Electronic commerce

The cutting edge for business today is electronic commerce
(e-commerce). Broadly defined, electronic commerce is a
modern business methodology that addresses the needs of
organizations, merchants, and consumers to cut costs
while improving the quality of goods and services and
increasing the speed of service delivery. That means of
electronic commerce consists of the buying, selling,
marketing, and servicing of product (business) or
services over computer networks.

What is Commerce?
Commerce

refers

to

all

the

activities

the

purchase and sales of goods or services.
Traditional commerce may be defined as:
The

exchange

commodities;
merchandise,

or

buying

esp.
on

a

the
large

and

selling

exchange
scale,

of
of

between

different places or communities; extended
trade or traffic.

What is E-Commerce?
Electronic commerce (e-commerce) is a general term
for

any

type

transaction

of

that

business,
involves

or
the

commercial
transfer

of

information across the Internet.
This covers a range of different types of businesses
from

consumer-based

retail

sites,

like

Amazon.com, through auction and music sites
like eBay or MP3.com, to business exchanges
trading goods or services between corporations.

What is E-Commerce?....Contd.

Electronic

commerce

is

the

use

of

electronic

communication to do business. E-commerce is not
about technology. It is not a new business. Ecommerce is a method for companies to create and
operate their business in new and efficient ways.
Most

fundamentally,

e-commerce

represents

the

realization of digital, as opposed to paper-based,
commercial

transactions

between

businesses,

between a business and its consumers, or between a
government and its citizens or constituent business.


E-commerce has prefix ‘E’ to Commerce and ‘E’ is the
reason why commerce will be out one day, and ecommerce will come gushing into our lives very
rapidly. This prefix does not only add electronic to
commerce,

but

it

adds,

energy,

effectiveness,

efficiency, economy, ease, edge, entry into new
markets and with a click, the entire world shrinks to
a market, where business can be easily done.

Traditionally, the definition of e-commerce has focused on
Electronic Data Interchange (EDI) as the primary means of
conducting business electronically between companies having a
pre-established contractual relationship.
Recently, the definition of e-commerce has broadened to
encompass business conducted over the Internet and includes
individuals and companies not previously known to each other.
E-commerce encompasses the entire online process of
developing, marketing, selling, delivering, servicing, and
paying for products and services purchased by Internet.
Electronic commerce systems rely on the resources of the
Internet, intranet, extranets, and other computer networks to
support every step of this process.



According to Bajaj and Nag, “E-commerce refers to the
paperless exchange of business information using Electronic
Data Interchange, Electronic Mail, Electronic Bulletin Boards,
Electronic Funds Transfer and other network-based technologies.
It

is

not

only

automates

manual

processes

and

paper

transactions, but also helps organizations move to a fully
electronic environment and change the way they operate”.


According to Organization for Economic Cooperation and
Development (OECD), "Electronic commerce refers generally to
all forms of transactions relating 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."

According to European Union, "Electronic is about doing business
electronically. It is based on the electronic processing and
transmission of data, including text, sound, and video. It
encompasses

many

diverse

activities

including

electronic

trading of goods and services, online delivery of digital content,
electronic fund transfers, electronic share trading, electronic
bills of lading, commercial auctions, collaborative design and
engineering,

online

sourcing,

public

procurement,

direct

consumer marketing, and after-sales service. It involves both
products (consumer goods, specialized medical equipment) and
services (information services, financial and legal services);
traditional activities (healthcare, education) and new activities
(virtual malls)."

That means e-commerce is• Business activities running over the Internet and World
Wide Web platform
• Use of TV and toll-free telephones in business are not
usually associated with e-commerce
• Depending on the situation, electronic data interchange
(EDI) may or may not be associated with e-commerce. EDI is
used for business-to-business transactions.
Examples of e-commerce:
– Buying books on Amazon.com
– Promoting cars on Toyota.com
– Participating in auctions at eBay.com
– Customer support at Fedex.com
– Industrial exchanges such as Covisint.com



A market is a network of interactions and
relationships

where

information,

products,

services, and payments are exchanged.


The

market

handles

all

the

necessary

transactions.


An electronic market is a place where shoppers
and sellers meet electronically.

ce E
l



In

electronic

markets,

sellers

and

buyers

negotiate, submit bids, agree on an order, and
finish the execution on-or off-line.

The Internet’s growth rate has far surpassed the growth rates
of

any

previously

introduced

electronic

information

dissemination mediums such as radio, television etc. The
Internet is a very unique infrastructure in that it is “owned” by
no one. The origin of the Internet has been traced to an
experimental networks established first in 1965 with funding
from the Advanced Research Project Agency of the US
Department of Defense (DoD), to enable the scientists engaged
on DoD projects to communicate with one another. The
Internet came “on-line” in 1969 as a joint project between the
Defense Advanced Research Projects Agency (DARPA) and four
university host computers.

More computer sites were added to the network, and electronic
mail was introduced in 1972. Over the next decade, the National
Science Foundation (NSF) became involved, and various standard
setting bodies to help structure and develop the Internet were
formed. Throughout the 1970s and 1980s, the network expanded
as technology became more sophisticated. In the early 1980s, the
commercial sector became increasingly interested in the Internet
and began to funnel resources into commercial Internet uses. In
1984, the Domain Name System (DNS) was introduced, giving
the world domain suffixes, such as edu, com, gov, and org, and a
series of country codes. This system made the Internet much more
manageable for people to use. Without it, users had to remember
the Internet Protocol (IP) address of every Internet site they wanted
to visit a long series of numbers, instead of a string of words.

The WWW was not prototyped until 1990, when Tim
Berners-Lee implemented his groundbreaking concepts and
became known as its father. The Web was popularized by
1993

release

of

a

graphical,

easy-to-use

browser.

Throughout the 1990s, personal computer (PCs) became
more powerful and less expensive, allowing millions of
people to buy them for their homes and offices. Internet
service

providers

(ISPs),

such

as

America

Online,

CompuServe, and many local providers, began offering
affordable dial-up connections to the Internet. The ease of
use of the WWW has contributed to the Internet’s
exponential growth rates.

Ecommerce became possible in 1991 when the Internet was
opened to commercial use. Since that date thousands of
businesses have taken up residence at web sites. At first, the
term ecommerce meant the process of execution of commercial
transactions electronically with the help of the leading
technologies such as Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT) which gave an opportunity for
users to exchange business information and do electronic
transactions. The ability to use these technologies appeared in
the

late

1970s

organizations
electronically.

and
to

allowed
send

business

commercial

companies

and

documentation

Although the Internet began to advance in popularity among the
general public in 1994, it took approximately four years to develop
the security protocols (for example, HTTP) and DSL (Digital
Subscriber Line) which allowed rapid access and a persistent
connection to the Internet. In 2000 a great number of business
companies in the United States and Western Europe represented
their services in the World Wide Web. At this time the meaning of
the word ecommerce was changed. People began to define the term
ecommerce as the process of purchasing of available goods and
services over the Internet using secure connections and electronic
payment services. By the end of 2001, the largest form of
ecommerce, Business-to-Business (B2B) model, had around $700
billion in transactions.

History of ecommerce is unthinkable without Amazon and
Ebay which were among the first Internet companies to allow
electronic transactions. Thanks to their founders we now have a
handsome ecommerce sector and enjoy the buying and selling
advantages of the Internet. Currently there are 5 largest and
most famous worldwide Internet retailers: Amazon, Dell,
Staples, Office Depot and Hewlett Packard. According to
statistics, the most popular categories of products sold in the
World Wide Web are music, books, computers, office supplies and
other consumer electronics. History of ecommerce is a history of a
new, virtual world which is evolving according to the customer
advantage. It is a world which we are all building together brick by
brick, laying a secure foundation for the future generations.

E-Commerce Trends: The Story of Amazon.com

E-Commerce Trends: The Story of Amazon.com.............contd.

In 1994, a young financial analyst by the name of Jeff Bezos was
full of hope about the potential of doing business on the
Internet. He sat down one evening and came u with a list of 20
products he believed would sell well on the Internet. Books
were number one. Three years later he formed Amazon.com.
Bezoz had never sell book in his life, but he figured that books were
small-ticket items that would be easy and inexpensive to ship.
They are the type of product customers do not have to inspect
before they decide to buy. Bezos figured that there were
probably over five million book titles worldwide in a given year,
and that no bookstore could conceivably stock more than a
fraction of the total. He developed a strategic plan for selling
books online.


Rest of the story like this........
Bezos improved on the initial plan of selling books by
capturing the comments and recommendations of
buyers on the site-like the friendly salesperson in a
store offering advice on which books to buy. The Web
site tracks customer traffic, the number of visitors who
access the site, how long they stay, what pages they
click on, and so forth. By carefully evaluating buying
patterns, promotion, and selling. Bezos fine-tuned
Amazon.com to become a highly respected Internet
business.


Surviving the 2001-2003 recession, Amazon.com began
to expand beyond books into music, hardware, and
electronics. Today, the company has added a wide
range of products, including cakes, cheese, and coffee.
Amazon’s Web sites list over 200 merchants in its food
department

alone.

Orders

for

food

items

are

electronically sent to food merchants for delivery.
Amazon takes a commission for simply being an
intermediary.


According to the research conducted in 2008, the
domain Amazon.com attracted about 615 million
customers every year. The most popular feature of the
web site is the review system, i.e. the ability for visitors
to submit their reviews and rate any product on a
rating scale from one to five stars. Amazon.com is also
well-known for its clear and user-friendly advanced
search facility which enables visitors to search for
keywords in the full text of many books in the
database.

E-business and E-commerce

Electronic business or e-business is the use of ICT to
improve business (from the use of email to facilitate
administrative

procedures

in

buying

and

selling

through the Internet).
Electronic commerce or e-commerce is where business
transactions take place via electronic communication
networks, especially the Internet.

E-business goes beyond a Web Site on the Internet to affect all
aspects of business, from strategy and process to trading partners
and the ultimate

consumer. It combines the resources of

traditional information systems with the global reach of the Web.
In e-business, organizations have several goals in mind:
•Reach

new markets

•Create

new products or services.

•Build

customer loyalty.

•Enrich
•Make

human capital.

the best use of existing and emerging technologies.

•Achieve

market leadership and competitive advantage.

In contrast, e-commerce is selling goods and services on the
retail level with anyone, anywhere, via the Internet. It includes
new business opportunities that result in greater efficiency and
more effective exchange of goods and services.
E-commerce has broken ground in several ways:
•Companies
•Suppliers
•Corporate

share information with competitors.

share information with buyers.
procurement is no longer determined solely on

price.
•Financial

transactions occur with the involvement of banks.

E-business vs. E-commerce
The main difference between them is that e-commerce defines
interaction between organizations and their customers, clients,
or constituents. On the other hand, e-business is broader term
that also encompasses an organization’s internal operations.
Electronic commerce describes the buying and selling of
products, services, and information via computer networks
including

the

Internet,

broadest definition of EC.

where

e-Business

describes

the

It includes buying and selling of

products and services, servicing customers, collaborating with
business partners, and conducting other intra-business tasks.

E-business and e-commerce

Three alternative deﬁnitions of the relationship between e-business
and e-commerce

E-Business concepts
E-business defined from the following perspectives:


Communications:

delivery

of

goods,

services,

information, or payments over computer networks
or any other electronic means.


Commercial

(trading):

buying

selling

and

provides

products,

capability
services,

of
and

information on the Internet and via other online
services.

E-Business concepts (cont.)


Business process: doing business electronically
by completing business processes over electronic
networks, thereby substituting information for
physical business processes.



Service: a tool that addresses the desire of
governments, firms, consumers, and management
to cut service costs while improving the quality of
customer service and increasing the speed of
service delivery.

E-Business concepts (cont.)


Learning: an enabler of online training and
education in schools, universities, and other
organizations, including businesses.



Collaborative: the framework for inter- and
intra-organizational collaboration.



Community: provides a gathering place for
community members to learn, transact, and
collaborate.

Sophisticated technology of the computers and value added
network services are essential for the development of ecommerce network. Key technologies and procedures
that are needed to e-commerce are Internet, e-mail,
electronic

document

management,

electronic

data

interchange, electronic fund transfer, security, credit
card, workflow processing, imaging, networking and
interconnectivity between them. The Internet access
system requires a personal computer that is connected
by telephone to the Internet or Internet access can be
cable based.

e-commerce

depends

on

a

series

of

underlying

infrastructures as outlined below:


Network Infrastructure covers the media required for
moving information, and thus includes the Internet as well
as cable television, telecommunication networks, and
private corporate networks, internet and extranet etc.



Production

Infrastructure

focuses

on

a

company’s

products (soft goods and hard goods) and what it takes to
create them. Some of the concerned items are databases,
multimedia

authoring,

manufacturing etc.

information

production,



Distribution Infrastructure that helps customers to get
products and services like e-mail, on-line catalogs,
databases,

networked

communities,

and

shipping

infrastructure.


Delivery Infrastructure, that needed for delivery of
goods like efficient courier service system.



Service Infrastructure handles such processes as
payments, customer support and security; and the
associated items are EDI, credit cards, digital cash, ecash, digital signature etc.

Browse Web Sites
Find product(s) from online catalog on the merchant’s Web page
Select item(s) to be purchased
Merchant provides an order form electronically
Customers fill the form and select the electronic payment instrument
Send the form to the merchant electronically
Merchant validates and confirms financial information
Merchant sends the confirmation of the order and payment
Merchant sends the product or service through the Net or Courier
Merchant requests payment from the consumer’s financial institute

Selling or purchasing over e-commerce results in savings of
time, energy and costs, because the merchants provide
detailed information about the products or services on the
Web sites and the buyer will just click the product to get the
same before his or her door within a very short period after
placing purchase order through the Net.
E-commerce is not just a matter of reducing costs as well as
reaching out new efficiencies, performing tasks with greater
speed and convenience, replacing existing commercial paper
based transactions with electronic transactions and not
doing any thing physically or manually that will assure longterm competitive advantages of a business.

There are benefits of electronic commerce to all involved
parties.
A bank benefits from reduced cash handling charges, and from a
new attractive service form they can provide their customers.
Customer behavior can be adapted to, due to interactivity in
electronic commerce. It is also easy to keep information up-to-date.
Retailers also benefit from reduced cash handling charges and they
do not need to store large amounts of money in their store. At the
end of the day they can transfer the money to the bank with one
transaction. This also results in a benefit of less robbery.
Consumers will notice how easily one can withdraw cash from
home and how prices will go down due to reduced service and order
costs.

Benefits of Business Enterprises
•Entering
•Benefits
•Lower

Global Market
over EDI

Procurement Processing Costs

•Keeping

Lower Inventory

•Enhanced
•Increase

Customer Service

Sales

•Easier

Money Transaction

•Lower

Advertising Cost

•Reduce

Distribution Cost

•Marketing
•Strong

of Product More Quickly

Customer-Business Relationship

•Diminishing
•Cost
•An

the Importance of the “Middleman”

of Acquiring, Serving and Retaining Customers is Cheap

Extended Enterprise is Easy to Build


Entering Global Market: There is an opportunity for
small and medium business/companies, apart from the
big ones to enter into global market through Internet with
a minimum entry cost. Internet creates an opportunity for
small and medium enterprises to make information on its
products and services available to the potential customers
in the worldwide market. E-commerce also helps to
breaks the social and political obstacles of entering world
market and business growth, especially in the developed
countries.

Benefits Over EDI: Business through electronic commerce is more
beneficial than tradition EDI commerce. The cost and installation of
EDI systems is generally quite high, and is has typically only been
beneficial to large firms that have enough sales volume to justify the
costs of developing their own networks or subscribing to a valueadded network. On the other hand, because of the low cost of
connecting to the Internet, medium and small business can now
afford

the

connection

cost.

Further,

because

of

software

developments that allow web-based EDI systems to interface with
traditional EDI systems, business of all sizes can now transact with
one another. This vastly expands the number of potential electronic
business partners, some of which may be a substantial, geographical
distance away. The Internet offers a greater choice of global partners
with which to conduct electronic commerce.


Lower Procurement Processing Costs: Procurement costs can be
lowered by consolidating purchases, developing relationships with
key

suppliers,

negotiating

volume

discounts,

and

greater

integration of the manufacturing process. Procurement costs can
be lowered for all companies, regardless of size, due to the
increased ability to transact electronically with one another. A
wider net can be cast when searching for suppliers. Options for
partnering with other firms increase. For example, small and midsize companies benefit because they are now able to conduct
business with the larger firms that are casting the wider nets. The
smaller firms also have the opportunity to reduce their processing
costs by using integrated electronic processing systems.

Keeping Lower Inventory: A reduction in inventory is desirable
because of the associate reduction on storage, handling,
insurance

and

commerce

can

administrative
help

firms

to

costs.
more

Internet
optimally

electronic
order

the

inventories by electronically linking suppliers and purchases
together and allowing them to share updated production
forecasts and projected inventory levels in order to allow both
parties to collaboratively “fine-tune” their production and
delivery schedules. Business can also use the Internet to
“upload” unwanted inventory or sell excess capacity very quickly
and with extremely low marketing costs.


Enhanced Customer Service: Customer service can be enhanced
using Internet electronic commerce by helping the customer to
access information before, during, and after the sale. Before the
sale is made, customers can electronically retrieve product
specifications, quantity, and pricing information. During the
product/service fulfillment cycle, customers can electronically
check on the status of the order. Support services for customers
are also enhanced by electronic services, such as electronic
notification of returned items and the ability to download and
print the necessary documentation and shipping costs result for
both the buyer and seller.


Increase Sales: E-commerce is a new channel of selling goods
and services over the Net. With the help of a Web site, a
company can automatically enter in to a global market and
become a global provider of goods and services. On the other
hand, the smaller sellers get a chance to compete against
largest competitors in almost every field. In this way, a
business or company can increase sales.

Easier Money Transaction: In e-commerce, transaction of money
is easier than traditional way of transaction, because transactions
of money are processed at faster speeds, more easily and it is less
expensive. There are some benefits of transaction of money
electronically as follows•Retailers’ benefits from reduce cash handling charges and they
do not need to store large amount of money in their cash box, and
this brings benefits retailers from robberies.
•A bank benefits from reduced cash handling charges, and from a
new attractive service that can provide to their customers.
•Customers get more security by not carrying cash, which
someone can steal.


Lower Advertising Cost: Without advertising it is hard to
sell products, unless the product is an essential one and
the only available in the market and e-commerce reduce
advertising cost than other media like magazine, television
etc. Companies can use web sites as their billboard for
interactive advertisements, and reach huge an international
audience.

Small

companies

can

afford

this

kind

of

advertising and can easily enter into world markets
electronically.

Reduce Distribution Cost: By using electronic commerce,
distribution cost can be minimize up to 50 to 80 percent of
consumer products, because of shrinking existing distribution
chains. Therefore, using of e-commerce can achieve substantial
savings and the prices of a product can be reduced.
Marketing of Product More Quickly: E-commerce provides very
easy way to get in touch with the customer at worldwide market.
By taking the entire product design process online-drawing
partners and customers in to the process and removing the
traditional communication barriers that prevent rapid product
design and creation- companies can bring products and services
to market far more quickly


Strong

Customer-Business

commerce,

business

can

interactive

relationship

Relationship:

engage

that

By

customers

result

in

using

in

a

customers

e-

direct
getting

precisely what they want and when they want and everything
from purchase orders to fund transfer can be handled faster
and more efficiently and even easier payment processing,
resulting

in

reduced costs.

stronger

customer

relationships

with

much

Diminishing the Importance of the “Middleman”: E-commerce is
capable of eliminating intermediaries. If the vendor wants to be
successful in global marketing with Internet, he will have to figure out
how to replace some of the functions that distributor used to fulfill.
By eliminating distributors, the price becomes considerably less, the
vendor’s margin will be increase, and the company becomes more
efficient, producing better financial results. Therefore, by using ecommerce, a vendor can avoid extra cost of doing business.
Cost of Acquiring, Serving and Retaining Customers is Cheap: It
is relatively cheaper to acquire new customers over the net; because
of round the clock operation and reach global customer is relatively
easy on the net. Through innovative tools of ‘push’ technology, it is
also possible to retain customers’ loyalty with minimal investments

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 extended your enterprise all the way to your
suppliers and business partners like distributors, retailers and
ultimately your end-customers. Internet provides an effective
(often 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 net, permitting amazing efficiency in time
needed to market, customer loyalty, on-time delivery and
eventually profitability

Benefits of Customers

Some benefits that customers may expect to receive from
e-commerce are:
•High

Satisfaction of Customer

•Shorter
•Choice

Time to Shopping

of Vendors

•Convenience
•Price

of Shopping

Comparisons

High Satisfaction of Customer: By e-commerce it is possible
to increase satisfy customer, because the Internet being always
open, 24 hours a day, 7 days a week and 365 days a year that
makes the business consequently always open and companies
always

keeps

information

up-to-date.

Internet

has

no

boundaries so a customer can shop from home, working place,
or anywhere they can make a connection with Net. On the other
hand, by connecting the e-commerce and shipping systems, it
would be possible to ship products faster for less money. On
the other hand easy to purchase, wider choice, lower price,
flexibility of time, and distance to enter into buying and selling
goods makes customs more satisfied


Shorter Time to Shopping: Nowadays, people become so
busy and it is difficult to manage time to go shopping, to
deal in business transactions, to go to bank to deposit or
withdrew amount from the bank, to transmit data, and to
exchange views. To make easy of these things, they are
increasingly use electronic media and telecommunicationsbased tools


Choice of Vendors: Customers have an increased choice of
vendors

because

they

are

no

longer

geographically

constrained by a reasonable walking or driving distance.
Customers have a greater choice of services they can receive
from global Internet companies. For example, a foreign-born
resident of the U.S. may subscribe to an electronic news
service from his/her home country and receive an electronic
“newspaper” on a daily basis that is sent directly from
his/her home country’s news service

Convenience of Shopping: The convenience of shopping at home allows
customers to shop when it is convenient for them and not during the store
hours. For handicapped or ill consumers, the ability to shop from home
opens up new shopping opportunities and offers greater convenience. For
busy employees that work long-hours, the ability to take care of some
errands may ease their tension and allow them to actually devote more
time is of better quality to their tasks. For example, busy workers facing
overtime may need to complete some personal errands, including grocery
shopping, buying and mailing a birthday present, and retrieving some
income tax forms to complete their tax return. While these errands may
require a total time of two hours if done physically, they may all be
conducted on the Internet in 15-20 minutes total. Thus, if employees can
perform these tasks during their lunch hour, they may still have time to
eat, reduce stress regarding their personal life, and feel better prepared to
face the rest of the day’s workload


Price Comparisons: Search engines and intelligent agents, are
making the process of sorting through information and
conducting price comparisons increasingly easier. Information
is buying power to consumers, and the Internet is unleashing
access to vast amount of information. How will Internet vendors
compete if price comparison is so easy? They are quickly
learning that service and reliability are also important.
Amazon.com does not just sell books and music, it provides
book and music reviews, suggest other books that may be of
interest based on the books being examined, and provides
sound clips for many of the music titles. It also provides
inventory status and expected shipping time

Disadvantages of E-commerce
Online selling is not so easy. It needs aggressive pricing, and
customer

service;

logistics,

infrastructure

investments

and

marketing; thus, for those looking for short-term profits, it may a
big disappointment. On the other hand, e-commerce is possible
only when the customers can provide his credit-card number. But
there is no guarantee that it will be confidential.
Disadvantages that hinder e-commerce can be listed below as:
•Lack
•A

of proper security.

customer cannot select of a product through personal
inspection.

•The
•It

assessment of all leveled taxes cannot be done properly.

needs strong infrastructure and huge investments.

•It

needs the electronic payment (credit-card, e-cash etc.) system
which is now just on the swing.

•Difficulties
•High
•It

in ensuring secure digital transfers via the Internet.

initial cost of introducing online payments mechanisms.

needs high awareness in the field of computers.

•There

is no security for the reliability of the available data on
the computer.

•Inability

to sell some products (e.g. high cost jewelry and

ai D
s

perishable foods etc.)

Issues and Constraints of E-commerce
i.

The Cost Factor

ii.

Security

iii.

System and Data Integrity

iv.

System Scalability

v.

E-commerce is Not Free

vi.

Fulfillment and Customer Relations Problems

vii.

Culture, Language, and Trust Issues

viii.

Corporate Vulnerability

The

Cost

Factor:

infrastructure,
sophisticated

you

To

set

need

interactive

up

an

cash.

Web

site,

e-commerce
Beyond
you

a

need

networks, servers, terminals, software, staffing, and
training. Transaction costs are another issue. The
electronic marketplace appears to be a perfect
market, where worldwide sellers and buyers share

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information and trade without intermediaries.

Security: With spamming, spying, file corruption, and
malicious misuse, no company can afford to do
business

online

without

protection

via

firewalls,

specialized, antivirus products, and the like. For
millions of potential cyber-customers, the fear of credit
theft and identity theft continues to be a concern. The
goal of an online merchant is to assure customers
secure lines and secure sites that will protect their

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privacy, whatever the transaction.

System and Data Integrity: Data protection and the
integrity of the system that handles the data are serious
concerns. Computer viruses are rampant, with new
viruses discovered every day. Viruses cause unnecessary
delays, file backups, storage problems, and like. The
danger

of

hackers

accessing

files

and

corrupting

accounts adds more stress to an already complex

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operation.

System and Data Integrity: Data protection and the
integrity of the system that handles the data are serious
concerns. Computer viruses are rampant, with new
viruses discovered every day. Viruses cause unnecessary
delays, file backups, storage problems, and like. The
danger of hackers accessing files and corrupting accounts

ussI

adds more stress to an already complex operation.

System

Scalability:

A

business

develops

an

interactive interface with customers via a Web site.
After a while, statistical analysis determines whether
visitors to

the

site

are

one-time

or

recurring

customers. If the company expects two million
customers and six million shows up, Web site
performance is bound to experience degradation,
slowdown, and eventually loss of customers. To keep

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this problem from happening, a Web site must be
scalable or upgradable on a regular basis

E-commerce is Not Free: For a long time, success stories
in e-commerce have favored large businesses with deep
pockets and smart funding. Small retailers that go headto-head with e-commerce giants could be in for a
surprise. As in the brick-and-mortar environment, they

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simply cannot compete on price or product offering.

Fulfillment and Customer Relations Problems: Tales of
shipping delays, merchandise mix-ups, and Web sites
crashing under pressure continue to be problems in etailing. Customer confidence in e-commerce’s ability to
deliver during heavy shopping seasons continues to be a
concern. Even happy customers say the experience could be
improved. Customer relations management (CRM) is taking
on high priority as more and more e-merchants have found
that without prompt delivery of products and quick

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response to customer complaints, they are not going to
make any headway in the e-industry.

Culture, Language, and Trust Issues: In addition to these
generic problems and drawbacks, there are global issues as
well. When e-commerce and the Internet went global, there was
an obvious pressure to adapt e-marketing, e-products, and
interfaces to culture expectations and constraints. Culture is
the set of norms and innate values of a community, a society, or
a region.. A firm launching a business in a new country must be
aware of the culture as well as the language of that culture.
Trust is another issue that needs to be addresses. When the
Internet is perceived to be an unreliable environment with a

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great number of anonymous users, customers are cautious in
communicating via the Internet.

Corporate Vulnerability: The availability of product
details, catalogs, and other information about a business
through its Web site makes it vulnerable to access by the
competition. The idea of extracting business intelligence

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from the competitor’s Web pages is called Web farming.

Electronic commerce

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