eCommerce

e-Commerce

1.An Overview

1.1 What is e-Commerce: e-Commerce refers to the process of buying or selling products or service over an electronic network. The most popular medium in which e-Commerce is conducted is the internet. It combines a range of process such as :

• Electronic Data Interchange (EDI)
• Electronic mail (E-mail)
• World Wide Web (WWW)
• Internet Applications
• Network Applications.

[XXXX Basically e-Commerce involves the sale or purchase of goods or services over computer mediated networks. These goods or services may be ordered though these networks, but payment for them and the ultimate delivery of the goods and services may be conducted on or off line. Some analyst define e-commerce as simple buying and selling over electronic networks; and use e-business (buzzword) to refer to these wider range of supporting business activities that can be conducted over such networks.]

**There are three basic components to every e-commerce solution:

• Communications
• Standards
• Software

1.2 Existing Barriers:

• Security
• Tariffs
• Legal issues

1.3 History of E-Commerce:

• In 1950’s companies began to use computers to store and process internal transaction records
• By 1960’s businesses that engaged large volume of transaction had began exchanging transaction information on punched card
• In 1968 Transportation Data Co-ordination Committee (TDCC ) was formed by some companies
• In 1979 ANSI (American National Standards Institute) chattered a new committee to develop uniform EDI (Electron Data Interchange)
• In 1987 UN publish its first standards under the title EDI

2.Traditional and Electronics Business Transaction:

The business process are broadly divided into five main categories namely:

• Market product and services
• Sell and deliver products and services
• Process payments
• Manage relationship
• Manage the enterprize

2.1 Traditional Commerce vs e-Commerce

Items	e-Commerce	Traditional Commerce
Sales Channel	Enterprize ® Internet ® Consumer	Manufacturer ® Wholesaler ® Retailer ® Consumer
Sales Hour /Region	Entire world 24x7	Restricted area Restricted sales hour
Sales place/method	Market space (Network) Sale based on information	Market space (store) Sale based on display
Customer information acquisition	Any time acquisition through internet Digital Data without no re-entry	Market survey and salesman Require information re-entry
Marketing activity	1:1 Marketing via bi-directional communication	One way marketing to consumer
Customer support	Real time support for customer Dissatisfaction Real time acquisition of customer needs	Delayed support for customer Dissatisfaction Time different for catching customer needs
capital	small	large

3. Types of E-Commerce:

E-commerce can be divided into primarily three catagories

(1) Business to consumer(B2C): Where enterprizes sell directly to the customer, often cutting out (‘disinter mediating’ ) wholesalers or ‘bricks and mortars’ retail outlets. B2C is the most commonly understood form of internet business (www.amazon.com). The most successful trading has been with standard products such as CDs, Books, Software, downloadable music etc.

(2) Business to Business (B2B): it is larger, growing faster. This includes procurements of raw materials and supplies, liaison with contractors, sales channels, servicing customers, collaborating with partners, integrated management with data and knowledge.

(3) Business to Government(B2G): Here business trade directly with government offices and agencies for public procurement (e.g. supplies for hospitals, school and other government contracts.

(4) Consumer to consumer (C2C): Online transaction between private individuals.

(5) Consumer to business(C2B):

4. Benefits of E-Commerce

The benefits of e-Commerce are many and many. Some of them include:

(1) 24X7 operation: Round the clock operation is an expensive proposition in the brick and mortar world while it is natural in the click and conquer world

(2) :Global reach: The net being inherently global, reaching global customers is relatively easy on the net compared to the world of bricks

(3) Cost of acquiring serving and retaining customers: It is relatively cheaper to acquire new customers over the net. Thanks to 24 X 7 operation and its goal reach. Through innovative tools of push technology to retain customers, loyalty with minimal investments.

(4) An extended enterprise is easy to build: In today’s world every enterprise is a part of the ‘connected economy’; as such you need to extend your enterprise all the way to your suppliers and business partners like distributers, retailers and ultimately you end customers. Internet provides an effective (often less expensive) way to extend your enterprise beyond the narrow confines of your own organization. Tools like enterprize resource planning (ERP) ,supply chain management (SCM) and customer relationship management (CRM), can easily be deployed over the net permitting amazing efficiency in time needed to market, customer loyalty, on time delivery and eventually profitability.

(5) Dis-intermediation: Using the net one can directly approach the customers and suppliers, cutting down the number of level sand in the process, cutting down the costs.

(6) Improved customer service to your clients: It results in higher satisfaction and more sales

(7) Power to provide the ‘best of both the worlds’: It enhances traditional along with internet tools.

[XXX*** The impact of e-Commerce to business can be huge. E-commerce can transform the way products and services are created, sold and delivered to the customers. It can also change the way in which the company works with its partners. The followings are well established benefits of e-commerce:

· Improved productivity :Using e-commerce, the time required to create, transfer and process a business transaction between trading partners is significantly reduced. Furthermore human errors like duplication of records are largely eliminated with the reduction of data entry and re-entry in the process. This improvement in speed and accuracy plus the acess to document and information, will result in increase in productivity.

· Cost savings: The cost savings stem from efficient communication, quicker turnaround and closer access to market.

· Streamlined business process: Use of internet and with automation of business process can make business more efficient

· Better Customer service: Customer can enjoy the convenience of shopping at any our and anywhere in the world.

· Opportunities for new business: Business over the internet have global customer reach. There are endless possibilities for business to exploit and expand their customer base.]

4.1 Benefits of e-Commerce to Organization

· Expands the Marketplace to national and international market

· Decrease the cost of creating, processing, distributing, storing and retrieving paper based information

· Allows reduced inventories and overhead by facilitating pull-type supply chain management

· The pull-type processing allows for customization of products and services which provides competitive advantage to its implementers

· Reduces the time between the outlay of capital and the receipt of product and services

· Supports Business process re-engineering (BPR) efforts

· Lowers telecommunication cost- the internet is much cheaper than value added networks (VANs)

4.2 Benefits of e-Commerce to Consumers

• Enables consumers to shop or do other transaction 24 hours a day, all year round from almost any location
• Provides consumers with more choices
• Provides consumers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons
• Allows consumers to interact with other consumers n electronic communities and exchange ideas as well as experiences
• Facilitates competition which results in substantial discounts
• Allows quick delivery of products and services (in some cases) especially with digitized products
• Consumers can receive relevant and detail information in seconds rather than in days or weeks
• Makes it possible to participate in virtual auction

4.3 Benefits of e-Commerce to Society

• Enables more individuals to work at home, and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution
• Allows some merchandise to be sold at lower prices benefiting less affluent people
• Enable people in third world countries and rural areas to enjoy product and services which otherwise are not available to them
• Facilitates delivery of public services at reduced cost, increases effectiveness and or improve quality

4.4 Disadvantages: Some disadvantages because of newness of e-Commerce. If e-commerce matured they will perhaps remove.

· Inadequate inspection facility

· Security

· legal issues

4.5 Technical Limitations to e-commerce

· Lack of sufficient system security, reliability, standards and communication protocols

· Insufficient telecommunication bandwidth

· The software development tools are still evolving and changing rapidly

· Difficulties in integrating the internet and e-commerce software with some existing application and data base

· The need for special web servers and other infrastructures, in addition to the network servers (additional cost)

· Possible problems of inter operability, meaning that some EC softwares does not fit with some hardware, or is incompatible with some operating systems or other components

4.6 Non- Technical Limitations to e-commerce

• Cost and Justification

- The cost of developing an EC in a house can be very high …….

• Security and privacy
• Lack of trust and user resistance
• Channel conflict
• Other limitations factors are:

-Lack of touch and feel online etc

(8) What are the reasons to put a company on a website?

1. To establish a presence: To be a part of the internet community and show that you are interested in serving them.

2. To network

3. To make business information available

4. To serve your customers

5. To heighten public interest

6. To release time sensitive materials

7. To sell things

8. To make pictures sound and film files available

9. To reach a high desirable demographic market

10.To answer frequently asked questions

11. To stay in contact with Sale people

12. To open international markets

13. To create a 24 hour service

14. To make changing information available quickly

15. To allow feedback from customers

16. To test market new services and product

17. To reach the media

18. To reach the education and youth market

19. To reach the specialized market

20. To serve your local market.

(9) Describe the difference between e-commerce and e-business

e-Business vs e-Commerce

e-Commerce

e-Commerce describes the process of buying, selling, transferring, or exchanging products, services, and or information via computer networks including the internet.

e-Commerce can take several forms depending on the degree of digitization(the transformation from physical to digital). The degree of digitization relates to:

• The product (service) sold
• The process
• The delivery agent (or intermediary)

e-Business:

· Compared with e-Commerce, e-Business is a more generic term; it refers not only to information exchanges related to buying and selling but also to servicing customers and collaborating with business partners, distributors and suppliers.

· E-Business encompasses sophisticated B2B interactions and collaboration activities at a level of enterprise applications and business process.

Characteristics of e-Business

e-Business is about integrating external company with an organization’s internal business process:

· Collaborative product development

· Collaborative planning, forecasting and replenishment

· Procurement and order management

· Operations and logistics

(10) Describe the main ingredients of e-business solution

1. Web: Website act as the pioneer role in e-commerce

2. Customer relationship management system (CRM): “front office” that help enterprise deal directly with their customers. CRM integrates and automates customer serving process within a company.

3. Enterprize Resource Planning System (ERP): Management Information system that integrate and automate many of the business practices associated with the operations or production aspects of a company. An ERP system includes:

· Production: Manufacturing resource planning and execution process

· Buying a product: Procurement process

· Sales of products and services: Customer order management process

· Costing, paying bills and colleting: financial/management accounting and reporting process

4. Supply Chain Management (SCM): A supply chain is a network of facilities and distribution option that performs the function of procurement of materials; transformation of these materials into intermediate and finished product & distribution of these finished products to customer. A supply chain has three essentially main parts: the supply, manufacturing and distribution.

5. Knowledge Management (KM): Knowledge regarding markets, products, processes, technologies and organization that a business owns that enable its business process to generate profits. Also include the subsequent planning and control of actions.