Introduction to Ecommerce

MEANING OF ECOMMERCE

E-Commerce or Electronic Commerce means buying and selling of goods, products, or services over the internet. E-commerce is also known as electronic commerce or internet commerce. These services provided online over the internet network. Transaction of money, funds, and data are also considered as E-commerce. These business transactions can be done in four ways: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B). The standard definition of E-commerce is a commercial transaction which is happened over the internet. Online stores like Amazon, Flipkart, Shopify, Myntra, Ebay, Quikr, Olx are examples of E-commerce websites. By 2020, global retail e-commerce can reach up to $27 Trillion. Let us learn in detail about what is the advantages and disadvantages of E-commerce and its types.

E-commerce is a popular term for electronic commerce or even internet commerce. The name is self-explanatory, it is the meeting of buyers and sellers on the internet. This involves the transaction of goods and services, the transfer of funds and the exchange of data.

So when you log into your Amazon and purchase a book, this is a classic example of an e-commerce transaction. Here you interact with the seller (Amazon), exchange data in form of pictures, text, address for delivery etc. and then you make the payment.

Brief History Of E-Commerce

The 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. The Internet was conceived in 1969, when the Advanced Research Projects Agency (a Department of Defence organization) funded research of computer networking. The Internet could end up like EDI (Electronic Data Interchange) without the emergence of the World Wide Web in 1990s. EDI (Electronic Data Interchange) is widely viewed as the beginning of E-commerce if we consider E-Commerce as the networking of business communities and digitalization of business information.

EDI, which expanded from financial transactions to other transaction processing and enlarged the participating companies from financial institutions to manufacturers, retailers, services, and so on. Many other applications followed, ranging from stock trading to travel reservation systems .Such systems were described as telecommunication applications and their strategic value was widely recognized. With the commercialization of the Internet in the early 1990s and its rapid growth to millions of potential customers, the term electronic commerce was coined, and EC applications expanded rapidly. One reason for the rapid expansion of the technology was the development of networks, protocols, software, and specifications. The other reason was the increase in competition and other business pressures. From 1995 to 1999 we have witnessed many innovative applications ranging from advertisement to auctions and virtual reality experiences. Almost every medium- and large-sized organization in the United States already has a Web site many are very extensive; for example, in 1999 General Motors Corporation offered 18,000 pages of information that included 98,000 links to its products, services, and dealers.

Definition Of E-Commerce:

Concepts of E commerce

Electronic commerce is an emerging model of new selling and merchandising tools in which buyers are able to participate in all phases of a purchase decision, while stepping through those processes electronically rather than in a physical store or by phone (with a physical catalogue). The processes in electronic commerce include enabling a customer to access product information, select items to purchase, purchase items securely, and have the purchase settled financially. It 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.

E-commerce is basically, doing business-as-usual, but across the Internet. You advertise your products or services on your Web site, as you would in any other media like newspapers, TV or brochures. Advertising on your Web site can be done in two ways.

The first is by use of a relatively simple Web site consisting of a few pages whereby you tell potential customers who you are, what you do, where you are and how they can contact you ( easiest done by giving them your email address).

The second way of enabling world-wide customers to buy from you is to provide them with an On-Line Catalogue of your products which they can browse at their leisure without having to go to your place of business.

On-Line Catalogue:

On-Line Catalogue is that catalogue where people access via the Internet. On-Line Catalogue is an integral part of website, enabling customers to...

Browse through stock list, read about an item or service;

Look at photographs of the products.

Select which items they want to purchase

And drop them into a shopping cart as they go along.

When they have completed their shopping, they go to the

Check-Out.

The next step is to request the order by filling in their details and method of payment on a form which is waiting for them at the Check-Out. The form is already partially completed with a breakdown of the items in their shopping cart, prices inclusive of tax, and shipping & handling charges, if any. If they choose to pay by credit card, the form includes a place for them to fill in their credit card number. And then, with one press of a button, they send the order to you.

Electronic Commerce under different perspectives:

Let’s see how Electronic Commerce (EC) is defined under each perspective.

1. Communications Perspective

EC is the delivery of information, products /services, or payments over the telephone lines, computer networks or any other electronic means.

2. Business Process Perspective

EC is the application of technology toward the automation of business transactions and work flow.

3. 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.

4. Online Perspective

EC provides the capability of buying and selling products and information on the internet and other online services.

Advantages of E-Commerce

Some advantages that can be achieved from e-commerce include: 

• Being able to conduct business 24 x 7 x 365.: E-commerce systems can operate all day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically. 

• Access the global marketplace: The Internet spans the world, and it is possible to do business with any business or person who is connected to the Internet. Simple local businesses such as specialist record stores are able to market and sell their offerings internationally using e-commerce. This global opportunity is assisted by the fact that, unlike traditional communications methods, users are not charged according to the distance over which they are communicating. 

• Speed: Electronic communications allow messages to traverse the world almost instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / ecommerce world. 

• Marketspace: The market in which web-based businesses operate is the global market. It may not be evident to them, but many businesses are already facing international competition from web-enabled businesses. 

• Opportunity to reduce costs: The Internet makes it very easy to 'shop around' for products and services that may be cheaper or more effective than we might otherwise settle for. It is sometimes possible to, through some online research, identify original manufacturers for some goods - thereby bypassing wholesalers and achieving a cheaper price. 

• Computer platform-independent: Many, if not most, computers have the ability to communicate via the Internet independent of operating systems and hardware. Customers are not limited by existing hardware systems. 

• Efficient applications development environment: In many respects, applications can be more efficiently developed and distributed because the can be built without regard to the customer's or the business partner's technology platform. Application updates do not have to be manually installed on computers. Rather, Internet-related technologies provide this capability inherently through automatic deployment of software updates. 

• Allowing customer self service and 'customer outsourcing': People can interact with businesses at any hour of the day that it is convenient to them, and because these interactions are initiated by customers, the customers also provide a lot of the data for the transaction that may otherwise need to be entered by business staff. This means that some of the work and costs are effectively shifted to customers; this is referred to as 'customer outsourcing'. 

• Stepping beyond borders to a global view. Using aspects of e-commerce technology can mean your business can source and use products and services provided by other businesses in other countries.. 

• A new marketing channel: The Internet provides an important new channel to sell to consumers. 

Limitations and Constraints of E-Commerce

Some disadvantages and constraints of e-commerce include the following. 

• Time for delivery of physical products: It is possible to visit a local music store and walk out with a compact disc or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods. 

• Physical product, supplier and delivery uncertainty: When you walk out of a shop with an item, it's yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It's pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive. 

• Perishable goods:. Forget about ordering a single gelato ice cream from a shop in Rome! Though specialized or refrigerated transport can be used, goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads to disintermediation in which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers. 

• Limited and selected sensory information: The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can't test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. This lack of sensory information means that people are often much more comfortable buying via the Internet generic goods - things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things. 

• Returning goods: Returning goods online can be an area of difficulty. The uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.

Classifications of E-Commerce Applications

Electronic Commerce (e-Commerce) is a general concept covering any form of business transaction or information exchange executed using Information and Communication Technologies (ICTs). E-Commerce takes place between companies, between companies and their customers, or between companies and public administrations. Electronic Commerce includes electronic trading of goods, services and electronic material.

E-Commerce systems include commercial transactions on the Internet but their scope is much wider than this; they can be classified by application type:

Electronic Markets:

The principle function of an electronic market is to facilitate the search for the required product or service. Airline booking systems are an example of an electronic market.

Electronic Data Interchange (EDI):

Electronic Data Interchange (EDI) is the electronic exchange of business documents in a standard, computer processable, universally accepted format between-trading partners.

EDI is quite different from sending electronic mail, messages or sharing files through a network. In EDI, the computer application of both the sender and the receiver, referred to as Trading Partners (TPs) have to agree upon the format of the business document which is sent as a data file over electronic messaging services.

The two key aspects of EDI that distinguish it from other forms of electronic communication, such as electronic mail, are:

The information transmitted is directly used by the recipient computer without the need for human intervention is rarely mentioned but often assumed that EDI refers to interchange between businesses. It involves two or more organization or parts of organization communicating business information with each other in a common agreed format.

The repeated keying of identical information in the traditional paper-based business.

Communication creates a number of problems that can be significantly reduced through the usage of EDI. These problems include: -

Increased time

Low accuracy

High labour charges

Increased uncertainty.

To take full advantage of EDI’s benefits, a company must computerize its basic business applications. Trading partners are individual organization that agrees to exchange EDI transactions. EDI cannot be undertaken unilaterally but requires the cooperation and active participation of trading partners. Trading partners normally consists of an organization’s principal suppliers and wholesale customers. Since large retail stores transact business with a large number of suppliers they were among the early supporters of EDI. In the manufacturing sector, EDI has enabled the concept of Just-In-Time inventory to be implemented. JIT reduces inventory and operating capital requirements.

EDI provides for the efficient transaction of recurrent trade exchanges between commercial organizations. EDI is widely used by, for example, large retail groups and vehicle assemblers when trading with their suppliers.

Internet Commerce

The Internet (and similar network facilities) can be used for advertising goods and services and transacting one-off deals. Internet commerce has application for both business to- business and business to consumer transactions.

The three categories of E Commerce

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

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 two businesses pass information electronically to each other. B2B e-commerce currently 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 fulfilment;

Managing trading-partner relationships.

B2C - Business to Consumer

Business to Consumer e-commerce is relatively new. 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 E-Commerce compared to the innovative dot.com start ups, but they usually have a sound commercial structure as well as in-depth experience of running a business - something which many dotcoms lacked, causing many to fail.

Example: A home user wishes to purchase some good quality wine. The user accesses the Internet site 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 details directly into the merchants’ inventory system. The wine is then dispatched from the supplier’s 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. Example: Harry is planning a holiday in Darwin. He requires a flight in the first week of December and is only willing to pay Rs. 250. Harry places a submission with in a web based C2B facility. Dodgy Brothers Airways accesses the facility and sees Harry’s submission. Due to it being a slow period, the airline offers Harry a return fare for Rs. 250.

B2E - Business to Employee

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 organisation with information. The intranet is usually access through the organisations network, it can and is often extended to an Entrant which uses the Internet but restricts uses by sign on and password.

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 then provides a connection between the seller and buyer to complete the transaction. 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 organisations, 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.

Scope of E-Commerce

Selling can be focussed to the global customer

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

E- Commerce in Action