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INTRODUCTION Electronic commerce is defined as embracing the concept of trade, µexchange of merchandise on a large scale between different countries¶

. By association, e-commerce can be seen to include the electronic medium for this exchange. Thus electronic commerce can be broadly defined as the exchange of merchandise (whether tangible or intangible) on a large scale between different countries using an electronic medium ± namely the Internet. The implications of this are that ecommerce incorporates a whole socio-economic, telecommunications technology and commercial infrastructure at the macro-environmental level. All these elements interact together to provide the fundamentals of e-commerce. Business, on the other hand, is defined as µa commercial enterprise as a going concern¶. WHAT IS E-COMMERCE?  Electronic commerce or e-commerce refers to a wide range of online business activities for products and services. It also pertains to ³any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.  Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet.  Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet.  E-commerce, ecommerce, or electronic commerce is defined as the conduct of a financial transaction by electronic means  E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals Even today, some considerable time after the so called µdot com/Internet revolution¶, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. Next stage is development of Electronic data interchange (EDI). EDI is the electronic transfer of a standardised business transaction between a sender and receiver computer, over some kind of private network or value added network (VAN). With the advent of the Internet, the term e-commerce began to include:  Electronic trading of physical goods and of intangibles such as information.  All the steps involved in trade, such as on-line marketing, ordering payment and support for delivery.  The electronic provision of services such as after sales support or on-line legal advice. OBJECTIVES OF ECOMMERCE       To understand the complexity of e-commerce and its many facets. To explore how e-business and e-commerce fit together. To identify the impact of e-commerce. To recognise the benefits and limitations of e-commerce. To use classification frameworks for analysing e-commerce. To identify the main barriers to the growth and development of e-commerce in organisations.

and  The relatively low cost of labor. and. in some cases.  Limited availability of credit cards and a nationwide credit card system. which implies that a shift to a comparatively capital intensive solution is not apparent. These include specialised search sites and trade and industry standards 2 .Most of developing countries are already participating in e-commerce.  Network security problems and insufficient security safeguards. For example the autoparts wholesaler (reliableautomotive. The B2B market has three components: a) Direct selling and support to business (as in the case of Cisco where customers can buy and also get technical support. and most experts predict that B2B ecommerce will continue to grow faster than the B2C segment. TYPES OF E-COMMERCE E-commerce identifies the partners directly involved in the transaction. such as the recognition of transactions under laws of other ASEAN member-countries. Business-to-Business (B-to-B) B2B e-commerce is simply defined as e-commerce between companies. communication fees. bid to make a purchase at a desired price. patches online).. On another plane. the relatively underdeveloped information infrastructure must be improved. In e-commerce. IS E-COMMERCE THE SAME AS E-BUSINESS While some use e-commerce and e-business interchangeably. About 80% of e-commerce is of this type. downloads. to facilitate ecommerce growth in these countries. information and communications technology (ICT) is used in inter-business or interorganizational transactions (transactions between and among the organizations). 1. where they compete with and complement the more developed economies. and hosting charges for websites with sufficient bandwidth.  Underdeveloped transportation infrastructure resulting in slow and uncertain delivery of goods and services. c) Information sites provide information about a particular industry for its companies and their employees. including connection service fees. This is the type of ecommerce that deals with relationships between and among businesses. b) E-procurement (also known as industry portals) where a purchasing agent can shop for supplies from vendors. certification inadequate professional IT workforce)  Cross-border issues. request proposals. and the chemical B-to-B exchange. they are distinct concepts. either as sellers or buyers. improvement of delivery methods and customs facilitation. developing countries are given increased access to the global marketplace.e. An informal version of this framework is being loosely applied in the use of the terms business-to-business (B-to-B).  Lack of skilled human resources and key technologies (i. businessto-consumer (B-to-C) and consumer-to-consumer (C-to-C) and mobile commerce (m-commerce).  Provision of services such as after sales support or on-line legal advice. Among the areas for policy interventions are:  High Internet access costs. However.

and second. the size of the B2G ecommerce market as a component of total e-commerce is insignificant. the public sector assumes a pilot/leading role in establishing e-commerce. This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions. as government e-procurement systems remain undeveloped. Consumer-to-Consumer (C-to-C): Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. for information goods. Business-to-Government (B-to-G): Business-to-government e-commerce or B2G is generally defined as commerce between companies and the public sector. In this case. The more common applications of this type of e-commerce are in the areas of purchasing products and information. tangibles such as books or consumer products) or information goods (or goods of electronic material or digitized content.organisation sites. however. it is assumed that the public sector has the greatest need for making its procurement system more effective. or e-books). This kind of e-commerce has two features: first. and other government-related operations. To date. 2.. Web-based purchasing policy increases the transparency of the procurement process and reduces the risk of irregularities. In the case of information goods.. receiving products over an electronic network. licensing procedures. E. involves customers gathering information. purchasing physical goods (i. 3. which empower the consumer to drive transactions. Business-to-consumer e-commerce. new market makers. B2C e-commerce is even more attractive because it saves firms from factoring in the additional cost of a physical distribution network. delivering information goods becomes increasingly feasible.g. It perhaps has the greatest potential for developing new markets. and. such as software. Many Bto-B sites may also fall into none or more than one of these groups. B2C e-commerce also reduces market entry barriers since the cost of putting up and maintaining a Web site is much cheaper than installing a ³brick-and-mortar´ structure for a firm. for countries with a growing and robust Internet population. Moreover. A concrete example of this when competing airlines gives a traveler best travel and ticket offers in response to the traveler¶s post that she wants to fly from New York to San Francisco firms/organizations) and in business-to-consumer transactions (transactions between firms/organizations and individuals). It refers to the use of the Internet for public procurement. 3 . B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer access to information and allowing consumers to find the most competitive price for a product or service. Consumer-to-business (C2B) transactions involve reverse auctions. which pertains to the management of personal investments and finances. the µc¶ represents either consumer or customer. or commerce between companies and consumers. is a leading portal for B-to-B news.e. information and services between business and the consumer. Business-to-consumer (B to C) ± The exchange of products. particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers. and personal finance management.

MODEL OF E-COMMERCE Definitions:Database: It is a storage container that holds information about the items being sold. all of the information about the products. This means that we can change prices. add new items and delete old items. Step 2: This step shows the arrow flowing from the Corporate web site into the database. WHY SHOP ONLINE? Online access has enabled people from all walks of life to bring entire libraries.. Each individual item. etc. add new items. etc from anywhere in the world. manufacturers. delete old items. All of the "updates" to these lists are instantly stored in the database. Online stores are open 24 hours a day. to a desktop or to a shirt pocket. Step 3: The final step shows the information that is stored in the database flowing into the Public web site. gadgets and groceries to clothing. We can access these lists from anywhere in the world. This functionality empowers to administer own web site allowing us to avoid web site maintenance fees and service time. and in a rapidly swelling tide. seven days a week. not just from inside the office. etc is being displayed in easy to read lists inside the web browser. and their inventories are often more complete than those of their brick-and-mortar counterparts. With all of the editing complete. Steps involved are: Step 1: In the diagram above. the Internet makes it easy for 4 . From this web site the merchandise can be securely purchased by anyone in the world. etc.) Public Web Site: This is the web site that displays and describes the products to the customers. In other words. The Internet¶s largest and most meaningful impact may very well be on the way consumers shop for everything from gifts. manufacturers. we have the confidence in knowing that the customers are seeing accurate and up to the minute products and price information. on each list is editable. post offices and financial centers to a workplace. As mentioned in Step 1. prices. consumers visit a store¶s Web site to make their choices before traveling to the store itself. cars. Step 1 shows the arrow flowing out of the database into the Corporate web site. entertainment venues. and cruises. More and more. The information is being displayed in the form of lists inside the web browser.) Corporate Web Site: This is a password protected web site that enables to modify the information in the database (update prices. many shoppers are bypassing the store altogether and ordering online directly from the Web sites of their favorite brands and outlets. The ease and selection that the Internet provides to shoppers has changed the face of retailing. ro (prices.

The Internet s largest and most meaningful impact may very well be on the way consumers shop for everything from gifts. and their inventories are often more complete than those of their brick-and-mortar counterparts.shoppers to compare products withi or between stores. Ebay carries on ticket gadgets and groceries to clothing. Online stores are open 24 hours a day. bought. the Internet makes it easy for 5 . appliances. to read product reviews from other customers. or sold daily on eBay. to access vendor return policies and to find warrant information.anything can be auctioned on the site as long as it is not illegal. cars. computers. It is now a multi-billion dollar business with operations locali ed in over thirty countries. arge international companies. California. online money transfers and other services. sell their newest products and offer services on eBay using competitive auctions and fi ed-priced storefronts. Generally.S. domain names vehicles. and other miscellaneous items are listed. post offices and financial centers to a workplace. such as IBM. to a desktop or to a shirt pocket. eBay is one of the notable success stories of the dot-com bubble. .com i i i Online auction Required to buy and sell T B (NASDAQ: EBAY) is an American internet consumer-to-consumer corporation that manages eBay. APPL AT E E E T T ublic NASDAQ: EBAY NASDAQ-100 Component S& 500 Component September 3. an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. entertainment venues. Online access has enabled people from all walks of life to bring entire libraries. Founded in 1995. decor. 1995 ierre Omidyar q i i San Jose. equipment. S$ 01. A recent study of the marketplace by Nielsen//Net Ratings found more than 200 million Americans (or 75%) are using the Internet. seven days a week.801 billion (2010) eBay. furnishings. and cruises. i l Millions of collectibles.

Choose a secure password to protect account information: Many people use passwords for online stores that could be guessed. to read product reviews from other customers. one can expect more predictable and more precise information on clearing time and delivery shipments. 5. The Internet offers the platform for retailers to provide information about their companies and histories while the buyers are empowered to do their research about the products and companies. and licenses.e. permits. Learn as much as possible about the product and seller: Shoppers will feel more secure and confident if they are familiar with the merchants from whom they¶re buying. if a full refund will be offered or a merchandise credit. SHOPPING SAFELY ONLINE Online fraud can take many forms from non-delivery of goods to non-return of damaged goods. With the computerization of customs processes and operations (i. it probably is: As with any purchase. to access vendor return policies and to find warranty information. 2) Customs clearance. click the links describing the purchase agreement). among others. online fraud can be deterred by following a few simple practices:1. electronic submission.shoppers to compare products within or between stores. look for the logos from companies like VeriSign or Trust E. HOW GOVERNMENT USES E-COMMERCE:1) E-procurement. and automated systems for data entry to integrate customs tables. Questions to ask include: the required timeframe a buyer must contact the retailers and return the items. µsupplier enablement¶ programs. and if an item that has been opened can be returned. 4. codes and pre assessment). shoppers should be wary of unreasonably low bargain prices or unusually attractive promises. Instead. and increased legitimate revenues. To know if the retailer is offering a safe checkout process. Understand the retailers¶ refund policies: Look for and ask about what the refund policies are. If an offer sounds highly suspicious or too good to be true. 3. 6 . in some instances. This includes a system for electronic processing and transmission of tax return information. In many cases. processing and electronic payment.. and an electronic process registration of businesses and new taxpayers. and e-procurement information systems. Social Security Number or a family member¶s name. online issuances of tax clearances. A recent study of the marketplace by Nielsen//Net Ratings found more than 200 million Americans (or 75%) are using the Internet. 3) Tax administration. While Internet shops frequently offer lower prices than brick-and-mortar stores. shoppers should read the fine print (or. Government agencies should be able to trade electronically with all suppliers using open standards-through µagency enablement¶ programs. Use a secure checkout and payment process: Many Web sites use a technology called Secure Sockets Layer (SSL) to encrypt the personal and financial information sent over the Internet. a password should contain a combination of upper and lower case letters and numbers and symbols that no one else will know. like their birthday. 2.

iii. its willingness to innovate and use technology to achieve objectives. Within this. In the past this was mainly door-todoor. As such. This moved to telemarketing and TV selling with the advances in telephone and television technology and finally developed into e-marketing spawning µeCRM¶ (customer relationship management) data mining and the like by creating new channels for direct sales and promotion. The criteria that determine the level of advancement of e-commerce are:1. marketing strategies and consumer behaviour and cultures. ii. Requirements of customers and suppliers ± in terms of product and service demand and supply. Skilled and committed workforce ± that understands. 3. It is often claimed that e-commerce is more advanced in the USA than in Europe. v. home parties (like the Tupperware parties) and mail order using catalogues or leaflets. Commercial benefits ± in terms of cost savings and improved efficiency that impact on the financial performance of the firm. the implementation of e-business is solely dependent on whether there is a demand by the organisation and whether it can be supplied within the organisation. WHAT IS THE IMPACT OF ELECTRONIC COMMERCE? E-commerce and e-business are not solely the Internet. 2. Political factors ± includes the role of government in creating government legislation. Since a distinction has been made in this book between e-commerce and e-business for consistency. These key drivers can be measured by a number of criteria that highlight the stages of advancement of e-commerce in each of the respective countries. websites or dot com companies. One of the areas in which it impacts particularly is direct marketing.WHAT ARE THE KEY DRIVERS? It is important to identify the key drivers of e-commerce to allow a comparison between different countries. iv. which include: i. Ecommerce provides the infrastructure and environment that enables and facilitates e-business. the key drivers of e-business are also identified. is willing and able to implement new technologies and processes. For example: Marketing ± issues of on-line advertising. e-business and e-commerce impact on many areas of business and disciplines of business management studies. 7 . Technological factors ± The degree of advancement of the telecommunications infrastructure which provides access to the new technology for business and consumers. Economic factors ± includes the general wealth and commercial health of the nation and the elements that contributes it. Social factors ± incorporates the level and advancement in IT education and training which will enable both potential buyers and the workforce to understand and use the new technology. These are mainly at the level of firm and are influenced by macro-environment and e-commerce. Organisational culture ± attitudes to research and development (R D). It is about a new business concept that incorporates all previous business management and economic concepts. 4. initiatives and funding to support the use and development of e-commerce and information technology. Competition ± ensuring the organisation stays ahead of or at least keeps up with competitors and industry leaders.

By becoming e-commerce enabled. customers could have any color so long as it was black. More choices.g. WHAT ARE THE BENEFITS OF E-COMMERCE? 1. storing and retrieving paperbased information has decreased (see Intel mini-case). This can range from the immediate delivery of digitised or electronic goods such as software or audio-visual files by downloading via the Internet. similarly the time for processing orders can be reduced by more than 90 per cent from days to minutes.E-commerce has revolutionized the way consumers buy goods and services. all year round from almost any location website. Production and operations management ± the impact of on-line processing has led to reduced cycle times. Mass customization. or by visiting a single site where prices are aggregated from a number of providers and compared (for example www.Customers not only have a whole range of products that they can choose from and customise. to the on-line tracking of the progress of packages being delivered by mail or courier. Human resource management ± issues of on-line recruiting. Lower telecommunications cost. In one case a pop star set up web cameras in every room in his house. distributing. privacy of customer information. etc. checking balances.Customers can µshop¶ around the world and conduct comparisons either directly by visiting different sites. obtaining travel and other information. Operational cost savings.Finance and accounting ± on-line customers to shop or conduct other transactions 24 hours a day. Issues such as copyright. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organisation and its authorised partners. The pull-type processing allows for products and services to be customised to the customer¶s requirements. so that he could check the status of his home by logging onto the Internet when he was away from home on tour. Benefits of e-commerce to organizations International marketplace. making payments. 2. accounting and auditing implications where µintangible¶ assets and human capital must be tangibly valued in an increasingly knowledge based economy.The cost of Production systems are integrated with finance marketing and other functional systems as well as with business partners and customers. Improved delivery processes.g. businesses now have access to people all around the world. legality of electronic contracts. but also an international selection of suppliers. It takes seconds to deliver digitized products and services electronically.What used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. Business law and ethics ± the different legal and ethical issues that have arisen as a result of a global µvirtual¶ market e.moneyextra. 8 . In effect all e-commerce businesses have become virtual multinational corporations. In the past when Ford first started making motor cars. Now customers can configure a car according to their specifications within minutes on-line via the www. home working and µentrepreneurs¶ are working on a project by project basis replacing permanent employees. Price for financial products and services). It is also cheaper to send a fax or e-mail via the Internet than direct dialing. processing. Benefits of e-commerce to customers 24/7 access. issues of transaction costs.

9 . health services available over the Internet (online consultation with doctors or nurses).As people become more used to interacting electronically there could be an erosion of personal and social skills which might eventually be detrimental to the world. and even the Consumers¶ Association in the UK. Several banking and other business websites.Enables people in developing countries and rural areas to enjoy and access products. Not only is this more convenient and provides happier and less stressful working environments. Customers are unable to touch and feel goods being sold on-line or gauge voices and reactions of human beings.There are problems where older business systems cannot communicate with web based and Internet infrastructures. standards and communication protocols. and filing taxes over the Internet through the Inland Revenue website. Under pressure to innovate and develop business models. information and other people which otherwise would not be so easily available to them. leading to running of almost two independent systems where data cannot be shared. Facilitates delivery of public services. The ease with which business models can be copied and emulated increases that pressure and curtails longer -term competitive advantage. so there is always a feeling of trying to µcatch up¶ and not be left behind. This often leads to invest in new systems or an infrastructure.To exploit the new opportunities which sometimes leads to detrimental of strategies to the organization. which enhances the quality of life for a whole host of people in society. Rapidly evolving and changing technology. LIMITATIONS OF E-COMMERCE 1. Connects people. Problems with compatibility of older and µnewer¶ technology. For example.3.. Benefits of e-commerce to society Enables more flexible working practices. including Barclays Bank. 2. which bridges the different systems In both cases this is both .There is no real control of data that is collected over the Web or Internet. which means an initial capital cost to customers. reliability. services. Physical contact and relationships are replaced by electronic processes. it also potentially reduces environmental pollution as fewer people have to travel to work regularly.For example. Lack of security and privacy of personal data. Limitations of e-commerce to organizations Lack of sufficient system security. have experienced breaches in security where µa technical oversight¶ o µa r fault in its systems¶ led to confidential client information becoming available to all. Microsoft has over the years issued many security notices and µpatches¶ for their software. Cost of access to the Internet.There are numerous reports of websites and databases being hacked into. whether dial-up or broadband tariffs. A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web. enabling them to work from home. financially costly as well as disruptive to the efficient running of organisations. Limitations of e-commerce to consumers Computing equipment is needed for individuals to participate in the new µdigital¶ economy. Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organisation. Data protection laws are not universal. and security holes in software. Breakdown in human interaction.

ebay. CONCLUSION Today¶s online shoppers have become very smart consumers very quickly. The Internet empowers people to easily compare 2.This could potentially cripple an economy in times of crisis as stocks are kept to a minimum and delivery patterns are based on pre -set levels of stock which last for days rather than weeks CASE Difficulty in policing the Internet. REFERENCES 1. advanced telecommunications infrastructures and IT skills are unavailable or scarce or underdeveloped. Reliance on telecommunications infrastructure. PayPal Security Center www.There is a potential danger that there will be an increase in the social divide between technical haves and have-nots ± so people who do not have technical skills become unable to secure better-paid jobs with potentially dangerous implications for social stability. Facilitates Just-In-Time manufacturing.anti-phishing. Now Internet users are becoming increasingly savvy about protecting their identities and their purchases when shopping by taking advantage of sites and systems to which they can turn to online. which means that numerous crimes can be perpetrated and often go undetected.paypal. Anti-Phishing Working Group www.Social division. which in developing countries nullifies the benefits when power. There is also an unpleasant rise in the availability and access of obscene material and ease with which pedophiles and others can entrap children by masquerading in chat 3. prices and delivery options which have made shopping more enjoyable. 10 . less expensive and less time consuming. power and IT skills. eBay Security Center 4. Pursuing wise choices when corresponding and making purchases online will help ensure that consumers and their resources remain secure and that confidence in all the benefits the Internet can bring to daily living will continue to expand.