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Electronic Commerce
Information Page

This Document contains the following sections:

Background on:

Electronic Commerce

Electronic Commerce is the use of the Internet (and its World Wide Web) as a tool in facilitating interchange of goods and services by both expanding market areas, providing a more efficient brokerage service (bringing buyers and sellers together), and reducing transaction costs. Electronic Data Interchange (the automatic computer to computer exchange of data) is a technology that helps facilitate electronic commerce and reduce transaction costs.  The success an organization has in developing programs of electronic commerce depends largely on how the implementation influences two basic factors:

A successful electronic commerce implementation decreases cost and increases value. How a business approaches the cost and value issue will depend on the organizations focus. 

Electronic commerce is approaching the point where it is becoming integral in the business world. Using Internets, Intranets and Extranets, electronic commerce can be thought of in several different ways.

1. As a new channel of distribution (Internet Shopping - End-User-to-Business Electronic Commerce)
2. As a way of automating backoffice operations involved in the transactions of business (On-Line Transaction Processing)
3. As a information dissemination tool that can be used by business partners to exchange information (Business-to-Business Electronic Commerce)
4. As a way to analyze supply chains and react quickly (Data Warehousing and On-Line Analytical Processing)

1. Electronic Data Interchange (EDI)

   data formatting standards (ANSI X12) that permit the inter--company computer--to--computer communication of standard business transactions in a way that permits the receiver to automatically perform the intended transaction.

2. Open Buying on the Internet (OBI)

   an Internet based protocol developed in 1997 that provides companies with a framework through which they can buy and sell goods with each other, using a set of Internet based protocols and technologies.  OBI is an extension of EDI, designed for high volume, low unit price transactions across a public network. 

3. Automated Transaction Processing System (TPS)

   usually consisting of a Client/Server or other form of distributed processing system using a Bar-Code Systems with scanner and bar code labels, (usually a block of alternating thick and thin bars) printed on packages. Bar Code system are used in retail sales as a part of Point of Sale (POS) terminals. Transaction Services Monitors may be used by Client/Server based TPS to guarantee multiple operations will succeed; otherwise changes are rolled back to ensure data integrity.
   

4. Communications Network

   traditionally operated by a Value Added Networks (VAN), but internet based EDI and OBI are becoming common (see RFC 1767 MIME Encapsulation of EDI Objects.)
   

5. Security and Authentication

   There are technical and procedural aspects to the problems involved in assuring the validity of transactions, transfer funds, initiate contracts, etc. With EDI security and authentication tend to be managed by the Value Added Reseller managing the EDI network; with OBI security and authentication are managed by such Internet protocols as Secure Electronic Transaction (SET) and Secure Socket Layer (SSL).

6. Distribution Requirements Planning

Go to the Nova Information Systems (a provider of credit and debit cards) web page for an explanation of How Electronic Commerce Works.

An effect of Electronic Commerce and EDI is the integration effort is that business activities are conducted on a real-time basis that may yield enhancements to the organization's competitive position through an increased responsiveness to customer needs.   At a minimum, the use of l  electronic mail will initiate changes in the organization and its culture -- the use of immediate communication without the social context cues traditionally used in face-to-face communication necessitates the use of a new electronic etiquette.

Georgia Tech's Graphics, Visualization and Usability Centre conducts annual user surveys that can be used to identify trends among users of the World Wide Web.

Electronic Commerce & Marketing

Direct Marketing is the selling to specific customers through the mail or other forms of communication. The success of direct marketing is determined largely by how well the program decreases the cost of distributing finished goods to the customer and increases the value or service received by the customer.

Electronic commerce has greatly effected commerce in the following ways:

Transaction Effect

Communication Effect

The Internet and its' World Wide Web, as depository of information and an inexpensive bulletin board and message delivery system can efficiently connect buyers and sellers. Increased value may be achieved in that the Internet may allow customers to easily evaluate a large number of vendors, making the purchase decision not just on the best price, but also in independent comments from other users. Reduced costs by allowing the customer, in effect, to post a purchase order and, with the help of intelligent search agents, will obtain a large number of purchase choices based on specific pre-selected criteria. The effect on advertising at the consumer level may be significant, reducing the benefit of a vendor flooding a market with advertising and promotions.

It is estimated that distribution expenses comprise between 50% and 80% of the cost of consumer products. Electronic commerce can change distribution patterns by shrinking existing distribution chains through the reduction of levels and numbers of distribution channels. Reduced transaction costs may be achieved through a reduced in the number of distribution channels. Consumers may purchase directly from the manufacturer, or may use a 'network' that uses more cost-efficient intermediaries. If electronic commerce gained 20% of the consumer retail market, this could affect significantly the demand for shopping centre space.

The point and click information gathering nature of the World Wide Web will make is easier for synergistic virtual company alliances to be created. For example: airline reservation also connect to hotel booking reservation systems.

Electronic Commerce and Uniform Commercial Code

A subtle, but far reaching effect of the implementation of Electronic Commerce in an organization, is its effects on the internal systems of the organization and its effects on the business relationships between its trading partners. See the web page (www.busn.ucok.edu/tips/edi/edi_law.htm) for a discussion of the implementation of EDI has important consequences with regards to the legal relationship between buyer and seller.

Index of Other Pages and Supplemental Materials on:

Electronic Commerce

Reference Web Sites:

Sources: