ELECTRONIC COMMERCE

•This involves performing commercial operations electronically.

•In a usual commercial operation ,buyers and sellers come in contact

with each other either physically or through other means of
communication and rest of the buying/selling procedure is performed in
physical sense.

•However in e-commerce the entire process, including the contact

between buyers and sellers, is completed through the use of IT .
• It consists primarily of the distributing, buying, selling, marketing,
and servicing of products or services over electronic systems such
as internet or other computer networks
• It can involve in electronic funds transfer, supply chain
management, e-marketing, online marketing, online transaction
processing, electronic data interchange, inventory management
systems, and automated data collection system

• It typically uses electronic communications technology such as the

internet, extranet, e-mail, e-books, database, catalogues and mobile
phones
 Historic development
• The meaning of the term “electronic commerce” has changed over
the last 30 years.
• Originally electronic commerce meant the facilitation of commercial
transactions electronically, usually using technology like EDI, and
EFT.
• The “electronic” or “e” in e-commerce or e-business refers to the
technology or systems, the commerce refers to be traditional
business models.
• It is defined as the complete set of processes that support
commercial/business activities on a network.
• In 1970’s and 80’s this would have involved information analysis.
• The growth of acceptance of credit cards, ATM’s, telephone banking
were also part of e- commerce
• However from 1990’s this would include enterprise resource
planning (ERP), data mining and data warehousing.
• The first US government electronic commerce system was developed
in 1983 by John Fonda, F.Gordon, Gary Heiselberg
• This system , known as Automation of Procurement and Accounting
Data Entry (APADE) and included the purchase of goods and services
• Today, it encompasses a very wide range of business activities and
processes from e-banking to off-shore manufacturing to e-logistics
• E-Commerce refers to all the forms of transactions related to
commercial activities, including both organizations and individuals,
that are based upon the processing and transmission of digitized
data, including text, sound, and visual images.

• E-Commerce is about doing business electronically. It is based on

the electronic processing and transmission of data , including text,
sound and video. It encompasses diverse activities including
electronic fund transfers, electronic share trading, commercial
auctions etc.
 SUCCESS FACTORS IN E-COMMERCE
1. Technical and organizational aspects
– Sufficient work done in market research and analysis
– A good management team armed with good and sound IT strategy.
– Providing an easy and secured way for customers to effect
transactions
– Providing reliability and security
– Constructing a commercially sound business model
– Engineering an electronic value chain
– Setting up an organization of sufficient alertness
– Providing an attractive website
– Streamlining business processes
– Providing complete understanding of the products or services offered
2. Customer-oriented
– Providing value to customers
– Providing service and performance
– Providing an incentive
– Providing personal attention
– Providing a sense of community
– Owning the customers total experience
– Letting customers help themselves
– Helping customers do their job of consuming
3. Acceptance
– Concerns about security
– Lack of instant gratification
– The problem of access to web commerce
– Social aspect of shopping
– Poorly designed websites
– Inconsistent return policies
 Features of electronic commerce
1. UBIQUITY: it is available just about everywhere at all times
• This reduces transaction costs-the cost of participating in a
market
2. GLOBAL REACH:
3. UNIVERSAL STANDARDS
4. INTERACTIVITY
5. INFORMATION DENSITY AND RICHNESS
6. PERSONALIZATION
 Limitations/failures of e-commerce
• Failure to understand customers, why they buy and how they buy
• Failure to consider the competitive situation
• Inability to predict environmental reaction
• Over-estimation of resource competence
• Failure to coordinate
• Failure to obtain senior management commitment
• Failure to obtain employee commitment
• Under-estimation of time requirements
• Failure to follow a plan
• Becoming the victim of organized crime
 E-Commerce applications
1. Business to business(B2B)
2. Business to consumer(B2C)
3. Business to government(B2G)
4. Consumer to administration(C2A)
5. Consumer to Consumer (C2C)
6. Mobile commerce
 Business to Business(B2B)

• It involves electronic transactions for business activity between two or more

business organization
• It deals with relationships between and among businesses
• This type of e-commerce model is becoming increasingly important as most
business organizations are reengineering their business processes in which
other organizations may play a vital role.
• B2B enables business partners to exchange information among themselves in
an automated way without the human intervention
• B2B has two primary components
1. E-frastructure
2. E-markets
1. E-frastructure : is the architecture of B2B ,primarily consisting of:
• Logistics
• Ware housing and distribution
• Outsourcing of functions in the process of e-commerce
• Auction solution software for the operation and maintenance of
real-time auctions in the internet
• Content management software for the facilitation of web site
content management and delivery
• Web-based commerce enablers

2. E-markets : these are simply defined as websites where buyers

and sellers interact with each other and conduct transactions.
• Most B2B applications are in the areas of supplier management,
inventory management, distribution management, channel
management and payment management.
• The impact of B2B markets on the economy of developing countries
is evident in the following:
• Transaction costs
• Disintermediation
• Economies of scale and network effects
 Business to consumer(B2C)
• Is commerce between companies and consumers, involves customers
gathering information ,purchasing physical goods or information goods,
receiving products over an electric network.
• Involves bringing business and consumers closer to each other and creating
a unique market place where products and services can be bought and
sold.
• It is conducted by providing well-designed websites which offer information
about products/services to be sold, display these with description, price in
the same manner as conventional shops do.
• It not only provide source of trade but also acts as supporting activities that
that help to generate revenue to companies.
• Examples are shopping sites, home banking, entertainment services- video
on demand, movies, games etc
• The most common applications of this type of e-commerce are in the areas
of purchasing products and information, and personal finance management,
which pertains to the management of personal investments and finances
with the use of online banking tools.
 Business to government(B2G)

• Involves dealing with government agencies like customs, excise

duties etc, electronically
• Usually a lot of paper work is involved resulting into delay in paper
processing which hampers efficiency of business organizations.
• Instead of this lengthy and time consuming paper work , B2G e-
commerce application connects various government agencies and
business organizations electronically which helps in speedy
processing of business documents thereby enhancing productivity
of business organizations.
 Consumer to administration(C2A)

• It involves providing relevant information to people by government

administrative agencies.
• Instead of visiting government offices for getting relevant
information, people can get this information through C2A websites.
 Consumer to Consumer (C2C)

• Is simply commerce between private individual or consumers

• This type of e-commerce is characterized by the growth o
electronic marketplaces and online auctions, particularly in
vertical industries where firms /businesses can bid for what they
want from among multiple suppliers.
• It has the greatest potential for developing new markets.
• this type of e-commerce comes in at least three forms:
1. Auctions
2. Peer-to-peer systems
3. Classified ads
 Mobile commerce

• Mobile commerce is the buying and selling of goods and services

through wireless technology i.e- handheld devices such as
cellular telephones and personal digital assistants.
• Industries affected by M-commerce include the following:
1. Financial services
2. Telecommunications
3. Information services
 Electronic commerce/ Electronic business
• Electronic commerce is a business to business (B2B) initiative
aimed at communicating business transaction documents on a real
time or near real time basis between known trading partners, such
as suppliers, customers, and increasingly between customers
customer and suppliers and supplier
• Use of electronic representations of business transactions
documents can reduce processing and handling , thereby reducing
processing costs, data entry errors and cycle times.

• Electronic business represents the internet based marketing

channel that has emerged, first slowly and then explosively
• It is aimed at selling products or services via internet
• Electronic business initiatives often provide both pre sales and post
sales support, directly to consumers on a self service basis.
 How do e-commerce link customers, workers, suppliers,
distributors and competitors

• E-commerce facilitates organization networks , wherein small firms depend

on partner firms for supplies and product distribution to address customer
demands more effectively.
• To maintain the chain of networks linking customers , an integrated or
extended supply chain management solution is needed.
• Supply chain management is defined as the supervision of materials,
information, and finances as they move from supplier to manufacturer to
wholesaler to retailer to customer.
• It involves the coordination and integration of these flows both within and
among companies.
• The goal of any SCM system is timely provision of goods or services to the
next link in the chain.
• The three main flows in the SCM are
– The product flow
– The information flow
– The finances flow