This action might not be possible to undo. Are you sure you want to continue?
E-Commerce [A Complete Overview]
Internet has become an important medium for doing global business based on the state of the art technology. Electronic commerce has two major aspects: economical and technological. The stress of this report will show you how to get started in the complex and exciting world of Electronic Commerce. New standards and new facilities are constantly emerging and their proper understanding is essential for the success of an operation, and especially for those who are assigned a duty to select, establish, and maintain the necessary infrastructure.
What is E-Commerce?
E-commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks including the internet. Definition of E-Commerce from Different Perspective i. Communications Perspective EC is the delivery of information, products/services, or payments over the telephone lines, computer networks or any other electronic means. Business Process Perspective EC is the application of technology toward the automation of business transactions and work flow. Service Perspective EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. Online Perspective EC provides the capability of buying and selling products and information on the internet and other online services.
Traditional and Electronic Commerce Transaction
The business processes are broadly divided into five main categories namely: Market product and services. Sell and deliver products and services. Process payments. Manage relationship. Manage the enterprise.
E-Commerce Report Traditional Commerce vs. E-Commerce Items Sales Channel Sales Hour /Region Sales place/method E-Commerce Enterprise Internet Consumer Entire world 24x7 Market space (Network) Sale based on Traditional Commerce ManufacturerWholesaler RetailerConsumer Restricted area Restricted sales hour Market space (store) Sale based on display
survey and Any time acquisition through Market salesman Customer information internet Require information reacquisition Digital Data without no re-entry entry Marketing activity 1:1 Marketing via bi-directional One way communication consumer marketing to
Delayed support for Real time support for customer customer Dissatisfaction Dissatisfaction Time different for catching Real time acquisition of customer customer needs needs Small Large
Benefits of E-Commerce The benefits of E-Commerce are many and many. Some of them include: 24X7 operation: Round the clock operation is an expensive proposition in the brick and mortar world while it is natural in the click and conquer world Global reach: The net being inherently global, reaching global customers is relatively easy on the net compared to the world of bricks Cost of acquiring serving and retaining customers: It is relatively cheaper to acquire new customers over the net. Thanks to 24 X 7 operation and its goal reach. Through innovative tools of push technology to retain customers, loyalty with minimal investments. An extended enterprise is easy to build: In today’s world every enterprise is a part of the „connected economy‟; as such you need to extend your enterprise all the way to your suppliers and business partners like distributors, retailers and ultimately you end customers. Internet provides an effective (often less expensive) way to extend your enterprise beyond the narrow confines of your own organization. Tools like enterprise resource planning (ERP) ,supply chain management (SCM) and customer relationship management (CRM), can easily be
deployed over the net permitting amazing efficiency in time needed to market, customer loyalty, on time delivery and eventually profitability. Disintermediation: Using the net one can directly approach the customers and suppliers, cutting down the number of level sand in the process, cutting down the costs. Improved customer service to your clients: It results in higher satisfaction and more sales Power to provide the ‘best of both the worlds’: It enhances traditional along with internet tools. Disadvantages of E-Commerce
Loss of ability to inspect products from remote locations. Rapid developing pace of underlying technologies. Difficult to calculate return on investment. Many products and services require that a critical mass of potential buyers be equipped and willing to buy through the Internet. Costs and benefits have been hard to quantity. Firms also face cultural and legal obstacles to conducting electronic commerce.
Scope of E-Commerce
Marketing, sales and sales promotion. Pre-sales, subcontracts, supply. Financing and insurance. Commercial transactions: ordering, delivery, payment. Product service and maintenance. Co-operative product development. Distributed co-operative working; Use of public and private services. Business-to-administrations (e.g. customs, etc). Transport and logistics. Public procurement. Automatic trading of digital goods. Accounting. Dispute resolution.
History of E-Commerce
In 1950’s companies began to use computers to store and process internal transaction records. By 1960’s businesses that engaged large volume of transaction had began exchanging transaction information on punched card. In 1968 Transportation Data Co-ordination Committee (TDCC ) was formed by some companies. In 1979 ANSI (American National Standards Institute) chattered a new committee to develop uniform EDI (Electron Data Interchange). In 1979: Online shopping was invented in the UK by Michael Aldrich. In 1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering. In 1984: World's first recorded B2C online home shopper. Mrs Jane Snowball uses the Gateshead SIS/Tesco system to buy groceries. In 1987: Swreg begins to provide software and shareware authors means to sell their products online through an electronic Merchant account. In 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer. In 1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN 0312063598. In 1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure. In 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
The Process of E-commerce i. Attract customers Advertising, marketing ii. Interact with customers Catalog, negotiation iii. Handle and manage orders Order capture Payment Transaction Fulfillment (physical good, service good, digital good) iv. React to customer inquiries Customer service Order tracking
Picture: E- Commerce in Action
How E-Commerce Works?
The consumer first moves through the internet to the merchant’s web site. At the web site, the consumer is briefly given an introduction to the product or services the merchant offers. It is at this point that the consumer makes the decision to visit the web store by clicking on a link or button located on the web page (e.g., Buy Now, Shop Online, or an image of a shopping cart button are common entry points into a web store). After choosing to visit the web store, the consumer is typically connected to an online transaction server located somewhere else on the internet which runs software commonly referred to as a shopping cart application. The shopping cart application has been setup by the merchant to display all products and services offered, as well as calculate pricing, taxes, shipping charges, etc. From there, the consumer decides that he wants to purchase something, so he enters all pertinent credit card information and a sales order is produced. Depending on the ecommerce implementation, the sales order can now take two totally different paths for confirming to the consumer that the order is officially placed. There are several basic steps you will need to accomplish before becoming Commerce Enabled. Getting a Merchant Bank Account Web Hosting Web Design Considerations Registering a Domain Name Obtaining a Digital Certificate Types of E-Commerce
There are a number of different types of E-Commerce B2B - Business to Business B2C - Business to Consumer C2B - Consumer to Business B2E - Business to Employee C2C - Consumer to Consumer B2B - Business to Business
B2B - Business to Business
E-Commerce has been in use for quite a few years and is more commonly known as EDI (electronic data interchange). In the past EDI was conducted on a direct link of some form between the two businesses where as today the most popular connection is the internet. The makes up about 94% of all E-Commerce transactions. Typically in the B2B environment, E-Commerce can be used in the following processes: • • • Procurement; Order fulfillment; Managing trading-partner relationships. two businesses pass information electronically to each other. B2B E-Commerce currently
For many Welsh SMEs B2B E-Commerce is synonymous with the vision of integrated supply chains. This might be the ultimate objective, but, in the short term, B2B E-Commerce could be used as a significant enabler in their move towards greater trading partner collaboration. E-Commerce technologies have allowed even the smallest businesses to improve the processes rather than provide a standard service. Pentwyn Splicers based in Pontypool manufacture pneumatic splicers for the UK and world textile market. They evaluated all aspects of their business process to determine where the greatest return could be obtained. Using the Web to sell more products was an initial consideration, but it was in the provision of customer service and support to their overseas distributors that the greatest benefits have been achieved. An alternative way of thinking of B2B E-Commerce is to think of it as being used to: Attract, develop, retain, and cultivate relationships with customers; Streamline the supply chain, manufacturing, and procurement processes, and automate corporate processes to deliver the right products and services to customers quickly and cost-effectively; Capture, analyze, and share, information about customers and company operations, in order to make better decisions.
for interfacing with customers. They are now able to develop services for individual clients
E-Commerce Report B2C - Business to Consumer Business to Consumer E-Commerce is relatively new to Australia. This is where the consumer accesses the system of the supplier. It is still a two way function but is usually done solely through the Internet. B2C can also relate to receiving information such as share prices, insurance quotes, on-line newspapers, or weather forecasts. The supplier may be an existing retail outlet such as a high street store; it has been this type of business that has been successful in using E-Commerce to deliver services to customers. These businesses may have been slow in gearing-up for ECommerce compared to the innovative dot.com start ups, but they usually have a sound many dot.coms lacked, causing many to fail Example: A home user wishes to purchase some good quality wine. The user accesses the Internet site and follows the links to read a report on the recommended wines. After reading the tasting notes the user follows the links to place an order along with delivery and payment suppliers’ warehouse and in theory is delivered to the consumer without delay. C2B - Consumer to Business Consumer to Business is a growing arena where the consumer requests a specific service from the business. details directly into the merchants’ inventory system. The wine is then dis-patched from the commercial structure as well as in-depth experience of running a business - something which
Example: Harry is planning a holiday in Darwin. He requires a flight in the first week of December and is only willing to pay $250. Harry places a submission with in a web based C2B being a slow period, the airline offers Harry a return fare for $250. B2E - Business to Employee facility. Dodgy Brothers Airways accesses the facility and sees Harry’s submission. Due to it
Business to Employee E-Commerce is growing in use. This form of E-Commerce is more commonly known as an ‘Intranet’. An intranet is a web site developed to provide employees of an organization with information. The intranet is usually access through the organizations network, it can and is often extended to an Entrant which uses the Internet but restricts uses by sign on and password.
E-Commerce Report C2C - Consumer to Consumer These sites are usually some form of an auction site. The consumer lists items for sale with a commercial auction site. Other consumers access the site and place bids on the items. The site provider usually charges a transaction cost. In reality this site should be call C2B2C. B2A is the least developed area of E-Commerce and it relates to the way that public sector then provides a connection between the seller and buyer to complete the transaction. The site
organizations, at both a central and local level, are providing their services on-line. Also known as e-Government, it has the potential to increase the domestic and business use of E-Commerce as traditional services are increasingly being delivered over the Internet. The UK government is committed to ensuring this country is at the forefront of E-Commerce and it is essential that E-Government plays a significant part in achieving this objective.
Eight Steps to Plan Successful E-Commerce
Let the Customer Plan E-Commerce Good plans are simple plans. They are also measurable, their implementation is accountable, he delivered. Done or not quite. Whatever planning process an organization uses, expect that the company will not control the direction in which online services evolve. The customer will decide what works and what doesn’t. Respond Fast resources to deliver the plan are available and there is a time-frame for the plan to be
If the plan is to respond to customer wishes, then the most successful plan will be the one that responds fastest. This means that every component of the plan should be built with the intention of proving a principle. Ask yourself if your customers want this? If they do, then a and use the knowledge gained to good effect elsewhere. Test out Your Plan In the online marketplace everything is a test until it’s proven by the customer. Successful testing follows a simple rule: more robust version can be built. If they don’t, then you can redirect your time and resources
E-Commerce Report Test one Thing at a Time Only test changes that can be measured directly. If a test includes more than one change, it’s to improve one step at a time. Challenge Internal Assumptions Remove internal processing costs to make dramatic improvements to profit margins. Analyse each sales process to clarify what it is that staff spend time doing. In particular, look for processes in which information is transferred. How many steps can be eliminated by outsourcing tasks to your customers and suppliers? Who is best placed to make the original What information could customers, suppliers and distributors find for themselves, computer to computer? With the time saved, what could your staff do to add more value for customers? Focus on Customer, Supplier & Distributor Benefits What’s in it for customers, suppliers and distributors? Have you asked what they’d like? The completely new service? Is it faster, cheaper, more convenient or just new and online? What new information do they get? Decide what you can reliably offer each group now and plan a and tested stand-alone services. Give Good Reasons to Use Online Services Not all customers will automatically move to an online service simply because it’s there. online channel by quickly moving large numbers of customers over to the new service. If you prefer customers to use an online channel, find ways to: Inform them that it is there (they may not know this) Tell them how to change over incentivize the swap to make it worthwhile Introduce the new service as a special privilege beta test program. Calculate the Three Sets of Costs Very few organizations have all the resources in-house to start offering online services. There are three sets of costs that should be calculated: i. Current company costs that will be altered by the online changes Equally, in a service’s early stages it may not make good sense to risk overwhelming a new phased introduction of more complex services. Complexity often arises from integrating tried web’s very good at research. Are you offering them a new way to use an existing service or a information entry? Can that information be shared to avoid re-entering the same information? almost always impossible to measure the effect of each one. Test to learn from the customer and
E-Commerce Report ii. iii. both internal and external costs interim support may be needed training for staff whose tasks change long-term cost-savings
Cost to implement the changes
New cost assumptions, post change long-term outsourcing arrangements ongoing online development plans
Help Staff Adapt to Online Working An online service will affect your staff and the work that they do. If your organization is typical, there will be a progressive transfer from processing tasks towards customer service. Some may find this work more fulfilling; others will not enjoy the increased interaction with service roles will require assistance to develop new skills. They will almost certainly require customers. customers. Unless a company’s online services are entirely online, staff who are to fulfill new some training in how to make the most of the new technology for the benefit of their
Forces that are Fuelling E-Commerce
There are at least three major forces fuelling E-Commerce: economic forces, marketing and customer interaction forces, and technology, particularly multimedia convergence. Economic Forces One of the most evident benefits of E-Commerce is economic efficiency resulting from the reduction in communications costs, low-cost technological infrastructure, speedier and more economic electronic transactions with suppliers, lower global information sharing and advertising costs, and cheaper customer service alternatives. Economic integration is either external or internal. External integration refers to the electronic networking of corporations, suppliers, customers/clients, and independent contractors into one community communicating in a virtual environment (with the Internet as medium). Internal integration, on the other hand, is the networking of the various departments within a corporation, and of business operations and processes. This allows critical business information to
be stored in a digital form that can be retrieved instantly and transmitted electronically. Internal
E-Commerce Report integration is best exemplified by corporate intranets. Among the companies with efficient corporate intranets are Procter and Gamble, IBM, Nestle and Intel. Example: SESAMi.NET: Linking Asian Markets through B2B Hubs. Market Forces
Corporations are encouraged to use E-Commerce in marketing and promotion to capture international markets, both big and small. The Internet is likewise used as a medium for enhanced more detailed product and service information using the Internet. Technology Forces The development of ICT is a key factor in the growth of E-Commerce. For instance, technological advances in digitizing content, compression and the promotion of open systems technology have paved the way for the convergence of communication services into one single platform. This in turn has made communication more efficient, faster, easier, and more economical as the need to set up separate networks for telephone services, television broadcast, cable television, and Internet access is eliminated. From the standpoint of firms/ businesses and consumers, having only one information provider means lower communications costs. Moreover, the principle of universal access can be made more achievable with convergence. At present the high costs of installing landlines in sparsely populated rural areas is a disincentive to can become more attractive to the private sector if revenues from these landlines are not limited to local and long distance telephone charges, but also include cable TV and Internet charges. This development will ensure affordable access to information even by those in rural areas and will spare the government the trouble and cost of installing expensive landlines. telecommunications companies to install telephones in these areas. Installing landlines in rural areas customer service and support. It is a lot easier for companies to provide their target consumers with
E-Commerce Report Is E-Commerce the Same as e-Business? While some use E-Commerce and e-business interchangeably, they are distinct concepts. In ECommerce, information and communications technology (ICT) is used in inter-business or interorganizational transactions (transactions between and among firms/organizations) and in business-to-consumer transactions (transactions between firms/organizations and individuals). In e-business, on the other hand, ICT is used to enhance one’s business. It includes any process
that a business organization (either a for-profit, governmental or non-profit entity) conducts over a computer-mediated network. A more comprehensive definition of e-business is: “The transformation of an organization’s processes to deliver additional customer value through the application of technologies, philosophies and computing paradigm of the new economy.” Is the Internet economy synonymous with E-Commerce and E-Business? Commerce and E-Business. The Internet economy pertains to all economic activities using electronic networks as a medium for commerce or those activities involved in both building the networks linked to the Internet and the purchase of application services such as the provision of enabling hardware malls”). It is made up of three major segments: physical (ICT) infrastructure, business infrastructure, and commerce. and software and network equipment for Web-based/online retail and shopping malls (or “e-
The Internet economy is a broader concept than E-Commerce and E-Business. It includes E-
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.