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ADVANTAGES OF ECOMMERCE

Faster buying/selling procedure, as well as easy to find products.

Buying/selling 24/7. More reach to customers, there is no

theoretical geographic limitations. Low operational costs and better quality of

services. No need of physical company set-ups. Easy to start and manage a business. Customers can easily select products from

different providers without moving around physically.

DISADVANTAGES OF ECOMMERCE

Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money.

There is no guarantee of product quality. Mechanical failures can cause

unpredictable effects on the total processes.

As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check.

There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways; all are always prone to attack.

Advantage of the E-commerce:1.E-commerce can increase sales.

2.It can decrease coasts.3.The Web is useful in creating virtual

communities that become ideal target markets for specific types of products or services.

4.A business can reduce the coasts of handling sales inquiries, providing price quotes & determining product availability by using sales support & order-taking processes.

5.E-commerce increases the speed & accuracy with which business can exchange information, which reduces costs on both sides of transactions.

6.E-commerce provides buyers with a wider range of choices than traditional commerce because buyers can consider many different products & services from a wider variety of sellers.

7.Electronic payments of tax refunds, public retirement & welfare support cost less to issue & arrive securely & quickly when transmitted over the Internet.

8.E-commerce can make products & services available in remote areas.

Disadvantages of E-commerce: 

1.Most common disadvantage of E-commerce is that stem from the newness & rapidly developing pace of the underlying technologies.

2.Perishable grocery products are harder to sell online because customers want to examine and select specific items that are still fresh and appealing.

3.To calculate return-on-investment numbers before committing to any new technology has been difficult to do for investments in electronic commerce.

4.Many firms have had trouble recruiting & retaining employees with the technological, design, & business process skills needed to create an effective e-commerce presence.

5.Many business face cultural and legal obstacles to conducting electronic commerce.

6.The legal environment in which e-commerce is conducted is full of unclear and conflicting laws.

7.In many cases, government regulators have kept up with technologies.

The role of E-Commerc

As they examine their industry value chains, many businesses are finding

That electronic commerce can play a role in reducing costs, improving product

Quality, reaching new customers or suppliers and creating new ways of selling

Existing products.

The value chain concept is a useful way to think about business strategy in general.

UNIT IINTRODUCTION  TO  E-COMMERCEInternet 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 course 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.

W h a t i s e - C o m m e r c e ?E-commerce is an emerging concept that describes the processor buying and selling or exchanging of products, services, and information via computer networks including the internet.

D e f i n i t i o n   o f E - C o m m e r c e f r o m   D i f f e r e n t P e r s p e c t i v e1 . C o m m u n i c a t i o n s   P e r s p e c t i v e•EC is the delivery of information, products/services, or payments over the telephone lines, computer networksorany other electronic means.2 . B u s i n e s s P r o c e s s P e r s p e c t i v e•EC is the application of technology toward the automation of business transactions and work flow.3 . S e r v i c e P e r s p e c t i v e

•EC is a tool that addresses the desire affirms, consumers, and management tout service costs while improvingthequality of goods and increasing the speed of service delivery.4 . O n l i n e   P e r s p e c t i v e•EC provides the capability of buying and selling products and information on the internet and other online services.B e n e f i t   o f   e - C o m m e r c e•Access new markets and extend service offerings to customers•Broaden current geographical parameters to operate globally•Reduce the cost of marketing and promotion•Improve customer service•Strengthen relationships with customers and suppliers•Streamline business processes and administrative functions

S c o p e o f E - C o m m e r c e•Marketing, sales and sales promotion•Pre-sales, subcontracts, supply•Financing and insurance•Commercial transactions: ordering, delivery, payment•

Product service and maintenanceCo-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

H i s t o r y o f E - c o m m e r c eThe history of e commerce is a history of how Information Technology has transformed business processes. Some authors will track back the history of e commerce to the invention of the telephone at the end of last century. EDI (Electronic Data Interchange) is widely viewed as the beginning of ecommerce if we consider ecommerce as the networking of business communities and digitalization of business information. Large organizations have been investing in development of EDI since sixties. It has not gained reasonable acceptance until eighties. EDI has never reached the level of popularity of the web-based ecommerce for several reasons:•

High cost of EDI prohibited small businesses and medium-sized companies from participating in the electronic commerce;•Slow development of standards hindered the growth of EDI; and•The complexity of developing EDI applications limited its adaptation to a narrow user base.

H o w   e - C o m m e r c e W o r k sThe 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 decisionto 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 as hopping 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 required 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.S c e n a r i o 1The consumer’s credit card information goes directly through private gateway to a processing network, where the issuing and acquiring

banks complete or deny the transaction. This generally takes place in no more than 5-7 seconds and the consumer is then informed that the order was received, the credit card was authorized, and that the product will ultimately be shipped.S c e n a r i o 2The consumer’s entire order and credit card information is electronically submitted back to the merchant’s server (usually via email, FTP, or SSL connection) where the order can be reviewed first and then approved for credit card authorization through a processing network. The consumer then receives an email shortly afterwards, confirming the order being received, the credit card being authorized, and status on when the product will exactly be shipped. In both scenarios, the process is transparent to the consumer and appears virtually the same. However, the first scenario is amore simplistic method of setting up a shopping cart application and does not take into consideration any back office issues that may delay shipment (i.e., items out of stock, back orders, orders submitted after office hours or during holidays, etc.).Manage ore’s ecommerce Manager relies on the second scenario to handle all of its ecommerce orders. This second scenario keeps the consumer accurately informed throughout the entire ordering process. For the sake of this tutorial, we will assume an ecommerce implementation that uses the second scenario mentioned above. 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 Let we review each step in more detail below:

FEATURES OF E-COMMERCE•E-commerce websites have to exert an image of vibrancy, competitiveness and efficiency. For that powerful website builder software has to be selected.•The pages have to be search optimized if you want your site to be visible in search engines at a higher position.•Integration of the website with PayPal would help accept real-time credit card processing instantly.•The templates of the site should be designed professionally and there should be space to accommodate catalogues prepared in Excel.•The site has to be integrated with other websites using HTML editor, which involves allotting codes to web pages.

E-COMMERCE Electronic commerce is the buying and selling of goods and services, and the transfer of funds, through digital communications. However EC also includes al l inter-company and

intra-company functions (such as marketing, finance, manufacturing, sel l ing, and negotiation) that enable commerce and use electronic mail , EDI, f i le transfer, fax, video conferencing, workflow, or interaction with a remote computer. Electronic commerce also includes buying and selling over the Web, electronic fundstransfer. E-commerce is can be understood generally as any electronic sales transactions over the internet. E-commerce may also refer to electronic data interchange (EDI), in which one company's computer queries and transmits purchase orders to another company's computer. The existence of an effective E-commerce portal is essential for a multitude of reasons some of which are explained below: Customer generation through E-Commerce Companies can achieve this by offering a product or product-l ine that attracts potential customers at a competitive price through in E-commerce because this cutout the middlemen and the need for physical infrastructure such as showrooms and display shelves. In the given scenario, agricultural machinery is the product offered. This includes both large and heavy and small products. The creation of a website would greatly cut down ware house and showrooms cost and yet manage to generate substantial sales leads. A website can offer a responsive and user-friendly purchasing experience, just like a shop retailer and this would also create customer

satisfaction and thereby greater revenues. To further enhance the experience of e-commerce for the consumer the following steps are essential: 1.Creating an attractive and capturing website is the first step towards effective-selling. The use of color, graphics, animation, photographs etc will enhance the consumer interaction with the website.2.The options for an incentive for customers to buy and to return are essential in-commerce. This could be in the way of sales coupons, special offers, and discounts, attractive interest rates on loan purchases etc. Cross-linked websites would also enhance usability.3.Many customers nowadays prefer the personal attention often found in good retail outlets. Appropriate web sites, purchase suggestions or combinations, and personalized special offers may help in substituting the face-to-face human interaction found at a shop.4.Loyalty schemes for consistent e-buyers would ensure loyalty towards the company and would make the e-commerce strategy success.5.Providing reliability and security is perhaps the most important area of debate a n d l e g i s l a t i o n i n e -c o m m e r c e . A p p r o p r i a t e , s u f f i c i e n t a n d t h e l a t e s t technology in the form of parallel servers, physical safeguards, fai l-safe technology, information encryption and firewalls can help towards this need for

security and confidentiality.6.Data integrity is the official term coined for descr ibing the confidential ity of information. The phrase data integrity implies that the data is protected from u n a u t h o r i z e d , u n a n t i c i p a t e d , o r u n i n t e n t i o n a l a c c e s s , m o d i f i c a t i o n a n d alteration.

ConclusionThe scene of internet trading has become a quite dangerous place. Organizations and even Government departments need to be constantly aware of the inherent risks of Internet computing. Because modern organizations continue to give employees new ways of accessing the Web, employees are constantly opening avenues for unexpected and  unau tho r i zed   a t t a cks   and   t he  po t en t i a l   t he f t  o f   pa t en t ed   and   con f iden t i a l information which can be the source for competitive advantage for many businesses. Traditional security measures add cost to the organization and yet do not perform. The dynamic and ever-changing nature of the internet is here to stay and firms need to adjust security policies accordingly. Businesses cannot adopt the method of ignoring t he  po t en t i a l   bene f i t s   o f   e -commerce .  The re fo re   t he  op t imum  way  wou ld  be implement adequate security measures and evolve into a modern trade competitor through the use of e-commerce.

Originally, electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as ElectronicandElectronic 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.Electronic commerce, commonly known asE-commerceOr E-commerce, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic, supply marketing, online processing, electronic (EDI), management systems, and automated data collection systems. Modern electronic commerce typically uses the World at least atones point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.LEARNING OBJECTIVESTo understand the complexity of e-commerce and its many facts. 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 inorganisations.E-CommerceEven today, some considerable time after the so called ‘dot com/Internet revolution’, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. There has been and continues to be much publicity and discussion about e-commerce. Library catalogues and shelves are filled with bookstand articles on the subject.  However,  there remains a sense of confusion,  suspicion and misunderstanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms. This book aims to consolidate the major themes that have arisen from the new area of electronic commerce and to provide an understanding of its application and importance to management. In order to understand electronic commerce it is important to identify the different terms that aroused, and to assess their origin and usage. Electronic commerce has been re-defined by the dynamics of the Internet and traditional e-commerce is rapidly moving to the Internet. 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.Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams. Some of the definitions of e-commerce often heard and found in publications and the media are:E l e c t r o n i c   C o m m e r c e   ( E C )   i s   w h e r e  b u s i n e s s   t r a n s a c t i o n s   t a k e   p l a c e   v i a telecommunications networks, especially the Internet. Electronic commerce describes the buying and selling of products,  services,  and information via computer networks including the Internet.Electronic commerce is about doing business electronically.E-commerce, ecommerce, or electronic commerce is defined as the conductor a financial transaction by electronic means. The wide range of business activities related to e-commerce brought about a range of other new terms and phrases to describe the Internet phenomenon in other business sectors. Some of these focus on purchasing from on-line stores on the Internet. Since transactions go through the Internet and the Web, the terms I-commerce (Internet commerce), ecommerce and even Web-commerce have been suggested but are now very rarely used. Other terms that are used for on-line retail

selling include e-tailing, virtual-stores or cyber stores. A collection of these virtual stores is sometimes gathered into a ‘virtual mall’ or ‘cybermall’.E-BUSINESSAs with e-commerce, e-business (electronic business) also has a number of different definitions and is used in a number of different contexts. One of the first to use the term was IBM, in October 1997, when it launched a campaign built around e-business. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities and this is what some see as e-business.E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.E-business includes customer service (e-service) and intra-business tasks.E-business is the transformation of key business processes through the use of Internet technologies. An e-business is a company that can adapt to constant and continual change. The development of intranet and extranet is part of e-business. E-business is everything to do with back-end systems in an organization. In practice, e-commerce and e-business are often used interchangeably.

IMPACT OF ELECTRONIC COMMERCEE-commerce and e-business are not solely the Internet, websites or dot com companies. It is about new business concept that incorporates all previous business management and economic concepts. As such, e-business and e-commerce impact on many

areas of business and disciplines of business management studies. For example: Marketing   – Issues of on-line advertising, marketing strategies and consumer behavior and cultures. One of the areas in which it impacts particularly is direct marketing. In the past this was mainly door-to door, home parties (like the Tupperware parties) and mail order using catalogues or leaflets. This moved to telemarketing and TV selling with the advances in telephone and television technology and finally developed into e-marketing spawning ‘ecru’ (customer relationship management) data mining and the like by creating new channels for direct sales and promotion.Computer sciences  – development of different network and computing technologies and languages to support e-commerce and e-business, for example linking front and back office legacy systems with the ‘web based’ technology.Finance and accounting  – On-line banking; issues of transaction costs; accounting and auditing implications where ‘intangible’ assets and human capital must be tangibly valued in an increasingly knowledge based economy.Economics  – The impact of e-commerce on local and global economies; understanding the concepts of a digital and knowledge-based economy and how this fits into economic theory.Production and operations management 

 – The impact of on-line processing has led to reduced cycle times. It takes seconds to deliver digitized products and services electronically; similarly the time for processing orders can be reduced by more than 90 per cent from days to minutes. Production systems are integrated with finance marketing and other functional systems as well as with business partners and customers (see Intel mini-case).Benefits of e-commerce to organisationsInternational marketplaceWhat used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. By becoming e-commerce enabled, businesses now have access to people all around the world. In effect all e-commerce businesses have become virtual multinational corporations.Operational cost savings

 The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased (see Intel mini-case).Mass customization-commerce has revolutionized the way consumers buy good and services. The pull-type processing allows for products and services to be customized to the customer’s requirements. In the past when Ford first started making motor cars, customers could have any color so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the www.ford.com website. Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain management – this is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing. This is particularly beneficial for companies in the high technology

sector, where stocks of components held could quickly become obsolete within months. For example, companies like Motorola (mobile phones), and Dell (computers)gather customer orders for a product, transmit them electronically to the manufacturing plant where they are manufactured according to the customer’s specifications (like color and features)and then sent to the customer within a few days.Lower telecommunications costThe Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organization and its authorized partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.Digitization of products and processesParticularly in the case of software and music/video products, which can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format? No more 24-hour-time constraints. Businesses can be contacted by or contact customers or suppliers at any time.Benefits of e-commerce to consumers24/7 accessEnables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other information. In one case a pop star set up web cameras in every room in his house, so that he could check the status of his home by logging onto the Internet when he was away from home on tour.More choicesCustomers not only have a whole range of products that they can choose from and customize, but also an international selection of suppliers.Price comparisonsCustomers can ‘shop’ around the world and conduct comparisons either directly by visiting different sites, or by visiting a single site where prices are aggregated from a number of providers and

compared (for example www.moneyextra.co.uk for financial products and services).Improved delivery processes. This can range from the immediate delivery of digitized or electronic goods such as software or audio-visual files by downloading via the Internet, to the on-line tracking of the progress of packages being delivered by mail or courier. An environment of competition Where substantial discounts can be found or value added, as different retailers vie for customers. It also allows many individual customers to aggregate their orders together into a single order presented to wholesalers or manufacturers and obtain a more competitive price (aggregate buying), for examplewww.letsbuyit.com.Benefits of e-commerce to society Enables more flexible working practicesWhich enhances the quality of life for a whole host of people in society, enabling them to work from home? Not only is this more convenient and provides happier and less stressful working environments, it also potentially reduces environmental pollution as fewer people have to travel to work regularly.Connects peopleEnables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them.Facilitates delivery of public servicesFor example, health services available over the Internet (on-line consultation with doctors or nurses), filing taxes over the Internet through the Inland Revenue website.LIMITATIONS OF E-COMMERCEThere was much hype surrounding the Internet and e-commerce over the last few years of the twentieth century. Much of it promoted the

Internet and e-commerce as the panacea for all ills, which raises the question, are there any limitations of e-commerce and the Internet? Isaac Newton’s 3rd Law of Motion, ‘For every action there is an equal and opposite reaction’ suggests that for all the benefits there are limitations to e-commerce. These again will be dealt with according to the three major stakeholders – organizations, consumers and society.Limitations of e-commerce to organisations Lack of sufficient system security, reliability, standards and communication protocolsThere are numerous reports of websites and databases being hacked into, and security holes in software. For example, Microsoft has over the years issued many security notices and ‘patches’ for their software. Several banking and other business websites, including Barclays Bank, Powered and even the Consumers’ Association in the UK, have experienced breaches in security where ‘technical oversight’ or ‘a fault in its systems led to confidential client information becoming available to all.

Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind. Under pressure to innovate And develop business models to exploit the new opportunities which sometimes lead to strategies detrimental to the organization. The ease with which business models can be copied and emulated over the Internet increases that pressure and curtails longer-term competitive advantage. Facing increased competition From both national and international competitors often leads to price wars and subsequent unsustainable losses forth organization.Problems with compatibility of older and ‘newer’ technology

There are problems where older business systems cannot communicate with webbasedand Internet infrastructures, leading to some organizations running almost two independent systems where data cannot be shared. This often leads to having to invest in new systems or an infrastructure, which bridges the different systems. In both cases this is both financially costly as well as disruptive to the efficient running of organizations.Limitations of e-commerce to consumersComputing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost to customers. A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web. Cost of access to the Internet, whether dial-up or broadband tariffs. Cost of computing equipment. Not just the initial cost of buying equipment but making sure that the technology is updated regularly to be compatible with the changing requirement of the Internet, websites and applications. Lack of security and privacy of personal data. There is no real control of data that is collected over the Web or Internet. Data protection laws are not universal and so websites hosted in different countries may or may not have laws which protect privacy of personal data. Physical contact and relationships are replaced by electronic processes. Customers are unable to touch and feel goods being sold on-line or gauge voices and reactions of human beings. A lack of trust because they are interacting with faceless computers.Application of E-CommerceThis framework, first developed by Kalakos and Whinston, 14 Professors of Information Systems and prolific authors on the subject, takes a holistic view and identifies the different components of business and technology that make up e-commerce. Using the analogy of the architecture of a building illustrated in Figur

e 1.3, they explain how the different components fit and interact together, emphasizing the relative importance of each component.Conclusion: There is no one commonly agreed definition of e-commerce or e-business. Thus, there is a need to clarify terms being used and explain the context in which they are being applied-commerce has an impact on three major stakeholders, namely society, organizations and customers (or consumers). There are a number of advantages, which include cost savings, increased efficiency, customization and global marketplaces. There are also limitations arising from e-commerce which apply to each of the stakeholders. These include information overload, reliability and security issues, and cost of access, social divisions and difficulties in policing the Internet. Successful e-commerce involves understanding the limitations and minimizing the negative impact while at the same time maximizes benefits.