Electronic Commerce Systems

Question 1

What is electronic commerce?

Answer 1

E-commerce involves the sale or delivery of goods or services by means of using information and communication technology (ICT). An example of ICT is the Internet.

Question 2

What are the 4 types of E-commerce in business?

Answer 2

1. Direct consumer marketing
2. Online delivery of digital products
3. Electronic funds transfer (Internet Banking)
4. Electronic transfer of stocks

Question 3

What are the 5 main types of E-Commerce?

Answer 3

1. Government services to the public and businesses.
2. B-2-B (Business to Business) eg. Alibaba
3. B-2-C (Business to Consumer) eg. Takealot.com
4. C-2-B (Consumer to Business) eg. Fiver
5. C-2-C (Consumer to Consumer) eg. Gumtree, Facebook Market Place

Question 4

Define the advantages of E-commerce:

Answer 4

• Allows smaller players to compete with established players all around the world.
• Allows a business to not be geographically bound and can transact with people all over the world.
• Lower costs associated with not having a brick and mortar location, which means that products can be offered at a better price and profitability can be improved.
• It can be a great extension of a physical store to new markets.
• More convenient for customers to shop online.
• Can offer a wide range of items online without having all the stock on hand or never keeping any stock. The supplier sends stock directly to the consumer (Drop Shipping).

Question 5

Disadvantages of E-commerce:

Answer 5

• Some customers still want to look at and feel the product before purchasing.
• Delivery costs could lead to one being uncompetitive.
• Delay in the customer receiving their good vs in store purchases which is immediate.

Question 6

What is E-business?

Answer 6

E-business differs from E-commerce is that E-business involves using the internet and online technologies to create operating efficiencies therefore increasing value to customers and values.

E-business is more internally focused. eg: integrating sales department with manufacturing department so that as soon as an order is placed, in real time, the manufacturing department has the information on the sale.

Question 7

Describe the three types of networks:

Answer 7

Networks can be categorized by their geographical area coverage.

1. LAN (Local Area Network): Network that connects devices and computers within a small area such as a home, school or small office. A LAN can be wireless in which case it is called a WLAN (Wireless Local Area Network).
2. WAN (Wide Area Network): A network that connects computers over a vast area such as a country. The internet is the largest example of a WAN.
3. VPN (Virtual Private Network): A private network within a public network. A VPN connects on a public network but uses security encryption to ensure only authorized users can access the network.