Frame work of E-commerce
Common business services infrastructureMessaging and information distribution
multimedia content and network publishing
Policy making support areas
1.People-buyers,sellers,intermediaries, services.IS people
2.Public policy-taxes ,legal , privacy issues,regulations
Marketing and advertisements-market research,promotions,web content
4.support services-logistics payments contents and security system
5.Business Partnerships-joint ventures,e-marketplaces,exchanges
-Directing marketing, job search, online banking, E-purchasing, egovt, travel , online publishing
Advantages of E-Commerce
Electronic Commerce can increase sales and decrease costs.
Advertising done well on the web can get even a small firm’s promotional
message out to potential customers in every country in the world.
Businesses can use electronic commerce to identify new suppliers and business
Electronic Commerce increases the speed and accuracy with which businesses
can exchange information, which reduces costs on both sides of transaction
E-Commerce provides buyers with a wider range of choices than traditional
commerce because buyers can consider many different products and services
from a wider variety of sellers.
Electronic payments of tax refunds, public retirement and welfare support
cost less to issue and arrive securely and quickly when transmitted over the
Disadvantages of E-Commerce
Some business processes such as perishable foods and high-cost, unique items
such as custom-designed jewellery might be impossible to inspect adequately
from a remote location.
Costs, which are a function of technology, can change dramatically even during
short-lived electronic commerce implementation projects because the
technologies are changing so rapidly.
Many firms have trouble recruiting and retaining employees with the
technological, design and business process skills needed to create an effective
electronic commerce presence.
Firms facing difficulty of integrating existing databases and transactionprocessing software designed for traditional commerce into the software that
enables electronic commerce.
Companies that offer software design and consulting services to tie existing
systems into new online business systems can be expensive.
Consumers are fearful of sending their credit card numbers over the Internet
and having online merchants. Consumers are simply resistant to change and
are uncomfortable viewing merchandise on a computer screen rather than in
DRIVING FORCES OF E-COMMERCE
E-Commerce is becoming popular, it is worthwhile to examine today’s business
environment so let us understand the pressures it creates on organizations and
Environmental factors that create Business Pressures:
Market, economical, societal and technological factors are creating a highly
competitive business environment in which consumers are the focal point.
These factors change quickly, sometimes in an unpredictable manner and
therefore companies need to react frequently not only in the traditional actions
such as lowering cost and closing unprofitable facilities but also innovative
activities such as customizing products, creating new products or providing
superb customer service
One of the most evident benefits of e-commerce is economic efficiency resulting
from the reduction in communications costs, low-cost technological
infrastructure, speedier and more economic electronic transactions with
suppliers, lower global information sharing and advertising costs, and cheaper
customer service alternatives
Categories of Economic Forces
Lower marketing costs: marketing on the Internet maybe cheaper and can reach a wider
crowd than the normal marketing medium.
Lower sales costs: increase in the customer volume do not need an increase in staff as the
sales function is housed in the computer and has virtually unlimited Accessibility
Lower ordering processing cost: online ordering can be automated with checks to ensure
that orders are correct before accepting, thus reducing errors and the cost of correcting
New sales opportunities: the website is accessible all the time and reaches the global
audience which is not possible with traditional storefront
DRIVING FORCES OF E-COMMERCE
Corporations are encouraged to use e-commerce in
marketing and promotion to capture international
markets, both big and small. The Internet is likewise used
as a medium for enhanced customer service and support.
It is a lot easier for companies to provide their target
consumers with more detailed product and service
information using the Internet
Strong competition between organizations, extremely low
labour cost in some countries, frequent and significant
changes in markets and increased power of consumers are
the reasons to create market forces
DRIVING FORCES OF E-COMMERCE
The development of information and communications technology
(ICT) is a key factor in the growth of ecommerce.
For instance, technological advances in digitizing content, compression
and the promotion of open systems technology have paved the way for
the convergence of communication services into one single platform.
This in turn has made communication more efficient, faster, easier, and
more economical as the need to set up separate networks for telephone
services, television broadcast, cable television, and Internet access is
From the standpoint of firms/ businesses and consumers, having only
one information provider means lower communications cost
DRIVING FORCES OF ECOMMERCE-Societal and environmental forces
To understand the role of E-commerce in today’s organizations, it becomes
necessary to review the factors that create societal and environmental forces.
Changing nature of workforce
Shrinking government subsidies
Increased importance of ethical and legal issues
Increased social responsibility of organizations
Rapid political changes
The Benefits of EC
The new markets could be accessed through the online and
extending the service offerings to customers globally.
Internet shrinks the globe and broaden current geographical
parameters to operate globally
Marketing and promotional campaigns can be done globally at the
Retaining the customer and the customer services could be
Strengthen relationships with customers and suppliers
Streamline business processes and administrative functions
No added sales staff
Benefits of EC
A catalogue which is quickly and easily updateable. This means
that when prices or stocks are changed, you don’t have to have
hundreds or thousands of obsolete catalogues lying around. You
don’t have to wait for the printer to deliver the catalogue before
the new prices can come into effect.
The facility to advertise daily, weekly or monthly ‘specials’ and
sales, or any special discounts - and they can be changed within
minutes, when and if necessary.
You can also add a marketing message which highlights your
strengths, such as the range and quality of your products or
services - or anything else you want to tell your customers
Benefits to Organizations
Electronic commerce expands the marketplace to national and international markets. With
minimal capital outlay, a company can easily and quickly locate more customers, the best
suppliers, and the most suitable business partners worldwide.
Electronic commerce decreases the cost of creating, processing, distributing, storing, and
retrieving paper-based information. For example, by introducing an electronic procurement
system, companies can cut the purchasing administrative costs by as much as 85 per cent.
Ability for creating highly specialized businesses. For example, dog toys which can be
purchased only in pet shops or department and discount stores in the physical world, are sold
now in a specialized www.dogtoys.com
Electronic commerce allows reduced inventories and overhead by facilitating “pull”-type
supply chain management. In a pull-type system the process starts from customer orders and
uses just-in-time manufacturing.
Benefits to Organizations
Electronic commerce reduces the time between the outlay of capital and the
receipt of products and services.
Electronic commerce initiates business processes reengineering projects. By
changing processes, productivity of salespeople, knowledge workers, and
administrators can increase by 100 per cent or more.
Electronic commerce lowers telecommunications cost-the Internet is much
cheaper than VANs
Other benefits include improved image, improved customer service, newfound
business partners, simplified processes, compressed cycle and delivery
time, increased productivity, eliminating paper, expediting access to
information, reduced transportation costs, and increased flexibility
Benefits to Consumers
Electronic commerce enables customers to shop or do other transactions 24 hours a
day, all year round, from almost any location.
Electronic commerce provides customers with more choices; they can select.
Electronic commerce frequently provides customers with less expensive products and
services by allowing them to shop in many places and conduct quick comparisons.
In some cases, especially with digitized products, EC allows quick delivery.
Customers can receive relevant and detailed information in seconds, rather than days or
Electronic commerce makes it possible to participate in virtual auctions.
Electronic commerce allows customers to interact with other customers in electronic
communities and exchange ideas as well as compare experiences.
Electronic commerce facilitates competition, which results in substantial discounts
The Limitations of EC
The limitations of EC can be grouped into technical and non-technical
Technical Limitations of EC
There is a lack of system security, reliability, standards, and some
Insufficient telecommunication bandwidth.
The software development tools are still evolving and changing rapidly.
It is difficult to integrate the Internet and EC software with some existing
applications and databases.
Vendors may need special Web servers and other infrastructures, in
addition to the network servers.
Some EC software might not fit some hardware, or may be incompatible with
some operating systems or other components
Of the many non-technical limitations that slow the spread of EC, the following are
the major ones.
Cost and justification: The cost of developing EC in-house can be very
high, and mistakes due to lack of experience may result in delays.
There are many opportunities for outsourcing, but where and how to do it is not a simple
issue. Furthermore, to justify the system one must deal with some intangible benefits (such
as improved customer service and the value of advertisement), which are difficult to
Security and privacy: These issues are especially important in the B2C area,
especially security issues which are perceived to be more serious than they really are
when appropriate encryption is used. Privacy measures are constantly improved. Yet, the
customers perceive these issues as very important, and the EC industry has a very long
and difficult task of convincing customers that online transactions and privacy are, in
fact, very secure.
Lack of trust and user resistance: Customers do not trust an unknown
faceless seller (sometimes they do not trust even known ones), paperless
transactions, and electronic money. So switching from physical to virtual stores may be
Other limiting factor:. Lack of touch and feel online. Some
to touch items such as clothes and like to know exactly
what they are buying.
Many legal issues are as yet unresolved, and government
standards are not refined enough for many circumstances.
Electronic commerce, as a discipline, is still evolving and
Many people are looking for a stable area before they enter
are not enough support services. For
example, copyright clearance centres for EC transactions
do not exist, and high-quality evaluators, or qualified EC
tax experts, are rare.
In most applications there are not yet enough sellers and
buyers for profitable EC operations.
Electronic commerce could result in a breakdown of
Accessibility to the Internet is still expensive and/or
inconvenient for many potential customers. (With Web
TV, cell telephone access, kiosks, and constant media
attention, the critical mass will eventually develop.)
Despite these limitations, rapid progress in EC is taking