Applying E-Commerce in Business

Rana Tassabehji

• Publisher: SAGE Publications Ltd
• Year: 2003
• Print ISBN: 9780761948759, 9780761948742
• eBook ISBN: 9781446223017
• Edition: 1
• Topic: Computer Science
• Subtopic: Computer Science General
• Index: Computer Science

This book provides an understanding of e-commerce by deconstructing it into its main constituents and explaining how they fit together. The objective is to introduce some consistency to the often contradictory views about e-commerce, bringing together different academic and management theories and frameworks into a coherent whole. It is written with a European perspective with examples that are drawn from around the globe, consistent with the nature of e-commerce.

Visit the companion website

This textbook gives an overview of e-commerce, relevant issues and frameworks.

It looks at the foundations on which e-commerce is built - the technology. Managers and students of management must have an understanding of the infrastructure and inextricable linkages between processes and technology in a 21st century business. It is no longer acceptable or good business practice for technology to be the sole responsibility of IT departments.

The book then goes on to examine businesses that have been built on these technology foundations. It explains the concept of the business model, the `dot com? phenomenon and frameworks that have emerged as a result. It also outlines the legal and ethical implications for an e-business.

It outlines the academic debate about the impact of e-commerce on economics and management thinking. It concludes with a glance to the future, exploring the potential new wave of technology.

This textbook will be essential for undergraduate and post graduate students. It is a user-friendly text with case studies, and learning objectives to guide the student and lecturers. A companion website will accompany the text including cases, student activities, PowerPoint slides, notes and articles in support of the book. It will also give lecturers direct access to the author.

It will provide students with the skills to be able to converse knowledgeably with IT managers and be able to ask the right questions in order to make a decision about IT.

	CHAPTER
Introduction to e-commerce	1

LEARNING OBJECTIVES

• To understand the complexity of e-commerce and its many facets.
• To explore how e-business and e-commerce fit together.
• To identify the impact of e-commerce.
• To recognise the benefits and limitations of e-commerce.
• To use classification frameworks for analysing e-commerce.
• To identify the main barriers to the growth and development of e-commerce in organisations.

WHAT IS ELECTRONIC COMMERCE?

Even today, some considerable time after the so called ‘dot com/Internet revolution’, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. There has been and continues to be much publicity and discussion about e-commerce. Library catalogues and shelves are filled with books and articles on the subject. However, there remains a sense of confusion, suspicion and misunderstanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms. This book aims to consolidate the major themes that have arisen from the new area of electronic commerce and to provide an understanding of its application and importance to management.

In order to understand electronic commerce it is important to identify the different terms that are used, and to assess their origin and usage. According to the editor-in-chief of International Journal of Electronic Commerce, Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks’.¹ He maintains that in its purest form, electronic commerce has existed for over 40 years, originating from the electronic transmission of messages during the Berlin airlift in 1948.² From this, electronic data interchange (EDI) was the next stage of e-commerce development. In the 1960s a cooperative effort between industry groups produced a first attempt at common electronic data formats. The formats, however, were only for purchasing, transportation and finance data, and were used primarily for intra-industry transactions. It was not until the late 1970s that work began for national Electronic Data Interchange (EDI) standards, which developed well into the early 1990s.

EDI is the electronic transfer of a standardised business transaction between a sender and receiver computer, over some kind of private network or value added network (VAN). Both sides would have to have the same application software and the data would be exchanged in an extremely rigorous format. In sectors such as retail, automotive, defence and heavy manufacturing, EDI was developed to integrate information across larger parts of an organisation’s value chain from design to maintenance so that manufacturers could share information with designers, maintenance and other partners and stakeholders. Before the widespread uptake and commercial use of the Internet, the EDI system was very expensive to run mainly because of the high cost of the private networks. Thus, uptake was limited largely to cash-rich multinational corporations using their financial strength to pressure and persuade (with subsidies) smaller suppliers to implement EDI systems, often at a very high cost. By 1996 no more than 50,000 companies in Europe and 44,000 in the USA were using EDI, representing less than 1 per cent of the total number of companies in each of the respective continents. According to Zwass, electronic commerce has been re-defined by the dynamics of the Internet and traditional e-commerce is rapidly moving to the Internet.

With the advent of the Internet, the term e-commerce began to include:

• Electronic trading of physical goods and of intangibles such as information.
• All the steps involved in trade, such as on-line marketing, ordering payment and support for delivery.
• The electronic provision of services such as after sales support or on-line legal advice.
• Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams.

Some of the definitions of e-commerce often heard and found in publications and the media are:

Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet.³

Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet.⁴

Electronic commerce is about doing business electronically.⁵

E-commerce, ecommerce, or electronic commerce is defined as the conduct of a financial transaction by electronic means.⁶

The wide range of business activities related to e-commerce brought about a range of other new terms and phrases to describe the Internet phenomenon in other business sectors. Some of these focus on purchasing from on-line stores on the Internet. Since transactions go through the Internet and the Web, the terms I-commerce (Internet commerce), icommerce and even Web-commerce have been suggested but are now very rarely used.

Other terms that are used for on-line retail selling include e-tailing, virtual-stores or cyber stores. A collection of these virtual stores is sometimes gathered into a ‘virtual mall’ or ‘cybermall’.

WHAT ABOUT E-BUSINESS?

As with e-commerce, e-business (electronic business) also has a number of different definitions and is used in a number of different contexts. One of the first to use the term was IBM, in October 1997, when it launched a campaign built around e-business. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities and this is what some see as e-business.

E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.

E-business includes customer service (e-service) and intra-business tasks.

E-business is the transformation of key business processes through the use of Internet technologies. An e-business is a company that can adapt to constant and continual change.⁷

The development of intranet and extranet is part of e-business.

E-business is everything to do with back-end systems in an organisation.

In practice, e-commerce and e-business are often used interchangeably.

E-COMMERCE, E-BUSINESS, WHO E-CARES?⁸

Some analysts and on-line business people have decided that e-business is infinitely superior as a moniker to e-commerce. That’s misleading and distracts us from the business goals at hand. The effort to separate the E-commerce and E-business concepts appears to have been driven by marketing motives and is dreadfully thin in substance.

Here’s the important thing: E-commerce, E-business or whatever else you may want to call it is a means to an end.⁹

The different names, definitions and words referred to in the previous sections are merely a sample of the glossary that has originated from marketing departments to sell a concept, the media to describe a sensational ‘new’ phenomenon, consultants to justify their fees and recommendations, and business to validate and implement the new technology. In fact there is no one definitive meaning of e-commerce or e-business that is universally established. The different terms are used to illustrate different perspectives and emphases of different people in different organisations and business sectors. Some argue that it makes little sense to have a restrictive definition for the term e-commerce since it is unlikely that there will be agreement on a single unique definition. ‘Attempting to define E-commerce or E-business is guaranteed to generate Byzantine debates with meaningless origins. It reminds me of trying to answer the following question: “If one synchronized swimmer drowns, would the others follow?”’¹⁰

Because of this trend, it is necessary when undertaking any electronic commerce, electronic business or any other e-related project or assignment, to clearly define any term in the context and environment in which it is being used.

AN E-DISTINCTION

For the purpose of clarity, the distinction between e-commerce and ebusiness in this book is based on the respective terms commerce and business. Commerce is defined as embracing the concept of trade, ‘exchange of merchandise on a large scale between different countries’.¹¹ By association, e-commerce can be seen to include the electronic medium for this exchange. Thus electronic commerce can be broadly defined as the exchange of merchandise (whether tangible or intangible) on a large scale between different countries using an electronic medium – namely the Internet. The implications of this are that e-commerce incorporates a whole socio-economic, telecommunications technology and commercial infrastructure at the macro-environmental level. All these elements interact together to provide the fundamentals of e-commerce.

Business, on the other hand, is defined as ‘a commercial enterprise as a going concern’.¹² E-business can broadly be defined as the processes or areas involved in the running and operation of an organisation that are electronic or digital in nature. These include direct business activities such as marketing, sales and human resource management but also indirect activities such as business process re-engineering and change management, which impact on the improvement in efficiency and integration of business processes and activities.

Figure 1.1 illustrates the major differences in e-commerce and e-business, where e-commerce has a broader definition referring more to the macro-environment, e-business relates more to the micro-level of the firm. Although different, both e-commerce and e-business are also highly integrated and reliant upon each other.

Figure 1.1 Electronic commerce and electronic business

WHAT ARE THE KEY DRIVERS?

It is important to identify the key drivers of e-commerce to allow a comparison between different countries. It is often claimed that e-commerce is more advanced in the USA than in Europe. These key drivers can be measured by a number of criteria that can highlight the stages of advancement of e-commerce in each of the respective countries. The criteria that can determine the level of advan...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• Preface
• Introduction
• 1 Introduction to e-commerce
• Part 1: The technology of e-commerce
• Part 2: Business and e-commerce
• Part 3: Economics, management theory and e-commerce
• Conclusions
• Index
• Appendices