UNIT NAME:E-COMMERCE

UNIT CODE: BIT 4204

WELCOME TO LECTURE
LECTURER:BONIFACE MWANGI W1 (TOPIC 1& 2)

ACTIVITIES: LECTURES;DISCUSSION
Introduction to E-commerce
Terminologies
 Electronic Commerce-consists of the buying and selling of products or services over
electronic systems such as the Internet and other computer networks
 Electronic business- Its the application of information and communication technologies
(ICT) in support of all the activities of business. Commerce constitutes the exchange of
products and services between businesses, groups and individuals and can be seen as
one of the essential activities of any business.
 Brick and mortar businesses – They are companies that have a physical presence — a
physical store — and offer face-to-face consumer experiences
 Pure play is an organization that originated and does business purely through the
Internet; they have no physical store (brick and mortar) where customers can shop.
Examples of large pure play companies include Amazon.com
 Click And Mortar - A type of business model that includes both online and offline
operations, which typically include a website and a physical store. A click-and-mortar
company can offer customers the benefits of fast, online transactions or traditional, face
to face service.
E-commerce Terminologies

Internet - The Internet is a global system of interconnected computer networks that use
the standard Internet Protocol Suite (TCP/IP) to serve billions of users worldwide. It is
a network of networks that consists of millions of private, public, academic, business,
and government networks, of local to global scope, that are linked by a broad array of
electronic, wireless and optical networking technologies.
Intranet-- An intranet is a private computer network that uses Internet Protocol
technology to securely share any part of an organization's information or network
operating system within that organization. Sometimes the term refers only to the
organization's internal website, but may be a more extensive part of the organization's
information technology infrastructure.
Extranet - An extranet is a computer network that allows controlled access from the
outside, for specific business or educational purposes. An extranet can be viewed as an
extension of a company's intranet that is extended to users outside the company,
usually partners, vendors, and suppliers.
 Classification of E-Business Transactions
 Business-to-business (B2B) describes commerce transactions between businesses, such as
between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
 Business-to-consumer (B2C, sometimes also called Business-to-Customer) describes
activities of businesses serving end consumers with products and/or services
 Business-to-business to consumer (B2B2C)-E-Commerce model in which a business
provides some product or service to a client business
 that maintains its own customers.
 Consumer-to-business (C2B)-E-commerce model in which individuals use the internet to
sell products or services to organizations or individuals who seek sellers to bid on
products or services they need.
 Consumer-to-consumer (C2)-E-commerce model in which consumers sell directly to other
consumers.
 Mobile-commerce (M-Commerce)-E-Commerce transactions and activities conducted in a
wireless environment
 Revenue Models
 A revenue model outlines how the organization or the EC project will generate revenue
Sources of revenue:
 Sales
 Transaction fees.
 Subscription fees
 Advertising fees. Companies charge others for allowing them to place a banner on their sites.
 Affiliate fees. Companies receive commissions for referring customers to others Websites.
 Other revenue sources. Some companies allow people to play games for a fee or to watch a sports competition in
real time for a fee. Another revenue source is licensing fees (eg., datadirect-technologies.com).
 Benefits of E-commerce to Organizations
 Global Reach:
Access to international markets: E-commerce allows organizations to reach customers globally
without the limitations of geographical boundaries, expanding their customer base significantly.
24/7 availability: Unlike physical stores, online platforms operate 24/7, enabling businesses
to make sales and provide customer service at all times.
 Lower Operational Costs:
Reduced overhead costs: Online businesses save on costs associated with physical retail spaces
(rent, utilities, staff, etc.).
Automation and efficiency: E-commerce platforms allow for automation of
inventory management, order processing, and customer support, reducing human
resource costs and errors.
 Personalization and Targeted Marketing:
Data-driven insights: E-commerce platforms allow businesses to collect data on customer behavior,
preferences, and buying patterns. This enables personalized marketing strategies and improved
customer experiences.
Tailored advertising: Organizations can use customer data to create targeted marketing campaigns,
offering personalized recommendations and promotions.
Benefits of E-commerce to Organizations
 Scalability
Easier expansion: E-commerce businesses can easily scale by increasing inventory, adding
new product lines, or expanding to new markets with fewer logistical challenges compared
to physical expansion.
Flexible infrastructure: Cloud-based e-commerce solutions offer businesses the ability to
scale their IT infrastructure quickly as demand grows.

 Faster Transactions
Quick and efficient: The buying process is streamlined, allowing customers to search,
compare, and purchase products quickly, resulting in faster sales cycles for organizations.
Multiple payment options: E-commerce platforms offer various payment methods,
increasing customer convenience and reducing abandoned carts.
 Benefits of E-commerce to Organizations
 Enhanced Brand Visibility:
Digital marketing integration: E-commerce allows businesses to integrate with social media,
search engines, and other digital marketing channels, increasing brand exposure and driving
traffic to their online stores.
SEO benefits: Well-optimized e-commerce sites can rank higher on search engines, attracting
organic traffic.

 Sustainability and Reduced Carbon Footprint

Eco-friendly operations: Online sales reduce the need for physical stores and reduce energy
consumption, contributing to more sustainable business practices. Some e-commerce models,
such as direct shipping from manufacturers, can also reduce packaging waste.
 Benefits to Consumers
 Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year
round, from almost any location.
 Electronic commerce frequently provides customers with less expensive products and services by
allowing them to shop in many places and conduct quick comparisons.
 EC allows quick delivery especially with digitized products.
 Customers can receive relevant and detailed information in seconds, rather than days or weeks.
 Electronic commerce makes it possible to participate in virtual auctions.
 Electronic commerce allows customers to interact with other customers in electronic communities
and exchange ideas as well as compare experiences.
 Electronic commerce facilitates competition, which results in substantial discounts.
 Benefits to Society

 Electronic commerce enables more individuals to work at home and to do less

traveling for shopping, resulting in less traffic on the roads and lower air pollution.
 Electronic commerce allows some merchandise to be sold at lower prices, so less
affluent people can buy more and increase their standard of living.
 Electronic commerce enables people in Third World countries and rural areas to
enjoy products and services that otherwise are not available to them. This includes
opportunities to learn professions and earn college degrees.
 Electronic commerce facilitates delivery of public services, such as health care,
education, and distribution of government social services at a reduced cost and/or
improved quality. Health-care services, for example, can reach patients in rural areas.
 limitations of e-commerce

 Limited Physical Interaction-

 Logistical and Shipping Challenges-Shipping delays and costs, Returns
and exchanges
 Security and Privacy Concerns-Payment fraud, Cyber security risks
 Technical Issues-Website downtime, Platform maintenance
 High Competition-Market saturation, Price wars
 Dependence on Technology-Internet access
 Limited Customer Service-Lack of human interaction, Difficulties with
immediate resolution
 Trust and Credibility Issues-Scams and fraudulent websites, Building
customer loyalty
 Factors Affecting E-commerce Adoption in Kenya

 Internet Penetration and Digital Infrastructure-Access & cost of the internet

 Mobile Payment Systems-Integration with e-commerce
 Trust and Security Concerns-Cyber security
 Logistics and Delivery Infrastructure-Poor logistics &High delivery costs
 Competition from Informal Markets
 Awareness and Marketing
 Product Availability-High import duties

Discussion: History of E-commerce

 ENABLING TECHNOLOGIES AND INFRASTRUCTURE (TOPIC 2)

Learning Objectives:
• i. Explain the technologies that facilitate E-commerce
• ii. Explain the concept of the Client server technologies
• iii. Explain the concept of the Intranets and the extranets
• iv. Explain the different connecting technologies for networks such as
broadband.
 Technologies that facilitate E-commerce

 The Internet and the World Wide Web

 Electronic Mail
 FTP (File Transfer Protocol)
 Telnet: logging in to Remote Network Computers
 Web Conferencing
 Internet Chat
Requirements for connecting to the internet
 Internet service provider
 telecommunication line
 Modem
 Web browser
Client –server technologies
The client–server model of computing is a distributed application structure that
partitions tasks or workloads between the providers of a resource or service,
called servers, and service requesters, called clients
Intranet and extranets
Types of content found on intranets:
 administrative - calendars, emergency procedures, meeting room bookings, procedure manuals and
membership of internal committees and groups
 corporate - business plans, client/customer lists, document templates, branding guidelines, mission
statements, press coverage and staff newsletters
 financial - annual reports and organizational performance
 IT - virus alerts, tips on dealing with problems with hardware, software and networks, policies on
corporate use of email and internet access and a list of online training courses and support
 marketing - competitive intelligence with links to competitor websites, corporate brochures, latest
marketing initiatives, press releases, presentations
 human resources - appraisal procedures and schedules, employee policies, expenses forms and
annual leave requests, staff discount schemes, new vacancies
 individual projects - current project details, team contact information, project management
information, project documents, time and expense reporting
 external information resources - route planning and mapping sites, industry organizations, research
sites and search engines
Role of the extranet in e-
commerce
 An extranet plays a crucial role in e-commerce by facilitating secure and efficient
communication and collaboration between a business and its external partners, such as
suppliers, customers, and other stakeholders. It is a private network that allows
controlled access to specific business information and services for authorized external
users.
 Extranets offer a cheap and efficient way for businesses to connect with their trading
partners. It also means that your business partners and suppliers can access the
information they need 24 hours a day.
 The ability of the extranet to automate the trading tasks between you and your trading
partners can lead to enhanced business relationships and help to integrate your
business firmly within their supply chain.
 Connecting technologies for networks

Guided Media: These are those that provide a conduit from one device to another that include
twisted pair, coaxial cable and fiber-optic cable. A signal traveling along any of these media is
directed and is contained by the physical limits of the medium. Twisted-pair and coaxial cable
use metallic that accept and transport signals in the form of electrical current. Optical fiber is a
glass or plastic cable that accepts and transports signals in the form of
light.
Unguided Media:
This is the wireless media that transport electromagnetic waves without using a physical
conductor. Signals are broadcast either through air. This is done through radio communication,
satellite communication and cellular telephony.
Broadband: refers to high-speed internet access that is always on and faster than traditional
dial-up connections. It enables the transmission of data, voice, and video over various types of
networks, making it the foundation for modern internet services. Broadband technology plays a
crucial role in enabling high-speed communication for businesses, households, and institutions,
supporting activities such as video streaming, online gaming, video conferencing, and e-
commerce.
Eg. Wireless and Satellite broadband