What is Electronic Commerce?
– The exchange of commodities, buying and selling, of products and services requiring transportation, from location to location is known as commerce. E-Commerce
– From a communications perspective, e-commerce is the delivery of information, products/services or payments via telephone lines, Fax, computer networks or any other means.
What is Electronic Commerce?
From an online perspective, e-commerce provides the capability of buying and selling products and information on the internet and other online services. It refers to a wide range of online business activities for products and services. Any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.
Difference between E-Commerce & E-Business
Electronic commerce or “e-Commerce”
E-commerce covers online processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production. More sophisticated system such as flight and hotel reservation system.
e-Commerce breaks into two components:
Online Shopping – the scope of information and activities that provides the customer with the information they need to conduct business with you and make an informed buying decision. Online Purchasing – the technology infrastructure for the exchange of data and the purchase of a product over the Internet. Online purchasing is a metaphor used in business-to-business e-Commerce for providing customers with an online method of placing an order, submitting a purchase order, or requesting a quotation.
E-Business is a super-set of E-Commerce.
E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, and human resources. E-business includes electronic mechanism to distribute information not directly related to buying and selling of goods. Examples:
Product specifications, customer testimonials, and product reviews. Purchasing activities on your site, e.g., order forms, shopping carts, and credit card processing. Customers can’t interact directly with the firm. (territory barrier)
History of EC
The term e-commerce was originally conceived to describe the process of conducting business transactions electronically using technology from the Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT).
These technologies, which first appeared in the late 1970’s, allowed for the exchange of information and the execution of electronic transactions between businesses, typically in the form of electronic purchase orders and invoices. EDI and EFT were the enabling technologies that laid the groundwork for what we now know as e-commerce. The Boston Computer Exchange, a marketplace for used computer equipment started in 1982, was one of the first known examples of e-commerce. Throughout the 1980’s, the proliferation of credit cards, ATM machines and telephone banking was the next step in the evolution of electronic commerce. The birth of companies such as eBay and Amazon (launched in 1994) really began to lead the way in e-commerce. Both eBay and Amazon were among the first to establish prominent e-commerce brands. The most prominent e-commerce categories today are computers, books, office supplies, music, and a variety of electronics. Dell.com,1997
Types of Ecommerce
B2B( Business to Business E-commerce) or Inter-Organizational E-commerce B2C( Business to Consumer E-commerce)
C2B( Consumer to Business E-commerce)
C2C( Consumer to Consumer E-commerce) or Ecommerce Involving Intermediaries Intra-organizational E-commerce m-commerce(Mobile E-commerce)
Business to Government E-Commerce
B2B (Business-to-Business) or inter-organizational Ecommerce Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable. B2B is used to improve business relationship among orgz. (invoices, cheques, purchase orders, financial reports) are in electronic for. For Example: Logistic companies
Supplier Management (reduce no. of suppliers, processing coast, and cycle time) Inventory Management (list of items/product, eliminate out of stock items) Distribution Management (list of ship’s cargo, purchase orders etc) Channel Management (reduce labour, time saving)
Payment Management (electronic payment reduce clerical errors, lower transaction fee and coast)
B2C Business to Consumer
In B2C seller is a business organization buyer is consumer. In this case costumer directly interacts with company, i.e. books and cd’s buy online and internet used as a medium for transaction. Newspapers reading and weather forecasting are used as a B2C E-commerce. This type of e-commerce improve the flow of information between firm and customers. Examples are ebay.com, and amazon.com.
C2B Consumer to Business
A consumer posts his project with a set budget online and within hours companies review the consumer’s requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. Elance empowers consumers around the world by providing the meeting ground and platform for such transactions. Freelancing
C2C (Consumer-to-Consumer) or
E-commerce Involving Intermediaries
In this type both seller and buyers are consumers.
There are many sites offering free classifieds, auctions and forums where individuals can buy and sell. PayPal where people can send and receive money online with ease. Olx.com auction service is a great example of where person-to-person transactions take place everyday.
The purpose of Intra-organizational applications is to help a company maintain the relationships that are critical to delivering superior customer value by paying close attention to various functions in the organization. Benefits:
Sales force Productivity
Business to Government E-C
A platform for businesses to bid on government opportunities. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. It reduces the risk of irregularities.
Income Tax Department, Excise and Taxation Department
Mobile commerce is the buying and selling of goods and services through wireless technology – i.e., cellular telephones and personal digital assistants (PDAs). Including mobile banking (when customers use their handheld devices to access their accounts and pay their bills). Bill payment and account reviews can all be conducted from the same handheld device. Delivery of entertainment, financial news, sports figures and traffic
updates to a single mobile device.
Advantages of e-commerce for businesses?
Reduction of costs in the business
E-commerce serves as an “equalizer”. It enables start-up and small- and medium-sized enterprises to reach the global market. E-commerce makes “mass customization” possible. E-commerce applications in this area include easy-to-use ordering systems that allow customers to choose and order products according to their personal and unique specifications. E-commerce allows “network production.” This refers to the parcelling out of the production process to contractors who are geographically dispersed but who are connected to each other via computer networks.
What forces are fuelling e-commerce?
There are at least three major forces fuelling e-commerce:
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.
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 customer service and support. Technology forces. The development of ICT is a key factor in the growth of ecommerce.
What are the components of a successful
e-commerce transaction loop?
To maximize the benefits of e-commerce, a number of technical as well as enabling issues have to be considered. A typical e-commerce transaction loop involves the following major players and corresponding requisites: 1. The Seller should have the following components:
A corporate Web site with e-commerce capabilities (e.g., a secure transaction server); A corporate intranet so that orders are processed in an efficient
manner; and IT-literate employees to manage the information flows and maintain the e-commerce system. 2. Transaction partners include:
Banking institutions that offer transaction clearing services (e.g., processing credit card payments and electronic fund transfers); National and international freight companies to enable the movement of physical goods within, around and out of the country. Authentication authority that serves as a trusted third party to ensure the integrity and security of transactions. 3. Consumers (in a business-to-consumer transaction)
Form a critical mass of the population with access to the Internet and disposable income enabling widespread use of credit cards; and Possess a mindset for purchasing goods over the Internet rather than by physically inspecting items. 4. Firms/Businesses that together form a critical mass of companies (especially within supply chains) with Internet access and the capability to place and take orders over the Internet. 5. Government, to establish:
A legal framework governing e-commerce transactions (including electronic documents, signatures, and the like); and Legal institutions that would enforce the legal framework (i.e., laws and regulations) and protect consumers and businesses from fraud, among others. 6. Internet, the successful use of which depends on the following: A robust and reliable Internet infrastructure; and
A pricing structure that doesn’t penalize consumers for spending time on and buying goods over the Internet (e.g., a flat monthly charge for both ISP access and local phone calls).