E-Commerce Unit 1
E-Commerce Unit 1
E-Commerce Unit 1
Definitions :-
1. E-commerce refers to the paperless exchange of business
information using EDI, E-mail, bulleting boards(Computerized system used to
exchange public messages or files) and other n/w based technologies.
History of e-commerce
EDI is widely viewed as the beginning of E-commerce.
EDI originated in the mid-1960s.(paperless offices)
The ability to use these technologies appeared in the late 1970s and allowed
business companies and organizations to send commercial documentation
electronically.
In the mid 1970s ,EDI was formalized by the Accredited by the Accredited stds
committee of Industry representatives.
1970-1980:Companies began to adopt EDI
Advantages of e-commerce
E-Commerce advantages can be broadly classified in three major categories –
Advantages to Organizations
Advantages to Consumers
Advantages to Society
Lower telecommunications cost The Internet is much cheaper than value added
networks (VANs) which were based on leasing telephone lines for the sole use
of the organization and its authorized partners. It is also cheaper to send a fax
or e-mail via the Internet than direct dialing.
3.Price comparisons Customers can ‘shop’ around the world and conduct
comparisons either directly by visiting different sites, or by visiting a single site
where prices of different sellers are exhibited.
enhances the quality of life of people in society, enabling them to work from
home. provides happier and less stressful working environments. reduces
environmental pollution as fewer people have to travel to work regularly
Business - to - Businesss
Business - to - Consumer
A website following the B2C business model sells its products directly to a
customer. A customer can view the products shown on the website. The
customer can choose a product and order the same. The website will then send a
notification to the business organization via email and the organization will
dispatch the product/goods to the customer.
Consumer - to - Consumer
A website following the C2C business model helps consumers to sell their
assets like residential property, cars, motorcycles, etc., or rent a room by
publishing their information on the website. Website may or may not charge the
consumer for its services. Another consumer may opt to buy the product of the
first customer by viewing the post/advertisement on the website.
Consumer - to - Business
Business - to - Government
B2G model is a variant of B2B model. Such websites are used by governments
to trade and exchange information with various business organizations. Such
websites are accredited by the government and provide a medium to businesses
to submit application forms to the government.
Government - to - Business
Government - to - Citizen
Governments use G2C model websites to approach citizen in general. Such
websites support auctions of vehicles, machinery, or any other material. Such
website also provides services like registration for birth, marriage or death
certificates. The main objective of G2C websites is to reduce the average time
for fulfilling citizen’s requests for various government services.
Business-to- consumer
Consumers are increasingly going online to shop for and purchase products,
arrange financing, arrange shipment or take delivery of digital products such as
software, and get service after the sale.
B2C e-business includes retail sales, often called e-retail (or e-tail), and other
online purchases such as airline tickets, entertainment venue tickets, hotel
rooms, and shares of stock.
E-tailors that offer traditional or Web-specific products or services only over the
Internet are sometimes called virtual merchants, and provide another variation
on the B2C model. Examples of virtual merchants includ (books. electronics,
toys, and music) (children's books and toys), and (personal accessories).
Many people were very excited about the use of B2C on the Internet, because
this new communication medium allowed businesses and consumers to get
connected in entirely new ways. The opportunities and the challenges posed by
the B2C e-commerce are enormous. A large amount of investment has gone into
this and many sites have either come up or are coming up daily to tap this
growing market.
Some of the reasons why one should opt for B2C are:
B2C e-commerce is more than just an online store. It really is about managing
the entire process, but just using technology as a tool for order processing and
customer support.
Visiting the virtual mall. The customer visits the mall by browsing the
online catalogue—a very organized manner of displaying products and
their related information such as price, description, and availability.
Finding the right product becomes easy by using a keyword search
engine. Virtual malls may include a basic to an advanced search engine,
product rating system, content management, customer support systems,
bulletin boards, newsletters and other components which make shopping
convenient for shoppers.
Customer registers. The customer has to register to become part of the
site's shopper This allows the customer to avail of the shop's complete
services. The customer becomes a part of the company's growing
database and can use the same for knowledge management and data
mining.
Customer buys products. Through a shopping cart system, order details,
shipping charges, taxes, additional charges and price totals are presented
in an organized manner. The customer can even change the quantity of a
certain product. Virtual malls have a very comprehensive shopping
system, complete with check-out forms.
Merchant processes the order. The merchant then processes the order
that is received from the previous stage and fills up the necessary forms.
Credit card is processed. The credit card of the customer is
authenticated through a payment gateway or a bank. Other payment
methods can be used as well, such as debit cards, prepaid cards, or bank-
to-bank transfers.
Operations management. When the order is passed on to the logistics
people, the traditional business operations will still be used. Things like
inventory management. total quality management, warehousing,
optimization and project management should still be incorporated even
though it is an e-business. Getting the product to the customer is still the
most important aspect of e-commerce.
Shipment and delivery. The product is then shipped to the customer.
The customer can track the order/delivery as virtual malls have a delivery
tracking module on the website which allows a customer to check the
status of a particular order.
Customer receives. The product is received by the customer, and is
verified. The system should then tell the firm that the order has been
fulfilled.
After-sales service. After the sale has been made, the firm has to make
sure that it maintains a good relationship with its This is done through
customer relationship management or CRM.
The example of the site also involves the B2C model in which the consumer
searches for a book on their site and places an order, if required. This implies
that a complete business solution might be an integration solution of more than
one business model.
For example, includes the B2B model in which the publishers transact with
Amazon and the B2C model in which an individual consumer transact with the
business organization.
The B2C model of e-commerce is more prone to the security threats because
individual consumers provide their credit card and personal information n the
site of a business organization. In addition, the consumer might doubt that his
information is secured and used effectively by the business organization. This is
the main reason why the B2C model is not very widely accepted. Therefore, it
becomes very essential for the business organizations to provide robust security
mechanisms that can guarantee a consumer for securing his/her information.
Business-to-Business
B2B interactions involve much more complexity than B2C. For instance, typical
B2B transactions include, among others, the following steps:
Review catalogues
Identify specifications
Define requirements
Post request for proposals (REP)
Review vendor reputation
Select vendor
Fill out purchase orders (PO)
Send PO to vendor
Prepare invoice
Make payment
Arrange shipment and
Organize product inspection and reception
Consumer-to-Consumer
However, it is essential that both the seller and the buyer must register with the
auction site. While the seller needs to pay a fixed fee to the online auction house
to sell their products, the buyer can bid without paying any fee. The site brings
the buyer and seller together to conduct deals as shown in figure below.
Let us now look at the previous figure with respect to eBay. When a customer
plans to sell his products to other customers on the Web site of eBay, he first
needs to interact with an eBay site, which in this case acts as a facilitator of the
overall transaction.
Then, the seller can host his product on www.ebay.com, which in turn charges
him for this. Any buyer can now browse the site of eBay to search for the
product he interested in. If the buyer comes across such a product, he places an
order for the same on the Web site of eBay. eBay now purchase the product
from the seller and then, sells it to the buyer. In this way, though the transaction
is between two customers, an organization acts as an interface between the two
organizations.
Consumer to Business
C2B Business Model
Let us look at another example of the C2B model. William Ward needs to buy
an airline ticket for his journey from New York to New Jersey. William needs
to travel immediately. Therefore, he searches a Web site for a ticket. The Web
site offers bidding facility to people who want to buy tickets immediately. On
the Web site, William quotes the highest price and gets the ticket.
In addition to the models discussed so far, five new models are being worked on
that involves transactions between the government and other entities, such as
consumer, business organizations, and other governments. All these transactions
that involve government as one entity are called e-governance. The various
models in the e-governance scenario are:
Brokerage
Aggregator
Info-mediary
Community
Value chain
Advertising
These transaction types take place in a variety of ways. Moreover, any given
firm may combine one or two of these as part of its web business strategy.
1) Brokerage Model
Brokers are market-makers: they bring buyers and sellers together and facilitate
transactions. Brokers play a frequent role in business-to-business (B2B),
business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually
a broker charges a fee or commission for each transaction it enables. The
formula for fees can vary depending on context. Brokerage models include:
Search Agent: a software agent or "robot" used to search-out the price and
availability for a good or service specified by the buyer, or to locate hard to find
information.
2) Aggregator Model
Electronic commerce business model where a firm (that does not produce or
warehouses any item) collects (aggregates) information on goods and/or
services from several competing sources at its website. The firm's strength lies
in its ability to create an 'environment' which draws visitors to its website, and
in designing a system which allows easy matching of prices and specifications.
Aggregator model includes:
Virtual Merchant: this is a business that operate only from the web and offers
either traditional or web specific goods and services. The method of selling may
be listing price or auction. Some example includes [Amazon, eToys]
Bit Vendor: This is the merchant that deals strictly in digital products and
services in its purest form.
Subscription model: The users have to pay for the access of the site. High
value added content should be essential for subscription model. Some examples
are [Wall street journal, Consumer Reports]
3) Info-mediary Model
Data about consumers and their consumption habits are valuable, especially
when that information is carefully analyzed and used to target marketing
campaigns. Independently collected data about producers and their products are
useful to consumers when considering a purchase. Some firms function as
infomediaries (information intermediaries) assisting buyers and/or sellers
understand a given market. Info-mediary model includes:
4) Community Model
The viability of the community model is based on user loyalty. Users have a
high investment in both time and emotion. Revenue can be based on the sale of
ancillary products and services or voluntary contributions; or revenue may be
tied to contextual advertising and subscriptions for premium services. The
Internet is inherently suited to community business models and today this is one
of the more fertile areas of development, as seen in rise of social networking.
Social Networking Services: sites that provide individuals with the ability to
connect to other individuals along a defined common interest (professional,
hobby, romance). Social networking services can provide opportunities for
contextual advertising and subscriptions for premium services. [Facebook,
Orkut]
Products, goods, services, or information are delivered through the parties of the
value chain from producers to end users. A value chain also has relationship and
administrative aspects, that is, you can manage the relationship of the partners
or enterprises in your value chain, as well as offer some administrative services
to those parties.
As a result, value chain business models must manage the two sides of their
businesses: their customers and direct sales, and their channel partners and
suppliers. Each requires its own management channels and practices.
To sell directly to customers (direct sales), value chain models usually include a
storefront, where customers can purchase their goods or services directly. To
manage relationships with partners or suppliers, the demand chain and a supply
chain models within the value chain include a hub.
6) Advertising Model
The web advertising model is an extension of the traditional media broadcast
model. The broadcaster, in this case, a web site, provides content (usually, but
not necessarily, for free) and services (like email, IM, blogs) mixed with
advertising messages in the form of banner ads. The banner ads may be the
major or sole source of revenue for the broadcaster. The advertising model
works best when the volume of viewer traffic is large or highly specialized.
Advertising model includes:
Portal: usually a search engine that may include varied content or services. A
high volume of user traffic makes advertising profitable and permits further
diversification of site services. Some common examples are [Google, Yahoo!]
Classifieds: list items for sale or wanted for purchase. Listing fees are common,
but there also may be a membership fee. [Monster.com, Craigslist]
User Registration: content-based sites that are free to access but require users
to register and provide demographic data. Registration allows inter-session
tracking of user surfing habits and thereby generates data of potential value in
targeted advertising campaigns. [NYTimes]