E Commerce
E Commerce
E Commerce
E-commerce is usually associated with conducting any transaction involving the transfer of
ownership or rights to use goods or services through a computer-mediated network. E-commerce
can be formally defined as technology-mediated exchanges between parties (individuals,
organizations, or both) as well as the electronically-based intra or inter-organizational activities
that facilitate such exchanges. A more complete definition is : “E-commerce is the use of
electronic communications and digital information processing technology in business
transactions to create, transform, and redefine relationships for value creation between or among
organizations, and between organizations and individuals.”
UK government gave a broad definition explaining the scope of e-commerce to industry : “E-
commerce is the exchange of information across electronic networks, at any stage in the
supply chain, whether within an organization, between businesses, between businesses and
consumers, or between the public and private sector, whether paid or unpaid.”
The Internet was designed more than 30 years ago to serve the needs of the U.S Department of
Defense and other organizations and individuals working on defense-related research projects.
The Department of Defense eventually opened its network to educational institutions and then to
commercial users. The table given below shows a rough timeline of how e-commerce has
evolved from a single exchange of information between government agencies to the World Wide
Web of today :
From 1969 to 2010
In 1969, the U.S Department of Defense established “The Advanced Research Projects Network”
(ARPANET). ARPANET was the first really viable inert-organizational network or Internet.
In the early 1970s, other networks such as Bitnet and Usenet sprang up as the technology
became more public.
In 1970s, banks began to use Electronic Fund Transfer (EFT) over secure private networks to
move money quickly and accurately. EFT made e-payments possible and led to direct deposit.
In 1974, Electronic Data Interchange (EDI) was formally introduced. As many as 380
organizations world wide adopted this technology and investment reached a level of around 4
billion dollars at that time.
In 1992, the World Wide Web arrived. The Web made the Internet graphical and relatively easy
to use. The Web made e-commerce cheaper because small businesses could now reach large and
new audiences easily.
E-Business
E-business involves business processes spanning the entire value chain : e-purchasing, e-supply
chain management, processing orders electronically, handling customer service, and cooperating
with business partners. E-business software solutions allow the integration of intra and inter firm
business processes. E-business can be conducted using the Web, the Internet, intranets, extranets,
or some combination of these.
In practice, e-business is more than just e-commerce. E-commerce seeks to add revenue streams
using the World Wide Web or the Internet to build and enhance relationships with clients and
partners and to improve efficiency. Electronic commerce focuses on the use of ICT to enable the
external activities and relationships of the business with individuals, groups and other businesses.
Electronic Commerce (EC) has some degree of overlap with Electronic Business (EB) or
Broadly t it can be said that Electronic Commerce is equivalent to Electronic Business
EC EB
EC=EB
EC is often confused with e-business but E-commerce is the subset of e-business that focuses
specifically on commerce. While e-business refers to more strategic focus with an emphasis on
the functions that occur using electronic capabilities, e-commerce is a subset of an overall e-
business strategy. Electronic Commerce is a subset of Electronic Business.
EC
EB
E-Commerce applications require a reliable network infrastructure to move the information and
execute a transaction in a distributed environment. Thus, in the framework network infrastructure
forms the very foundation while publication and distribution technologies are the 2 pillars that
support the creation of distributed electronic commerce applications. Elements of E-Commerce
Framework are as follows :
The consumer first moves through the internet to the merchant’s web site. At the web site, the
consumer is briefly given an introduction to the product or services the merchant offers. After
choosing to visit the web store, the consumer is typically connected to an online transaction
server located somewhere else on the internet which runs software commonly referred to as a
shopping cart application. The shopping cart application has been setup by the merchant to
display all products and services offered, as well as calculate pricing, taxes, shipping charges,
etc.
Now, the consumer enters all pertinent credit card information and a sales order is produced.
Depending on the ecommerce implementation, the sales order can now take two totally different
paths for confirming to the consumer that the order is officially placed.
Scenario 1 : The consumer’s credit card information goes directly through a private gateway to a
processing network, where the issuing and acquiring banks complete or deny the transaction.
This generally takes place in no more than 5-7 seconds and the consumer is then informed that
the order was received, the credit card was authorized, and that the product will ultimately be
shipped.
Scenario 2 : The consumer’s entire order and credit card information is electronically submitted
back to the merchant’s server (usually via email, FTP, or SSL connection) where the order can
be reviewed first and then approved for credit card authorization through a processing network.
The consumer then receives an email shortly afterwards, confirming the order being received, the
credit card being authorized, and status on when the product will exactly be shipped.
In both scenarios, the process is transparent to the consumer and appears virtually the same.
However, the first scenario is a more simplistic method of setting up a shopping cart application
and does not take into consideration any back office issues that may delay shipment. The second
scenario keeps the consumer accurately informed throughout the entire ordering process.
The economic forces motivating the shift to e-commerce are internal as well as external.
External integration molds the vast network of suppliers, government agencies, and
large corporations into a single community with ability to communicate across any
computer platform. In Internal integration, incoming orders are received electronically
and the information is automatically sent not only to production but to shipping, billing
and inventory systems also. Internal integration also ensures that critical data is stored in
media formats that permits instantaneous retrieval and electronic transmission.
2) Marketing & Customer Interaction Forces : Companies also employ e-commerce to
provide marketing channels, to target micro segments, and to improve post-sales
customer satisfaction by creating new channels of customer service and support.
The relentless advance of technology, the emergence of multimedia standards, and the
shift to distributed, computing and inter-networking are providing the raw power for the
“digital convergence”.
4) Implication of various other Forces : Economic and marketing forces and digital
convergence have influenced how industries re-positioning themselves to take advantage
of new opportunities, including the creation of newly service delivery channels, the
development of new-markets for existing products, and development of new information-
based products for the online environment.
For instance, the digital convergence is reshaping the competitive environment for tele-
communications services around the globe. In response to the intensified competition and
reduced margins on basic telephone services in telecom markets, network operators are
building new Computer-Driven intelligent networks in order to offer wide range of value-
added services like home shopping, on demand audio-video.
E-Commerce Advantages
E-Commerce is one of the most important facets of the Internet to have emerged in the recent
times. Some advantages that can be achieved from e-commerce include :
• Being able to conduct business 24 X 7 X 365 : E-commerce systems can operate all day
every day while the physical storefront is not open all the day round.
• Access the global marketplace : The Internet spans the world, and it is possible to do
business with any business or person who is connected to the Internet. Simple local
businesses such as specialist record stores are able to market and sell their offerings
internationally using e-commerce.
• Market space : The market in which web-based businesses operate is the global market.
• Computer platform-independent : Customers are not limited by existing hardware
systems.
• Allowing customer self service and ‘customer outsourcing’ : People can interact with
businesses at any hour of the day that it is convenient to them, and because these
interactions are initiated by customers, the customers also provide a lot of the data for the
transaction that may otherwise need to be entered by business staff. This means that some
of the work and costs are effectively shifted to customers; this is referred to as ‘customer
outsourcing’.
• Cost of acquiring, serving and retaining customers : It is relatively cheaper to acquire
new customers, over the net because of its 24 X 7 operation and its global reach.
• Disintermediation : Using the Internet, one can directly approach the customers and
suppliers, cutting down on the number of levels and in the process, cutting down the
costs.
• An extended enterprise is easy to build : The Internet provides an effective (less
expensive) way to extend your enterprise beyond the narrow confines of your own
organization. Tools like Enterprise Resource Planning (ERP), Supply Chain Management
(SCM) and Customer Relationship Management (CRM), can easily be deployed over the
Internet, permitting amazing efficiency in time needed to market, customer loyalty, on-
tile delivery and eventually profitability.
• Time for delivery of physical products : E-commerce is often used to buy goods that
are not available locally from businesses all over the world, meaning that physical goods
need to be delivered, which takes time and costs money. In some cases there are ways
around this, for example, with electronic files of the music or books being accessed
across the Internet, but then these are not physical goods.
• Physical product, supplier & delivery uncertainty : e-commerce purchases are made
on trust. This is because, firstly, not having had physical access to the product, a purchase
is made on an expectation of what that product is and its condition. Secondly, because
supplying businesses can be conducted across the world, it can be uncertain whether or
not they are legitimate businesses and are not just going to take your money.
• Perishable goods : Goods bought and sold via the Internet tend to be durable and non-
perishable that is they need to survive the trip from the supplier to the purchasing
business or consumer. This shifts the bias for perishable and/or non-durable goods back
towards traditional supply chain arrangements.
• Limited and selected sensory information : The Internet is an effective conduit for
visual and auditory information : seeing pictures, hearing sounds and reading text. If we
were looking at buying a car on the Internet, we would see the pictures the seller had
chosen for us to see but not the things we might look for if we were able to see it in real.
And, taking into account our other senses, we can’t test the car to hear the sound of the
engine as it changes gears or sense the smell and feel of the leather seats.
• Returning goods : Returning goods online can be an area of difficulty. The uncertainties
surrounding the initial payment and delivery of goods can be exacerbated in this process.
Will the goods get back to their source? Who pays for the return postage? Will the refund
be paid?
• Privacy, security, payment, identity, contract : Many issues arise – privacy of
information, security of that information and payment details, whether or not payment
details (eg. credit card details) will be misused, identity theft, contract, and, whether we
have one or not, what laws and legal jurisdiction apply.
• Defined services & the unexpected : E-commerce is an effective means for managing
the transaction of known and established services. It is not suitable for dealing with the
new or unexpected.
• Size and number of transactions. E-commerce is most often conducted using credit
card facilities for payments, and as a result very small and very large transactions tend
not to be conducted online. The size of transactions is also impacted by the economics of
transporting physical goods.
The role of e-commerce in daily life is becoming very important. E-commerce can be used in the
following ways :
1. Online Education : Different types of interactive tutorials, textual and multimedia contents
are available on the Internet. The students can browse these online books and tutorials or can
download them after purchasing. Some websites provide online lectures for the students.
2. Electronic Banking : Using computer, user can connect to the bank’s computer system via
the Internet and control the daily financial dealing from home. It reduces the staff and building of
banks. Many customers pay their bills from their bank accounts using this facility.
3. Electronic Shopping : People can browse the website, place an order and even make a
payment using credit card. It has made shopping very easy.
4. Job Search : Internet is used to search different types of jobs all over the world. Many
websites are developed that provide information to the people about job vacancies.
5. Conducting Auctions : Many websites provide the facility of auction. People participate in
the auction to purchase a product. They can also pay the price using their credit cards etc.
6. Collaboration with Partners : Businessmen can collaborate with their partners using the
Internet. They can discuss ideas, exchange views and make strategies in collaboration with all of
their business partners in the world.
7. Providing Customer Services : Businessmen can interact with their customers using the
Internet. They can discuss different issues about their products and also deal with their
complaints and provide different services to them.
10. Online Trading : The stockbrokers can do all trading activities electronically. They can
submit and receive bids using computers. It reduces the cost as no paper or special building is
required to conduct these activities.
Customer Any time acquisition through Market survey & through salesman
information internet
acquisition