Electronic Commerce Framework

•E-Commerce application will be built on the existing technology infrastructure

ØA myriad of computers

ØCommunication networks

ØCommunication software

•Common business services for facilitating the buying and selling process

•Messaging & information distribution as a means of sending and retrieving information

•Multimedia content & network publishing, for creating a product & a means to communicate about it

•The information superhighway- the very foundation-for providing the high way system along which all e-commerce must travel

•The two pillars supporting all e-commerce applications & infrastructure

•Any successful e-commerce will require the I-way infrastructure in the same way that regular commerce needs

•I-way will be a mesh of interconnected data highways of many forms

Ø    Telephone ,wires ,cable TV wire

Ø     Radio-based wireless-cellular & satellite

•Movies=video + audio

•Digital games=music + video + software

•Electronic books=text + data + graphics + music + photographs + video

•In the electronic ‘highway system’ multimedia content is stores in the form of electronic documents

•These are often digitized

 On the I-way messaging software fulfills the role, in any no. of forms: e-mail, EDI, or point-to-point file transfers

§Encryption & authentication methods to ensure security

§Electronic payment schemes developed to handle complex transactions

These logistics issues are difficult in long-established transportation

Anatomy of E-Commerce applications

•Multimedia Content for E-Commerce Applications

•Multimedia Storage Servers & E-Commerce Applications

              i. Client-Server Architecture in Electronic Commerce   

              ii. Internal Processes of Multimedia Servers

              iii. Video Servers & E-Commerce

•Information Delivery/Transport & E-Commerce Applications

•Consumer Access Devices

Multimedia Content for E-Commerce Applications

•Multimedia content can be considered both fuel and traffic for electronic commerce applications.

•The technical definition of multimedia is the use of digital data in more than one format, such as the combination of text, audio, video, images, graphics, numerical data, holograms, and animations in a computer file/document. See in Fig.

•Multimedia is associated with Hardware components in different networks.

•The Accessing of multimedia content depends on the hardware capabilities of the customer.

Multimedia Storage Servers & E-Commerce Applications

•E-Commerce requires robust servers to store and distribute large amounts of digital content to consumers.

•These Multimedia storage servers are large information warehouses capable of handling various content, ranging from books, newspapers, advertisement catalogs, movies, games, & X-ray images.

•These servers, deriving their name because they serve information upon request, must handle large-scale distribution, guarantee security, & complete reliability

i. Client-Server Architecture in Electronic Commerce

•All e-commerce applications follow the client-server model

•Clients are devices plus software that request information from servers or interact known as message passing

•Mainframe computing , which meant for “dump”

•The client server model, allows client to interact with server through request-reply sequence governed by a paradigm known as message passing.

•The server manages application tasks, storage & security & provides scalability-ability to add more clients and client devices( like Personal digital assistants to Pc’s. See in fig.

ii. Internal Processes of Multimedia Servers

•The internal processes involved in the storage, retrieval & management of multimedia data objects are integral to e-commerce applications.

•A multimedia server is a hardware & software combination that converts raw data into usable information & then dishes out.

•It captures, processes, manages, & delivers text, images, audio & video.

•It must do to handle thousands of simultaneous users.

•Include high-end symmetric multiprocessors, clustered architecture, and massive parallel systems.

iii. Video Servers & E-Commerce

The electronic commerce applications related to digital video will include

                       1. Telecommunicating and video conferencing

                       2. Geographical information systems that require storage &     

                            navigation over maps

                       3. Corporate multimedia servers

                       4. Postproduction studios

                       5. shopping kiosks.

•Consumer applications will include video-on-demand.

•The figure which is of video–on demand consist video servers, is an link between the content providers (media) & transport providers (cable operators)

Information Delivery/Transport & E-Commerce Applications

•Transport providers are principally telecommunications, cable, & wireless industries.

   

    Information Transport Providers                    Information Delivery Methods

•Telecommunication companies                    long-distance telephone lines;

                                                                           local telephone lines

•Cable television companies                         Cable TV coaxial, fiber optic &

                                                                           satellite lines

•Computer-based on-line servers                  Internet; commercial on-line

                                                                          service providers

•Wireless communications                           Cellular & radio networks;

                                                                          paging systems

                                                                            

Consumer Access Devices

  Information Consumers                                        Access Devices

•Computers with audio & video                    Personal/desktop computing

      capabilities                                                   Mobile computing

•Telephonic devices                                      Videophone

•Consumer electronics                                   Television + set-top box Game

                                                                            systems

•Personal digital assistants (PDAs)                Pen-based computing, voice-

                                                                            driven computing

E-Commerce Consumer applications

•People needs entertainment on demand including video, games, news on-demand, electronic retailing via catalogs etc.

•Currently now we are taking the video on-demand.

•Why most companies betting heavily on this?

•93 million homes have television

•Americans spend nearly half their free time watching television

•Every evening, more than one-third of the population is in front of a television

4. sight, sound, and motion combine to make television a powerful means of marketing

Consumer Applications and Social Interaction:

•Lessons from history indicate that the most successful technologies are those that make their mark social

•In 1945, in U.S no one had TV. By 1960 about 86percent of households did

•Now contrast with Telephone. Bell invented the telephone in 1876 and by1940, 40% of U.S. households and by 1980 about 95-98 percent of households connected

•Penetration was slower for Telephone than for TV because of the effort needed to set up the wiring infrastructure

§The impact of both was good on business, social, consumer behavior and entertainment habits

§Radio began in 1960, and by 1989, almost 3 decades later, just 319 radio stations followed the news format

§In 1994, their number exceeded 1000

What do Consumers Really want?

§They want quality and cost of service

§If a new system requires more steps to do essentially the same things, consumers may resist it

§Some people fit that mold, but most of public prefers to lay back and just watch television and let someone else do the work of figuring out the sequence of television programming

What are Consumers willing to spend?

§According to the video on-demand, consumers get the cable bill at basic charge they will buy

§If it is doubled they will not buy and at the service provider economics will increased then network operators might look to advertises to fill the gap

Delivering products to Consumers

§Packing and distribution must be considered

§Blockbuster video collects the information and shows the typical consumer

§Spends $12 a month on home video expenditures

§Go to video store to select video on limited budget and has time to kill

§ Only periodically expends a large sum of money

Consumer Research and E-Commerce

Consumer opinion about interactive television is

§46% be willing to pay

§39% want video phone calls

§63% would pay for movies on-demand

§57% would pay for Television shows on-demand

§78% said their worry about it is that they will pay for something that they previously received free of charge

§64% are think it make it harder for viewers to protect privacy

41% are tell that it is too confusing to use

E-Commerce Organization applications

Changing business Environment

§The traditional business environment is changing rapidly

§Many companies are looking outside and within to shape business strategies

§These activities include private electronic connections to customers ,suppliers ,distributors ,industry groups etc

§The I-superhighway will expand this trend so that it allow business to exchange information

See in fig.

E-Commerce and the retail Industry

§Conditions are changing in the “new economy” with respect to the retail industry

§Consumers are demanding lower prices, better quality, a large selection of in-season goods.

§Retailers  are filling their order by slashing back-office costs, reducing profit margins, reducing cycle times. buying more wisely and making huge investments in technology

§Retailers are in the immediate line of fire and were first to bear the brunt of cost cutting

Marketing and E-Commerce

§E-commerce is forcing companies to rethink the existing ways of doing target marketing and even event marketing.

§Interactive marketing is in electronic markets via interactive multimedia catalogs

§Users find moving images more appealing than still image and listening more appealing than reading text on a screen

§Consumer information services are a new type of catalog business

Inventory Management and Organizational Applications

§With borders opening up and companies facing stiff global competition

§Adaptation would include moving to computerized, “paperless” operations to reduce

§Once targeted business process is inventory management, solutions for these processes go by different names

§In manufacturing industry they’re known as just-in-time inventory systems, in the retail as quick response programs, and in transportation industry as consignment tracking systems

Just-in-Time (JIT) Manufacturing

§It is viewed as an integrated management system consisting of a number of different management practices dependent on the characteristics of specific plants

§The first principle is elimination of all waste (time ,materials ,labour & equipment)

§The following management practices are focused factory, reduced set-up times, group technology, total productive maintenance, multifunction employees, uniform workloads, IT purchasing  bank an total quality control & quality circles

Quick Response Retailing (QR)

§It is a version of JIT purchasing tailored for retailing

§To reduce the risk of being of out of stock, retailers are implementing QR systems

§It provides for a flexible response to product ordering and lowers costly inventory levels

§QR retailing focuses on market responsiveness while maintaining low levels of stocks

§It creates a closed loop consisting of retailer, vendor, & consumer chain,& as consumers make purchases the vendor orders new deliveries from the retailer through its computer network

Supply Chain Management

§QR and JIT address only part of the overall picture

§Supply Chain Management (SCM) is also called “extending”, which means integrating the internal and external partners on the supply and process chains to get raw materials to the manufacturer and finished products to the consumer

§It includes following functions

§Supplier management: The goal is to reduce the number of suppliers and get them to partners

§Inventory management: The goal is to shorten the order-ship-bill cycle. When a majority of partners are electronically linked, information faxed or mailed

§Distribution management: The goal is to move documents (accurate data) related to shipping

§Channel management: The goal is to quickly disseminate information about changing operational conditions ( technical , product and pricing information) to trading partners

§Payment management: The goal is to link company and the suppliers and distributors so that payments can be sent and received electronically

§Financial management: The goal is to enable global companies to manage their money in various foreign exchange accounts

§Sales force productivity: The goal is to improve the communication flow of information among the sales, customer & production functions

In sum, the supply chain management process increasingly depends on electronic markets

  

Work group Collaboration Applications:

§A internet work  that enables easy and inexpensive connection of various organizational segments

§It is to improve communications and information sharing and to gather and analyze competitive data in real-time

§Videoconferencing, document sharing and multimedia e-mail, are expected to reduce travel and encourage telecommuting

Improves the distribution channel for documents and records to suppliers, collaborators and distributors

CONSUMER-ORIENTED APLLICATIONS

The wide range of applications envisioned for the consumer marketplace can be broadly classified into:

            (i)   Entertainment

            (ii)  Financial Services and Information

            (iii) Essential Services

            (iv) Education and Training

Consumer Life-Style Needs                        Complementary Multimedia Services

           

• Entertainment                                               Movies on demand, Video cataloging,                                                                                   interactive ads, multi-user games,  

                                                                        on-line discussions.

•Financial Services and                                   Home Banking, Financial services,

 Information,                                                   Financial news.

•Essential Services                                           Home Shopping, Electronic Catalogs,    

                                                                        telemedicine, remote diagnostics.    

                                                                                                                                                                                                                                                                 

•Education and Training                                 Interactive education, multi-user                              

                                                                        Games ,video conferencing , on-line

                                                                        databases.

  1. Personal Finance and Home Banking Management

      (i)   Basic Services

      (ii)  Intermediate Services

      (iii) Advanced services

  2. Home Shopping

      (i)  Television-Based Shopping

      (ii) Catalog-Based Shopping

  3. Home Entertainment

      (i)  Size of the Home Entertainment Market

      (ii) Impact of the ome Entertainment on Traditional Industries

  4. Micro transactions of Information

Personal Finance and Home Banking Management

•The newest technologies are direct deposit of payroll, on-line bill payment and telephone transfers

•The technology for paying bills, whether by computer or telephone, is infinitely more sophisticated than anything on the market a few years ago

•In 1980s were the days of “stone age” technology because of technology choices for accessing services were limited

•For home banking, greater demands on consumers and expanding need for information, it’s services are often categorized as basic, intermediate and advanced

Basic services

•These are related to personal finance

•The evolution of ATM machines from live tellers and now to home banking

•The ATM network has with banks and their associations being the routers and the ATM machines being the heterogeneous computers on the network.

•This interoperable network of ATMs has created an interface between customer and bank that changed the competitive dynamics of the industry. See in next figure

•Increased ATM usage and decrease in teller transactions

•The future of home banking lies with PC’s

Intermediate Services

•The problem with home banking in 1980 is, it is expensive service that requires a PC, a modem and special software

•As the equipment becomes less expensive and as bank offers broader services, home banking develop into a comprehensive package that could even include as insurance entertainment

•Consider the computerized on-line bill-payment system

•It never forgets to record a payment and keeps track of user account number, name, amount and the date and we used to instruct with payment instructions. See in Fig;

 Advanced Services

•The goal of advanced series is to offer their on-line customers a complete portfolio of life, home, and auto insurance along with mutual funds, pension plans, home financing, and other financial products

•The Figure explains the range of services that may well be offered by banks in future

•The services range from on-line shopping to real-time financial information from anywhere in the world

•In short, home banking allows consumers to avoid long lines and gives flexibility

Home Shopping

•It is already in wide use.

•This enable a customer to do online shopping

Television-Based Shopping:

•It is launched in 1977 by the Home Shopping Network (HSN).

•It provides a variety of goods ranging from collectibles, clothing, small electronics, housewares, jewelry, and computers.

•When HSN started in Florida in 1977, it mainly sold factory overruns and discontinued items

•It works as, the customer uses her remote control at shop different channels with touch of button. At this time, cable shopping channels are not truly interactive

Catalog-Based Shopping

•In this the customer identifies the various catalogs that fit certain parameters such as safety, price, and quality

•The on-line catalog business consists of brochures , CD-ROM catalogs, and on-line interactive catalogs

•Currently, we are using the electronic brochures

Home Entertainment

•It is another application for e-commerce

•Customer can watch movie, play games, on-screen catalogs, such as TV guide.

•In Home entertainment area, customer is the control over programming

•In Table tells the, What will be required in terms of Television-based technology for this

 telemart to become a reality

Size of the home Entertainment Market:

•Entertainment services are play a major role in e-commerce

•This prediction is underscored by the changing trends in consumer behavior.

•It is shown in Table

Impact of Home entertainment on traditional industries:

•This will have devastating effects on theater business

•Economic issues might allow theaters to maintain an important role in the movie industry

•Today average cable bill is approximately $30 a month

                Industry Estimates of consumer Expenditures

                             

                               1980 ($4.7 bin)       1990  ($31.0 bin)        1993 ($37.8 bin)

Theaters                   49.0%   $2.3             14.5%   $4.5                13.2%   $5.0

Basic cable              35.0%   $1.6             34.5%   $10.7              36.9%   $13.9

Premium cable        16.0%   $0.8             16.5%    $5.1                14.0%   $5.3

Home video               __    __                   33.8%    $10.5              34.8%   $13.2

Pay per view              __    __                   0.7%      $0.2                1.1%     $0.4

Micro-transactions of information

•One change in traditional business forced by the on-line information business is the creation of a new transaction category called small-fee transactions for micro services

•The customer by giving some information away for free and provide information bundles that cover the transaction overhead.

•The growth of small-money transfers could foster a boom in other complementary information services

•The complexity is also increased in micro services when an activity named, re-verification is entered.

•It means checking on the validity of the transaction after it has been approved

Desirable Characteristics of an Electronic marketplace

•Critical mass of Buyers and sellers: To get critical mass, use electronic mechanisms

•Opportunity for independent evaluations and for customer dialogue and discussion: Users not only buy and sell products, they compare notes on who has the best products and whose prices are outrageous

•Negotiation and bargaining: Buyers and sellers need to able to haggle over conditions of mutual satisfaction, money, terms & conditions, delivery dates & evaluation criteria

•New products and services: Electronic marketplace is only support full information about new services

•Seamless interface: The trading is having pieces work together so that information can flow seamlessly

•Resource for disgruntled buyers: It provide for resolving disagreements by returning the product.

Mercantile Process models

•Mercantile processes define interaction models between consumers and merchants for on-line commerce

Mercantile Models From The Consumer's Perspective

(i) Pre-purchase preparation

         (a) The consumer information search process.

         (b) The Organizational search process.

         (c) Consumer search experiences.

        (d) Information brokers & brokerages.

(ii) Purchase consummation.

       (a) Mercantile process using digital cash.

       (b) Mercantile transaction using credit cards.

       (c) Costs of electronic purchasing.

(iii) Post purchase interaction.

Mercantile Models From The Consumer's Perspective

•The pre-purchase preparation phase include search and discovery for a set of products to meet customer requirements

•The purchase consummation phase include mercantile protocols

•The post-purchase interaction phase includes customer service & support

Pre-purchase Preparation

•The purchase is done by the buyers, so consumers can be categorized into 3 types

•Impulsive buyers, who purchase products quickly

•Patient buyers, purchase products after making some comparisons

•Analytical buyers, who do substantial research before making decision to purchase              

Products.

Marketing researches have several types of purchasing:

•Specifically planned purchases

•Generally planned purchases

•Reminder purchase

•Entirely unplanned purchases

The consumer information search process

•Information search is defined as the degree of care, perception,& effort directed toward obtaining data or information related to the decision problem

The Organizational search process

•Organizational search can be viewed as a process through which an organization adapts to such changes in its external environment as new suppliers, products, & services.

Consumer Search Experiences

•The distinction between carrying out a shopping activity “to achieve a goal” (utilitarian) as opposed to doing it because “ u love it” (hedonic).

Information Brokers and Brokerages

•To facilitate better consumer and organizational search, intermediaries called information brokers or brokerages

Information brokerages are needed for 3 reasons: Comparison shopping, reduced search costs, and integration