In this post, part two of the article, "What is E-Commerce?" we will pay. To do this, we will first focus on the scope of e-commerce. Then, we will describe the difference between e-commerce and traditional commerce. We will also describe the features of e-commerce. We will continue to highlight the benefits of Internet commerce and capabilities. And in the end, we will look at Internet commerce in terms of business, technical and technology.
The Scope of Electronic Commerce
Electronic Commerce encompasses one or more of the following:
- EDI
- EDI on the Internet
- E-mail on the Internet
- Shopping on the World Wide Web
- Product sales and services on the Web
- Electronic banking or funds transfer
- Outsourced customer and employee care operations
Electronic Commerce:
- Automates the conduct of business among enterprises, their customers, suppliers and employees - anytime, anywhere.
- Creates interdependencies between your company’s value chain and those of your suppliers and customers. Your company can create competitive advantage by optimizing and re-engineering those valuechain links to the outside.
Differences between Electronic Commerce and traditional commerce
The major difference is the way information is exchanged and processed:
Traditional commerce:
- face-to-face, telephone lines , or mail systems
- manual processing of traditional business transactions
- individual involved in all stages of business transactions
E-Commerce:
- using Internet or other network communication technology
- automated processing of business transactions
- individual involved in all stages of transactions
- pulls together all activities of business transactions, marketing and advertising as well as service and customer support
Characteristics of Electronic Commerce
The tools are electronic but the application is commerce.
- Commerce is not accounting or decision support or any other internally focuses function.
- Commerce is externally focused on those with whom you do business.
- Commerce is doing business, not reporting on it or sending messages about it.
Special characteristics of electronic commerce and Web commerce:
- information exchanged and processed by a communications network and computers, as well as e-commerce software.
- most transactions are processed automatically.
- pulls together a gamut of business support services, such as
- inter-organizational e-mail, on-line directories
- trading support systems for commodities
- products, and customized products
- custom-built goods and services
- ordering and logistic support system supports
- management and statistical reporting systems
Why Internet Commerce?
In the short term:
- The top line: Access to a Global Market
- the ability to reach new customers and create more intimate relationships with all customers.
- The bottom line:Dramatic Reduction in distribution costs
- drastic cost reductions for distribution and customer service.
In the long term:
- The Internet may well change the structure of the competitive landscape.
- Internet communications will transform
- the relationship between business and their customers.
- the conversion from physical to digital will displace the source of business value.
The World Wide Web is one of the most prominent applications supported by the Internet.
Current revenues are about $500 million per year.
Potential markets for Web commerce as large as $500 billion a year.
Yankee Groups’forecasts about Web Commerce:
- Business-to-business market to reach $137 billion by 2000.
- Consumer market: $10 billion by 2000.
- Businesses on line in 1995: 150,000.
- Businesses on-line in 2000: 2 million.
- in 1996, 25% of on-line subscribers are on-line shoppers.
- By 2000, 79% of technically advanced families (TAFs) and 30% of non-TAFs will make purchases on-line.
- In 1995, only 13% TAFs and 6% of non-TAFs did.
Capabilities Required for Internet/Web Commerce?
Enable buyers to:
- inquire about products
- review product and service information
- place orders, authorize payment
- receive both goods and services on-line
Enable sellers to:
- advertise products
- receive orders
- collect payments
- deliver goods electronicakky
- provide ongoing customer support
Enable financial organizations:
- to server as intermediates that accept payment authorization
- make
Enable sellers to notify logistics organization
Benefits of Internet Commerce
Business benefits:
- Reduced costs to buyers from increased competition on-line
- Reduced costs to suppliers by on-line auction
- Reduced errors, time, and overhead costs information processing
- Reduced inventories, and warehouse
- Increased access to real-time inventory information, speed-up ordering & purchasing processing time
- Easier enter into new markets in an efficient way
- Easily create new markets and get new customers
- Automated business processing
- Cost-effective document transfer-
- Reduced time to complete business transactions, speed-up the delivery time
- Reduced business overhead and enhance business management
Marketing benefits:
- Improved market analysis, product analysis and customer analysis.
- Low-cost advertising
- Easy to create and maintain customer o client database
Customer benefits:
- Wide-scale information dissemination
- Wide selection of good products and goods at the low price
- Rapid inter-personal communications and information accesses
- Wider access to assistance and to advice from experts and peers.
- Save shopping time and money
- Fast services and delivery
Business Issues in Internet Commerce
Internet commerce is about business - using the network effectively to achieve business goals. This include the changes in both computing, communication, business marketing, business processing and transactions.
Questions should be asked and answered:
- How does it fit with our strategy? Should our strategy change?
- What does this mean to our competitive situation?
- Do we expect return in the short term, or is this a long-term investment?
- How much will it cost? What do we expect to accomplish?
- How will we measure the success?
- How does this affect our sales channels, our partners, our suppliers?
Concerning factors:
- Cost, Technology, Transition Time, and Strategy
Technical Issues in Internet Commerce:
How to apply Internet technology to business problems?
- Business model selection
- Technology selection
- Protocol selection for transaction processing
- Market place set-up
- Security solution
Fast technological changes
- Communication and network technology
- Computer hardware and application software
- WWW Technology, HTML, CGI, XML, SVG, …
- Browser technology and server technology
- Multimedia technology
- Information search technology
- Security technology
- Protocols and transaction technology
Technology Issues in Internet Commerce
Special characteristics of electronic commerce and Web commerce:
- on-line retail store, such as amazon.com
- electronic shopping, on-line shopping mall
- on-line trading, e-trade
- on-line auction, ebay
- on-line marketplace, such as
- electronic information communication between customers and manufactories.
- electronic publishing, such as product catalog
- electronic ordering, purchasing, and payment processing
- electronic advertising, marketing, such as an electronic market place
- electronic services and and supports
- electronic business management and statistical reporting
- electronic business workflow control and tracking
Source: Introduction To E- Commerce, Jerry Gao, Ph.D
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