E - COMMERCE MUHAMMED JAMSHEED. M.B.A. II YEAR Srinivas School of Management, Mukka, Mangalore - 575021 E mail: firstname.lastname@example.org, email@example.com“Electronic commerce is sharing business information, maintaining businessrelationships and conducting business transactions by means of telecommunicationsnetworks’.The term e-commerce began to include: Electronic trading of physical goods and of intangibles such as information. All the steps involved in trade, such as on-line marketing, ordering payment and support for delivery. The electronic provision of services such as after sales support or on-line legal advice. Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams.Today, major corporations are rethinking their businesses in terms of the Internet andits new culture and capabilities and this is what some see as e-business.Differences between Electronic Commerce and traditional commerceThe major difference is the way information is exchanged and processed: Traditional commerce: o face-to-face, telephone lines , or mail systems o manual processing of traditional business transactions o individual involved in all stages of business transactions
E-Commerce: o using Internet or other network communication technology o automated processing of business transactions o individual involved in all stages of transactions o pulls together all activities of business transactions, marketing and advertising as well as service and customer supportBrief History • 1970s: Electronic Funds Transfer (EFT) – Used by the banking industry to exchange account information over secured networks • Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e- commerce within companies – Used by businesses to transmit data from one business to another • 1990s: the World Wide Web on the Internet provides easy-to-use technology for information publishing and dissemination – Cheaper to do business – Enable diverse business activities E-commerce Applications Supply Chain Management Video-on-demand Procurement and purchasing On-line Marketing and Advertising Home Shopping On- line banking Electronic bill payment E – ticketing
Online Shopping: Online shopping is the process consumers go through to purchase products or services over the Internet. An online shop, e-shop, e-store, internet shop, web shop, web store or online store is the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall. Online shopping is a type of electronic commerce used for business-to- business (B2B) and business-to-consumer (B2C) transactions. Online shoppers commonly use credit card to make paymentsOnline Banking: Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their bank. The common features provided by online-banking fall broadly into several categories: Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, and applications... apply for a loan, new account, etc.) Funds transfer between a customers own accounts, or to another customers account. Investment: purchase or sale. Loan applications and transactions, such as repayments. Non-transactional (example: online statements, chat with banks representative etc.) Bank statements
Shopping Cart Software: Shopping cart software is software used in e-commerce to assist people making purchases online, analogous to the American English term shopping cart. In British English it is generally known as a shopping basket. The software allows online shopping customers to place items in the cart. Upon checkout, the software typically calculates a total for the order, including shipping and handling (i.e. postage and packing) charges and the associated taxes, as applicable.Electronic Bill Presentment and Payment: There are a significant number of bills that consumers pay on a regular basis, which include: power bills, water, oil, internet, phone service, mortgages, car payments etc. Electronic bill presentment and payment (EBPP) is a fairly new technique that allows consumers to view and pay bills electronically. EBPP systems send bills from service providers to individual consumers via the internet. The systems also enable payments to be made by consumers, given that the amount that appears on the e-bill is correct. The biggest difference between EBPP systems and the traditional method of bill payment is that of technology. Rather than receiving a bill through the mail, writing out and sending a check, consumers receive their bills in an email, or are prompted to visit a website to view and pay their bills.
Electronic ticketing: An electronic ticket or e-ticket is used to represent the purchase of a seat on a passenger airline, usually through a website or by telephone. This form of airline ticket has rapidly replaced the old multi-layered paper tickets (from close zero to 100% in about 10 years) and became mandatory for IATA members as of June 1, 2008. During the last few years, where paper tickets were still available, airlines frequently charged extra for issuing them. Once a reservation is made, an e-ticket exists only as a digital record in the airline computers. Customers usually print out a copy of their receipt which contains the record locator or reservation number and the e-ticket number. Various applications of e-commerce are continually affecting trends andprospects for business over the Internet, including e-banking, e-tailing and onlinepublishing/online retailing.A more developed and mature e-banking environment plays an important role inecommerce by encouraging a shift from traditional modes of payment (i.e., cash,checks or any form of paper-based legal tender) to electronic alternatives (such as epayment systems), thereby closing the e-commerce loop. E-banking in developing countries is in the early stages of development. Mostbanking in developing countries is still done the conventional way. However, there is anincreasing growth of online banking, indicating a promising future for online banking in thesecountries.In most developing countries, the payment schemes available for online transactionsare the following:
Traditional Payment Methods● Cash on delivery. Many online transactions only involve submitting purchaseorders online. Payment is by cash upon the delivery of the physical goods.● Bank Payments. After ordering goods online, payment is made by depositing cashinto the bank account of the company from which the goods were ordered. Delivery islikewise done the conventional way. Electronic Payment Methods● Innovations affecting consumers, include credit and debit cards, automated tellermachines (ATMs), stored value cards, and e-banking.● Innovations enabling online commerce are e-cash, e-checks, smart cards, andencrypted credit cards. These payment methods are not too popular in developingcountries. They are employed by a few large companies in specific secured channelson a transaction basis.● Innovations affecting companies pertain to payment mechanisms that banksprovide their clients, including inter-bank transfers through automated clearing housesallowing payment by direct deposit.IMPACT OF ELECTRONIC COMMERCEE-commerce and e-business are not solely the Internet, websites or dot comCompanies. It is about a new business concept that incorporates all previousBusiness management and economic concepts. As such, e-business and e-commerceimpact on many areas of business and disciplines of business management studies.For example:Marketing: Issues of on-line advertising, marketing strategies and consumer behavior andcultures. One of the areas in which it impacts particularly is direct marketing. In thepast this was mainly door to door, home parties (like the Tupperware parties) and mailorder using catalogues or leaflets. This moved to telemarketing and TV selling withKey drivers of e-business the advances in telephone and television technology andfinally developed intoE-marketing spawning ‘eCRM’ (customer relationship management)data mining andthe like by creating new channels for direct sales and promotion.
Computer sciences: development of different network and computing technologies and languagesto support e-commerce and e-business, for example linking front and back officelegacy systems with the ‘web based’ technology.Finance and accounting: On-line banking; issues of transaction costs; accounting and auditingimplications where ‘intangible’ assets and human capital must be tangibly valued inan increasingly knowledge based economy.Economics: The impact of e-commerce on local and global economies; understanding theconcepts of a digital and knowledge-based economy and how this fits into economictheory.Production and operations management: The impact of on-line processing has led to reduced cycle times. It takesseconds to deliver digitized products and services electronically; similarly the time forprocessing orders can be reduced by more than 90 per cent from days to minutes.Production systems are integrated with finance marketing and other functionalsystems as well as with business partners and customersManagement information systems: Analysis, design and implementation of e-business systems within anorganization; issues of integration of front-end and back-end systems.Human resource management: Issues of on-line recruiting, home working and ‘entrepreneurs’ working on aproject by project basis replacing permanent employees.Business law and ethics: The different legal and ethical issues that have arisen as a result of a global‘virtual’ market. Issues such as copyright laws, privacy of customer information,legality of electronic contracts, etc.Types of E-commerce systems:B2B (Business-to-Business) B2B e-commerce is simply defined as e-commerce between companies. Thisis the type of e-commerce that deals between businesses.
B2C (Business-to-Consumer) Businesses selling to the general public through catalogs using shopping cartsoftware.C2B (Consumer-to-Business) A consumer posts his project with a set budget online and within hourscompanies review the consumers requirements and bid on the project.C2C (Consumer-to-Consumer) There are many sites offering free service , forums where individuals can buyand sell using the online payment systems like PayPal , E-goldBENEFITS OF E- COMMERCEBenefits of e-commerce to organizationsInternational marketplace: What used to be a single physical marketplace located in ageographical area has now become a borderless marketplace including national andinternational markets. By becoming e-commerce enabled, businesses now have accessto people all around the world. In effect all e-commerce businesses have becomevirtual multinational corporations.Operational cost savings: The cost of creating, processing, distributing, storing andretrieving paper-based information has decreasedMass customization: E-commerce has revolutionized the way consumers buy goodand services. The pull-type processing allows for products and services to becustomized to the customer’s requirements. In the past when Ford first started makingmotor cars, customers could have any color so long as it was black. Now customerscan configure a car according to their specifications within minutes on-line viathe www.ford.com website. Enables reduced inventories and overheads byfacilitating ‘pull’-type supply chain management – this is based on collecting thecustomer order and then delivering through JIT (just-in-time) manufacturing. This isparticularly beneficial for companies in the high technology sector, where stocks ofcomponents held could quickly become obsolete within months. For example,companies like Motorola (mobile phones), and Dell (computers) gather customerorders for a product, transmit them electronically to the manufacturing plant wherethey are manufactured according to the customer’s specifications (like color andfeatures) and then sent to the customer within a few days.
Lower telecommunications cost: The Internet is much cheaper than value addednetworks (VANs) which were based on leasing telephone lines for the sole use of theorganization and its authorized partners. It is also cheaper to send a fax or e-mail viathe Internet than direct dialing.Digitization of products and processes: Particularly in the case of software andmusic/video products, which can be downloaded or e-mailed directly to customers viathe Internet in digital or electronic format.No more 24-hour-time constraints. : Businesses can be contacted by or contactcustomers or suppliers at any timeBenefits of e-commerce to consumers24/7 access : Enables customers to shop or conduct other transactions 24 hours a day,all year round from almost any location. For example, checking balances, makingpayments, obtaining travel and other information. In one case a pop star set up webcameras in every room in his house, so that he could check the status of his home bylogging onto the Internet when he was away from home on tour.More choices: Customers not only have a whole range of products that they canchoose from and customize, but also an international selection of suppliers.Price comparisons : Customers can ‘shop’ around the world and conduct comparisonseither directly by visiting different sites, or by visiting a single site where prices areaggregated from a number of providers and compared(for example www.moneyextra.co.uk for financial products and services).Improved delivery processes: This can range from the immediate delivery of digitizedor electronic goods such as software or audio-visual files by downloading via theInternet, to the on-line tracking of the progress of packages being delivered by mail orcourier.An environment of competition: where substantial discounts can be found or valueadded, as different retailers vie for customers. It also allows many individualcustomers to aggregate their orders together into a single order presented towholesalers or manufacturers and obtain a more competitive price (aggregate buying),for example www.letsbuyit.com.
Benefits of e-commerce to societyEnables more flexible working practices: which enhances the quality of life for awhole host of people in society, enabling them to work from home. Not only is thismore convenient and provides happier and less stressful working environments, it alsopotentially reduces environmental pollution as fewer people have to travel to workregularly.Connects people: Enables people in developing countries and rural areas to enjoy andaccess products, services, information and other people which otherwise would not beso easily available to them.Facilitates delivery of public services. : For example, health services available overthe Internet (on-line consultation with doctors or nurses), filing taxes over the Internetthrough the Inland Revenue website.LIMITATIONS OF E- COMMERCELimitations of e-commerce to organizations:Lack of sufficient system security: reliability, standards and communicationprotocols. There are numerous reports of websites and databases being hacked into,and security holes in software.Facing increased competition: from both national and international competitors oftenleads to price wars and subsequent unsustainable losses for the organization.Problems with compatibility of older and ‘newer’ technology: There are problemswhere older business systems cannot communicate with web based and Internetinfrastructures, leading to some organizations running almost two independentsystems where data cannot be shared. This often leads to having to invest in newsystems or an infrastructure, which bridges the different systems. In both cases this isboth financially costly as well as disruptive to the efficient running of organizations.Limitations of e-commerce to consumersComputing equipment: is needed for individuals to participate in the new ‘digital’economy, which means an initial capital cost to customers. A basic technicalknowledge is required of both computing equipment and navigation of the Internetand the World Wide Web.Cost of access to the Internet: whether dial-up or broadband tariffs.
Cost of computing equipment: Not just the initial cost of buying equipment butmaking sure that the technology is updated regularly to be compatible with thechanging requirement of the Internet, websites and applications.Lack of security and privacy of personal data: There is no real control of data that iscollected over the Web or Internet. Data protection laws are not universal and sowebsites hosted in different countries may or may not have laws which protectprivacy of personal data.Physical contact and relationships are replaced by electronic processes. Customersare unable to touch and feel goods being sold on-line or gaugeVoices and reactions of human beings.A lack of trust because they are interacting with faceless computersLimitations of e-commerce to societyBreakdown in human interaction: As people become more used to interactingelectronically there could be an erosion of personal and social skills which mighteventually be detrimental to the world we live in where people are more comfortableinteracting with a screen than face to face.Social division: There is a potential danger that there will be an increase in the socialdivide between technical haves and have-nots – so people who do not have technicalskills become unable to secure better-paid jobs and could form an underclass withpotentially dangerous implications for social stability.Wasted resources: As new technology dates quickly how do you dispose of all the oldcomputers, keyboards, monitors, speakers and other hardware or softwareFacilitates Just-In-Time manufacturing: This could potentially cripple an economy intimes of crisis as stocks are kept to a minimum and delivery patterns are based on pre-set levels of stock which last for days rather than weeksSome of the Portals Accessible For Transactions in Indiaindiacar.com, automartindia.com – New and used car salesreddiff.com, beautyarcade.com, indiashop.com – General shoppingebay.com, flipkart.com – shopping
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