection of Computer
Languages
Programming languages
Standalone
Procedural
Traditional (e.g., COBOL)
Object-oriented (e.g., Java)
Nonprocedural (e.g., SQL)
Scripting languages (rely on other
components)
JavaScript
VBScript
Others (e.g., Perl)
Markup languages (e.g., XHTML)
Stylesheet languages (e.g., CSS, XSL)
Database languages (e.g., SQL)
An Overview of Markup
Languages
SG M L
H TM L XM L O th e rs
XH TM L M a th M L G u e s tM L . . .
XML Processing
Standard XHTML Document
<html>
<head>
<title> . . . title goes here . . . </title>
. . . scripts, style rules, meta elements, etc.
...
</head>
<body>
. . . this is where content and markup goes
...
</body>
</html>
An Overview of XHTML
Elements
A web document is a collection of XHTML
elements
Note that XHTML is essentially HTML
XML compliant
Reformulation of HTML, but with stricter rules
Two types of elements
Standard
Empty
Each element
Has
Opening tag and closing tag is standard
Self closing tag if otherwise
May have attributes specified
Also: XHTML entities
XML Syntax for Standard
Elements
Either
<tag attr1=“xxx” attr2=“yyy” attr3=“zzz” . . . >
. . . content . . .
</tag>
Or
<tag
attr1=“xxx”
attr2=“yyy”
attr3=“zzz”
...
>
. . . content . . .
</tag>
Why the difference?
More readable code (for us, not the computer)
Yet to Come . . .
More on infrastructure
Types of networks
Connection options
Internet2 and other futuristic
concepts
Business models for the Web
Summary of Objectives
Define eCommerce and eBusiness
Compare and contrast the first and
second waves of ecommerce\
Discuss the role of eCommerce, along
with advantages, disadvantages, and
challenges
Discuss the global nature of eCommerce
Understand the basic network concepts
that enable the Internet
Describe what happens when a web page
is delivered to a browser
Discuss the contents of a typical HTML
document
