E-commerce: Mechanisms, Infrastructure, AND Tools
Learning Objectives
 Describe the major electronic commerce (EC) activities
and processes and the mechanisms that support them.
 Define e-marketplaces and list their components.
 Describe electronic catalogs, search engines, and
shopping carts.
 Describe the major types of auctions and list their
characteristics.
 Discuss benefits and limitations of e-auctions.
 List the major Web 2.0 tools and their use in EC.
 Understand virtual worlds. Knowledge Management and EGovernment
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The Ecommerce models mentioned in chapter
one are enabled by
different mechanisms. These mechanisms are as follows:
1. Electronic Markets
2. Storefront, Malls, Portals
3. E-catalogs, search engines, shopping carts, directories, e-maps.
4. E- auctions
5. Web 2.0 tools, social network services
6. Virtual Worlds
Each mechanism will be discussed in more detail throughout this chapter.
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1- Electronic Markets
Markets have three main functions.
1. Matching buyers and sellers
2. Facilitating the exchange of goods and services and payments.
3. Providing an institutional infrastructure, such as a legal system.
An e-marketplace is an online (virtual) market, in which sellers and buyers
meet and conduct different types of transactions such as exchange goods
and services.
An e-marketplace also called e-market, virtual market, or market-space.
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The major components and players in a market-space are:
1. Customers
2. Sellers
3. Products and Services (can be digital)
4. Infrastructure (electronic networks, hardware, software…)
5. Front end:
The e-sellers business process in which customers interact.
1. Back end:
The activities that support online order fulfillment, inventory
management and more..
1. Intermediaries:
A third party that operates between sellers and buyers.
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Re-intermediation: The process whereby intermediaries (either new
ones or those that had been dis-intermediated) take on new
intermediary roles
Intermediaries: Disintermediation and Re-intermediation
Disintermediation: The removal of organizations or business process
layers responsible for certain intermediary steps in a given supply chain
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Two major types of online intermediaries are:
1. Brokers: is a person or company that facilitates transactions
between buyers and sellers. Example: virtual mall, matching
services.
2. Informediaries: electronic intermediaries that provide and/or control
information flow in cyberspace, often aggregating information and
selling it to others.
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2 - Customer Shopping Mechanisms: Storefront, Malls,
Portals
Several kinds of interactions exist among sellers, buyers and emarketplaces. Below are the main three:

Webstore (storefront): A single company’s website where products
or services are sold and usually has an online shopping cart. Many
webstores target a specific industry and find their own unique corner
of the market.

Electronic Malls: An online shopping center where many online
stores are located.

Web (Information) Portal: A single point of access, through a web
browser, to critical business information located inside and outside (via
Internet) an organization. Example: Yahoo.
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3-
Merchant
Solutions:
E-catalogs,
Search
Engines,
Shopping Carts

E-Catalogs: The presentation of product information in an electronic
form.
E-catalogs are the backbone of most e-selling sites.
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
Search Engines
Types of EC Searches:
There are three major types:
1. Internet/Web search – This is the most popular search that involves any
documents on the Web.
2. Enterprise Search – The practice of identifying and enabling specific
content across the enterprise to be indexed search and displayed to
authorized users.
3. Desktop Search - Search tools that search the contents of a user’s or
organizations computer files.
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Each search method discussed above is accomplished through the use of a
search engine; a computer program that can access databases of Internet
sources, search for specific information or key words and report the results.

Shopping Cart (Electronic shopping cart): is an order processing
technology that allows customers to accumulate items they wish to
buy while they continue to shop.
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4- E- auctions
An auction is a market mechanism that uses a
competitive
process
in
which
a
seller
solicits
consecutive bids from buyers (forward auctions) or a
buyer solicits bids from sellers (backward auctions);
prices are determined dynamically by the bids.
One major characteristic of auctions is they are based
on:
Dynamic pricing - Prices that change based on supply
and demand relationships at any given time.
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Limitations of Traditional Offline Auctions
-
They last only a few minutes or seconds, this rapid
process may give potential buyers little time to make a
decision.
-
Bidders may have difficulty in learning about auctions
and cannot compare what is offered at each location.
-
Bidders must be physically present at the auction site.
-
Sellers have to move goods to the auction site.
-
Commissions are fairly high because a physical location
must be rented.
E- auctions are auctions conducted online. Example E-Bay
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Types of Auctions
-
One Buyer, One Seller
o based on negotiation or bartering
-
One Seller, Many Potential Buyers
o Forward auction
-
One Buyer, Many Potential Sellers
o Two popular types of auctions in which there is
one buyer and many potential sellers are:
 Reverse auction (bidding
or tendering
system).
 Name-your-own-price model.
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Benefits of E-auctions
-
Benefits to Sellers
 Increased revenues
 Opportunity to bargain
 Improved customer relationship and loyalty
-
Benefits to Buyers
 Opportunity to find unique items
 Entertainment
 Convenience
Limitations of E-Auctions
-
Minimal security
-
Possibility of fraud: because the buyer cannot see the item, the buyer
may get defective or false products.
-
Limited Participation
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5- Web 2.0 tools, Social Network Tools
Social Software is a software product that allows users to
interact and share data, this software has become
very
popular with websites like Facebook, YouTube and Amazon.
Blogging
The Internet offers the opportunity for individuals to publish
on the web using a technology known as blogging.
A blog is a personal website or part of a website open to the
public, in which the owner expresses his or her feelings or
opinions.
A vlog is a blog with video content and Micro-blogging is a
form of blogging that allows user to write messages and
publish them, either to be viewed by anyone or a restricted
group that can be chosen by the user, example Twitter
accounts.
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A wiki (wiki-log) is a blog that allows everyone to
participate as a peer; anyone may add, delete or
change content.
A virtual community is a group of people with similar interests who interact with
one another using the Internet. There are many types of virtual communities that
can be classified their purpose and what the facilitate. The most popular type of
virtual community is social networks.
One type of social networks is business – orientated social networks, which
is a social network whose major interest is business topics. Members are
professional people. Such networks are used mostly for creating contacts,
providing requirement, and enlisting members’ support for problem solving and
knowledge sharing. Example: LinkedIn.
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A virtual world is a user – defined world in which
people can interact, play and do business. The most
publicized virtual world is Second Life. In a virtual
world you can be anyone you want.
Avatars are animated computer characters that
exhibit humanlike movements and behaviors.
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7- E-Government
E-government is an ecommerce model in which a government entity buys or
provides goods, services, or information to business or individual citizens.
-
Government to Citizens (G2C): is an e-government category that includes all
the
interactions
between
a
government
and
its
citizens.
Example:
www.bahrain.bh . Two popular examples of G2C is:
a. Electronic Voting: The first country to use full electronic voting was Brazil.
b. Electronic Benefits Transfer: Example in Bahrain the meat subsidy.
-
Government to Businesses (G2B):
is an e-government category that
includes interactions between government and businesses. Two key G2B
areas are:
a. Government E-Procurement: When government purchase materials from
suppliers.
b. E-Auctions: Government auctions surpluses of equipment’s and goods.
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-
Government to Government (G2G):
a category that consists of EC
activities between units of governments.
M-Government: The wireless implementation of e-government mostly to
citizens but also to businesses.
The benefits of M-Government
-
Cost Reduction
-
Increased efficiency
-
Transformation/modernization of public sector organizations.
-
Added convenience and flexibility for users
-
Better services to the citizens
-
Ability to reach a larger number of people through mobile devices.
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8- Knowledge Management (KM)
Knowledge Management is the process of capturing or creating knowledge,
storing it, updating it constantly, disseminating it and using it whenever
necessary.
Organizational knowledge is embedded in the following resources:
a. Human capital –includes employee knowledge, capabilities and creativity.
b. Structured capital
- includes organizational structure and culture,
processes.
c. Customer and partner capital – includes the relationship between
organizations and their customers and other partners.
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Organizational knowledge must be properly managed, and this is the major
purpose of KM.
a. Create Knowledge
b. Capture Knowledge
c. Refine (improve) knowledge
d. Store Knowledge
e. Manage Knowledge
f. Disseminate (distribute) Knowledge
Knowledge is of little value if it is not updated and shared. The ability to
share knowledge decreases its cost per user and increases its effectiveness
for greater competitive advantage.
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