E-COMMERCE

E Commerce is one of the most important facets of the Internet to have emerged in the recent times. Ecommerce involves carrying out business over the Internet with the assistance of computers, which are linked to each other forming a network.

E-commerce consists of the buying, selling, marketing, and servicing of products or services through digital communication.

BENEFITS OF E-COMMERCE

Ecommerce allows people to carry out businesses without the barriers of time or distance. One can log on to the Internet at any point of time, be it day or night and purchase or sell anything one desires at a single click of the mouse.

There is no human interaction during the on-line electronic purchase order process. Also, electronic selling virtually eliminates processing errors, as well as being faster and more convenient for the visitor.

From the buyer’s perspective also ecommerce offers a lot of tangible advantages.

1. Reduction in buyer’s sorting out time. 2. Better buyer descisions 3. Less time is spent in resolving invoice and order discrepancies. 4. Increased opportunities for buying alternative products.

BENEFITS OF E-COMMERCE (Cont…)

The strategic benefit of making a business ‘ecommerce enabled’, is that it helps reduce the delivery time, labour cost

Another important benefit of Ecommerce is that it is the cheapest means

of doing business.

Consumers are increasingly searching for information on the internet prior

to making a purchase. Make your business available to them.

The overhead cost of an E-commerce web site is generally much less than the cost of maintaining a physical storefront;

• You have the ability to reach customers all over the world rather than

being limited to a certain geographical location

Limitations of E-Commerce

There is lack of system security, reliability.

some protocols are not standardized around the world

There is insufficient telecommunication bandwidth.

The software development tools are still evolving and changing rapidly.

Customers do not trust an unknown faceless seller.

Lack of touch and feel online

CATEGORIES OF E-COMMERCE

Business-to-Business E-Commerce (B2B)

Business-to-Consumer E-Commerce (B2C)

Consumer-to-Consumer E-Commerce (C2C)

Consumer-to-Business E-Commerce (C2B)

Business to Business E-Commerce

In B2B customers are other businesses

B2B concerns itself primarily with supply chain management.

A B2B site deals primarily with other businesses, not the general

public

B2B sites normally handle a lot more than just sales of products

B2B systems automate internal or external business processes

• Procurement• Order processing• JIT Manufacturing• JIT Distribution• Customer Support

Supply Chain

Farmers Markets Retaiilers Consumers

Farmers Wholesalers Supermarkets Consumers

Farmers Manufacturers Wholesalers Supermarkets

Consumers

Farmers Consumers

Consider an industry such as food production

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Supply Chain Integration

SupplierShipper

Consumer Dealer

Manufacturers

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An example of how a Supply Chain Integration may work, case study let’s use an order of a new PC as a case study. the process has the following steps:

A customer submits an order for a new computer system through a dealer’s Web site.

The dealer receives the order. Receipt of the order automatically generates a query to the manufacturer of the computers (case, microprocessor, memory, monitor, CPU, and so on) that make up the system.

Receipt of the query by the computer manufacturer automatically initiates a query to the parts inventory database of the computer manufacturer. The query results show that the computer manufacturer does not have the microprocessor in stock needed to fulfill the order. The computer manufacturer’s inventory system contacts the microprocessor supplier and places an order for the necessary parts.

 

The microprocessor supplier’s system informs the computer manufacturer of the earliest possible date for delivery of the microprocessor and places the order for the chip.

Using this date as input, the computer manufacturer calculates the date by which it could have the computers built, based on the schedule of available capacity on its manufacturing floor. Then generates a query to the shipper’s computer.

The shipper’s system checks its own transport capacity and determines that it will be able to schedule and provide delivery of the computer.

The computer manufacturer then confirms the order with the dealer’s system.

Finally, the dealer sends confirmation to the consumer.

Corporate Procurement

Requisitioner

Supplier

Shipper

Accounts Payable

Approval Process

Shipping Information

In this scenario, typically users fill out requisitions using an interface like a browser to use self-service Web applications to place orders for goods. These orders can then be electronically routed to approving managers. Company officials are able to enforce purchase approval policies through automated business rules. Once purchase orders are approved, they are routed electronically to the business partners (typically suppliers) and committed for fulfillment. Products ordered subsequently will be logged to accounts payable applications and delivered to the requistioner in accordance with the terms in place between the buyer’s organization and the supplier. This process is illustrated in the diagram below:

Business to Consumer E-Commerce

Business-to-consumer (B-to-C) electronic commerce is online retailing or e-tailing.

A B2C site sells directly to the end user. 

B2C websites are intermediary portals to link customers to suppliers.

Some of the major ones are

1. www.ebay.com an auction site.

2. www.Yell.com an internet version of yellow pages 3. www.zdnet.com a technology market place.

Consumer to Consumer E-Commerce

Consumer sells directly to consumers

Individual sellings in classified adds (www.classified 2000.com)

Selling residential property, cars and so on.

Advertising personal Services on the internet and selling

knowledge and expertise

Consumer to Business E-Commerce

This category includes individuals who sell

Products or services to organizations.

Electronic Credit Card System on the Internet

The Players

Cardholder

Merchant (seller)

Issuer Bank

Acquirer Bank

The process of using credit cards

A cardholder requests the issuance of a card brand (like Visa and MasterCard) to an issuer bank in which the cardholder may have an account.

The authorization of card issuance by the issuer bank, or its designated brand company, may require customer’s physical visit to an office.

A plastic card is physically delivered to the customer’s address by mail. The card can be in effect as the

cardholder calls the bank for initiation and signs on the back of the card.The cardholder shows the card to a

merchant to pay a requested amount. Then the merchant asks for approval from the brand company. Upon the approval, the merchant

requests payment to the merchant’s acquirer bank, and pays fee for the service. This process is called a “capturing process”

The acquirer bank requests the issuer bank to pay for the credit amount.

Electronic Credit Card System on the Internet (cont….)

Cardholder Merchantcredit card

Card Brand Company

Payment authorization, payment data

Issuer Bank

CardholderAccount

Acquirer Bank

MerchantAccount

account debit data payment data

Credit Card Procedure (offline and online)

payment data

amount transfer

E-tailing

E-tailing refers to retailing over the internet. Thus an e-tailer is a B2C business that executes a transaction with the final consumer.

"Card Not Present" Merchant Account :

An account that allows merchants to process credit cards without a face to face transaction with the purchaser.

Banner :An interactive ad placed on a webpage that is linked to an external advertiser's website or another internal page within the same website.

Merchant Account :A "bank account" established with a payment processor for the settlement of credit card transactions. Any merchant who wants to take credit card orders must establish a merchant account. Internet merchants need a "Card Not Present Merchant Account.

• Consumer Types– Individual consumers: get much of the media attention

– Organizational buyers: do most of the shopping in cyberspace

• Purchasing Types– Impulsive buyers: purchase products quickly

– Patient buyers: purchase products after making some comparisons

– Analytical buyers: do substantial research before making the decision to purchase products or services

• Purchasing Experiences– Utilitarian: shopping “to achieve a goal” or “complete a task”

– Hedonic: shopping because “it is fun and I love it”

A Model of EC Consumer Behavior

Consumer Purchasing Decision-Making

Roles that people play in the decision making process

– Initiator : the person who first suggests or thinks of the idea of buying a particular product or service

– Influencer : a person whose advice or views carry some weight in making a final buying decision

– Decider : the person who ultimately makes a buying decision or any part of it - whether to buy, what to buy, how to buy, or where to buy

– Buyer : the person who makes an actual purchase

– User : the person who consumes or uses a product or service