E-Commerce

Defining E-Commerce
 E-business
 Activitiesa company performs for selling and buying
products and services, using computers and
communication technologies
 E-commerce
 Buying and selling goods and services over the Internet
 Builds on traditional commerce by adding the
flexibility that networks offer and the availability of
the Internet
Defining E-Commerce (cont’d.)
 Business applications that use the Internet:
 Buying and selling products and services
 Collaborating with other companies
 Communicating with business partners
 Gatheringbusiness intelligence on customers and
competitors
 Providing customer service
 Making software updates and patches available
 Offering vendor support
 Publishing and disseminating information
E-Business Opportunities
 At present almost everyone uses the Internet
 Small and large organizations are provided with
great opportunities to complete in the global
market
 Has the ability to transmit and transform business
information and use it to achieve competitive
advantage
 Designed to meet the needs of a business
organization’s customers
Three basic characteristics of information when
combined with internet technologies
1. Reach- refers to the potential number of local and
international customers of a business organization that
can interact with each other through the use of the
Internet. It can also be defined as the number of
categories and products that can be covered in a
consumer interface, this may include catalogues,
websites and so on.
2. Richness-refers to the information that business
organizations can share to their consumers, this may
include detailed information about a certain product,
such as product name, description, price and availability.
Three basic characteristics of information when
combined with internet technologies

3. Affiliation- refers to the effectiveness of the linkages

between organizations. In terms of online partnerships,
the business with more linkages to other organizations
are able to gain more influence and reach. E.g. Google,
Yahoo! and eBay
Risks and Barriers to E-Business Adoption
Strategic risks – wrong decision to invest,
inappropriate approaches and execution
Practical risks – poor customer service
manifested through slow or no connection,
unsecured systems, issues on privacy and data
protection, problems with online orders,
neglected customer emails
The Value Chain and E-Commerce
 Value chain
 Michael Porter
 1985
 Seriesof activities designed to meet business needs
by adding value (or cost) in each phase of the
process
 Identifycost drivers and sources of differentiation
for competitive advantage
 Primary Activities:
• Inbound Logistics: Receiving, storing, and distributing
inputs (e.g., raw materials).
• Operations: Transforming inputs into outputs (e.g.,
manufacturing).
• Outbound Logistics: Collecting, storing, and distributing
finished products to customers.
• Marketing and Sales: Activities that promote and
facilitate the purchase of products or services.
• Service: Activities that enhance or maintain the value of
a product or service after the sale.
 Support Activities:
• Firm Infrastructure: Activities related to the overall
management and administration of the company (e.g.,
accounting, finance).
• Human Resource Management: Activities related to
recruiting, training, and managing employees.
• Technology Development: Activities related to
developing and improving products, processes, and
technologies.
• Procurement: Activities related to purchasing inputs
(e.g., raw materials).
E-Commerce versus Traditional Commerce
 The Internet
 Increases the speed and accuracy of communication between suppliers, distributors,
and customers
 Low cost means companies of any size can participate in value chain integration
 Internet and telecommunication technologies play major role
 No physical store
 Click-and-brick e-commerce
 Mix of traditional and e-commerce
Twitter Helps Businesses to Find Customers
 Twitter can be used by businesses as a promotional tool and as a
way to find sales leads

 Boloco, a burrito restaurant chain, posted a photo of a coupon on

Twitter and invited customers to bring in any image of the coupon --
a photocopy, a printout, or even an image on a mobile phone -- to
get the discount

 The promotion was a big success, given that 900 customers

redeemed the coupon (including by bringing their mobile phones) as
opposed to the usual 350
Advantages and Disadvantages of E-Commerce
 Advantages:
 Betterrelationships with suppliers, customers, business
partners
 Price transparency
 Round the clock and globe operations
 More information on potential customers
 Increasing customer involvement
 Improving customer service
 Increasing flexibility and ease of shopping
Advantages and Disadvantages of E-Commerce
(cont’d.)
Increasing the number of customers
Increasing opportunities for collaboration with
business partners
Increasingreturn on investment because inventory
needs are reduced
Offeringpersonalized services and product
customization
Reducing administrative and transaction costs
Advantages and Disadvantages of E-Commerce
(cont’d.)
 Disadvantages:
Bandwidth capacity problems
Security issues
Accessibility
Acceptance
Features of E-Commerce
1. Ubiquity - this means that the marketable
transaction or activity is accessible at any time,
anywhere in the world.
2. Global Reach and Security – global reach, also
known as worldwide access, is the maximum
number of possible consumers a business can
reach.
3. Universal Standards – refers to a website that can
be operated on a standard platform which follows
identified methods and systems. This employs an
easy-to-use e-commerce website with a simple
design and content.
Features of E-Commerce
4. Richness - this refers to the volume of the content of
the website and the way it is used by consumers.
Ensuring a site’s richness, by providing a combination of
messages and means to improve customer experience,
is essential for businesses. Videos, pictures, texts,
sounds and links can be used to improve customer
experience.
5. Interactivity – refers to the relationship between a
consumer and an e-commerce website, it provides face-
to-face customer meetings when conducting business
transactions. Increased interactivity allows for the
establishment of an emotional connection between
consumers and the business, thus helping build brand
trust and loyalty.
Features of E-Commerce

6. Information Density - this refers to the amount of

products that can fit on a computer screen. There
is no given standard for an e-commerce website’s
information density.
E-Commerce Business Models
 E-commerce companies focus their operations
in different parts of the value chain
 Types:
 Merchant - involves a company purchasing
goods or services to resell them to customers
at a profit, adding a markup to the
cost. Examples include retailers like Best
Buy, Target, and Walmart, who buy products
from manufacturers and sell them directly to
the public.
 Brokerage- connect buyers and sellers without directly
owning or selling goods, charging fees or commissions for
facilitating transactions, common in areas like real estate,
investments, and freight.
 Advertising- involve generating revenue by selling advertising
space or time, with examples including platforms like
YouTube, social media, and search engines, where businesses
pay for exposure to users.
 Mixed- combines elements of different models, like online
and offline retail, or social and business entities, to achieve
diverse goals, and examples include Amazon with its online
and physical stores, Warby Parker with online browsing and in-
store try-ons, and Bank of America with traditional and online
banking.
 Informediary-business model that focuses on
managing and providing information, acting as a
bridge between businesses seeking information
and those who supply it. Examples include travel
comparison sites, online review platforms, or B2B
directories
 Subscription- involve customers paying a
recurring fee for ongoing access to a product or
service, creating a predictable revenue
stream. Examples include streaming services like
Netflix, subscription boxes like Birchbox, and
software-as-a-service (SaaS) like Microsoft Office
365.
Business-to-Consumer E-Commerce
Business-to-Consumer(B2C) E-Commerce
 Companies sell products or services directly to
consumers
 Examples:
Amazon.com
Lazada Philippines
Shopee Philippines
Zalora Philippines
Metrodeal
eBay Philippines
Business-to-Consumer (B2C) E-Commerce
 Originated in e-retail wherein a customer visits a
website and purchases products online
 Reduces transaction costs
 Increases the number of consumers
 Allows consumers to find the most competitive
price of a certain product
 Includes the purchase of both physical and
information goods
 Physical goods – laptops, books, car accessories
 Information goods – e-books, software
A B2C E-Commerce Cycle
 Majoractivities:
Information sharing
Ordering
Payment
Fulfillment
Service and support
Business-to-Business (B2B)E-Commerce
 Businesses provide products or services to other businesses for the
production of goods, business operations, or reselling of products
 A wholesaler selling products to a retailer
 Involves electronic transactions between businesses
 Electronic data interchange (EDI) and electronic funds transfer (EFT)
 Fastest growing segment of e-commerce
 Uses:
 Purchase orders, invoices, inventory status, shipping logistics,
business contracts, and other operations
 Example:
 Walmart, Pinoy Listing, Yalwa
B2B E-Commerce: A Second Look
 B2Bs use these additional technologies
extensively:
 Intranets
 Extranets
 Virtual private networks
 Electronic data interchange (EDI)
 Electronic funds transfer (EFT)
 Lowers production costs and improves
accuracy
 By eliminating many labor-intensive tasks
Major Models of B2B E-Commerce
 Three
major types of B2B e-commerce
models, based on who controls the
marketplace:
Seller
Buyer
Intermediary (third-party)
 Fourth
model called trading partner
agreements
Consumer-to-Consumer(C2C) E-Commerce
 Involves business transactions between users
 Where individuals sell and buy from each other using
online platforms
 Used similarly as the classified advertising section of
a local newspaper of an auction page
 Online classified ads:
Craigslist, Facebook Marketplace, Gumtree
 Online auction sites:
eBay.com
Consumer-to-Business(C2B) E-Commerce
 Involves people selling products or services to businesses
 Examples
• Freelancing Platforms: Websites where individuals offer
their skills (e.g., writing, design, coding) to businesses.
• Crowdsourcing: Businesses solicit ideas or feedback from
consumers, who are then rewarded for their contributions.
• Influencer Marketing: Individuals with large social media
followings promote products or services for businesses.
• Royalty-Free Content Platforms: Consumers sell images,
videos, or other media to businesses.
 Examples of C2B Platforms:
 Upwork (freelancing), Fiverr (freelancing), iStock (royalty-free
images), Upfluence (influencer marketing)
Business-to-Government (B2G) E-Commerce
 Business-to-Government (B2G) – refers to a business
model that sells products and services, or information
to governments and/or government agencies. This
model provides a means for businesses to bid on
government projects or products that are needed for
their organizations,
Ex. LTO with their license cards and plate numbers,
COMELEC with their PCOS machines used during
elections
Government E-Commerce
 E-government applications
 Categories:
 Government-to-citizen (G2C) – used by the government to
approach and communicate with citizens in general. The main
purpose is to reduce the average time needed for fulfilling
citizen’s requests for various government services. Ex. PSA,
LTO
 Government-to-business (G2B)- refers to government agencies
that provide services or information to a business
organization. Ex. Websites that support auctions, as well as
bender and application submissions
Organizational or Intrabusiness E-Commerce
 Involves e-commerce activities that take place
inside an organization
 Can include:
Exchange of goods, services, or information
among employees
Conducting training programs and offering
human resource services
 Supporting activities in Porter’s value chain
Seller-Side Marketplace
 Most popular B2B model
 Sellers who cater to specialized markets come together to
create a common marketplace for buyers
 E-procurement
 Enables employees in an organization to order and
receive supplies and services directly from suppliers
 Can also automate some buying and selling activities
 Major vendors of e-commerce and B2B solutions include I2
Technologies, IBM, Oracle, and SAP
Buyer-Side Marketplace
 Buyer,
or a group of buyers, opens an electronic
marketplace
Invites sellers to bid on announced products or
requests for quotation (RFQs)
 Buyers can:
Manage the procurement process more efficiently
Lower administrative costs
Implement uniform pricing
 Large corporations, such as General Electric or Boeing
Third-Party Exchange Marketplace

 Controlled by a third party

 Marketplacegenerates revenue from the fees charged
for matching buyers and sellers
 Usually active in vertical or horizontal market
 Offers
suppliers a direct channel of communication to
buyers through online storefronts
E-Commerce Security Systems
The following are indispensable conditions for safe e-
payments and/or transactions:
1. Auditability - data should be documented in such a wat
that it can be audited for the real requirements
2. Authenticity – there should be procedures to authenticate
a user before giving him/her access to the required
information
3. Availability – it is a requirement that information must be
available anytime and anywhere, it must be bound by a
time limit
E-Commerce Security Systems
4. Confidentiality – information should be kept and not
accessed by an unauthorized user. It should not be
interrupted during the transmission
5. Encryption – information must be secured through the
encryption and decryption of an authorized user
6. Integrity – information must not be modified during its
transmission over a network
7. non-repudiation - means ensuring that a party cannot
later deny having sent, received, or agreed to a
transaction or message, thus guaranteeing
accountability and authenticity
Mobile and Voice-Based E-Commerce
 Mobile commerce (m-commerce)
 Based on Wireless Application Protocol (WAP)
 Using handheld devices, such as smart phones or PDAs, to
conduct business transactions
 Supporting technologies:
 Wireless wide-area networks and 5G networks
 Short-range wireless communication technologies
 Examples:
 iPhone apps
 Internet Explorer Mobile
 Google mobile
The following are the benefits of mobile technologies:
1. Ubiquity – allow user access anywhere
2. Reachability – users are easy to reach
3. Convenience – there is no need for users to have fixed-
lined connections
4. Security – ensure that user information is free from the
risk of loss or theft through authentication
5. Privacy – the degree of privacy is higher compared to a
desktop pc
6. Availability – users can freely access them at any time of
the day
Top M-Commerce Applications in the
Philippines
1. Lazada 6. BeautyMnl
2. Shopee 7. eBay
3. Zalora 8. Sephora
4. Amazon 9. Alibaba
5. AliExpress 10.Althea
Mobile and Voice-Based E-Commerce
 Voice-based e-commerce
Rely on voice recognition and text-to-speech
technologies
Can conduct business using e-wallets
Security features
Call recognition, voice recognition, fixed
shipping address
E-Commerce Supporting Technologies

 Electronicpayment systems
 Web marketing
 Search engine optimization
Electronic Payment Systems
 Electronic payment
Money or scrip that is exchanged only electronically
 Payment cards:
Credit, debit, charge, and smart cards
 Smart cards
Credit card sized
Containan embedded microprocessor chip storing
important financial and personal information
Electronic Payment Systems
 Other types of payments:
E-cash
E-check
E-wallets
PayPal
Micropayments
Web Marketing
 Uses the Web and its supporting technologies to
promote goods and services
 Terms:
 Ad impression
 Banner ads
 Click
 Cost per thousand (CPM)
 Cost per click (CPC)
 Click-through rate (CTR)
 Cookie
Web Marketing
Hit
Meta tag
Page view (PV)
Pop-up ads
Pop-under ads
Splash screen
Spot leasing
Search Engine Optimization
 Method for improving the volume or quality of traffic to a
Web site
 Some companies offer SEO service
 Editinga site’s contents and HTML code to increase its
relevance to specific keywords
 Recommendations for optimizing a Web site:
 Keywords
 Page title
 Inbound links
Differences Between E-Business and
E-Commerce
Basis for Comparison E-Commerce E-Business
Definition Trading of merchandise Running a business the
over the Internet internet
Focus on monetary Yes No
transactions
Type of transactions Commercial transactions Business transactions
carried out
Requirements Website or mobile app Website, customer
relationship
management, enterprise
resource planning,
supply chain
management
Required network Internet Internet, intranet, and
extranet
Differences between E-Commerce and
M-Commerce
Web World(E-Commerce) Mobile World(M-Commerce)

Internet access through a M-Commerce is done

laptop or desktop is through wireless
necessary for e-commerce connectivity using mobile
devices
The buying and selling of The buying and selling of
products and services are products and services are
done with the use of the done with the use of mobile
Internet phones that have access to
the Internet or cellular data
It requires devices such as It requires devices such as
computers and laptops. cellphones, iPads, and
tablets
Differences between E-Commerce and
M-Commerce
Web World(E-Commerce) Mobile World(M-Commerce)

The platforms used are The platforms used are

webstores. webstores(mobile
version/web app), hybrid
app, and native app.
Mobility is limited as you As mobile devices are easy
cannot carry computers to carry, it offers more
everywhere. Even the use of mobility, accessibility, and
laptops, one needs enough convenience.
space, and although it is
portable, it is not as light as
mobile phones
Differences between E-Commerce and M-Commerce
Web World(E-Commerce) Mobile World(M-Commerce)
It is less costly as the store It is costly as a mobile app is
is created on the web and required, and cellular data
can be accessed using the or Internet use is necessary.
Internet.
As it is applicable to a Mobile devices are usually
broader area, customization owned by an individual, so
for each user is not possible. anyone can use the
customized app to fulfill
their business or personal
needs.
Its interface is more It promotes easy use
complicated and more because all the functions
functions are available. are simplified.
Guidelines and Laws Governing E-
Commerce
1. Taxes– every state/country has different rules
and laws regarding taxes. Therefore, conducting
research and understanding your target market
are necessary to avoid problems about taxation.
2. Trademarks, Patents and Copyrights
• Trademark – it is a distinguishing word, phrase,
symbol, and/or design that identifies the
uniqueness of a product or service of one party
from the others.
Guidelines and Laws Governing E-
Commerce
2. Trademarks, Patents and Copyrights
• Patent – a government authority or license
conferring a right or title for a set period,
especially the sole right to exclude others from
making, using, or selling an invention.
• Copyright – it protects the authorship, such as
writings, music and works of art, that have
been tangibly expressed.
Guidelines and Laws Governing E-
Commerce
3. Shipping Restrictions
The following are products typically restricted
for shipping:
a. Air bags
b. Animals
c. Perishable materials
d. Hazardous materials
4. Inventory – certain rules and prohibitions that
align with lease, deed, or zoning codes when it
comes to stock inventory for businesses.
Guidelines and Laws Governing E-
Commerce
5. Business Restrictions - Different types of
insurance exist for small businesses such as
general, product, professional and commercial
liability insurances and home-based insurance.
The insurance depends on the location and
nature of business.
6. Licenses and Permits – A license is needed to sell
products or services. Licenses are dependent on
the location of a business and re distributed by a
local licensing department.
Guidelines and Laws Governing E-
Commerce
7. Payment Card Industry Compliance – PCI
compliance serves as protection for online
businesses, especially software-as-a-
service(SaaS) e-commerce platforms, from
problems such as data theft.
Being PCI compliant also means having to avoid
the storage of oral and written information
regarding purchases.
Philippine Laws and Legal Requirements
Regarding the Security of Customer
Information

1. Republic Act 8792 –Electronic Commerce Act of 2000

This covers the mandate of the Phil. Government in
terms of executing online transactions locally or
internationally.
2. Republic Act 10173 – Data Privacy Act of 2012
This prohibits the communication and sharing of
written, electronic, an d recorded information by an
individual to another.
Philippine Laws and Legal Requirements Regarding
the Security of Customer Information
3. Consumer Protection Regulation – Transactions through E-
Commerce
The DTI with the participation of other government agencies,
issued a consumer protection regulation that provides protection
to consumers when buying and selling products through the use
of e-commerce.
4. Tax Guidelines for E-Commerce Transactions in the Philippines
The BIR issued on Aug.5, 2013 a Revenue Memorandum Circular
No. 55-2013, Reiterating Taxpayer’s Obligations in Relation to
Online Business Transactions. The main purpose of this circular
is to remind individuals and business organizations to handle
sales and taxes properly when conducting online transactions.
E-Commerce Websites
1. Amazon – an American e-commerce website that gives
users and opportunity to buy products online worldwide.
E-Commerce Websites
2. eBay – an American e-commerce website that provides
services to consumers such as auctions, online
payments, and online shopping
E-Commerce Websites
3. Alibaba – a Chinese company that specializes in retail,
the Internet, and technology.
M-Commerce
1. Mobile Vouchers

Purchasing of a gift voucher using a

mobile app
M-Commerce
2. eToro Mobile App – it is a platform that can be used to
invest in stocks or trading

eToro mobile app for investment