Professional Documents
Culture Documents
INDEX
E-COMMERCE
Introduction:
is characterized by the extensive use of global communications which is called the internet.
The globalization of business and easy access of global information has given a new meaning
to the concept of “information”. The internet changed the way the world does business.
Common functions like reading and gathering information, distributing, advertising is done
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electronically for virtual items such as access to premium content on a website, but most
electronic commerce involves the transportation of physical items in some way. Online
retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail.
Almost all big retailers have electronic commerce presence on the World Wide Web.
• Internet marketing,
Definition of e-commerce.
or eCommerce, consists of the buying and selling of products or services over electronic
systems such as the Internet and other computer networks.it includes electronic rading of
administrations.”
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History of e-commerce
electronic funds transfer (EFT). These were both introduced in the late 1970s, allowing
The growth and acceptance of credit cards, automated teller machines (ATM) and telephone
banking in the 1980s were also forms of electronic commerce. From the 1990s onwards,
electronic commerce would additionally include enterprise resource planning systems (ERP),
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commerce in physical goods was the Boston Computer Exchange, a marketplace for used
computers launched in 1982. The first online information marketplace, including online
consulting, was likely the American Information Exchange, another pre-Internet online
only by the end of 2000, a lot of European and American business companies offered their
services through the World Wide Web. Since then people began to associate a word
"ecommerce" with the ability of purchasing various goods through the Internet using secure
Timeline
1990:
Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT
computer.
1992:
J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change
1994:
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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 becomes
commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL
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
1998:
Electronic postal stamps can be purchased and downloaded for printing from the Web.
1999:
Business.com sold for US $7.5 million to eCompanies, which was purchased in 1997 for
2000:
2002:
eBay acquires PayPal for $1.5 billion. Niche retail companies CSN Stores and NetShops
are founded with the concept of selling products through several targeted domains,
2003:
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2007:
2008:
US eCommerce and Online Retail sales projected to reach $204 billion, an increase of 17
Matthew Gray, of the Massachusetts Institute of Technology, estimated there were a mere
130 web sites in June 1993, which had risen to 650,000 by January 1997. Leading search
engine Google now claims to index 1,346,966,000 web pages. Global Reach placed the
Payment Diagram
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1. Consumer places an order with the merchant through any number of sales channels: Web
2. Authorize.Net detects an order has been placed, securely encrypts and forwards the
Authorization Request to the Consumer's Credit Card Issuer to verify the consumer's
3. The Authorization (or Decline) Response is returned via Authorize.Net to the Merchant.
6. The Merchant Account Provider deposits transaction funds into the Merchant's Checking
Account
The potential benefits of e-commerce have been covered categorically in e-market and EDI.
Besides that there are a number of other benefits too, to consumers and business alike.
which prices from many suppliers can be compared within seconds. Bloor predicts that
"Arbitrage will become a fact of life in the electronic economy. Nowhere will artificially
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high prices be sustainable". Sites such as Deal Time and my Simon enable consumers to
find the best online deal for whatever they want - free of charge.
Convenience
For the elderly, disabled or those simply short of time, goods may be ordered online and
Flexibility
e-commerce increases the variety of ways in which business may be transacted. The use
of auction has become increasingly common with sites such as eBay permitting anyone to
Priceline.com , where customers enter the price they are willing to pay for air tickets,
the company then surveys the major airlines to find if one is willing to sell at that price.
These alternative business methods would not be possible without the real-time
provides a potential worldwide audience of over 300 million, which is growing daily.
Savings in overheads will be made as retail outlets and office space become redundant.
Many more workers will be freed from the daily drudgery of commuting as home working
becomes widespread.
New Opportunities
the new medium provides unprecedented opportunity for small operators. Whittle writes
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"The web site of a small company fills just as much of an individual's screen as the web
To business
Benefits of e commerce
World-wide reach
To customers
Any hour of the day, any day of the year
From the comfort of home or office
Find and retain new customers
Any hour of the day, any day of the year
Eliminate intermediaries
Access to worldwide choices
Low cost and global marketing channel
Access to cost competition
Update product catalogs in real-time
Online test of digital products (e.g., music)
Deliver personalized shopping experience
Immediate download of digital products
Scope of e-commerce
The scope of e commerce is much wider since commercial transactions are extended to the
Electronic markets,
Internet Commerce.
1. ELECTRONIC MARKETS:
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An electronic market is basically the search and negotiate phase of the trade cycle. It is
the online trading and auctions. The electronic market places the emerging marketing
virtual representation of a physical market. Electronic market brings together the product,
price and service information from many suppliers of a particular class of goods in a specific
sector.
It is extensively used in the airline industry for booking system in which the site can
inform the customer about the flights available for the journey, and then on the
basis of convenience, price and loyalty scheme the customer can book his flight.
It is a perfect market where there are worldwide buyers and sellers who have the
ADVANTAGES:-
No need of intermediaries : Since buyers and sellers come in direct contact with
each other there is no need of a middleman. Thus reducing costs.
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Commonplace for worldwide buyers and sellers: since there is a commonplace for
buyers and sellers, the competition is severe and thus E-market is efficient.
Expansion of market: buyers and sellers can join hands to increase their reach thus
expansion is easy, quick and relatively quick.
DISADVANTAGES:-
Inefficient search: To search a complete database on the web the consumer has
to pay some amount. Also some sellers do not provide full and correct information
Mindset of customers: many people do not know how to use the web thus they
prefer the traditional approach of buying and selling.
Regular updates: regular and prompt updates are required within a short span of
time to keep the website up to date which can prove to be a tedious job.
EDI stands for electronic data interchange. It was developed in the 1960s to
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business transactions. It does not create any new process but expands the existing
Definition of EDI
Steps in EDI:-
At the first stage, representatives of two companies who want to exchange data
electronically, specify the application which they will implement. The companies are
Then the company adds the EDI program in its computer, to translate data into a
standard format that will be used for transmission. These EDI programs can be
Before sending any data, the sender confirms the identity of the recipient using the
program and then transmits the data in the EDI format. Mechanisms are provided
Once the data is received the recipient translates the formatted message with the
EDI program.
BENEFITS OF EDI:-
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EDI is beneficial both for the sender and receiver in the following manner:
Reduced paperwork: The entire EDI process can be done without using a single
piece of paper. Electronic transactions reduce the time spent on transfer of
data. EDI minimizes the efforts to maintaining records, paper related supplies,
filling cabinets and other storage systems. It also reduces postage expenses
Reduced data entry errors: As EDI goes directly from one computer to
another without involving a human being, there is no need to retype the data at
Improved customer service: EDI reduces the processing time to complete the
cycle. As soon as orders are entered into the system they can be processed on
the receiving side in seconds. Hence it saves the time of document transfer and
Reduced cost: Saving time is as helpful as saving money. Over a long period of
time, processing documents with EDI is cost effective as compared to process
Cash flow: Speeding up the trade cycle by getting invoices quickly and directly
matched to the corresponding orders and deliveries.
suppliers and customers. A customer once associated does not shift to another
base.
Reduced stock holding: The amount of goods kept in the store room
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Mr.B in such a way that only he can read it then Mr. A encrypts the purchase order
called the plain text with an appropriate encryption key and then sends the
encrypted text to Mr. B. this encrypted purchase order is called cipher text. At
the receiving end, Mr.B decrypts the cipher text with the decryption key and reads
the purchase order. In between the hacker may obtain the cipher text as it passes
through the network, but without the decryption key, it is not possible to recover
3. Internet Commerce
commerce.
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Internet commerce
Every cyber surfer who visits an e-commerce website through his browser
is a potential customer
After browsing he selects a product and adds to his shopping cart. products
Then he checks his shopping cart and begins his check out process in which
he gives his details liked addresss, credit card number, contact/phone number etc.
Taxes and shipping charges are levied based on the place f residence and
Customers makes payments through his credit card, the credit card number
The vendor then sends an invoice along with a purchase order to the
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The vendor then checks the inventory and ships the product to the
customer.
There are basically 2 types of trancations that take place over the internet:-
1. Credit transaction
2. Cash transaction
Thus we can divide the various steps of internet commerce in the following ways:-
1. Search
2. Negotiate
3. Order
4. Deliver
5. Invoice
6. Payment
7. After sales
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exchange.
Price: the internet can have a price advantage. There is no retail outlet.
Product: some products are more suited over the others to sell over the
internet. Existing transactions give you an idea that technical products are not sold
much.
product.
Place: information can be provided easily but tangible goods require costly
physical delivery depending upon the distance. For bulky items someone must be
• Television
• Mobiles
Disadvantages of E-commerce
Taxes: How would you tax a business selling goods over the Internet? This question
arises when e-commerce became more popular. Should consumers pay sales tax on web
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purchases? If the business and customer are in different states, who state tax would
be applied? During the end of the 20th century, the government was trying to ask this
question. If web purchases were free from tax, then brick-and-mortar stores will lose
business but customers will pay more over the web since shipping and handling fees are
applied. Also, small businesses may lose out both ways because they may not have
resources to buy expensive software to figure out the different state taxes for each
customer.
Security: The biggest disadvantage of e-commerce is the issue of security. Even with
the improvements with data encryption, there is still the danger of someone getting a
hold of your personal and financial information. Also, some sites don't have the
capabilities to prove authentic transactions. If someone gets your credit card, they can
go to one of these sites and purchase items without proving who they are. All they need
is your name and credit card number which is already printed on the card.
The use of e-commerce can violate codes such as, "Avoid harm to others." The risk of
identity theft is one problem that businesses who use the concept of e-commerce of
their site. A customer who is a victim of this can have their credit history ruin, even
their identity stolen. Also, the codes states, "Respect the privacy of others" Since
there is not real standard for security enforced for online transactions, many sites do
not have high encryption. Many other sites often illegally collect buying statistics on
their customers without permission. Business owners complain that transactions over
the internet are not tax and that businesses that did not have physical stores were
of the products may be available for viewing. But we can’t buy the product by seeing the
image on the internet. There is a risk involved in the quality of the product that the
consumer is purchasing.
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Online Purchasing Security: There are possibilities of credit card number theft.
Hardware and Software: There are specific hardware and software that are essential
to start up an e-commerce company that may be big and costly.
Maintenance of Website: The website must be maintained and updated regularly and
this may lead to extra labor costs. The website should update the current information
of the new product and the cost of the new product instantly.
Costs: Even though the company may initially save money by cutting intermediaries, and
not having to invest much on capital assets, other costs may be incurred by start-up
Website Stickiness and Customer Loyalty: A company can have a website and exist
within the Internet but there may not be enough people visiting the site and purchasing
services or products from the company. The Internet provides less expensive
advertising but also because of its sheer vastness and the existence of websites of
attract market share and create loyalty among the acquired market share.
Training and Maintenance: The Company needs well-skilled and trained workers to
maintain and create the ecommerce facilities of the company. Many companies prefer to
The Future
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e-commerce has experienced phenomenal growth in the last five years both in terms of the
number of participants and the variety and sophistication of features which e-tailers can
access devices coupled with an ever richer array of software tools which designers can
employ to convey their message across the 'net suggest the impact of e-commerce is set to
increase unabated for the foreseeable future. The momentum acquired thus far is likely to
widely deployed it would appear that profit through artificially high prices will cease to be
feasible. Merchants of near-identical goods and services will need to provide some form of
added value to their core purpose in order to differentiate themselves from their
competitors and earn a share of the market. For those that can successfully achieve this,
e-commerce promises to liberate business, consumers and workers alike but is set to impact
widely on the existing economy forcing traditional businesses to adapt and creating
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