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Lesson 1 INTRODUCTION TO E-COMMERCE 1.1 INTRODUCTION In the past few years, enterprises across the globe have experienced significant changes in their business information system. Huge investments were made in enterprise resource planning system implementations but still they struggle to get timely information that is needed to make effective business decision and to ensure continuous growth of enterprises. Placing "e" in front of any process or function seemed to be the magic prescription for never ending story of success and rapid returns for enterprises. E-business, e-procurement, e-sales, e-payment, e-banking, e-CRM, e-CAD, e-delivery are just a few. Internet, for example is becoming one of the most popular medium in transmitting various data. Users can find any kind of information within a shorter time compared with conventional method that consumes more time.
The emergence of the Internet throughout the world has been contributing such a variety medium in doing business as well as people lifestyle. In fact, Internet is the essential prerequisite for the existence of E- commerce. Electronic commerce or e-commerce has been defined as the ability to perform transactions involving the exchange of goods or services between two or more parties using electronic tools and technique. The explosion of E-commerce has created new phenomena in our lifestyle especially in shopping activities. Consumers can easily buy products or services like magazines and airlines tickets via Internet.
1.2 DEFINITION The word commerce is the basic concept for electronic commerce, pertaining to buying and selling of goods while ‘commercial’ denotes business practice and activities intended to make profits. Electronic commerce, like any other business, deals with the exchange of money for soft or hard goods and services. Kalakota and Whintons in 1997 defined the term E-commerce from different perspectives. These perspectives are:
- Communication
- Business Process
- Service
- Online Communication Perspective: According to this perspective, E-commerce is the delivery of information, product/services or payments over telecommunication channels, computer networks or any other electronic mode of communication. Business Process Perspective: This says that E-commerce is the application of technology towards the automation of business transactions and work flow. Service Perspective: E-commerce is defined as a tool that addresses the desire of firms, consumers and management to cut service cost while improving the quality of goods/services and increasing the speed of service delivery. Online Perspective: E-commerce provides the capability of buying and selling products and information on the internet and other online services. The term commerce is treated as transaction between business partners. Therefore, the term e- commerce seems to fairly narrow to people. Thus some time we use the term e-business. It is a broader definition of e-commerce. There is confusion among the consultants and the academicians over the use of this term. Some think that e-commerce encompasses all world of electronically based organizational
activities that support a firm’s market exchanges – including a firm’s entire information system’s infrastructure. On the other hand, some argue that e-business encompasses the entire world of internal and external electronically based activities including e-commerce. “E-commerce has the potential to unleash enormous savings and business efficiencies, but the practicalities remain elusive. How will e-commerce change the global planning and purchasing of transport and logistics in the supply chain? Logistics has been described as the key enabler for e- business – but how can individual logistics and transport companies ensure that they benefit from, rather than perish in, the e-commerce revolution?” Electronic Commerce (e-commerce) is electronic business. It’s using the power of computers, the Internet and shared software to send and receive product specifications and drawings; bids, purchase orders and invoices; and any other type of data that needs to be communicated to customers, suppliers, employees or the public. E-commerce is the new, profitable way to conduct business which goes beyond the simple movement of information and expands electronic transactions from point-of-sale requirements, determination and production scheduling, right through to invoicing, payment and receipt. E-commerce uses key standards and technologies including Electronic Data Interchange (EDI), Technical Data Interchange (TDI), Hypertext Mark-up Language (HTML), Extensible Mark-up Language (XML), and the Standard for Exchange of Product model data (STEP). E-commerce is made possible through the expanded technologies of the Internet, the World Wide Web, and Value-Added Networks. The Internet is a worldwide collection of computer networks, co-operating with each other to exchange data using a common software standard. Through telephone wires and satellite links, Internet users can share information in a variety of forms. The size, scope and design of the Internet allows users to connect easily through ordinary personal computers and local phone numbers, exchange electronic mail (E-mail) with friends and colleagues with accounts on the Internet, post information for others to access, and update it frequently, access multimedia information that includes sound, photographic images and even video, and access diverse perspectives from around the world. An additional attribute of the Internet is that it lacks a central authority—in other words, there is no "Internet, Inc." that controls the Internet. Beyond the various governing boards that work to establish policies and standards, few rules and answers to no single organization bind the Internet. Different people use different terminology such as 'electronic trading' 'electronic procurement' 'electronic purchasing' or 'electronic marketing'. From the above definition, we can conclude that electronic commerce is often used in a much broader sense, to mean essentially the same as 'electronic business'. In other words e-commerce includes purchases of goods, services and other financial transactions in which the interactive process is mediated by information or digital technology at both locationally separate, ends of the interchange. Here 'transactions' include both specification of goods and service required and commitment to buy. E-commerce transaction model can be in terms of business to business (B2B), business to customer (B2C) or customer to customer (C2C). 1.3 FEATURES OF E-COMMERCE TECHNOLOGY Electronic Commerce means better business communication and data interchange information is essential for any and every business. The quality and quantity of information which a business delivers to customers or use this information to make decisions can determine just how competitive the business is. A company already may be using a number of electronic based tools to help acquire and extend information and communication needs. These may include personal computers, word processors, courier, facsimile machines, telex services, cellular phones, pagers and more.
- Linking sales team numbers to gather, including international representatives, and
- Closing sales without delays. Effectiveness and Efficiency Electronic commerce can increase the efficiency and effectiveness of public relation programmes, broadcast press releases, financial updates and other corporate communications. Copy reviews and approvals are expedited by circulating instant messages to key internal and external contacts. Close Contact with Clients In any business where maintaining close contact with customers is a priority consideration, electronic business can increase responsiveness of the company' and ensure customer satisfaction. Appointment confirmations, requests for information, follow-up reports and electronic data interchange can be effected with greater efficiency using instant messages. Planning and Execution of Meetings The mechanism of electronic operations in business facilitates planning and execution of meetings. Executive management meetings, seminars, workshops, symposia and conventions take a great deal of time and effort to manage. Arrangements must be coordinated among a variety of diverse groups in different locations e.g., hotels, speakers, exhibitors, attendees, the media etc. Reports and surveys need to be distributed before and or after, the event. And there are always the headaches of late breaking events and last minute announcement. In an electronic business environment, video-conferences, document conference, computer-based conference, which offer companies the flexibility of both electronic and paper distribution, can make these jobs easier and more effective. SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY Dimension of E-commerce Technology Significance in Business Ubiquity Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices, anytime.
The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. “Marketspace” is created; shopping can take place anywhere. Customer convenience is enhanced, and shopping costs are reduced.
Global Reach The technology reaches across national boundaries, around the earth.
Commerce is enabled across cultural and national boundaries seamlessly and without modification. “Marketspace” includes potentially billions of consumers and millions of businesses worldwide. Universal Standards There is one set of technology standards, namely internet standards.
There is one set of technical media standards across the globe.
Richness Video, audio, and text messages are possible.
Video, audio, and text marketing messages are integrated into a single marketing message and consuming experience.
Interactivity The technology works through interaction with the users.
Consumers are engaged in a dialog that dynamically adjusts the experience to the individual, and makes the consumer a co- participant in the process of delivering goods to the market.
Information Density The technology reduces information costs and raises quality
Information processing, storage, and communication costs drop dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap and accurate Personalization / Customization The technology allows personalized messages to be delivered to individuals as well as groups.
Personalization of marketing messages and customization of products and services are based on individual characteristics.
NEED FOR E-COMMERCE
The global business environment is moving faster than ever before. Increased competition at home and abroad means quality as well as profitability must be preserved by corporate houses. This pressure has led to a reappraisal of the accepted existing business practice in the search for greater efficiently. Traditionally, the response in the face of competitive threat has been to reduce costs by rationalizing production, shedding labour and restructuring business, coupled with investments in .technology to improve productivity and generate profit. Whether business to business (B2B) or business to customer (B2C) there are benefits to all parties. A reduction in acquisition times and costs, lower prices for goods and services, an expanded number and quality of suppliers, an increase in buyer productivity. Better management information and better inventory control is possible. A Reduction time to market is also achievable giving improved operating efficiencies and improved product quality at reduced cost. The payment process can also be improved and finally and most importantly a greatly expanded customers base. B2B e-commerce was born out of an attempt to solve an administrative problem. It developed a new computer standard to handle these needs, which became known as EDI, Electronic Data Interchange. Today its descendant, XML, a lighter, simpler data interchange standard is used by B2B sites. Simple e-commerce sites first appeared in 1992. The early e-commerce sites were virtual catalogues, simply listing products for sale. Ordering was off-line, through e-mail, phone or fax. By 1996 the technology had advanced greatly to produce virtual stores with shopping carts, client accounts and, with the development of protocols such as Secure Socket Layer (SSL), enabled customers to order and pay for their purchase on-line directly by credit card. E-commerce quickly became popular with consumers and suppliers. For customers, it was fast, easy and efficient, allowing them to compare products, price and service before purchase. For suppliers, it allowed them to reach an unlimited international audience, 24 hours a day, 7 days a week at reduced costs. Today e-commerce is widely used and growing fast. B2B is the largest, fastest growing and most profitable market. According to IDC, this year, it is expected to account for two thirds of worldwide e-commerce. B2C is also expected to grow, boosted by Broadband (high-speed) Internet access to more on-line households. Future advances include digital money and e-wallets, and 'personal agents' that help users find what they are looking for. Sites can work with fulfilment centres providing customers with excellent service and suppliers with information, and can support the newest trend for human interaction in E-commerce customer service. The Internet is creating unprecedented and seeming infinite opportunities for both customers and businesses. Yet it one of its major problems is that it is changing so fast that both parties are overwhelmed by the speed of change and the sheer number of choices available to them. In addition web businesses win by following rules quite different than those which traditional businesses may follow. E-commerce appears to be exempt from the kinds of constraints that have limited companies historically. An e-commerce environment handled in a proper manner, with the right customisation of products and services, in innovative ways, can lead to win-win situations. The customers can get the right product at the right time and for the right price, companies can set new standards in efficiency and profitability.
1.4 INTERDISCIPLINARY NATURE OF E-COMMERCE
Electronic commerce, being a new field, is just developing its theoretical or scientific foundations. Ii is based on several disciplines. The major disciplines of E-Commerce with some samples of issues with which they are concerned follow:
There are five major segments under the broader category of e-business. However, the following are some popular e-commerce models used by companies engaged in e-commerce:-
- Business to business e-commerce (B2B)
- Business to consumers e-commerce (B2C)
- Consumers to consumers e-commerce (C2C}
- Business to employees e-commerce (B2E) and
- Consumer to business e-commerce (C2B) Business to Business E-commerce (B2B) E-business is the process of conducting business on the Internet. Its scope includes not only buying and selling but also services, fulfilling the needs of customers and collaborating with business partners. Business to business e-commerce is smart business. The opportunity for business to business e- commerce is even greater. A wholesaler may sell products to the retailer. There are advanced e-commerce software which support multi-tier pricing. This helps to set up online stores to offer preferred pricing to some vendors and shared price to others. This includes internet-enabled initiatives of an enterprise to form commercial linkages with another enterprise, dealer, warehouse or manufacturer. In this form of e-commerce, e paperwork and time-to- market get vastly reduced. Throughout the world, this e-commerce mode is the biggest. In a B2B transaction, the interaction is between businesses. For example, a website that is catching for the steel industry might have facility for buyers and sellers to list their requirements and post their products. It helps them in quickly closing the transactions and the buyer can get quality, material and can choose from different suppliers. B2B commerce is a growing business in the e-commerce arena- with the increasing use of the internet, more and more business are realizing the commercial advantage of giving business clients a streamlined and easy manner to order products or service online. It facilitates access to the ordering process to only those with whom a concern has a commercial relationship. Business to Business e-commerce provides small and medium enterprises (SMES) with an excellent opportunity to access new markets, improve customer service and reduce costs. And while hurdles exist, they should be viewed more as speed breakers rather than road barriers. As a medium of information storage and dissemination, the internet has and is emerging a clear winner. Its rate of penetration has far outpaced the growth of other popular media such as newspaper, radio and television. B2B transactions are however relatively high value in nature and organizations are slow to change their traditional systems for the supply chain management. The reasons for the growth in B2B e- commerce are many. In an increasing competitive scenario, e-commerce offers highly attractive cost saving options. The shift to this process is often driven by the needs of buyers. Innovative methods of enhancing B2B and B2C levels of e-commerce include:
- CD-ROM catalogues that are linked to the user's online catalogue, enabling him to browse offline and order online.
- Kiosks placed at physical store locations or in shopping malls to introduce users to the easy online ordering options.
- Extranets to link businesses together that conduct regular business to .business transactions and
- Affiliate programmes to drive business to your commerce site from other content related sites.
B2B e-commerce is expected to be the largest mode of transacting e-business and is a global phenomenon. It involves taking internet enabled initiatives to form commercial links with other enterprises, dealers or manufacturers. In this form of e-commerce, a business firm places orders for supplies with another business firms directly over the Internet. Paperwork and time required for processing the order and delivery of the goods are thus reduced to a great extent. Business to Consumers E-commerce (B2C) It is for the customers to buy stores from the web. The problem to be recognized in this is to secure payment, using encryption, transaction integrity, quick response, time and reliability. B2C e-commerce involves selling of goods and services to consumers or end users. It allows them to browse the product catalogue, select products or services and complete the order online. In a B2C transaction, the interaction is between a consumer and the preferred business. For example, the most popular site is amazon.com, which is the first online bookseller which has proved a potential competitor to the traditional bricks and mortar booksellers such as Barrens and Noble. In this category of e-commerce, businesses use the internet to offer to consumers sales and services around the world 24 hours a day, seven days a week and 365 days a year, The sites Amazon, Rediff and Uphar are among those belonging to this category. These websites are meant for selling goods directly to consumers through the internet. The two-way accessibility of the internet enables operating companies to directly ascertain customer preference and buying trends. Businesses are using these consumer insights to formulate marketing strategies and offer to the customers what they want and when they want. E-business in this mode significantly reduces the costs associated with intermediaries, service centres and mass marketing campaigns. Since e-commerce makes just in time delivery possible, the supplier does not have to store the goods. He can procure them from the suppliers as and when he gets the order from the buyer through the internet. B2C is the most popular form of e-commerce, wherein the individuals are directly involved in B2C e- commerce, and businesses use the internet for offering their products or services 24 hours a day through global access. The sites Amazon.com and Rediff are among these. These websites spell goods directly to consumers over the Internet. The two way accessibility feature of the internet enables operating companies to ascertain consumer preferences and buying trends directly. Consumer to Consumer E-commerce (C2C) Here interaction is between consumer to consumer. For example, in sites like e-Buy Bid or Buy.com, Baazi.com which are auction sites, one can virtually sell and buy any goods (either used or new ones). This form of e-commerce is nothing but the cyber version of the good old auction houses. If anyone wants to sell anything, all one has to do is post a message on the site, giving details of the product and the expected price and wait for an interested customer to turn up and buy it. The buyer gets in touch with the seller through the Internet and the deal is crossed once the amount is finalised. Online message boards and barters are also examples of C2C e-commerce. Consumer-to-Business E-commerce (C2B) E-commerce, by empowering the customer, has been strategically redefining business. An example of C2B model of e-commerce is the site Price line.Com, which allows prospective airline travellers, tourists in need of hotel reservations etc. to visit its websites and indicate their preferred price for travel between any two cities. If an airline is willing to issue a ticket on the customers offered price, the consumer can then travel to the mentioned destination at his terms. Business to Employees E-commerce (B2E)
Opportunities Threats
- Consumer desire for. one-stop shopping • Competitors have stronger brand names.
- Consumers know what they want to buy.
- Internet could be a powerful marketing tool.
- Competitors have strong relationships with computer retailers.
The strategy that Dell followed after doing the analysis took all four of the SWOT elements into consideration. Dell decided to offer customized computers built to order and sold over the phone, and eventually, over the Internet. Dell's strategy capitalized on its strengths and avoided relying on a dealer network. The brand and quality threats posed by Compaq and IBM were lessened by Dell's ability to deliver higher perceived quality because each computer was custom made for each buyer
1.7 THE BENEFITS OF E-COMMERCE Few innovations in human history encompass as many potential benefits as E-Commerce does. The global nature of the technology, low cost, opportunity to reach hundreds of millions of people, interactive nature, variety of possibilities, and resourcefulness and growth of the supporting infrastructure (especially the web) result in many potential benefits to organizations, individuals, and society. These benefits are just starting to materialize, but they will increase significantly as E- Commerce expands. It is not surprising that some maintain that the E-Commerce revolution is just 'as pro- found as the change that came with the industrial revolution. Benefits to Organizations The benefits to organizations are as follows:
- Electronic commerce expands the market place to national and international market with minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide.
- Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent.
- Ability for creating highly specialized businesses. For example, dog toys which can be purchased only in pet shops or department and discounts stores in the physical world are sold now in a specialized www.dogtoys.com (also see www.cattoys.com).
- Electronic commerce allows reduced inventories and overhead by facilitating “pull” type supply chain management. In a pull-type system the process starts from customer orders and uses just- in-time manufacturing.
- The pull-type processing enables expensive customization of products and services which provides competitive advantage to its implementers.
- Electronic commerce reduces the time between the outlay of capital and the receipt of products and services.
- Electronic commerce initiates business processes reengineering projects By changing processes, productivity of salespeople, knowledge workers, and administrators can increase by 100 percent or more.
- Electronic commerce lowers telecommunication cost the internet is much cheaper than value added networks.
- Other benefits include improved image, improved customer service, new found business partners, simplified processes, compressed cycle and delivery time, increased productivity, eliminating paper, expediting access to information, reduced transportation costs, and increased flexibility. Benefits to Consumers The benefits of E-Commerce to consumers are as follows:
- Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.
- Electronic commerce provides customer with more choices; they can select from many vendors and from many more products.
- Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.
- In some cases, especially with digitized products, E-Commerce allows quick delivery.
- Customers can receive relevant and detailed information in seconds, rather than days or weeks.
- Electronic commerce makes it possible to participate ate in virtual auctions.
- Electronic commerce allow customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.
- E-commerce facilitates competition, which results in substantial discounts.. Benefits to Society The benefits of E-Commerce to society are as follows:
- Electronic commerce enables more individuals to work at home and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution.
- Electronic commerce allows some merchandise to be sold at lowest prices, so less affluent people can buy more and increase their standard of living.
- Electronic commerce enables people in third world countries and rural areas to enjoy products and services that otherwise are not available to them.
- Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health care services, e.g., can reach patients in rural areas.
1.8 THE LIMITATIONS OF E-COMMERCE The limitations of E-Commerce can be grouped into two categories which are:
- Technical limitations and
- Non-technical limitations Technical Limitations of E-COMMERCE The technical limitations of E-Commerce are as follows:
- There is a lack of s stem security, reliability, standards and communication protocols.
- There is insufficient telecommunication bandwidth.
- The software e development tools are still evolving and changing rapidly.
- It is difficult to integrate the Internet and E-Commerce software with some existing applications and databases.
- Vendors may need special Web servers and other infrastructures in addition to the network servers.
such as credit card numbers or address over the Net. Lack of adequate imagination and understanding of what web-based technologies can do to markets and competition only adds to the delay in economic development. The old business habits are demanding and controlling the business. The risk adverse attitude of the people is conspicuous and waiting for others to lead is also another attitude. Credit Cards Frauds In India, distribution channels are just one part of the problem related to e-payments. The bigger problem is that of security. All credit cards related transactions are approved offline and given the high incidence of frauds, the banks are extremely wary of approving them. In-fact, there are some unconfirmed reports of a multi-national bank refusing to approve credit card transactions carried out by a large Indian portal. Other drawbacks may include that the buyers are quite prepared to boot the real mail for e-mail. The e- tailers themselves are not yet ready to keep pace with the potential e-commerce and this brings us to another point. Although e-commerce has the ingredients of being successful, it may have come slightly ahead of its time. The e-commerce mechanism eliminates the need for intermediaries. Unfortunately, this also has negative effects. So, security needs to be extended to customers to gain their loyalty including substantial business. Absence of Tax Laws E-commerce over the Net has effectively eliminated national borders. This has posed an important question as to tax on the transactions over the internet. Net business posed many peculiar technological and legal problems making it difficult to impose tax and formulate a sound taxation policy. The following are the various tax implications of e-commerce:
- There is no fixed physical location for the internet.
- It is difficult to monitor or prevent transmissions of information or electronic cash across the Net.
- Neither the users, administrators nor intermediaries have any control on the type of information, either transactions or cybercash and traveling through their networks.
- There is no emphasis on national boundaries, and messages travel across the boundaries of several countries globally. So, it means no difference, whether the information or electronic money sought to be transmitted are within one jurisdiction or between several.
- A person's location and identity is necessary for tax purposes. Since these two are difficult, the anonymity on the Net would pose a big problem for taxations.
- Electronic commerce eliminates intermediaries or middlemen. Though it is an advantageous feature, it also has negative effects because they could have served as leverage points for collection of tax also as information sources for transactions entered by the customers.
- In addition to technology problems, certain legal hurdles may also be encountered with reference to international taxation laws.
- The difficulties in defining service incomes as distinguished from sale of products, income or royalties cannot be ignored. So, it is desirable that the Net be turned as a potential free trade zone. Cyber Laws Another important problem is lack of comprehensive cyber laws so as to ensure safety and protection. There should not be any legal regulations, or barriers to faster and increased development of e- commerce. The crying need of the hour is urgent action to be taken by the Government to enact cyber laws including electronic fund transfer, and amendments of official Secrets Act.
Cyber laws are not in place. In other countries, the business community is moving fast ahead, and stringent government regulations are there. The technology is changing the business paradigm so fast; government’s ability to proactively change the law is a very difficult task. In addition to them, the fear regarding the security aspects of online transactions without proper government directives and the existing policy machinery contribute to cyber criminality. Adding to them, separate cyber laws and amendments are also required to many existing laws like Companies Act, Evidence Act, Copyright Act, Bankers Book Evidence Act, Indian Penal Code, Contract Act etc. The country entered into a cyber space and documents through the computers should be made acceptable in a court of law. This is actually a big hurdle on the way which would solve one big hurdle for the business-to-business and business- to-customers e-commerce segment. Stock Dilemma Many people are not too happy with e-commerce trends. Though online shopping may be growing but so is frustration with it. A key source of dissatisfaction is the out of stock dilemma. In most cases, advertised products or services are not available. The options of feedback and not receiving suggestions are also reasons for annoyance. Many online consumers want more detailed information on their purchases but are not available. The Net is becoming more main-stream and the expectations are also becoming more mainstream. Lack of True Strength The presence on the web alone will not always ensure successful e-commerce. Having a website or dot com is no longer a novelty and merely setting up a website will not help companies in increasing the volume of business. They must accept the true strength of this new electronic medium of business and its potential for improving efficiency in extending services to the consumers. There are many people who are connected to the internet but cannot browse the web and they are only availing the e-mail facility for communication. Lack of Skills and Expertise Lack of skilled and trained personnel impedes the growth of implementation of IT related e- commerce. The use of the Net for trade requires a complex introduction of servers, browser software and knowledge of web design, hosting, promotion and many more skills. It requires understanding many new things. Many Indian businesses are not prepared to approach electronic commerce. For many business houses for which commerce over internet may not work, would take a lot of efforts for every little return. Internet Outrage Failures in networks and the Net itself can play havoc. We read of frequent press reports of internet outrages. The IT industry is not yet attempting to improve network reliability to prevent these outrages. Reliability is a major issue in net business that needs to be attended. Though worldwide, many business people looking at e-commerce as a blessing, many people also perceived the cyber space as a threat. There are also reported evidences of enforcing new censorship regimes to prevent cyber crimes. Absence of Cyber Brand Image Another problem is that advertising an the Net tends to focus on e-commerce rather than on brands found in the real world. This would prove to be a deterrent in ensuring consumer loyalty. The biggest thing going for it is a brand image and power. Though the already existing name is known and trusted, the issue is how to extend it into the new cyber reality. A concern should be to preserve
Cyber Competition It is becoming clearer that cyber structure is not enough to support cyber growth. Such a growth rate needs proper planning and world class global supply chain parameters. The profit strapped, not-struck cyber entrepreneurs have no vision and invest money on this. One should not forget about low entry barriers, and as a result, cyber competition is perhaps more fierce. Cyber competition needs improvement in better contents, faster delivery of services and online support. It is a great task to pacifying angry live customers and then think how difficult it is to e- reassure a lost one. This means again more investment and more capitalization which is further from break-even. Difficulty of Reengineering The web business structure will have to undergo a drastic change and be reengineered. It is not just about having a website or about sticking a web address on conventional advertising or transferring a few people to a new division and designation. It is about breaking free and creating new web services to satisfy the existing customers. Internet for Small Business Another problem is that for major project, a large consumer product company needs profiling of customers who undertake transaction through e-commerce. E-commerce is still being dominated by large corporations. Small and medium sized business houses have to take advantage of everything on the Net. Online shopping is clearly catching on with consumers and retailers need to keep pace with growing demands. Blocking and Censorship People worldwide are under virtual slavery. It has been ISS reported in some media that many countries are blocking their citizens from accessing the Net, either partially or wholly. Censorship is enforced by some countries by stopping either a total ban on the Net or controlling the access traffic or installing filters blocking access to websites. Indian citizens enjoy unprecedented degree of freedom of speech and therefore may constitute a threat to the government. Development in any field may prove detrimental if it does not appreciate the code of ethics. Infant Stages Electronic commerce is still in its infant stage. Indian commerce is establishing itself in the area of internet business. The concept of e-commerce is still in evolutionary stage, it is a job that still needs to be defined. The IT function has not grown beyond the marketing department and credit cards, merchant accounts, digital signatures and prompt payment and one has to realize that the e-commerce role is more about harnessing technological resources to deliver profits to the Net users. Only a few Indian big houses have gone online to explore the potentials of e-commerce. E-commerce has yet to take off in India, because Indian consumers are wary of leaving their re credit card numbers on the Net. They eye the neighbourhood shopkeeper with suspicion and drive a hard bargain. So, e-commerce websites are losing thousands of customers. 1.9 KEYWORDS E-Commerce: Digitally enabled commercial transactions between and among organizations and individuals. EDI: Electronic Data Interchange, means a way to exchange standard documents in intra or inter organizations. B2B: Business to Business, means e-commerce transactions taking place between business to business organizations.
B2C: Business to Consumers, means e-commerce transactions taking place between business organizations and consumer directly. C2C: Consumers to consumers e-commerce, means e-commerce transactions taking place between consumer to consumer. B2E: Business to employees e-commerce, means e-commerce transactions taking place between business organizations to employees. C2B: Consumer to business e-commerce, means e-commerce transactions taking place between consumers to business organizations. Cyber Law: Cyber law is that law which is used to deal with all cyber crimes, i.e., crimes done on internet.
markets only those will survive who have a strong fundamental framework based on sound business and market understanding. As e-commerce is rather evolving at a fast pace, the importance of developing business models on such sound frameworks is accentuated. Such a framework needs to encompass within itself the basic and supportive infrastructure and business applications as well as the basic issues that are needed to be kept in mind while developing the e-commerce business model. There are certain basic considerations that should be kept in mind while developing such a generic framework for e-commerce. These are as listed below.
1. Interoperability Electronic commerce must be based on a common set of services and standards that ensure interoperability. Preferably, service providers and application designers will be able to use these services and standards as building blocks that can be combined, enhanced, and customized. 2. Flexibility and Forward integration E-commerce as said above is constantly improving. And as it does so, new services and business application areas will emerge. It is thus very much logical that any generic framework developed for e- commerce shall be able to accommodate future enhancements and trends in the infrastructure, industry and applications. 3. involving latest technological and applications As the technological and business logic develops in its natural flow, e-commerce framework should be able to incorporate those newer technologies and business logic. An example of such possible business logic will be the payment systems that shall be developed along the path of development of the field. The generic framework of e-commerce should be able to acknowledge and accept such advancements, especially in the field of electronic payment systems. 4. Backward Integration There will be many business enterprises that will shift from traditional commerce to electronic commerce. These traditional business enterprises are bound to be using their own “legacy systems.” These include paper checks, mainframe-based settlement and payment systems, and EDI VANs. It is very much logical to expect that these legacy systems will not vanish overnight. A successful electronic commerce infrastructure must let the user transfer easily and transparently between these older systems and newer, all-electronic systems, applications, and processes. 5. Media Convergence Electronic commerce transactions involve all kinds of legacy and newly developed devices and media, and networks over which these are delivered. A generic framework developed for Electronic commerce must be able to take into its stride the ability to accommodate the plethora of technologies, devices and their convergence, needed to reach and sustain the mass market. 6. Information-intensive products These products are actually enabled by information technology, not just distributed more efficiently by it. Information products include electronic publications, catalogs, videos, and the like, as well as interactive video games, software programs, electronic tokens, customized design specifications, and even electronic keys to hotel rooms, cars, storage compartments, and airport boarding gates. Many of these products will not be simply ``offered'' by a vendor; they will be designed or tailored by a customer. Customers can, for example, choose their own selection of articles to be bound in an electronic book, or customize their own
clothing designs. This capability adds a customer-driven activity - a design phase - to the purchase cycle. It is likely that for these products, ordering, billing, payment, and distribution would be tightly integrated and happens virtually simultaneously.
7. New revenue collection methods Electronic commerce need to support advanced types of revenue collection in addition to traditional methods (e.g., payment upon receipt, payment in advance, etc.). For example, an information product service provider could distribute its product widely and charge on a usage basis; that is, charge the customer only when the information (be it a software program, digital document, or electronic key that opens and starts a rental car) is used. One innovative approach that permits usage accounting and payment is called meterware. It provides local hardware and/or software to record and bill customers continuously based on their product usage. Meterware, electronic cash and checks that don't need an online payment processor, and other advanced revenue collection ideas create opportunities for reaching new customers and for distributing products and services. These methods make a lot of sense in a low distribution cost environment supported by the electronic commerce infrastructure. 8. Legacy systems Many “legacy systems” exist in the electronic commerce domain. These include paper checks, mainframe- based settlement and payment systems, and EDI VANs. None of these legacy systems will go away overnight: A successful electronic commerce infrastructure must let the user transfer easily and transparently between these older systems and newer, all-electronic systems, applications, and processes. 9. Transaction devices Electronic commerce transactions involve all kinds of legacy and newly developed devices and media, and networks over which these are delivered. Electronic commerce must accommodate the technologies and devices needed to reach and sustain the mass market. A framework developed with all of these needs and considerations in mind form the strongest basis for a powerful and useful electronic commerce infrastructure. We next describe the specific activities and functions this infrastructure must support. Activities and Functions - advertising and shopping, - negotiating, - ordering, - billing, - payment and settlement, - distribution and receipt, - accounting, - customer service, and - information and knowledge processing.
The specific functions associated with these activities in an electronic commerce setting are discussed below. Note that not all of these activities are performed in every transaction, nor are they necessarily performed in this order; indeed, they may be performed in parallel. Also, all activities are not necessarily conducted electronically. Finally, these activities can vary in complexity and importance depending on the transaction's size and scope. Advertising and Shopping This activity can include
- searching and browsing electronic directories and catalogs on a network;
