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E-Commerce

1. INTRODUCTION TO E-COMMERCE

1.1 INTRODUCTION: 21st century is referred as the Information Age/Technology. The information age is charaterised by the extensive use of global communication networks which is called as Internet. Information Age is the knowledge-based industrial revolution. The globalisation of business and accessing the global information has given a new dimension to the concept of information. The internet has changed the way in which the world conducts the business. The free flow of information without any geographic and national barriers is enabled by internet. Information Age is the knowledge-based industrial revolution. Information Technology and business come together to provide better service to the customers. Now-a-days business owners around the world are turning to the internet to conduct the business. Information gathering, processing, manipulating and distributing are common functions of trading.
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These functions are possible with the help of internet. Because of the high speed and processing capability of computers, these are used in network to communicate with buyers and sellers to conduct business transactions. Today computers in networking are processing electronic marketing. Electronic Commerce means buying and selling of goods and services across the internet. An e commerce site can be as simple as a catalog page with a phone no, or it can range all the way to a real time credit and processing site where customer can purchase downloadable goods and receive them on the spot. E-Business is the creation of new, and the redesigning of existing value chains and business processes through the application of information technology. Naturally, e-Business is more than e-commerce. It expands the scope of e-commerce to transform the company and the industry itself. If you have something you'd like to sell on the Net, new technologies have opened up an array of e-commerce options -- there's one to suit every need and requirement. Most importantly, e-commerce is safe. Experts tell us that online transactions are every bit as safe as face to face transactions-- although neither can be guaranteed to be 100% risk free. You're just as likely to be mugged on your way to the Bank Machine as you are to run into security problems with Internet commerce! An alternate definition of E-commerce might view it as the conduct of business commercial communications and management through electronic

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methods, such as electronic data interchange and automated data-collection systems. Electronic commerce may also involve the electronic transfer of information between businesses (EDI). The meaning of the term electronic commerce has changed over time. Originally, electronic commerce meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) to send commercial documents like purchase order or invoices electronically. Today it includes activities more precisely termed Web commerce the purchase of goods and services over the World Wide Web via secure servers (note HTTPs, a special server protocol which encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic pay services, like credit card pay authorizations. E-Commerce is also the exchange of goods and services for money. In the olden days, there was a form of commerce called the barter system in which goods were exchanged in lieu of other goods or services. By the time paper money was introduced, its use revolutionized the way the commerce was conducted. In recent years, commerce is also being conducted via electronic medium like the internet. This commerce is called E- Commerce. Electronic commerce (E- Commerce) is an integration of communication services, data management, and security mechanism that allows organisations to exchange information about the sale of gods and services, where:

E-Commerce

Communication Services support the transfer of information from the buyer to the seller electronically. Data Management is the exchange and storing of data in a uniform format to facilitate easy exchange of information. Security Mechanisms authenticate the source of information and guarantee the integrity and privacy of information. In other words, E-Commerce involves marketing, retailing, customer service, banking, billing, corporate sector purchasing, secure distribution of data, and other value-added services over the Internet.

1.2 PROSPECTS OF ELECTRONIC COMMERCE:


Many believe that e-commerce will increase exponentially in the coming years: It is estimated that 148 million people are online and this figure is likely to double even much more year by year. In 1999, 100 million shoppers are expected to send an estimated US $15 million in the cyber market space. IDC estimates online sales to consumers are set to increase more than twenty-fold by 2001. US department of commerce in April 1998 report predicted (Ref. The Emergent Digital Economy) that e-commerce may account for more than US $300 million annually by 2002.
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Areas expected to grow include financial services, entertainment, travel and groceries. The jackpot returns from e-commerce depend a lot on how the business processes are being leveraged by the electronic transmission. Longer a company waits; the more difficult it will be smaller companies to establish their presence, as per experts in the field. In the next few years, the world and the world of marketing in particular are to be entirely transformed by the yet-to-be realized potential of e-commerce.

1.3 DEFINITION OF ELECTRONIC COMMERCE:


Electronic Commerce means buying and selling of products or services by businesses and consumers over the internet. E-commerce is the business environment in which information for buying, selling and transportation of goods and services moves electronically. Definition: E-commerce means selling and buying products and services through web storefronts. E-commerce is the powerful business environment that gets created when you connect directly to customers, vendors and business partners by using internet. Today that means conducting business over the internet. Ecommerce provides open and global electronic market place. It is the paperless exchange of business information. In E-commerce business

E-Commerce

information is exchanged by using EDI, E-mail, Electronic bulletin Boards and Electronic Funds Transfer. Modern businesses are changing their operations to increase supply capabilities, global competition and customer expectations. E-commerce supports such changes on a global scale. Since E-commerce is concerned with attracting new customers, so it involves in marketing functions like advertising, public relation, customer information, order processing, backoffice, accounting and administration. E-commerce is a modern business methodology. It addresses the needs of organizations, merchants and consumers to cut cost and to improve the quality of goods and services. In E-commerce products traded may be physical products or digital products. Physical products include cars or services, online consultation and remote education. Generally digital products are traded such as news, audio and video, database software and all knowledge-based products etc. In this way E-commerce helps the organization to move towards a fully electronic environment.

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1.4 HISTORY:

1.4.1 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. 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

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consulting, was likely the American Information Exchange, another preInternet online system introduced in 1991. 1.4.2 Business applications: 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.

1.4.3 Government regulations: In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers personal information. As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.

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1.4.4 Forms: Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce. On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books, grocery to expensive items like real estate. Another example will be online banking like online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All these activities can be done with a few keystrokes on the keyboard. On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce these days.

1.5 SCOPE OF ELECTRONIC COMMERCE:


Electronic Commerce (e-commerce) is a term is popularised after the invention of commercial services on the internet. Internet e-commerce is only one part of the overall sphere of e-commerce. Three categories of ecommerce are: (i) Electronic Market (ii) Electronic Data Interchange (EDI) (iii) Internet Commerce.

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1.

Electronic Market: An electronic market is the use of information

and communication technology to present variety of offerings available in a market segment. Electronic market is the virtual representation of physical market. Electronic market is a perfect market where there are world wide buyers and sellers, and have detailed information about the market.

2.

Electronic Data Interchange (EDI): EDI provides a standard system

for coding trade transactions that can be communicated directly from one computer system to another. EDI docs not require printed orders and invoices. EDI does not create any new process, but it expands the existing business processes. Supermarket chains use EDI for transactions with their suppliers.
3.

Internet commerce: Information and communication technologies

can also be used to advertise and make once off sales of a wide range of goods and services. This type of e-commerce is possible by the commercial use of the internet. The internet can be used for the purchase of books that are then delivered by post.

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1.6 DIFFERENCE BETWEEN TRADITIONAL COMMERCE V/S. E-COMMERCE:


Traditional commerce is related to local market and product attributes are selected by seller. E-commerce captures the Global Market and it provides 24 hours service to the customers. There is a lot of difference between traditional commerce and E-commerce which is as follows: Traditional Commerce 1. 2. 3. 4. 5. 6. 7. 8 Scope is local or regional. 1. Time required for business 2. transaction is in terms of week. Product Attributes are selected by 3. seller. Prices are listed by taking over 4. view of local market. Service is available between 5. 9 a.m. to 5 p.m. in weekdays. Marketing focus is related 6. to product position. Asset for traditional business 7. is location of shop. Value proposition is related 8. to product. E-Commerce Scope is Global. Time required for business

transaction is in terms of minutes. Product attributes are selected by buyer. Prices are listed by taking over view of global market. 24 hours service is available for all 7 days. Marketing focus is related to customer relation. Asset to E-commerce is customer database. Value proposition is related to product, information and service.

2. TYPES OF E-COMMERCE
E-Commerce can be classified into four distinct categories:

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TYPES OF ELECTRONIC COMMERCE:


Electronic commerce can be categorized into four categories: Business-To-Consumer Business-To-Business Consumer-To-Consumer Consumer-To-Business

Currently, the first two categories arc the most popular models of ECommerce:
Business-To-Consumer Model:

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In this model, commerce is conducted between a consumer, such as a home user on a PC, & a business. As an example, to buy books or CDs, the consumer accesses the business' internet site and makes purchases. For e.g.:
1. One can purchase music cassettes and CDs from the web site

planetmonline.com In the above you select the cassettes from a wide range that is available and then eventually pay online. This is a very convenient exercise, which will help save time and provide variety. 2. Amazon.com, the online booksellers that launched its site in 1995 to

sell books and other products directly to consumers, is a prime example of B2C E-commerce. In addition to online retailers, is a prime example of B2C E-commerce?

Business-To-Business Model:

In this model, commerce is conducted between two businesses. It includes trading goods like business subscriptions, professional services, and wholesale dealing. Sometimes business, may exist between virtual companies, neither of which may have any physical existence.
Consumer-To-Consumer Model:

In this model, commerce is conducted between two consumers. This can be seen in auction bidding houses. In this example, commerce is

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conducted between a consumer who is auctioning and consumers who are bidding for it. The consumer who is auctioning decides the price of the product. The consumers who are bidding analyse the product and decide how much they value it. For e.g.: A student wants to fly from London to New York, but has only 200 ($320) in the bank to pay for this round trip. They put up an ad in an Internet C2B site, seeking airlines that are willing to offer the transatlantic round trip for 200 or less. The beauty of the Internet is that it brings together a large number of customers to create a marketplace that a number of airlines (that will have to otherwise fly with empty seats) will be interested in.

Consumer-To-Business Model:

In this model, commerce is conducted between a consumer and a business. The model is still in its evolving stage. This may come up as a model in which the goods are produced & the price of the product would he dictated by the consumer rather than the supplier, this may revolutionise the way businesses are conducted over the Web, or even otherwise.

3. ADVANTAGES AND DISADVANTAGES IN E-COMMERCE

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Coin has two sides; head and tail. Similarly, new up comings like ecommerce, in 21st century provides following advantages and also the disadvantages to the customer and business.

3.1 ADVANTAGES IN E-COMMERCE:


1. Provides better customer service: All business transactions such as generation, processing, co-ordination and distribution of goods and services are automated by E-commerce. It also provides better and efficient communication with customers. Customers have access to your business in 24 hours a day and 7 days a week. So customers can enjoy shopping at any time throughout the world. Customers don't have to leave home but product is delivered at their door. 2. Lower cost and prices: More suppliers are able to compete in electronically open market place. It causes a great competition which naturally lowers prices of the goods. Cost savings also occur because of efficient communication, closer access to market, no travelling cost and no sales tax. This increase in competition leads to better quality and variety of goods. It also produces ability to produce customized goods. 3. Increase in efficiency and accuracy: E-commerce provides 24 hour access to customers, so people from all over the world can visit the cyber store at any time free of cost. It makes easier and efficient to do business with the customers. Efficiency and accuracy of business increases because order processing is automated, efforts required for inventory control and billings are minimized.

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4. Improved productivity: With e-commerce, time required to conduct business transaction is significantly reduced. It also eliminates human errors and duplication of records. So the improvement in speed and accuracy result in increase in productivity. 5. Requires less marketing efforts: Once website is created, it promotes all your products, services and pricing in one place which is globally accessible. If required data can be updated quickly and easily, also it is possible to update electronic brouchers without going to a printer. Visitors can check the availability of product. If required they can also request about more information of the product and finally place an order. 6. On-line communication: It is possible to collect information about your customers and businessman can establish e-mail communication with customer to share the information about requirements and suggestions of customers regarding a particular product. Online communication helps to improve the product to fulfill customer's needs. Also it is possible to create feedback to obtain ideas for new products. 7. Simple administration: Business on e-commerce can capture all the accounting data online. Also orders, billing and customers' support can be linked in network system to automate the entire business. Hence it provides simple administration. 8. Better Distribution to the firm: Business on net causes distribution cost or cost-of-sales shrink to zero. Since digital products can be delivered immediately, it eliminates the need of middleman. Buyers and sellers can

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access and contact each other directly which eliminates some of the marketing expenses. This makes the product distribution more efficient. 9. Operational benefits to the firm: Operational benefits of web for industrial sellers are reduced error, time and overhead cost in information processing. It also reduces cost to suppliers by providing on-line database. In addition, it also provides the opportunity to new market segments and easier entry into new markets. It eliminates delays between different steps of business sub processes.

3.2 DISADVANTAGES IN E-COMMERCE:


As a commercial medium, E-commerce also offers some important deficiencies and risks. These are as follows: 1. Change in business environment and technological issues: To start a web shop requires personal computer, modem and a subscription to a Value Added Network (VAN). So it requires more extensive involvement. Due to rapid change in technology, it requires updating of current technology and networks. It requires a lot of money. It is not possible to decide a figure on this cost. 2. Privacy and security problem: 60% of the users do not trust the web as a payment channel. Web transaction takes place with credit card, but credit card itself is not safe. Anyone who transfers the data of the credit card on the web is not sure about the salesman's identity. Also the salesman is not sure

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about the buyer's identity. Buyer is also not sure that his credit card number is not used for some malicious purposes. So transaction with credit card is not safe. 3. Inefficient consumer search: Database or product information provided on web sites is not complete. Also sometimes sellers may not provide all necessary information. Because of this, consumers will not get detailed information about the product. 4. Problem of trust on retailers: The fluctuation and instability of internet retailers make difficult for new retailers to establish a reputation. Since it is observed that many retailers do not survive. Hence there is a lack of confidence that exists in trusting internet retailers.

3.3 BENEFITS OF E-COMMERCE:

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E-Commerce is one of the most important facets of the Internet to have emerged in the recent times. E-commerce or electronic commerce involves carrying out business over the Internet with the assistance of computers, which are linked to each other forming a network. To be specific e-commerce would be buying and selling of goods and services and transfer of funds through digital communications. 3.3.1 The benefits of E-commerce:

E-commerce allows people to carry out businesses without the barriers of

time or distance. One can log on to the Internet at any point of time, be it day or night and purchase or sell anything one desires at a single click of the mouse.

The direct cost-of-sale for an order taken from a web site is lower than

through traditional means (retail, paper based), as there is no human

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interaction during the on-line electronic purchase order process. Also, electronic selling virtually eliminates processing errors, as well as being faster and more convenient for the visitor.

E-commerce is ideal for niche products. Customers for such products are

usually few. But in the vast market place i.e. the Internet, even niche products could generate viable volumes.

Another important benefit of E-commerce is that it is the cheapest means

of doing business.

The day-to-day pressures of the marketplace have played their part in

reducing the opportunities for companies to invest in improving their competitive position. A mature market, increased competitions have all reduced the amount of money available to invest. If the selling price cannot be increased and the manufactured cost cannot be decreased then the difference can be in the way the business is carried out. E-commerce has provided the solution by decimating the costs, which are incurred.

From the buyers perspective also ecommerce offers a lot of tangible

advantages:

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1. Reduction in buyers sorting out time.


2. Better buyer decisions.

3. Less time is spent in resolving invoice and order discrepancies. 4. Increased opportunities for buying alternative products.

The strategic benefit of making a business e-commerce enabled, is that

it helps reduce the delivery time, labour cost and the cost incurred in the following areas:
1. Document preparation. 2. Error detection and correction.

3. Reconciliation.
4. Mail preparation. 5. Telephone calling. 6. Data entry. 7. Overtime. 8. Supervision expenses.

Operational benefits of e-commerce include reducing both the time and

personnel required to complete business processes, and reducing strain on other resources. Its because of all these advantages that one can harness the power of e-commerce and convert a business to e-business by using powerful turnkey e-commerce solutions made available by e-business solution providers.
4.

E-COMMERCE AND THE TRADE CYCLE

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Trade cycle in Electronic Commerce is totally different as compared to traditional commerce. The following figure shows the different phases of trade cycle. The flat boxes show the customer activities and threedimensional boxes show business processes which are not performed by the customer. The following steps are necessary in e-commerce. The trade cycle depends on: The nature of the organisations involved. The frequency of trade between the partners to the exchange. The nature of the goods or services being exchanged. The trade cycle has to support: Finding goods or services appropriate to the requirement and agreeing the term of trade. Placing the order, taking delivery and making payment. After sales activities such as warrantee, service etc. Depending upon the above factors, there are numerous versions of the trade cycle.

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Marketing

1. 1. Customer// Customer Visitor Visitor

11. 11. ShipOrder Ship Order

2. 2. Web Site Web Site Visit Visit

10. 10. Fulfill Fulfill Order Order

3. 3. Product Product Browsing Browsing

9. 9. Process Process Order Order

E-Commerce Phases
4. 4. Shopping Shopping Basket Basket

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8. 8. Receipt Receipt

5. 5. Check Out Check Out 6. 6. Tax& Tax & Shipping phases consist Shipping

7. 7. Payment Payment

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4.1 Description: E-commerce

of different activities such as

marketing, customer, web site visit, product browsing, shopping, check out, tax and shipping, payment and receipt, process order, fulfill order, ship order etc.
1. Marketing: Marketing is the media to target consumers. Media used for

marketing are banner advertising, targeted e-mails, sweepstakes etc. It is necessary to provide the environment of web site in such a way that visitor must come back repeatedly to visit the site. It is possible by using the marketing techniques such as discussion forums, polls, surveys, chat etc. 2. Customer / visitor: In e-commerce, customer is a cyber-surfer who clicks on a link to visit the web site. Customer may be business-to-business and consumer-to-business customer. In business-to-business, the purchaser is another business entity who uses different purchasing options such as credit card, purchase order and credit account. In consumer-to-business model, the individual person is going to pay with a credit card and item is shipped to his home. 3. Web Site Visit: Web site visit is the initial step in the e-commerce shopping process. Once the customer visits a site, he downloads that site. Then web-owner starts tracking and profiling this consumer. Based on the information provided, web shopper begins the targeted products of the customer. 4. Product Browsing: When a visitor surfs on a particular web site and if he likes that site, then he starts to browse the site product pages. A visitor will

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browse through departments and the products within those departments. Then the potential customer will notice the products on sale, promotions, upgraded products etc. 5. Shopping Basket: Once the customer selects the products, he adds the product into his shopping basket. Shopping basket is a list of products which he has selected, the quantities, prices, attributes such as color, size etc., and other things related to the potential order. Shopping basket offers the options such as to clear the basket, remove items and update quantities. 6. Checkout: Once the shopper has all of his items ready for purchase, he will begin with checkout process. The consumer will enter in his shipping and billing address information. The shopper will also add the additional information for a gift greeting, gift wrapping and other information for ancillary services. 7. Tax and Shipping: E-commerce includes two types of taxes such as state tax and local tax. Local tax rate is related to local representation such as storefronts in multiple states. Shipping considers charging a flat rate on the purchased item on it. It also considers charges specific to purchased product related to the distance, product has to be shipped. If business supports international orders, then it requires to accept new requirements and many challenges.

8. Payment: Once the purchase cost, tax and shipping are calculated, buyer is ready to present the payment. Purchase is done via a credit card. For

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business-to-business e-commerce, negotiation, follow-up, ship time etc. are required. Credit card transaction is on-line which uses cyber cash and HPveriphone. When online processing is used, the credit card data is securely transmitted over the net and then a response is sent back to indicate whether the card is cleared or not. 9. Receipt: Once the order is placed, seller returns a receipt to the purchaser. The receipt is a listing e-mailed to the purchaser which is attached to a purchase order. This process is automated in a network transaction. 10. Process order: Once the purchase order is submitted by customer, and then seller verifies the credit card. It is not possible to process the credit card automatically, and then it is necessary to process the financial transaction. It occurs if the order comes via a phone-line. But if the order is from mail, then facility is provided to inform the customer about the status of order.

11. Fulfill order: Once a valid order is reacted by the customer, it is necessary to fulfill it. This stage is the most challenging business process. Central inventory is available to fulfill the order. Though 90% of the transactions are electronic, sometimes it is required to send phone call or email to the business. Sometimes problem occurs because of integration between web server and fulfillment systems. 12. Ship Order: This is the last stage in the business process of trade cycle to send the product to the customer. It includes UPS or FedEX shipping number for the customer to track their shipment)

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4.2 HYPER GROWTH E-COMMERCE:

Hyper growth that's the term now being used to describe what e-commerce is currently experiencing. Companies of all sorts and sizes large or small, established or start-ups are hopping on to the e-commerce bandwagon to give the much-needed boost to their businesses and become the next Amazon in the Internet world. And why not? The open nature of the Internet gives the flexibility to a small firm to conduct business in direct competition to a brick and mortar giant. It is a question of who grabs the opportunity first. Various reports cite explosive growth claims and projections. An industry report by the Peterborough, NH-based ActivMedia Research reveals that that the top 100 e-commerce Websites are reporting annual growth rates of 1,000 percent and are pulling in revenues of as much as $100 million. And as more and more people move online in the future, these figures are expected to be even more staggering. And, as per the International Data Corporation, the number of people buying online is expected to increase from 18 million in December 1997 to 128 million in 2002, representing more that USD400 billion worth of transactions. In U.S.
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alone, the revenue generated by Internet businesses in 1998 was larger than all previous estimates a boggling $ 300 billion.

4.3 THE ACTUAL E-BUSINESS OPERATION CAN BE DESCRIBED AS FOLLOWS:


1. The client uses the web browser on the local terminal to connect to the eCommerce site via the Internet / Intranet. 2. The site presents the client with the products/services offered. 3. The client chooses to make an online transaction, and the e-Commerce site requests the client browser to enable an SSL-protected link. This link-tolink encryption offers high level of security to the entire process. 4. The e-Commerce site (also called the server), requests personal and financial information from the client that is relevant to the authentication and validation of the transaction in process. This is sent for validation to a transaction server connected to all databases of all the supporting financial institutions. (For example, the authentication databases of MasterCard, American Express or VISA), or the internal authentication database of an Intranet. Depending on the values returned to the transaction server by the authentication databases, the client's transaction process is further processed. E-commerce really means the extension of business systems and providing an easy-to-use interface between the external world and the organization,

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while increasing reach. Where one can complete the transaction online and integrate the supply chain into transaction management process.

4.4 SIGNIFICANCE OF E-COMMERCE:


Participants in the electronic market place are not only to digital product companies such as publishing, software and information industries. The digital age and digital revolution affect all of us by virtue of their process innovations. The web TV and digital television is going to affect the TV news and entertainment programs. Changes in telecommunication will affect the way we receive information, product announcements, or orders etc. As phones, fax machines, copiers, PCs, printers have become essential ingredients in doing business, so will be e-mails, websites, and integrated digital communication and computing. While today's office business machines are not integrated, the much talked "convergence" will drive all these equipment into one digital platform, whether it be a computer connected to internet and intranets, or a device capable of interacting with other devices, because that devices will proves to be more efficient and productive.

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4.5 EXAMPLES OF SPECIFIC BUSINESS BENEFITS OF E-COMMERCE:


Reduced advertising costs. Reduced delivery cost, notably for goods that can also be delivered electronically Reduced design & manufacturing cost. Improved market intelligence and strategic planning. More opportunity for niche marketing. Equal access to markets (i.e. For small vis-a-vis larger corporations) Access to new markets. Customer involvement in product & service innovation. The smaller companies can now conduct business on line like their larger counterparts. Disintermediation or eradication of middle-man concept & thus increasing profit margins, reducing prices & providing consumers with more information and service.

4.6 OPPORTUNITIES FOR INDIA:


At macro level, if one looks at the opportunities for India, "Outsourcing Software and IT Services" from USA and other advanced countries have emerged as one of the means to reduce the cost today and in this regard, India has emerged as a preferred destination. Therefore, Indian Software Export Industry could target for a significant share of global ebusiness/e-commerce market in the years to come.

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In the emerging global digital economy, it would be necessary for Indian firms to follow the same online B2B practices as done by others in the world to be a stakeholder. E-Commerce would give opportunity to Indian small and medium enterprises to project their capability globally and thus participate more proactively in such ventures. Many traditional sectors such as handicrafts, textiles, art, natural medicines which could not tap the global markets due to lack of marketing resources should find an ideal medium in Internet. Indian cultural heritage, monuments, temples, classical music etc. could be made known widely to the world and could be further leveraged in enhancing tourism. E-Commerce is one IT tool that could do wonders to the Indian economy in many fields. In Nasscom-McKinsey Study: Indian IT Strategy, these opportunities are covered under the broad sector of IT Services (E-Commerce as "extended enterprise" applications) and E-businesses. As per this study, India has the potential to create e-business worth $ 1.5 billion by 2004 and around $10 billion by 2008 with opportunities in both B2B (ePSM, Commodity trading market places and payment systems) and B2C arenas (connectivity, online retaining and portals/communities targeting NRIs)

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4.7 BUILDING AN E-COMMERCE SITE:


Building an e-commerce site involves three stages which are as follows: Creating Customized Shopping Cart: Shopping Cart is like a store front where you can display your products, catalogue, price etc. The customer comes to your store through website and selects the item which he requires; after selection gets completed he will be shown with the total amount to be paid for the items he has selected. He would be given an option for paying through Credit Card and complete the transaction. Approaching Payment Gateway Service Provider: Now the Payment Gateway Service Provider comes into pictures that are authorised to accept credit card on behalf of merchant. It may be a Bank or Authorised Company who can accept and process credit card online. They provide us with the payment gateway software that needs to be integrated with the website to enable secure transaction. The providers are been certified by Digital Certified Authorities like Verisign, Thwate etc which build trust among buyer and can transact safely. Integrating Payment Gateway with your Website: This is very important part and the last stage of completing you epresence. Our Team at Cyber web Global Services Ltd will integrate the

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Payment Gateway software with your website to carry online transaction safely and securely.

WEBSITE

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5. E-COMMERCE APPLICATIONS
With the aid of Internet, now commerce is also transacted electronically. This helps businesses to offer goods and services online by extending the base of customers beyond the geographic limit. At Ecosmob Technologies Pvt. Ltd., they provide us E-Business solutions, which will help us to reduce manual errors. We can help you to cut down the cost by automating your business processes. E-commerce applications have been proved as the latest trend to reach out to a large span of the customers. They can help us to achieve high customer satisfaction with attractive and efficient system interaction. Ecosmob Technologies Pvt. Ltd. can build a customized shopping cart best suitable to your requirements. We can also help you to obtain your "Secure Certificate (SSL)" from trusted Certificate Authorities and to select a Merchant Account from a reputable and supportive gateway. How E-commerce Application can help your business:

Expand the customer base Streamline supplier Chain Management Lower down the cost

Have better hold on Inventory

Lock your customers by providing the product/service at their ease Automate business processes by reducing paperwork Speed up billing

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Scale up your business by adding new product-lines

5.1 Government of Andhra Pradesh eSeva:


1)

Payment of Utilities Bills: Electricity bills Water & sewage bills Telephone bills (BSNL & TATA Tele Services) Property tax Sales tax

2) Certificates: Registration of births/deaths Issue of birth/death certificates

3) Labour Department: Licence new registration Licence renewal

4) Permits/Licences: Issue/renewal of trade licences

5) Transport Department Services: Change of address of a vehicle owner Transfer of ownership of a vehicle
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Issue of learners licences Issue/renewal of driving licences (non-transport vehicles) Registration of new vehicles

6) Reservations: Reservations of APSRTC (Andhra Pradesh State Road Transport HMWSSB (Hyderabsd Metropolitan Water Supply & Sewage Board):

Corporation) Reservation of water tanker 7) Other Services at eSeva Centres: Sale of passport application forms Receipt of passport applications Registration Department: Sale of non-judicial stamps

8) Internet Services: Internet-enabled electronic payments Downloading of forms & Government Orders (GOs) Filing of applications on the Web

9) Business to Consumer Services: Cell phone bill payments

10) Police Services: Payment of Inquest/Panchanama fees Rs. 50

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Payment for First Information Report Rs. 50 Payment for Post Mortem Report Rs. 50

5.2 Application: Motorola's E-Commerce Platform is Web presence building software that allows small and medium enterprises to capitalize on doing business online. Motorola's software enables a vast network of partners such as telecommunication companies, distributed enterprises, and franchisors to widely deploy and promote thousands of Web sites, Web stores, and backend business tools to generate solid incremental revenue. About Motorola E-Commerce Technology: Motorola's Web platform is built on industry standard technologies such as Java, Flash, XML, and W3C. The Web platform is truly extensible and can be integrated with third party applications.

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6. BUSINESS MODELS FOR E-COMMERCE


Brick and Mortar Business: Brick and Mortar refers to a company which possesses a building for operations. The phrase can be a misnomer since not all buildings are physically constructed from bricks and mortar. In the jargon of eCommerce, Brick and Mortar businesses are companies which have a physical presence (for example, a building made of bricks and mortar) - which offer face-to-face consumer experiences. This term is usually used to contrast with a transitory business or an internet-only presence (see online shop for comparison). An example would be the brick and mortar movie rental shop Blockbuster Video -- the competition from the new online rental services offered by Netflix. A comparable term in the United Kingdom is High Street shops, although the phrases brick(s) and mortar business are also used. Bricks-and-Clicks Brick-and-clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-andmortar or clicks-and-bricks, as well as bricks, clicks and flips, flips referring to catalogs.
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For example, an electronics store may allow the user to order online, but pick up their order immediately at a local store, which the user finds using locator software. Conversely, a furniture store may have displays at a local store from which a customer can order an item electronically for delivery. The bricks and clicks model has typically been used by traditional retailers who have extensive logistics and supply chains. Part of the reason for its success is that it is far easier for a traditional retailer to establish an online presence than it is for a start-up company to employ a successful pure "dot com" strategy, or for an online retailer to establish a traditional presence (including a strong brand). The success of the model in many sectors has destroyed the credibility of analysts who argued that the Internet would render traditional retailers obsolete through disintermediation.

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7. E-BUSINESS INFORMATION

A starting point is to define E-Business as "interaction with business partners, where the interaction is enabled by information technology". This is an accurate definition, but doesn't give us much insight into the excitement surrounding E-Business and E-Commerce. EDI (Electronic Data Interchange) technology has been around since the 1970s, but no one got very excited about EDI. So what does E-Business have that EDI doesn't, apart from the natural glow of youth? The key change is the information technology is available to "enable" business transactions electronically. The Internet has made access to enabling information technology, much more widespread, cheaper, more powerful, and more integrated into the enterprise.

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EDI was about cutting back-office costs (for instance, orders sent from one E-Business partner to another no longer required paper work).

E-Business is changing the way we do business; at every step in the value chain (initial benefits for manufacturing firms will focus on the supply chain, which is the chain of activities from procuring raw materials, manufacturing the product to finally distributing it). It even beats EDI at its own game: EDI lowered transaction costs making feasible the rapid exchanges of orders in a just in time environment. E-Business lowers transaction costs to the point where entire new classes of customers and services are profitable. EDI is expensive to set up, and was only used by large companies with their regular business partners; it required a very high level of volume to make sense. E-Business is cheap, has hundreds of millions of participants already, and reaches into everything a business does. Another key change is people: the workforce is now full of people who are much more familiar with advanced technology than twenty years ago. Another definition of E-Business is that it is Business Process Reengineering (BPR), except this time; information technology is much more entwined. This is a provocative definition. Firstly, BPR was very painful in the 1980s, and only a few firms succeeded in radical change. BPR promised to redesign a firm so that all processes focused on the customer; old hierarchies were no longer relevant. It was supposed to empower junior employees, and remove layers of management. Many firms that thought they did a good job at BPR actually paid only lip service to the concepts. Secondly, it became associated with downsizing. Thirdly, it was supposed to

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be closely related to IT in the 1980s, so why do we need to emphasize that again? The key technology of the 1980s was ERP (Enterprise Resource Planning) systems. ERP implementations are large, complex and slow moving projects. EPR systems were the first software systems to integrate supply chain all activities into a single IT backbone. The software involved was monolithic -- huge, expensive and not very flexible. The only way to implement an ERP system is to move the way the company does business to suit the ERP package; even ERP systems offering 'flexibility' is really just more comfortable straightjackets. The technology of E-Business is different: it is smaller, faster and much more fragmented. There is no E-Business system available from a single firm. An E-Business infrastructure is made up by piecing together different systems (the first thing that is usually done is linking various E-Business applications, such as an ordering website, into the ERP system, bypassing the ERP order entry method and just using the ERP system as a big database of inventory). This technology is rapidly changing business in many industries. Now that the dot.com hysteria has gone, we can see that E-Business in a quantum leap in the way enterprises use information technology. The new requirements are to integrate with many external business partners and to have an IT environment that can much more quickly respond to changes such as mergers and acquisitions. E-Business sees the end of the attempt to run a business with centralized. Monolithic IT solutions. In a way, it's analogous to transport passing from the railway era to the roadway era. Railways are fixed gauge, run by a handful of operators, and users were expected to build their warehouses and factories near the railway, rather than the other way around. Railways are

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high volume and still today the best way of moving very heavy loads over long distances. But roads can be built almost everywhere; they can be heavy-duty eight lane masterpieces of civil engineering, or they can be gravel tracks where this is the only affordable solution. You can ride a bicycle on a road, or a Ferrari; carry goods in a minivan or an outbackAustralian road-train. E-Business is about understanding the potential of new technologies in your market and in your supply chain and then reorienting your business to implement your vision, and implementing it quickly enough to minimize the threat from competitors if you are defending your market share, or fast enough to take advantage of the opportunities if you are aggressive about growing market share.

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8. E-MARKET AND ITS USAGE


Electronic market refers to the online trading and auctions, i.e. online stock trading markets, online auction for computers and other goods. The electronic market place is the emerging market economy where producers, intermediaries and consumers interact electronically. The electronic market is a virtual representation of physical market. Electronic commerce is broadly concerned with the electronic market place. The electronic market consists the components such as electronic, digital, virtual or online. The economic activities undertaken by this electronic market place represent the digital economy. Electronic market is a perfect market where there are worldwide buyers and sellers who have detail information about the market and products.

8.1 ADVANTAGES OF ELECTRONIC MARKET:


(i) E-market is competitive and efficient: E-market consists of worldwide sellers and buyers. They provide a lot of information about the market and their products. (ii) No need of intermediaries: Since electronic market is online trading and actions, so there is no need of intermediaries. Hence, it saves the cost of middleman.
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(iii) Use of adoptive technology: E-market uses adoptive technology. These adoptive technologies get adjusted with the changing demands of the customer. (iv) E-market is common place for worldwide buyers & sellers: Worldwide buyers and sellers are coming at a common place for purchase and selling activities. So-competition is severe. E-market is efficient to conduct any business on net. (v) Marginal cost: Digital products are highly customizable because they are easy to revise, reorganize and edit. Digital products will be approaching towards a zero marginal cost, because their reproduction cost is minimum.

8.2 DISADVANTAGES OF ELECTRONIC MARKET: Electronic


market has following disadvantages: (i) Inefficient consumer search: To search a complete database on a web, consumer has to pay some amount. Time required to visit a particular shop on web is proportional to the cost. Also some sellers may not provide all necessary/required information. (ii) Need of intermediaries: Electronic market does not require intermediaries such as wholesale and retail outlets. But it requires other types of intermediaries such as certification authorities, electronic mail and mediators for bargaining and conflict resolution etc. All these intermediaries increase the cost of transaction.

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8.3 FUTURE OF ELECTRONIC MARKET: WEB-BASED MASS INFORMATION SYSTEMS [WMIS] is the basic infrastructure for global transaction application. Every transaction in electronic market contains access, absorption and selling of information. So WMIS is to be designed in such a way so that it will search the needs of new customers to exploit the potential of on-line trading of information, services and goods. It is necessary to utilize formulating, analyzing, and implementing marketing startegies for WMIS. Business ecosystem for electronic market consists of supplier, customers, governement agencies, shareholder, world-wide web and web based information system. All the members of such eco-system are responsible for prosperity of a particular system. So contribution of all the members is required for the growth of electronic market. Development of electronic market consists of four business stages such as Birth, Expansion, Authority and Renewal or Death. Today we are at the beginning of the expansion stage. Since there is a strong competition between electronic market and traditional market, it is necessary to create a world-wide mass of customers. For this, critical and unique applications must be provided for the customers who are using e-commerce applications. These advantages can be provided by adopting modern technology which can change with the changing demands of the electronic markets. For retrieval of information and complex negotiations, digital agents such as telescript, safe-Tel etc. can be used. To analyse the evolution of e- market, research framework can be provided which is useful for number of future research efforts. These projects will focus on retailing transactions and

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support technology oriented business decisions by predicting future developments in the business ecosystem of electronic market.

9. INTERNET COMMERCE
E-commerce can be used for once-off transactions. This area of trade is characterised by the consumer purchasing over the internet. But there are other networks also, such as Television sales channels are in use in U.S. French minitel is the example of an interactive, public access network. This type of e-commerce is used by organisations to make infrequent purchases of items such as computer and office supplies. This form of ecommerce provides the credit card facility to its customers. But it is mostly related with 'cash' trade cycle where cash payment is taken to include settlement at the time of purchase by a credit card.

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9.1 INTERNET AND TRADE CYCLE: Internet & trade cycle shows the internet and the trade cycle.

Internet & Trade Cycle Description: The internet can be used for all or part of the trade cycle. 1. The first stage of the trade cycle is search and the facilities of the internet can be used to locate sites offering or advertising, appropriate goods or services. This function is similar to the electronic market. In some cases, internet sites offer only information and any further steps down the trade cycle are conducted on the telephone.

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2. An increasing number of sites offer facilities to execute and settle the transaction. Delivery may be electronic or by a home delivery service depending on the nature of goods and service being offered. The use of the internet for on-line purchasing may or may not follow a search. 3. The final use of internet e-commerce is for after-sales service. Many IT providers now offer on-line support and on-line services, such as banking is a special case of the use of after-sales transactions. Internet trade is not suited to all goods or services. The internet as a marketing and sales channel can be examined in the context of product, price, promotion and place. (i) Product: Some products are more suited than others to sell over the internet. Existing mail order an indication and the technical product could be added to the list. (ii) Price: The internet can have a price advantage. There is no need for a retail outlet. Also business facilities needed by internet vendor are relatively cheap. (iii) Promotion: The internet provides a very cheap way of promoting a company and a product. Promotion on the internet relies on the customer having the facility to access the internet. (iv) Place: Information services can be delivered electronically but tangible goods require costly physical delivery. For bulky items, someone to be available to accept the delivery.

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10. ELECTRONIC DATA INTERCHANGE


10.1 Introduction:
EDI stands for Electronic Data Interchange. EDI was developed in 1960 to accelerate the movement of documents. EDI offers easy and cheap communication of structured information throughout the corporate community. Definition: EDI is the exchange of documents in standardised electronic form between organisation in an automated manner directly from a computer application in one organisation to the application in another organisation. In short, EDI is the electronic exchange of routine business transactions. In EDI information is organised according to a specified format set by both parties. EDI includes documents such as purchase orders, invoices, inquiries, planning, pricing and financial reporting. EDI does not create any new process, but it expands the existing business process. EDI works under the standard ANSI system (American National Standards Institute). The ANSI committeee ensures that everyone who uses EDI follows the same rules and methods, so that it is universally accepted. EDI eliminates the need for a paper-based system by providing electronic link between companies. This improves business cycle time.

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Electronic Data Interchange

As shown in fig. data is transferred with its suppliers or customers. Since information is passed from one computer to another over a network, there is no need to read, retype or print the information. Any company which uses EDI is called a trading partner. The trading partners should not be from the same manufacturer. EDI requires the co-operation and active participation of trading partners.

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10.2 WORKING MECHANISM OF EDI:


1. At the first stage, representatives of two companies who want to exchange the data electronically, specify the application in EDI standard which they will implement. 2. Then company adds EDI programs to its computer, to translate company data into standard formats. This standard formatted data is used for transmission. The EDI programs are also used to reverse translate the data which it receives. 3. Before sending any data, sender confirms that the receiver is an authorised recipient for such data. Then sender transmits the data which is formatted in EDI standard. 4. Once the data is received at the receiver station, receiver translates the formatted message with his computer. During transaction of data, all transmissions are checked both electronically and functionally. Mechanism is provided for error detection and correction.

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10.3 BENEFITS OF EDI: EDI implementation is beneficial for both the


sender and the receiver. It is a mutual effort. Its benefits are maximized by sharing information in a timely manner. The benefits are as follows:

1. Reduced paperwork: The entire EDI process can be handled without using a single piece of paper. Electronic transactions drastically reduce the time spent to transfer the data. EDI minimizes the efforts related to maintaining the records, paper-related supplies, filling cabinets and other storage systems. EDI also reduces postage bills since there is no necessity to send the papers. 2. Reduced data entry errors: As EDI data goes directly from one computer to another without involving a human being, there is no need to retype the data at the receivers end. This reduces data entry errors. 3. Improved customer service: EDI reduces the processing time of the complete cycle. As soon as the orders are entered into the system, they can be processed on the receiving side in seconds. Hence it saves the processing time of document transfer, and provides better service to the customer. 4. Reduced cost: Any saving in time is directly linked to savings in money. Over a long period of time, processing the document with EDI is cost effective as compared to process the document in paper form. 5. Expanded customer/supplier base: Many large manufacturers are suggesting their suppliers to implement EDI program in their organisation.

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With the help of electronic transfer, new manufacturer, retailers and suppliers are now available, so it is possible to bring new product in market with easy communication between manufacturer and supplier.

6. Increase in speed: If uniform system is not available, then to conduct a specific transaction more time is required in paper-work. Since EDI uses electronic data transfer, so it is a faster and more efficient way to process the business data. 7. Provides better market position: EDI follows the ANSI standard which is universally accepted. ANSI assumes that under EDI, everyone uses the same rules and methods. Hence, all businesses share a common interchange language. So EDI provides a better market position in relation to non EDI competitors. 8. Reduced inventories and better planning: Once EDI is implemented; companies do not need to keep a safety stock for order processing. It saves the major inventory cost. Also planning and replanning can be communicated to other parties immediately. MRP (Material Requirement and Planning) can take into account as soon as the advance ship notice transaction is received. 9. Better business processes: As compared to traditional methods of data transfer, EDI is a better way of communication with the trading partners. With EDI, companies are willing to share information. This environment also supports supply-chain management.

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10.4 EXAMPLE ON ELECTRONIC DATA INTERCHANGE: In


EDI, output from one application becomes input to another through the computer-to-computer exchange of information. EDI is extensively used in procurement function to increase the interaction between the buyer and seller. Auto-manufactures use EDI to transmit large, complex engineering designs created on specialized computers. Universities use EDI to exchange transcriptions quickly. Multinational firms use EDI to send on-line price catalogues to customers which contain information about products, prices, discounts and terms. EDI-capable business can compare prices and terms and make direct orders by EDI. EDI can automate the information flow and provides facility for easy management of the business process. Following figure shows the EDI transactions for a purchase, shipment and corresponding payment.

Information Flow With EDI Information flow for EDI is as follows:


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Step 1: Buyer's computer sends purchase order to seller's computer. Step 2: Seller's computer sends purchase order confirmation to buyer's computer. Step 3: Seller's computer sends Booking Request to transport company's computer. Step 4: Transport Companys computer sends Booking confirmation to seller's computer. Step 5: Seller's computer sends Advance ship notice to buyer's computer. Step 6: Transport Companys computer sends current status to seller's computer. Step 7: Buyer's computer sends Receipt Advice to seller's computer. Step 8: Seller's computer sends invoice to buyer's computer. Step 9: Buyer's computer sends payment to seller's computer. All the above steps or interactions occur through EDI forms and are automatically generated by the computer. All the above processes are closely monitored. Companies have the ability to trace, manage and audit the operations. There will be no errors made in keying in the order. So with EDI business processes become more efficient.

11. SECURITY ISSUES

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Security is very important for information system professionals. Since 1993 computing facilities and information system they support, have become increasingly accessible because of internet facility. Since confidential information is transferred or increasing traversed through modern networks, so security, privacy and authentication of information is the commonly discussed issue in e-commerce. Confidence, reliability and protection of this information against security threats is the major prerequisite for the functioning of the e-commerce. When we are doing electronic transactions then there should not be any compromise on alteration of data.

11.1 SECURITY THREATS:


Security threat is a circumstance or event with the potential to cause economic hardship to data or network resources in the form of destruction, disclosure, modification of data, denial of service or fraud and abuse. Security threats can be analysed into the following types: 1. Natural threats: Occurs due to natural effects such as act of nature as fire, flood, earthquake, tidal wave etc. 2. Accidental threats: By human being who are directly involved e.g. failing to perform a manual procedure correctly, mis-coding information etc. By other person e.g. insolvency, bankruptcy or withdrawal of support by a key supplier. By machine and machine designers e.g. disk head-crash, electricity failure, software bug etc.

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3. Intentional threats: By human being who are directly involved e.g. intentional capture of incorrect data, unjustified amendment or deletion of data, theft of backups etc. By other humans e.g. release of malicious software, riot, terriorism, warfare etc. From the above threatening events, intentional threat is to be considered seriously which directly affects the security of information, intentional threats are as follows: (a) Damage to data: Data gets damaged while in transit on the network. (b) Loss of data: Data gets loss or disclosure of data when data is in transit on the network. (c) Unauthorised use of data: Unauthorised person can use the data when data is in transaction. He may alter the content of data and may change user names, credit card numbers and amount during transaction. Sometimes competitors also try to use the data in transit to get confidential and secure information.

11.2 SECURITY PROCEDURES:

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Because of security threats which take place at any time and place, companies need to put a security infrastructure to make their systems much more secure. Security procedures are as follows: (1) Firewall (2) encryption (3) password (4) access control list (5) digital certificates.
1. Firewall: Firewall is the most commonly accepted network protection.

Firewall is a barrier between two networks i.e. a company's internal network and external network called as internet. Firewall is used to control and monitor all traffic between external network and local network. It allows full access to insiders for services of the external world, while it grants access to the external network based on log-on name, password, IP address etc. Firewall is a system containing a router, a personal computer, a host. A firewall system is usually located at a site's connection to the internet. It examines incoming and outgoing packets as per the set rules. Then it decides either to allow pockets or block the pockets. Firewall provides controllable filtering of network traffic and allows restricted access to certain applications.

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Firewalls secured internet connection Firewalls acts as a pair of mechanisms: One to block incoming traffic and the other to permit outgoing traffic. Most routers use a firewall technique called packet filtering which examines the source and destination address. Firewalls help to place limitations on the amount and type of communication that takes place between the protected network and other external network called internet. Different technologies are used in the creation of firewalls such as pocket filtering, circuit gateways and application proxies. 2. Encryption: Encryption is the process of changing intelligible data into unintelligible data. Decryption is the reverse of encryption process i.e. changing unintelligible data into intelligible data. Data in a network is held in a common storage facility. Anyone who has authority to use the network
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has potential to access classified data. To avoid this, store the data in an encrypted form, so any unauthorised person who will access the data will not be able to read it. There are two types of primary encryption i.e. link and end-to-end. Link encryption is used to make data unreadable between two pcs. Link encryption prevents the casual reading of data. End-to-end encryption protects data anywhere on the system.

Conventional encryption As shown in fig., original message referred to as plaintext is converted into apparently random text called as ciphertext. The encryption process consists of an algorithm and a key. Key controls the algorithm. The algorithm will produce different output depending upon the specific key used. If the key is changed, then it changes the output of the algorithm. Once the ciphertext is produced it is transmitted to the receiving end by user B. At the receiving end the ciphertext can be transformed back to the original plain text by using a decryption algorithm. In the above process key is very important. It sets the encryption process in motion. The commonly used encryption algorithm is RSA. RSA uses two separate keys.

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Each participant has provided one private key-known only to that person and one public key which can be seen by anyone. Public key is used to encrypt the text and the private key is used to decrypt the text. For E.g. If Mr. A wants to send a purchase order to Mr. B in such way that only Mr. B can read it, then Mr. A encrypts purchase order called as plaintext with appropriate encryption key and then sends encrypted purchase order to Mr. B. This encrypted purchase order is called the ciphertext. At the receiving end, Mr. B decrypts the ciphertext with the decryption key and reads the purchase order. In between a hacker may, the ciphertext as it passes on the network, but without decryption key, it is not possible to recover the message to the hacker. The total, encryption mechanism is shown in fig.

Public-key encryption In this way encryption is the heart of e-commerce transaction to secure the data on the internet.

3. Password: Password is the easiest and inexpensive way to provide security. It is a first level barrier to accidental intrusion. Password and

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username can be used in different areas of networking to protect the data. Password is used to provide protection from unauthorised access. Following rules are used for passwords: Use uncommon names: Use uncommon username that cannot be easily identified but can be remembered by those who need it. Make password meaningless to others: Make the password meaningful to you but it should be meaningless to others. Use a long password: The password should contain more than 8 characters. It must contain mixed case letters and at least one nonalphanumeric character. Run a program to test all possible number/letter combination and make it long enough, so that it is not possible to discover it. Change your password often: Change the password periodically, so that it is not the same word every time. Generally username remains static and password is changed. Don't write your password down: If you don't write the password down, then other fellow can never read it and it will remain as a secret password.

But password is not 100% secure. It is possible to record the password or to find the password by algorithmic way. If a password is used in a

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remote-log-in session, then anyone who has control over the hardware can simply record the password. To avoid this problem, smart cards, tokens and challenge-response schemes are used. Some devices generate a visually displayed token that can be entered as a one-time password. 4. Access control list: Access control is used to provide access to authorised users. That access and modification of particular portions of data is limited to authorised individuals and programs. Control access is associated with user and group of data. The control of access by user is referred as authentication. It is a process of using a key to verify the integrity of a document. Electronic devices like identification numbers, callback procedures, encryption are evolved to establish authenticity of an instruction. New challenges arise to solve problems unique to electronic authentication such as issues of data, integrity, non-repudiation, choice of technology etc. In many local networks, two levels of authentication are probably used. Individual, host is provided with log-on facility to protect host-specific resources and applications. Also network as a whole may have protection to restrict network access to unauthorised users. User has been granted access to one or set of processes. The operating system can enforce rules based on the user profile. The database management system must control access to specific portions of records, e.g. anyone can see the list of company

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personnel in the organization, but only, selected candidates may have access to salary information. General model of access control by a database management system is shown in fig.

General model of access control The above fig. is called as access matrix. One axis of table consists of individual users or user group where access is controlled for terminals, hosts or processes. The other axis lists the objects that may be accessed. Objects may be database, record type or entire database. The access matrix is decomposed into coloumns and rows. When matrix is decomposed by columns, it gives access control list. So for each

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object, access control list gives user and their permitted access opportunities. Decomposition by rows specifies authorised object and operations for a user. Each user has a number of tickets and has authority to give them to others. Generally, access control is decentralised and controlled by a data management systems. But if a network data base server exists on a LAN, access control becomes a network service. 5. Digital certificates: Digital certificates are used to verify the identity of each person in an electronic transaction. Certificates are issued by Certificate Authorities. Certificate Authorities verify the authenticity of certificate request in connection with person's public key and their identification. Then certificate authorities provide a unique digitally signed certificate which is used as a proof in electronic transactions. This certificate can be used as an indicator of identity for clients who are entering on web sites. Now-a-days different bodies offer certificate authority services such as Verisign, Belsign etc. This certificate authority links a public key to the user. Netscape and Xcert offer certificate servers for managing digital certificates. Certificate Authority is a trusted party or a public entity to assign digital certificates. X-50g is widely used industry standard for defining digital certificates.

12. E-COMMERCE CAREERS

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So, you have decided to take a plunge in Electronic Commerce, but need to see the options and fathom the knowledge required, I must say you have chosen the right place then! The developments of Internet and Electronic Commerce technologies have opened floodgates for Electronic Commerce professionals. The estimated figures for Businesses over Internet and consequent demand for professionals are mind-boggling. Not only Professionals with cutting edge technologies are in great demand but professionals in traditional fields are also finding new areas to work in. 12.1 E-Commerce Careers that are in hot demand:

Web site design and development Content Development Web Programming and Application Development Database administration Webmaster

12.2 E-COMMERCE IN INDIA: The past 2 years have seen a rise in the number of companies' embracing e-commerce technologies and the Internet in India. Most ecommerce sites have been targeted towards the NRIs with Gift delivery services, books, Audio and videocassettes etc. Major Indian portal sites have also shifted towards e-commerce instead of depending on advertising revenue. The web communities built around these portal sites with content
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have been effectively targeted to sell everything from event and mouse tickets the grocery and computers. Experts have argued that the low cost of personal computers, a growing installed base for internet use, and an increasingly competitive Internet Service Provider (ISP) market will help fuel e-commerce growth in Asia's second most populous nation. Dataquest, an Indian computer magazine, has found that the rise of Indian Internet subscribers will ultimately depend on the proliferation of network computers and Internet cable. Cyber cafes will also continue to provide low-cost access. Currently, the lion's share of current e-commerce revenues is generated from an ever-expanding business to consumer (B2C) rather than business to business (B2B) market. As in the United States, B2C transactions have taken the form of on-line purchases of music, books, discounted airline tickets, and educational resources. In a recent McKinseyNaccson report, it was estimated that some 80% of e-commerce in India over the next few years could be B2B if the correct environment were developed. The B2B market is expected to increase following greater investment in the Indian Telecommunications infrastructure, and once intellectual property rights and legal protections for commerce over the Net are addressed. There are still enormous challenges facing e-commerce sites in India. The relatively small credit card population and lack of uniform credit agencies create a variety of payment challenges unknown in the United States. Increased distribution of online purchases could be complicated by

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India's complex postal system and an uncertain regulatory environment. Nonetheless, everyone from Yahoo, Microsoft, and IBM to local carpet vendors, hotels, and some 300 Indian ISP's are trying to claim a slice of the rapidly emerging Indian e-commerce market.

12.3

HELP

INDIAN

INDUSTRY

GAIN

COMPETITIVE

ADVANTAGE THROUGH E-COMMERCE:


Real benefits of E-Commerce will come to India if Indian industry leap-frog in using these tools to re-engineer their operations aiming at gaining competitive advantage. USA and Europe through support of their respective governments have taken such initiative. Specifically under the Fifth Framework Programme of European Commission, one of the key actions is related to New Methods of Work and Electronic Commerce. In USA, an industry-Government Small Business Electronic Commerce Working Group has been created to serve SMEs. Collaborative programmes are being developed to help SMEs benefit from electronic commerce through increased training and education. To take lead in E-Commerce, it is necessary to develop such programmes. Various organisations of MIT could work with different leading industry associations to develop such awareness building and education programme. A group could be set-up to develop this.

12.4 E-COMMERCE AND THE FUTURE:


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What does the future hold for e-commerce? Many would say it is difficult to predict. The forces that determine the web's winners and losers are just taking shape and technological advances could add even more uncertainty. On the downside, some experts predict that it will be increasingly difficult for smaller companies to establish their presence. Public companies and traditional brand name retailers have deep pockets and a name recognition that will make it difficult for smaller sites and mom-andpop shops to attract customers, thereby forcing them to compete with the big boys. On the Net, it's one big neighborhood. On the upside, nearly all experts believe that overall e-commerce will increase exponentially in coming years. Business to business transactions will represent the largest revenue. Online retailing will also enjoy a drastic growth. Areas expected to go include financial services, travel, entertainment and groceries. And for those considering opening a virtual storefront, forthcoming technology and standards agreements will make it easier to create a site, to protect it against payment fraud, and to share information with suppliers and business partners.

Once upon a time, not so long ago, it was considered cutting-edge simply to have a presence on the web. Soon enough, what was needed to remain competitive was to sell products and services online. In the few millennium, successful, next-generation e-commerce demands delivery of customer value beyond mere transaction. Value beyond the transactions means developing a customer-centric approach to e-commerce no matter what the business model is (businrss-to70

E-Commerce

consumer, business-to-business or e-marketplace). Meeting customer wherever they are in another continemt, from their PDAs, around the clock; Forging new customer relationship and growing existing ones is vital to generating new revenue and increasing profit margins. That, in essence, is commerce e enabled or electronically enabled. A variety of e-commerce solutions (a combination of hardware, software, networking design, protocols and architecture) that empower companies of all sizes are available. They all should:

Get the website up and running quickly and cost-effectively- that is

the most fundamental prerequisite for e-commerce. Facilitate the establishing of sustained, valuable customer relationships. Genuinely conduct business on a global scale. Get products and service to the desired market faster. Reduce sourcing, transaction and distribution costs. Streamline purchasing processes. Integrate the site with existing business-critical processes and systems. Adapt on-the-move as markets shift and business goals evolve. Solidify relationship with buyers, trading partners and suppliers. And thereby clearly distinguish an e-business from competition.

CONCLUSION

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E-Commerce

Electronic commerce is a new form of marketing with a predicted explosive growth over the next few years. The technology underlying the market is quite complex, and will become more so as new payment methods and Web technologies come on stream. The marketing approach is also new and different. The key to success is to find innovative ways to use that technology to attract customers and build business. This project is intended to give an overview of the most important concepts in electronic commerce. Other papers in this series will: Give guidelines for the business requirements study. List some guidelines for creating a successful site. Now is a good time to enter this market at a relatively low cost, to learn how the market works, and be ready to take advantage of new opportunities as they arise.

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