The world of e-commerce is changing rapidly. Ten years ago e-commerce was mostly defined as participating in an electronic data interchange (EDI) initiative.
Today, e-commerce means much more than just EDI. It means supporting interactive Web sites; it means enabling the communications with multiple exchanges; it means using XML and the Internet to conduct interactive business-to-customer (B2C) and B2B
Every business’s activities, by definition, pertain to goods and services. Those activities can be divided as to whether they involve consumption, creation, transformation, or provision, of goods and services, a combination of these activities, or the management of such activities. Any of these types of activities can involve external business entities (including customers or consumers). For somewhat historical reasons, special emphasis has been given to B2B activities (those that involve other businesses) and to B2C activities.
This definition does not introduce any technology. The definition of B2B and B2C is first and foremost a business issue. The B2B and B2C classifications pertain to activities by which the business interacts with external entities. Certain types of business, such as pure B2B exchanges, wholesalers, or distributorships, might primarily conduct B2B activities. These businesses derive their revenues from other businesses. All the business activities of such companies either are B2B activities or support them, which has important implications for B2B success.
Although it is common to think of B2B as being implemented by public (external) business processes, virtually every private (internal) business process is an essential element to the support of B2B activities.
The B2C e-commerce model is a publicly accessible Web site that offers products for sale. It is analogous to a store on the street, where anyone can walk in and make a purchase. A new, unknown customer is known as a guest shopper.
The guest shopper has the option of making purchases, after providing general information about themselves to fulfill the transaction (name, address, credit card, and so on). Most B2C sites encourage users to register and become members. In doing so, the business can establish a relationship with the customer, provide better service, and build customer loyalty.
The B2B e-commerce model refers to an e-commerce store specifically designed for organizations to conduct business over the Internet. B2B applications focus on using the Internet, extranet, or both to improve B2B partnerships and transform inter-organizational relationships. The two entities are known to each other, and all users are registered. Trading can be conducted directly between buyers and sellers or supported by a third-party(an intermediary) within an e-Marketplace.
Note:E-commerce can be divided into two main subclasses:B2C and B2B. There are two styles of B2B:
this shows the breakdown between e-Marketplaces and B2Bi based on the number of buyers and sellers. In the case of B2Bi, there is usually a one-to-one relationship between buyers and sellers. Any other relationship, such as one-to-many many-to-many, or many-to-one, falls into the e-Marketplace category.
Relationship between B2Bi and e-Marketplaces
Each of the e-Marketplace categories has its own unique characteristics, which are reflected in their implementation. For example, in the case where there is one sellerand many buyers, the interaction is similar to that of a traditional auction. Therefore, the digital model has to allow for multiple disclosed bids.
B2Bi covers programmatic links between arm-length businesses, between companies where a trading partner agreement might be appropriate. A good example is supply chain applications or trading partners that engage in an exchange.
The second style covers the e-Marketplace where the model supports B2M2B. The M represents the e-Marketplace, which supports multiple buyers and suppliers. The buying function can be performed online or programmatically.
The traditional B2B model, centered around the buyer-seller transaction paradigm, shows its limitations. It is definite in scale and displays only partial efficiency in terms of market economics. B2M2B overcomes these limitations and leverages existing B2B applications and technology. The e-Marketplace or online trading communities assist multiple buyers and suppliers to exchange information and transactions.
Trading communities are Internet-based hubs that focus on specific industry verticals orspecific industry processes. They use various market making mechanisms, such as auctions, exchanges, and aggregation, to mediate any-to-any transactions among businesses. Through the trading communities, hubs, buyers, and sellers can trade electronically with established partners and at the same time gain access to new markets and new parts of the supply chain.
e-Marketplaces can be a public, interactive buying and selling community. Here all members participate in the open. Or, they can be private, invitation-only communities whose members participate in special pricing arrangements or product and service offerings. Online trading communities have the potential to create excellent and efficient markets.
Evolution of the B2B data structures
The structure of information exchanged electronically between businesses has evolved over time. This evolution was basically an evolution to support more open and global standards, so that any business can perform electronic document exchanges with any other business.
First era: National and industry-oriented EDI data structures
Twenty years ago, many companies along vertical industries participated in defining the first standards for exchanging information throughout a supply chain. Because this early work started along vertical industries, the standards that were created focused on industries, such as retail, transportation, automotive, and so on. Besides, this kind of work was occurring in multiple countries, resulting in standards that had a vertical industry orientation as well as geographical characteristics. The result was the overlapping of data structures across multiple industries in different geographies with no interoperability among these standards.
Second era:International EDI data structures
The proliferation of multiple electronic data interchange (EDI) standards dramatically increased the implementation cost of EDI. Cross-industry players, such as transportation companies, found themselves having to learn and implement different EDI data structures depending on the industry that they served and the region in which they operated.
Standards that became the dominant format for conducting e-commerce are ANSI X12 in North America; TRADACOMS in the United Kingdom; GENCOD in France(retail); Uniform Communication Standard for the U. S. grocery industry; and MDA SEDAS in Germany.
Gradually, the various industry groups came together to create one international datastandard: Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT). Nowadays, most trade between companies in two separate countries is based on the EDIFACT standard. The migration from industry-oriented or nation-oriented standards to international standards is still happening and might take years. However, the EDI world has achieved one common data structure, which will help drive the costs of EDI much lower.
Third era: National and industry-oriented XML data structures
During the last twenty years, the majority of EDI growth supported the business focus on direct material procurement and the movement of goods. EDI data structures worked well for direct material purchases given the structured nature of the procurement process. Prices, contracts, delivery, shipping, and many other details are negotiated and determined during the procurement process.
When newer technologies arose and the Internet became the platform for e-commerce, XML appeared on the horizon. XML has offered one key advantage. That is, data streams can now be interpreted and presented to both human beings and machines. The availability of XML meant that users with a browser can receive data structures without any change to that data’s construct. XML offers other benefits. Because the technology is extensible, users can add data tags regardless of whether the receiving user is prepared to handle the additional data. However, adding extra tags can cause interoperability issues.
In the late 1990s, lacking any XML data structure organizations, vertical groups again led the charge to create specific vertical-industry data structures. The first group to complete this task was RosettaNet, which defined a series of XML data structures for the high-tech supply chain. The lack of already agreed-upon XML data structures and the perceived need to create them rapidly led the vertical groups to create, publish, and endorse their own data structures. Examples are xCBL from Commerce One and cXML from Ariba.
Early cross-industry adopters of XML data structures find themselves in a similar situation to early adopters of EDI. They must still learn and implement multiple XML structures, which now include the proprietary ones just mentioned as well as several others. There is no interoperability among the differing XML data structures, and companies need to implement these multiple XML standards to reach all of the constituents in their supply chain. Supporting multiple XML standards will drive the same interoperability issues that existed with EDI during the 1980s and will similarly lead to higher implementation costs.
Fourth era: International XML data structures
XML is now being adopted for B2B e-commerce on a national basis and the international use of XML is just a step away. In the meantime, the same issues arise that historically accompanied the lack of an accepted standard. Industry groups, such as RosettaNet, find themselves making changes to accommodate international needs. Meanwhile, vendors who have defined their own XML standards want their standards to become international.
Certain participants in the e-commerce community acknowledge the role played by e-business XML (ebXML) as one of the early pioneers of a global standard industry set of XML standards. The ebXML work is a joint effort between the United Nations body for Trade Facilitation and Electronic Business (UN/CEFACT) and the Organization for the Advancement of Structured Information Standards (OASIS). UN/CEFACT and OASIS have users defining the documents. They both have previously worked in the e-commerce standards arena, which ensures that strong data dictionaries exist, as well as processes for change control, communication, and documentation regarding the standards.
Evolution of B2B data communications
In addition to an evolution in the structure of exchanged documents, there has been an evolution in the communication method to exchange documents.
First era:Point-to-point direct connections
Early inter-enterprise computer-to-computer data exchange moved data via primitive computer protocols. At that time, numerous communication protocols were used. Several communication protocols are still found in vertical-industry implementations, such as the BiSync 2780/3780 no-logon protocol of the Uniform Communications Standard for the U. S. grocery industry. Other early protocols still in use include ANSI Clear and X, Y and Z Modems.
Second era:Value-added networks
To communicate across a supply chain with multiple suppliers, an early EDI user needed to manage a variety of protocols. Implementing and supporting the many and different communications protocols that were proliferating had a cost. Companies often needed to buy multiple products. These products, in turn, required their own operational assistance with scheduling transmissions, executing the programs, and setting up audit and error-handling procedures.
Soon, users migrated to value-added networks (VANs) to resolve this issue. The VAN became popular, because it was able to insulate the protocol of a given trading partner from the protocols used by all the other trading partners. The VAN offered protocol conversion and insulated one company from another company so neither company logged on to the other’s system. This insulation provided security and eliminated the need to build an operational communications infrastructure capable of supporting communications sessions with multiple concurrent users. The VAN also insulated users from having to synchronize communications. Companies were free to bring down their systems and perform maintenance without coordinating their activities with multiple trading partners.
In the 1990s, the Internet became the primary focus for conducting e-commerce. The prevailing view was that the Internet will replace the VAN as a network intermediary. Leaving the VANs, early Internet adopters wanted the Internet to become the universal protocol and to offer unlimited inexpensive reach. Unfortunately, these early adopters are facing a familiar situation. Again, they have had to learn how to deal with differing format protocols, such as File Transfer Protocol (FTP), Hypertext Transfer Protocol (HTTP), and Simple Mail Transfer Protocol (SMTP).
First users have also had to learn how to deal with securing the data during transport. Security concerns have led to the management of certificates for using encryption methodologies, such as Secure Sockets Layer (SSL) and Secure/Multipurpose Internet Mail Extensions (S/MIME). Given the absence of prevailing format protocols, vertical industry groups again moved in to sort out confusion by endorsing a given protocol format and encryption methodology.
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