E-COMMERCE

 

E-commerce is short for electronic commerce. It is similar to traditional commerce system which involves the activities of selling and buying, but it perform these operations using any electronic medium like, TV, fax, radio or internet. Today internet has captured all the e-trade demand with its comparatively greater features, so here we will consider only internet as an e-commerce source.

 

Categories of E-commerce

 

There are two basic categories of e-commerce:

 

• Business-to-Business (B2B)
  
• Business-to-Consumer (B2C)
  

 

Business-to-Business (B2B)

E-commerce plays an important role in enhancing and transforming relationships between and among businesses.

 

Some B2B applications are:

 

Supplier Management: Electronic applications in this area aid in expediting business partnerships through the reduction of purchase order (PO) processing costs and cycle times, and by maximizing the number of POs processed with fewer people.

 

Inventory Management: Electronic applications make the order-ship bill cycle shorter. For instance, if most of a business's partners are linked electronically, any information sent by mail can be transmitted instantly. Businesses can easily keep track of their documents to make sure that they were received. Such a system improves auditing capabilities, and helps reduce inventory levels, improve inventory turns, and eliminate out-of-stock occurrences.

 

Distribution Management: Electronic-based applications make the transmission of shipping documents a lot easier and faster. Shipping documents include bills of lading, purchase orders, advance ship notices, and manifest claims. E-commerce also enables more efficient resource management by certifying that documents contain more accurate data.

 

Channel Management: E-commerce allows for speedier dissemination of information regarding changes in operational conditions to trading partners. Technical, product and pricing information can be posted with much ease on electronic bulletin boards.

 

Payment Management: An electronic payment system allows for a more efficient payment management system by minimizing clerical errors, increasing the speed of computing invoices, and reducing transaction fees and costs.

 

Business-to-Consumer (B2C)

Business-to-Consumer e-commerce involves customers gathering information, purchasing, and receiving products over an electronic network.

The consumer uses electronic commerce in the following economic transactions:

 

Purchasing products and information: Electronic applications make it possible for consumers to look up online information about existing and new products/services.

Personal finance management: In this field, electronic applications aid the consumers in managing investments and personal finances through the use of online banking tools. Chow.net is a good example of B2C electronic commerce application, particularly of purchasing products online.

 

E-commerce benefits

 

Benefits to Organization

• Expends the marketplace to national and international markets.
  
• Decrease the cost of creating, processing, distributing, storing and retrieving paper-based information.
  
• Allows reduced inventories and overhead by facilitating "pull" type supply chain management.
  
• The pull type processing allows for customization of products and services which provides competitive advantages to its implementers.
  
• Reduce the time between the outlay of capital and the receipt of products and services.
  
• Support Business Processes Reengineering (BPR) efforts.
  
• Lowers telecommunication cost – the internet is much cheaper than Value Added Networks (VANs).
  

 

Benefits to Society

• Enables more individual to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution.
  
• Allows some merchandise to be sold at lower prices benefiting the poor ones.
  
• Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them.
  
• Facilities delivery of public services at reduced cost, increases effectiveness, and/or improves quality.
  

 

Benefits to Consumer

• Enables customers to shop or do other transactions 24 hours a day, all year round from almost any location.
  
• Provides customers with more choices.
  
• Provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.
  
• Allows quick delivery of products and services in some cases, especially with digitized products.
  
• Customers can receive relevant and detailed information in seconds; rather than in days or weeks.
  
• Makes it possible to participate in virtual auctions.
  
• Allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.
  
• Electronic commerce facilitates competition, which results in substantial discounts.
  

 

Limitations of E-commerce

 

Technical Limitations

• Lack of sufficient system's security, reliability, standards, and communication protocols.
  
• Insufficient telecommunication bandwidth.
  
• The software development tools are still evolving and changing rapidly.
  
• Difficulties in integrating the Internet and electronic commerce software with some existing applications and databases.
  
• The need for special Web servers and other infrastructures, in addition to the network servers (additional cost).
  
• Possible problems of interoperability, meaning that some E-commerce software does not fit with some hardware, or is incompatible with some operating systems or other components.
  

 

Non-Technical Limitations

• Cost and justification (35% of the respondents)
  

The cost of developing an EC in house can be very high, and mistakes due to lack of experience, may result in delays. There are many opportunities for outsourcing, but where and how to do it is not a simple issue. Furthermore, to justify the system one needs to deal with some intangible benefits which are difficult to quantify.

• Security and Privacy (17% of the respondents)
  

These issues are especially important in the B2C area, and security concerns are not truly so serious from a technical standpoint. Privacy measures are constantly improving too. Yet, the customers perceive these issues as very important and therefore the E-commerce industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, fairly secure.

• Lack of trust and user resistance (4%)
  

Customers do not trust an unknown faceless seller, paperless transactions, and electronic money. So switching from a physical to a virtual store may be difficult.

 

• Other limiting factors
  
  • Lack of touch and feel online.
    
  • Many unresolved legal issues.
    
  • Rapidly evolving and changing E-commerce.
    
  • Lack of support services.
    
  • Insufficiently large enough number of sellers and buyers.
    
  • Breakdown of human relationships.
    
  • Expensive and/or inconvenient accessibility to the Internet.
    

 

TRADITIONAL COMMERCE VS E-COMMERCE

 

Some major comparisons between the traditional commerce methods and modern E-Commerce are listed below:

	Traditional Commerce	E-Commerce
Cost	Cost is greater due to taxes, advertisement and employees.	Average cost is much lower than traditional type.
Market	Product market is limited because of geo-graphical constraints.	Product market is across the world because of non-physical aspects.
Advertisement	It requires product advertisement on various mediums.	Developers of the websites also makes adds on domains.
Time	It requires more time to go outside, to choose, compare and evaluate product.	It takes less time to choose and make comparison between several products.
Accessibility	Less accessible due to time or geo-graphical constraints.	Products can be accessed at any time and from almost anywhere.
Reliability	People trust it more because of physical transactions.	Due to lake of awareness this is less popular among people.
Support	Customers support centers support their customers.	No physical support centers available.
Feedback	Feedback from customers takes a lot of time.	Feedback is immediate by certain website features.
Interactivity	Fewer customers can be interacting with at a time because of less physical limitations.	Websites are especially designed for multi-users.