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									E-Commerce

Rashedul Hasan
        Electronic commerce
• Electronic commerce consists of the buying and
  selling of products or services over electronic
  systems such as the Internet and other computer
  networks.
• Ecommerce is the purchasing, selling, and
  exchanging of goods and services over computer
  networks such as the Internet through which
  transactions or terms of sale are performed
  electronically.
                    History
• The meaning of electronic commerce has changed
  over the last 30 years. Originally, electronic
  commerce meant the facilitation of commercial
  transactions electronically, using technology such
  as Electronic Data Interchange (EDI) and
  Electronic Funds Transfer (EFT). These were both
  introduced in the late 1970s, allowing businesses
  to send commercial documents like purchase
  orders or invoices electronically.
                       History
• The growth and acceptance of credit cards, automated
  teller machines (ATM) and telephone banking in the 1980s
  were also forms of electronic commerce. Another form of
  e-commerce was the airline reservation system typified by
  Sabre in the USA and Travicom in the UK.
• Online shopping was invented in the UK in 1979 by
  Michael Aldrich and during the 1980s it was used
  extensively particularly by auto manufacturers such as
  Ford, Peugeot-Talbot, General Motors and Nissan. From
  the 1990s onwards, electronic commerce would
  additionally include enterprise resource planning systems
  (ERP), data mining and data warehousing.
New and Old Ways of Purchasing
           an Item
                Traditional        Electronic
Sales Cycle     Commerce           Commerce
Step            (Multiple          (Single
                Media              Medium
                Employed)          Employed)
Acquire Product magazines,         Web pages
Information     flyers, catalogs
Request item    printed forms,     e-mail
                letters
New and Old Ways of Purchasing
           an Item
Sales Cycle     Traditional     Electronic
Step            Commerce        Commerce
                (Multiple       (Single
                Media           Medium
                Employed)       Employed)
Check catalogs, Catalogs        online catalogs
prices
Check product      phone, fax   [online catalogs]
availability and
confirm price
New and Old Ways of Purchasing
           an Item
Sales Cycle      Traditional    Electronic
Step             Commerce       Commerce
                 (Multiple      (Single
                 Media          Medium
                 Employed)      Employed)
Generate order   printed form   e-mail, Web
                                pages
Send order       fax, mail      e-mail
(buyer);
New and Old Ways of Purchasing
           an Item
Sales Cycle     Traditional     Electronic
Step            Commerce        Commerce
                (Multiple       (Single
                Media           Medium
                Employed)       Employed)
Check inventory printed form,   online database,
at warehouse    phone, fax      Web pages

Generate        printed form    online database
invoice
New and Old Ways of Purchasing
           an Item
Sales Cycle     Traditional   Electronic
Step            Commerce      Commerce
                (Multiple     (Single
                Media         Medium
                Employed)     Employed)
Receive product Shipper       Shipper,
                              Download
Send payment    Mail          EDI
(buyer);
   Reasons Why Your Business
  Needs An eCommerce Website
• More and more people are looking for your
  products and services in the Internet.
• If your customers cannot find you in the
  Internet, they will purchase from your
  competitor who has an eCommerce web site
  instead.
• Customers can purchase your products 24
  hours a day, 7 days a week from any part of the
  world.
   Reasons Why Your Business
  Needs An eCommerce Website
• Acquiring of customers is a lot more cost-
  effective than hiring a flock of sales reps
  to push your product.
• Your customers expect it.
• Significantly lower advertising cost
  compared to traditional print, tv or radio
  ads.
   Reasons Why Your Business
  Needs An eCommerce Website
• Improve customer service
• Establish relationship with customers.
• Online spending is increasing every year.
     Planning for e-commerce
• Direct sales
  Many businesses use e-commerce for the
  direct selling of goods or services online.
  For some businesses such as those selling
  software or music, the actual sale and
  delivery of goods can be made online.
  However, for most the supply of goods will
  continue to require a physical delivery.
      Planning for e-commerce
• Pre-sales
  You can use your website for pre-sales activities .
  exploiting the widespread use of the internet to
  generate sales leads. At its most basic this can be
  through the use of 'brochureware' - having an
  online version of your promotional materials on
  your site. Other options include email campaigns
  or online advertising to attract visitors to your own
  website where you can promote your products.
       Planning for e-commerce
• Post-sales support
  You can also use the internet to automate aspects of your
  customer support to reduce the number of routine customer
  service calls. This can be achieved by using your site to
  answer the most frequently asked questions, or by putting
  technical information online.
  However you decide to use e-commerce, it is important to
  define your expectations from the outset. What level of
  sales are you hoping to make? How many sales leads are
  you looking to generate? What percentage reduction in
  customer telephone calls are you expecting to achieve?
  Ensure that targets are put in place so that you can measure
  the success, or otherwise, of your e-commerce facility.
       Advantages of Ecommerce
• 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.
• 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 / e-commerce world.
     Advantages of Ecommerce
• Market space. 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. Eliminating
  wholesalers and achieving a cheaper price is very
  much possible now a days.
     Advantages of Ecommerce
• 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'.
        Advantages of Ecommerce
•  A new marketing channel. The Internet provides an important new channel
   to sell to consumers. Peterson et al. (1999) suggest that, as a marketing
   channel, the Internet has the following characteristics:
• the ability to inexpensively store vast amounts of information at different
   virtual locations
• the availability of powerful and inexpensive means of searching, organizing,
   and disseminating such information
• interactivity and the ability to provide information on demand
• the ability to provide perceptual experiences that are far superior to a printed
   catalogue, although not as rich as personal inspection
• the capability to serve as a transaction medium
• the ability to serve as a physical distribution medium for certain goods (e.g.,
   software)
• relatively low entry and establishment costs for sellers
No other existing marketing channel possesses all of these characteristics.
              Disadvantages
• 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.
                  Disadvantages
• Physical product, supplier & 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.
                    Disadvantages
• 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.
                        Disadvantages
•   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.
                 Disadvantages
• 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.
• Privacy, security, payment, identity, contract. Many
  issues arise - privacy of information, security of that
  information and payment details, whether or not payment
  details (eg credit card details) will be misused, identity
  theft, contract, and, whether we have one or not, what laws
  and legal jurisdiction apply.
                    Disadvantages
• Personal service . Although some human interaction can be facilitated
  via the web, e-commerce can not provide the richness of interaction
  provided by personal service. For most businesses, e-commerce
  methods provide the equivalent of an information-rich counter
  attendant rather than a salesperson. This also means that feedback
  about how people react to product and service offerings also tends to
  be more granular or perhaps lost using e-commerce approaches. If your
  only feedback is that people are (or are not) buying your products or
  services online, this is inadequate for evaluating how to change or
  improve your e-commerce strategies and/or product and service
  offerings. Successful business use of e-commerce typically involves
  strategies for gaining and applying customer feedback. This helps
  businesses to understand, anticipate and meet changing online
  customer needs and preferences, which is critical because of the
  comparatively rapid rate of ongoing Internet-based change.
                 Disadvantages
• Size and number of transactions. E-commerce is most
  often conducted using credit card facilities for payments,
  and as a result very small and very large transactions tend
  not to be conducted online. The size of transactions is also
  impacted by the economics of transporting physical goods.
  For example, any benefits or conveniences of buying a box
  of pens online from a US-based business tend to be
  eclipsed by the cost of having to pay for them to be
  delivered to you in Australia. The delivery costs also mean
  that buying individual items from a range of different
  overseas businesses is significantly more expensive than
  buying all of the goods from one overseas business
  because the goods can be packaged and shipped together.
    Ecommerce can be broken into four
           main categories:

•   Business-to-Consumer (B2C),
•   B2B (Business-to-Business),
•   Business-to-Government (B2G)
•   Consumer-to-Consumer (C2C).
    Ecommerce offers a wider choice of
    services and types of making transactions.
          Business-to-consumer

• Business-to-consumer (B2C) describes activities
  of businesses serving end consumers with
  products and/or services.
• An example of a B2C transaction would be a
  person buying a pair of shoes from a retailer. The
  transactions that led to the shoes being available
  for purchase, that is the purchase of the leather,
  laces, rubber, etc. as well as the sale of the shoe
  from the shoemaker to the retailer would be
  considered (B2B) transactions.
              Business-to-consumer

• B2C (Business-to-Consumer) is basically a concept of online
  marketing and distributing of products and services over the Internet. It
  is a natural progression for many retailers or marketer who sells
  directly to the consumer. The general idea is, if you could reach more
  customers, service them better, make more sales while spending less to
  do it, that would the formula of success for implementing a B2C e-
  commerce infrastructure.
• For the consumer, it is relatively easy to appreciate the importance of
  e-commerce. Why waste time fighting the very real crowds in
  supermarkets, when, from the comfort of home, one can shop on-line
  at any time in virtual Internet shopping malls, and have the goods
  delivered home directly.
            Who should use B2C E-
                 Commerce?
• Manufacturers - to sell and to retail the business buyers
• Distributors - to take orders from the merchants they supply
• Publisher - to sell subscriptions and books
• Direct Sales Firms - as another channel to reach the buyers
• Entertainment Firms - to promote new products and sell copies
• Information Provider - to take payment for downloaded materials
• Specialty Retailers - Niche marketers of products ranging from
  candles, coffees, specialty foods, books use it to broaden their
  customer reach.
• Insurance Firms - On-line rate quotes and premium payments have
  made it easier for this industry to attract and retain customers. In fact,
  virtually any business that can deliver its products or provide its
  services outside its doors is a potential user.
•
              Business-to-business
• Business-to-business (B2B) is a term commonly used to describe
  commerce transactions between businesses, as opposed to those
  between businesses and other groups, such as business-to-consumers
  (B2C) or business-to-government (B2G). More specifically, B2B is
  often used to describe an activity, such as B2B marketing, or B2B
  sales, that occurs between businesses and other businesses.
• The volume of B2B transactions is much higher than the volume of
  B2C transactions. The primary reason for this is that in a typical supply
  chain there will be many B2B transactions involving subcomponent or
  raw materials, and only one B2C transaction, specifically sale of the
  finished product to the end customer. For example, an automobile
  manufacturer makes several B2B transactions such as buying tires,
  glass for windshields, and rubber hoses for its vehicles. The final
  transaction, a finished vehicle sold to the consumer, is a single (B2C)
  transaction.
           Business-to-business
• It is intended to bring "Just In Time" concept to a greater
  height which allow businesses to coordinate with its
  business associate for real time transaction and improving
  efficiency and productivity for both organizations. Because
  Time is money; people are money, good management of
  both means more money for the business and less
  expenditure on others.
• B2B also offers unique benefits such as less human
  intervention, less overhead expenses, fewer inadvertent
  errors, more efficiency, more advertising exposure, new
  markets and new physical territories equate to an
  intelligent method of mutual business. It is a win-win
  situation for both buyer and seller.
 Currently there are 2 main issues to
deal with when conducting a B2B E-
             commerce
• Supply Chain Management - to co-ordinate The fields of
  competition turned to efficiency in manufacturing. In the
  80's, concepts like Lean Manufacturing, Design for
  Manufacturability, Just-in-Time, and Stockless Production
  emerged. If properly managed, the operating costs of such
  systems can be substantially reduced. Reduction in costs
  can be in the form of reduced inventory cost, obsolescence,
  transportation and other logistics costs, overhead and direct
  labor costs. All have pointed out potential savings in costs
  that could amount to billions when companies can engage
  in supply chain integration efforts.
 Currently there are 2 main issues to
deal with when conducting a B2B E-
             commerce
• Electronic Procurement System - using Internet
  technologies to handle product distribution to the buyer
  and from supplier while at the same time removing the
  complexity of multi-level paper and processing which are
  labor intensive. This allows the business to run more
  efficiently and allows purchasing professionals to have
  more time to focus on complex acquisitions and supplier
  negotiation. Besides reducing cost and hassle, it must be
  designed expressly for casual use by untrained employees
  and it must also provide extensive management controls,
  reporting, and integration with existing systems.

								
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