Unit 31: E-business Operations

Session 3

Learning Outcomes
1.1 Describe the extended purchasing process used in e-business
1.2 Examine how use of professional buyers affects the buying process

Topics
Review of Last session Group Report Lecture The purchase process of b2c (business to consumer) purchasing transactions The purchase process of b2b (business to business) buying transactions Activities of professional buyers

Review of Last Session

Test of Baseline Knowledge -Review

What is E-business? Types of E-Business Models What are Purchase Processes? Name some activities under the purchase process Name some activities of a Buyer

Group 1
the term used to describe the information systems and applications that support and drive business processes, most often using web technologies. E-business allows companies to link their internal and external processes more efficiently and effectively and work more closely with suppliers and partners to better satisfy the needs and expectations of their customers, leading to improvements in overall business performance.

Group 2 & 3
is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners

Group 4
E-business is about utilizing the Internet technologies to provide superior customer service, streamline business processes, increase sales, and reduce costs. E-business uses tools such as email, online banking solutions, websites, supply chain management software and web-based customer relationship management.

E-business
is the conduct of business using electronic means whether its internet, mobile, intranet, LAN, WAN or other electronic devices, not only buying and selling but also servicing customers and collaborating with business partners.

Types of E-Business Group 1,2

Brokerage Model Advertising Model Merchant Model Community Model Subscription Model

Types of E-Business Group 3

Storefront Model Shopping-cart Technology Online Shopping Mall Auction Model Portal Model Dynamic Pricing Models B2B Exchanges B2b Services Providers Online Trading and Lending Models Getting a Loan Online

Recruiting on the Web Online News Services Online Travel Services Online Entertainment Online Automotive Sites Energy Online Selling Brainpower Online Art Dealers E-Learning Click and Mortar Businesses

Types of E-Business Group 4

E-shops E-malls E-auctions Virtual Communities Value-chain integrators Information Brokerage

Types of E-Business

B2C

Types of E-Business

B2B

Types of E-Business

P2P

Types of E-Business

C2C

Types of E-Business

Mobile Commerce

Other types of E-Business

Business to Employee (B2E), Government to Business (G2B) and Government to Citizen (G2C)

Purchase Transactions

The purchase process of b2c buying transactions

Needs and Wants Information search, comparisons and evaluation of alternatives, purchase decision and purchase sequences credit card information, post-purchase communications

B2C Information Search

Initial use of search engines to look for the needs or wants
Food Luxury Items Etc

Think of a 5 commodities you want now Search the internet for that commodity with specifics Submit links via email

B2C comparisons and evaluation of alternatives,

Compare alternatives using a comparison software in the internet Search a comparative software in the internet

B2C purchase decision and purchase sequences

Price Quality After Sales Service Industry mark

B2C purchase decision and purchase sequences

Order Information Customer Information Billing address Click what credit card to use

B2C credit card information,

Name Credit Card Number Amount Security Code questions Security Token
Hard Virtual

Credit Card Steps

S.E.T. stands for Secure Electronic Transactions and is a proposed standard for performing credit card transactions over the Internet. Used by VISA and Mastercard

Credit Card Steps

The buyer indicates that they are interested in making a credit a card purchase. The merchant's system generates and sends the buyer an invoice for the purchase. The buyer selects a VISA or MasterCard credit card for payment The buyer's software initiates the payment process by sending a request to the merchant's software for both their encryption public key and the public key of the payment gateway The request indicates the type of credit card the buyer will use, as a merchant may use different payment gateways for different types of cards.

Credit Card Steps

The merchant's software generates a response to the request and replies back to the buyer's software. The buyer's software then verifies the merchant's and payment's gateways The buyer's software generates two packets of information to send back to the merchant, the Order Information packet (OI), and the Purchase Instructions (PI) packet The buyer's software transmits the OI and PI to the merchant.

Credit Card Steps

The merchant's software checks the message from the buyer with the OI and PI for any tampering The merchant's software generates an authorization request for the credit card payment request. The merchant sends to the payment gateway of their acquiring bank a message encrypted using the payment gateway's public key. : The payment gateway then decrypts the message and its various

Credit Card Steps

The payment gateway then sends a request for payment authorization to the buyer's credit card issuer through customary bankcard channels The issuing bank sends back an approval or denial response and code to the payment gateway in response to the authorization request. The payment gateway generates an authorization response message to be sent back to the merchant. The payment gateway encrypts and sends the authorization response message back to the merchant's software.

Credit Card Steps

The merchant's software decrypts the authorization notice from the payment gateway If the transaction is approved, the merchant's software then creates a purchase response message which is sent to the buyer's software. The buyer's software processes the purchase response message and informs the buyer that payment was accepted. At a later time, the merchant's software generates a capture request message to send to the payment gateway. This request includes the capture token (optional), transaction ID, and authorization information. The sequence of events surrounding the capture are very similar to steps 13 - 15 of the authorization process.

B2C post-purchase communications

Customer Support Sales returns

B2C Purchase Diagram

Existence of Need / Want

post-purchase communications

informa tion search,

purchase decision and purchase sequences credit card information,

comparisons and evaluation of alternatives,

The purchase process of b2b buying transactions

Problem/ Need Recognition requisition from person who needs the items, review quotations from alternative suppliers, negotiate contract, place purchase order, allow leadtime for supply (often longer for non-standard items), delivery, goods receiving, check quality, receive invoice, buyer approves payment, payment authorised by accounts, often by credit transfer through banking system

B2B Problem Recognition

Needs Assessment Capital Expenditure Operational Expense Marketing Incentives Other needs

B2B Requisition
Items Required Specifications Number of Items needed

B2B supplier search

Via current suppliers Via referrals Via yellow pages Via internet

B2B review of quotations

Company being chosen Amount Specifications given After sales support Warranty Payment Terms available

B2B negotiate contract

Contracting Parties Product Qty Unit Price Amount Total Payment Terms Date Due Details Amount Due Inspection Terms Delivery Terms Other Terms

B2B place purchase order

Placement of order Detail of product/ Services Placement of terms and conditions placed on the contract

B2B delivery
Physical Delivery Online Delivery

B2B goods receiving

Warehouse Office Computer Other Protocol

B2B quality check

Compare products with specifications Detailed quality check as prescribed by system Quality Check system varies per company

B2B Invoicing
Accept invoice from Suppliers Check Invoice based on payment terms Revision of Invoice (if needed)

B2B buyer approves payment

Authorization of buyer to pay Agreement of contract Sign with digital Signature

B2B payment authorized by accounts

Single signatory Dual Signatory Documentations by other office units

B2B payment made via Electronic Fund Transfer (EFT)

Electronic Fund Transfer
Bank Account to bank account E-check Electronic Wallet Credit/ Cash Card

B2B Purchase Diagram

problem recognition receive invoice, buyer approves payment, payment authorised by accounts payment made via Electronic Fund Transfer (EFT) delivery,

requisition

quality check,

goods receiving,
supplier search review of quotations, negotiate contract,

place purchase order,

Activity
Experience the whole cycle of both the b2c and b2b transactions via research of related materials Submit via Email Links of your research

Professional Buyer

Activities of professional buyers

Contracts High proportion of business costs, Negotiation of contract includes
Products and services, Quantities, Delivery dates, Prices and payment terms

Buyer
Plans and directs procurement activities of the organization. Creates, assesses and consents to improved administrative, clerical and purchasing procedures; and ensures that the economy and efficiency of operation is maintained in the organization. Responsible for approving bid proposals together with specifications. Recommends for purchases that need approval; Liaises with purchasing officers, contractors, vendors as well as city department officials; and Carries out research on commodity areas

Contracts
Request for Quotes Terms and Conditions acceptable to both parties Preparation of Contract

High proportion of business costs

Virtue of procurement Capital Expenditure Operational Expense Special Procurement

Negotiation of contract
Products and services, Quantities, Delivery dates, Prices and payment terms