Electronic Commerce

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CORPORATE PURCHASING SEGMENTS

Most attention is given to purchasing of materials since most money is spent on this sector. Purchasing applications is usually divided into three segments:

- Purchasing of Direct Materials – searching out reliable sources of supply, negotiating price, quality, and delivery performance

- Electronic Data Interchange (EDI)– direct computer-to-computer transfer of transaction information contained in standard business documents.

- Three Criteria for it to be considered to be considered as EDI:

- Computer-to-Computer exchange

- Standard business documents

- Standard formats

- Value Added Network – make it easier for trading partners to establish communication link with each other

- Virtual Private Network – uses software to establish a secure channel on the Internet for transmitting data.

- Purchasing of Indirect Materials (MRO)

- Purchasing of Services

NEXT-GENERATION SOLUTIONS:

- eXtensible Markup Language (XML) – coding language for the Web which lets computers interpret the meaning of information in Web documents

- Approaches on B2B E-commerce:

- ebXML – designed to permit enterprises of any size and in any geographical location to conduct business over the Internet.

- Web Services – software applications which talk to other software applications over the Internet.

B2B MARKETPLACES - internet-based services which bring together buyers and sellers.

- Reverse Auction – process in which a buyer posts its interest in buying a certain quantity of items and sellers compete for the business by lowering their bids.

INTRANETS AND EXTRANETS

- Intranet – internal organizational Internet which is guarded against outside access by a firewall.

- Extranet – an intranet which allows the access of certain outsiders such as customers and suppliers

- Customer Relationship Management (CRM) systems – use information about customers to gain insights into their needs, wants, and behaviors to attain better service.

THE ROLE OF E-GOVERNMENT

E-Government

- the application of e-commerce technologies in governmental agencies in purchasing and payments

- creates a customer oriented portals with easy access to find services and information with convenience.

Application of E-commerce technologies in the government:

- Biometrics (access to secured areas)

- Face recognition technology (detecting persons who might present security threat)

Some activities in the E-government space in using the internet that provides better services and information to citizens:

- If you need a copy of a vital record (Birth certificate, marriage license, etc.)

- Acquiring permits and licenses

- Paying taxes

- Filing an online complaint

E-Government in the Philippines is envisioned to create “a digitally empowered and integrated government that provides responsive and transparent online citizen-centered services for a globally competitive Filipino nation.” (Republic of the Philippines, Department of Information and Communications Technology)

The government is slowly changing through E-government initiatives, with creative application of the Internet, to provide better governmental services and information to citizens.

Digital Divide

- issue that the E-government must deal

- access to internet technologies is tilted in favor of citizens at the higher ends of the income scale. Thus, governments must devise solutions to ensure that citizens have access to e-government services, especially those in lower income groups

Example: ATMs as means to distribute welfare payments or using electronic direct deposits to checking accounts instead of the traditional way of sending checks through mail; however, keep in mind that many welfare recipients do not have bank accounts.

E-COMMERCE PAYMENT SYSTEMS

Financial Electronic Data Interchange (FEDI)

- use of EDI for payments and has been available for Business to Business payments (B2B)

- has not attained widespread acceptance not because of technical reasons but due to the reluctance of people, especially corporate treasurers to change their business processes and employ it.

Credit Cards

- most common method of payment for e-commerce transactions, particularly in Business to Consumer (B2C) space

Limitations of Credit Cards:

- Not suitable for small amounts and the lack of widespread use of credit cards in countries like China and India hurdles the B2C companies

Smart Cards

- A proposed alternative but has not achieved a widespread acceptance

- Plastic cards the size of a credit card that contain an embedded chip on which digital information can be stored

Stored Value Card

- A smart card with a monetary stored digital information

Example: Mondex – answers the micropayments issue of a credit card, making it possible to purchase low-value items on the internet

Financial Cybermediaries

- Internet-based companies