ELECTRONIC COMMERCE

ELECTRONIC COMMERCE  

INTRODUCTION

The growth of Internet into a global market place attracts more business firms to use this
media for commerce. Business firms may use the Internet initially for communication. Websites
are set up to provide information about its products and services. Business firms offer corporate
information, product information, marketing related services etc,.
The Internet has integrated the fragment markets words over though in a modest way. But
this interaction is growing rapidly. The most important advantage of the internet for business
firms is that it allows reaching customers at very low costs.

 ELECTRONIC COMMERCE

Electronic commerce is the process of searching, choosing, buying and selling of
product or service on the electronic network; it uses the computer and communication networks
for promoting products, selling, delivery, collection and delivery service.

•  Electronic Commerce includes:

a) Buying and selling on the internet
b) Making payments electronically
c) Business transaction in which there is no physical exchange or physical contact.
d) It is transacting a business over am electronic network without physical contact.

• The problems connected with electronic commerce are:

a) Identity
b) Authentication
c) Protection of data
d) ConfidentialityThese problems can be solved by using:a) Secure socket layer and hypertext transfer protocol
b) Digital signatures
c) Using public key cryptography
d) Using digital certificates.

In E- commerce, the parties to a transaction interact electronically. They may be
separated by long distances physically, yet the electronic network bring them together not only to
complete a transaction but also to get after sales support, E-commerce is not just doing
transaction over the Internet, it aims at few other things as well like :

=> Web enabling an organization’s business so that it can facilitate better customer interaction,
handing customer enquiries receiving customer order and payments online.=>Improving customer service capabilities by allowing customers by providing Inert access to
its databases containing customer interest information.=> Use the web to gather customer need information and thus to reducing cycle time by
responding to customer needs quickly. It enables the firm in coming out with new available
new product information to customers.=> Raising productivity of all activities in the organization by improving the flow of information
in the organization.

 FEATURES OF E-COMMERCE:

E-Commerce has the following general features:
a) It is a business strategy to cut down costs, while improving quality and increasing the speed
of delivery of goods/services.
b) It has ability to sell and purchase products/services/information on computer networks.
c) It is a solution for office automation and quick business transactions.
d) It is a tool to improve intra business functioning like business re-engineering.
e) It is tools to improve inter business communication through easy and accurate interaction and
information interchange.

 IMPORTANCE OF E-COMMERCE

E-Commerce becomes inevitable because of the following:a) Low setup cost:Any body can easily set up a website. In fact there are many organizations and training
institutes who help customers in developing and launching websites. To market a product large
retail showrooms are not required, just a web site showing the characteristics of the product
including cost details are sufficient.

b) Global Free Market:Nobody can dominate the global market as presence on the internet is easy not only for
global giants, but even small organisations can participate actively at low costs and compete with
stiff competition.

c) Global Access:Since more than 200 countries are hooked onto the Internet, anybody who can afford a
TV and a telephone can fully access the Internet and gain the information required.

d) Availability of Technology:Since the same technology like web servers, browsers, engines, internet, etc., is used
throughout the world therefore business can be easily conducted.

e) Multiple Opportunities:By using E-Commerce multiple activities like selling, renting, purchasing etc. can be
performed. In fact a whole variety of transactions can be provided all under one roof.

f) Others:E-commerce systems are being established for automating and enhancing many aspects
of communications, publishing, marketing, sales and customer service such as:=> Customer Research;=>Pre-Sales Enquiries;=>Information Publishing and Dissemination;=> Sales;=> Advertising;=> Promotions;=>Public Relations;=> Purchasing;=> Transactions;=>Funds Transfer;=> Production; ` Delivery;=> After-Sales Service;=> Ongoing Relationship Management; and=> Customer Support.
The benefits of electronic commerce are not just available to large corporations and
government departments, and many small to medium businesses are discovering new cost -
effective opportunities to use Internet-related technology to help their business operations locally
and internationally.

 TYPES OF ELECTRONIC COMMERCEBased on the parties involved in electronic transactions, the e-commerce can be classified
into the following types.a) Business –to- Business (B2B)b) Business –to- Consumer (B2C)c) Consumer –to- Consumer (C2C)

a) Business –to-Business E-CommerceThis is done between business firms. For example, electronic transactions between a
manufacturing firm and its supplier firms are B2B transactions. This segment is the largest and
the fastest growing one in electronic, commerce. Here firm use the electronic network for
purchasing products, consulting services and paying for them.

b) Business –to- Consumer E-CommerceConsumers check electronic catalogues to learn about products and compare prices of
products sold. They purchase products at the firm’s website and may pay electronic cash or
other means like credit card.

c) Consumer –to- Consumer E-CommerceSome sites offer consumers to deal directly with each other. Auction sites are examples.
At these auction sites consumers can buy and sell products.

Electronic commerce is useful to both producers and consumers as it helps them
overcome the traditional barriers of distance from markets and lack of information about market
opportunities. Producers and traders no longer need to maintain physical establishments
requiring large capital outlays. Virtual shops and contact points on the Internet may enable
storage close to the production site and distribution can be made directly to the consumer.
Increased advertising possibilities world wide may help small and medium industries and
businesses that traditionally find it difficult to reach the consumer abroad. E- Commerce may
also enable such firms to eliminate middlemen while trying to sell their products abroad.

 E-COMMERCE ACTIVITIESBusiness firms use the internet platform for communication and commerce. The ecommerce activities can be discussed as follows:a) Direct marketing and sellingBusiness firms set up websites for direct marketing and selling. Direct selling was one of
the earliest forms of e-commerce. For example, Amazon.com, Barnes and noble and Dell
computers engaged in direct selling. Gradually firm moved on to one or more complex
operations on the web.

b) Value chain integrationE- Commerce does not tolerate any kind of delay. Delay in inventory tracking and
management can cripple the business. E- Commerce firm use EDI for exchanging transaction
data among them so that transactions are automatically processed. Thus suppliers, customers
and service providers will use open EDI for integrating their processing systems leading to mare
efficient operations.

c) Corporate purchasing:Internet provides opportunities for business firms to reduce cost of purchasing. Suppliers
keep their electronic catalogs updated. Comparative price information is also available.
Ordering can be electronically done to reduce the laborious paper work in purchasing.
Officers can approve purchase orders electronically. The firm can enforce policies; provide
greater services to customers and suppliers.

d) Financial and information servicesA wide range of financial services are offered on the internet. They include:=> Online banking=> Online billing=> Online securities transactions=>Secure information distribution

e) Mobile commerce:Mobile commerce is a part of e-commerce and differs from the latter on the use of mobile
telecommunication communication network in place of telecommunication network. Mcommerce includes only transactions with a monetary value and it excludes short message
services. One condition essential for the success of mobile commerce is large user base of
mobile phones. Adequate security for mobile transactions is another condition for its adoption in
a big way.