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INTRODUCTION WHAT IS E-COMMERCE?
Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily since the spread of the Internet. A wide variety of commerce is conducted in this way,
Spurring and drawing on innovations in electronic
Supply chain management
Online transaction processing Electronic data interchange (EDI) Inventory management systems Automated data collection systems.
A way of doing real-time business transactions via telecommunications networks, when the customer and the merchant are in different geographical places. Electronic commerce is a broad concept that includes virtual browsing of goods on sale, selection of goods to buy, and payment methods. Electronic commerce operates on a bona fide basis, without prior arrangements between customers and merchants. E-commerce operates via the Internet using all or any combination of technologies designed to exchange data (such as EDI or e-mail), to access data (such as shared databases or electronic bulletin boards), and to capture data (through the use of bar coding and magnetic or optical character readers)..
HISTORY Early Development
The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. Perhaps it is introduced from the Telephone Exchange Office, or maybe not. The earliest example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. The first online information marketplace, including online consulting, was likely the American Information Exchange, another pre-Internet online system introduced in 1991.Although the Internet became popular worldwide in 1994, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. And by the end of 2000, a lot of European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.
1990: Tim Berners-Lee writes the first web browser, Worldwide Web, using a NeXT
computer. 1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN 0312063598.
1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also becomes commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure. 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb. 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $150,000. The peer-to-peer file sharing software Napster launches. 2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion. Niche retail companies CSN Stores and
NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal. 2003: Amazon.com posts first yearly profit.
2007: Business.com acquired by R.H. Donnelley for $345 million.
2008: E-commerce sales projected to reach $204 billion, an increase of 17 percent over 2007.
Some common applications related to electronic commerce are:
E-mail and messaging Documents, spreadsheets, database Accounting and finance systems Orders and shipment information Enterprise and client information reporting Domestic and international payment systems Newsgroup
E-COMMERCE ADVANTAGES AND DISADVANTAGES E-Commerce Advantages
Being able to conduct business 24 x 7 x 365. E-commerce systems can operate all
day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically.
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.
Speed. Electronic communications allow messages to traverse the world almost
instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / e-commerce world.
Market space. The market in which web-based businesses operate is the global
market. It may not be evident to them, but many businesses are already facing international competition from web-enabled businesses.
Opportunity to reduce costs. The Internet makes it very easy to 'shop around' for
products and services that may be cheaper or more effective than we might otherwise settle for. It is sometimes possible to, through some online research, identify original manufacturers for some goods - thereby bypassing wholesalers and achieving a cheaper price.
Computer platform-independent, ‘Many, if not most, computers have the ability to
communicate via the Internet independent of operating systems and hardware. Customers are not limited by existing hardware systems' (Gascoyne & Ozcubukcu, 1997:87).
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'.
Stepping beyond borders to a global view. Using aspects of e-commerce
technology can mean your business can source and use products and services provided by other businesses in other countries.
E-COMMERCE DISADVANTAGES AND CONSTRAINTS
Time for delivery of physical products. It is possible to visit a local music store and
walk out with a compact disc, or a bookstore and leave with a book. 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. When you walk out of a shop
with an item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects 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.
Perishable goods. Forget about ordering a single gelato ice cream from a shop in
Rome! Though specialised or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer.
Limited and selected sensory information. The Internet is an effective conduit for
visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. 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 person
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? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.
Privacy, security, payment, identity, contract. Many issues arise - privacy of
information, security of that information and payment details, whether or not payment details (e.g. 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, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve.
Personal service. Although some human interaction can be facilitated via the web, ecommerce can not provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an informationrich counter attendant rather than a salesperson.
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 Internet has lead to the birth and evolution of electronic commerce or Ecommerce. E-commerce has now become a key component of many organizations in the daily running of their business. E-commerce challenges traditional organizational practices, and it opens up a vast array of issues that the organizations must address. By focusing on the varying levels of an organization, it soon becomes apparent what effect E-commerce can
have. An understanding of the implication E-commerce has on such organizational divisions can help businesses gain understanding hence plan for its inevitable continuing evolution.