Introduction to E-Commerce

Commerce has a long tradition of profiting from innovative systems and tools. As
technologies emerge, successful businesses are quick to identify developing opportunities
and expand their commercial capabilities. Conducting commerce electronically is no
different. For many businesses, new technologies that digitally exchange text and
monetary information are effective tools to serve traditional business goals of
streamlining services, developing new markets, and creating innovative business
opportunities. In addition, they offer the potential to develop types of services that are so
innovative and distinct from tradition that they define a new type of commerce.
Appropriately named, electronic commerce (E-Commerce) is the synthesis of traditional
business practices with computer, information and communication technologies.
E-Commerce is not an entirely new type of commerce. It first emerged in the 1960's on
private networks, as typically large organizations developed electronic data interchange
(EDI) installations and banks implemented electronic funds transfer (EFT). Today,
however, E-Commerce is no longer the exclusive domain of large organizations or private
networks. The open network Internet and particularly the World Wide Web not only
present new commercial potential for large organizations, but also provide a viable entry
point for small and medium-sized enterprises (SMEs) into E-Commerce opportunities.
Even though E-Commerce has existed for over thirty years, it has just recently sustained
significant growth. In the past 5 years the Internet has transformed from an auxiliary
communication medium for academics and large organizations into an entrenched
communication medium that spans across nearly all parts of mainstream society. ECommerce growth is tied directly to these socio-technological changes. The more
entrenched the medium becomes, the more users are drawn to it. An increase in users
increases markets. As markets expand, more businesses are attracted, which in turn drives
the development of better, more stable and secure technology to facilitate E-Commerce.
A stable, secure environment for exchanging mission-critical and monetary information
only draws more businesses and consumers to the Internet and ensures the growth pattern
continues. All these related factors contribute to a burgeoning E-Commerce marketplace
that should continue to grow well into the new millennium.
Only now is it becoming apparent how large the potential for E-Commerce will be in the
next few years. With E-Commerce prospects continuing to improve, most large
corporations have already developed preliminary E-Commerce strategies. Although many
SMEs are not following this trend of large corporations, others have found that a modest
investment in a simple Web site can develop into a commitment to E-Commerce as a
major component of the business plan. At this stage of development, E-Commerce is not
an essential operation for every type of SME, but in the near future it may become
standard for many.

Definition

There does not exist a simple definition of E-Commerce that adequately describes the
coverage of its operations, functions and underlying technologies. One common view is:
E-Commerce is online shopping via the Internet.
Although this is correct, online shopping is only one of many types of E-Commerce
activities. In broader terms:
E-Commerce is any commercial activity conducted electronically, particularly via
private or open networks, such as the Internet.
The key point of this definition is that E-Commerce is a confluence of business
operations with electronic and network technologies. Telephony and non-networked
technologies such as CD-ROM media may integrate into operations, but the core of ECommerce is network technologies and especially open networks such as the Internet.

UK Government
E-Commerce is the exchange of information across electronic networks at any
stage in the supply chain whether within an organisation , between businesses,
between business & consumers, or between public and private sectors whether paid
or unpaid

Zwass (1998)
E-Commerce is the sharing of business information , maintaining business
relationships & conducting business transactions by means of telecommunications
networks

IBMs Definition of E-Business

The transformation of key business processes through the use of internet
technologies
Agarwala & Agarwala
E- commerce is a shift in business paradigm to seamlessly integrate the various
business processes through dissemination of real time information

E-Commerce Business Operations

By virtue of its similarities, the scope of operations for E-Commerce is nearly as broad as
traditional commerce. E-Commerce includes both traditional activities (e.g. providing
product information) and new activities (e.g. conducting online retail in virtual malls,
publishing digital information). Some of the common operations that define E-Commerce
are specific business-to-business and business-to-customer interactions, such as:
1. Information exchange
2. Goods or services trading
3. Sales promotion and advertising
4. Online digital content delivery
5. Electronic funds transfers and transaction processing
6. Electronic share trading
7. Electronic bills of lading processing
8. Collaborative work interaction
9. Manufacturing management
10. Accounts settlement
11. Online sourcing
12. Public procurement
13. Direct consumer marketing
14. Inventory management
15. Post-sales service
16. Commercial auctions.

E-Commerce conducted over the Internet differs from typical commercial activity in that
it is influenced by the unique characteristics of the medium itself. In contrast to print
media, E-Commerce is dynamic, allowing users to interact with the commercial site, send
comments, and even define the scope of a document. Unlike person-to-person commerce,
E-Commerce allows for a controlled interaction between vendor and potential purchaser,
where the vendor may strategically direct the customer through a series of options and
processes. E-Commerce also differs from traditional commerce by its boundless relation
to time and space. Interaction is not restricted to normal working hours or geopolitical
borders. There is potential to conduct business with other merchants and consumers
around the world in different time zones, 7 days a week, 24 hours a day.
Benefits of E-Commerce
In the short-term, entry into E-Commerce may offer a competitive advantage over slower
to act competitors. The market for E-Commerce is growing, as more consumers and
businesses gain Internet access and transaction processing technologies improve security.
Companies that establish an operation today, still in the early stages of Internet based ECommerce, will have a fuller understanding of the issues and be better prepared to
capitalize on emerging technologies when E-Commerce markets open up in the next few
years.

The benefits of E-Commerce to a small business may include capabilities to:

1. To enhance customer base with reference to reach 24x7 ( Bank ATM machine ) .
2. To build up global brand image / equity .
3. Higher customization of product / services .
4. To increase the speed of transaction / business process workflows .
5. Extend the range of sales territory
6. Streamline communication to suppliers and clients
7. Expand reach to new clients
8. Improve service to existing clients
9. Reduce paperwork and time spent on correspondence
10. Track customer satisfaction
11. Expedite billing
12. Improve collaboration on work projects
13. Expand markets beyond geographical, national boundaries
14. Leverage legacy data
15. Improve inventory control, order processing
16. Establish position in emerging E-Commerce marketplace
17. Lower costs of overhead
18. Realize economies of scale by increasing sales volume to new markets
19. Monitor competition and industry trends
20. Improve or expand product lines - locate new suppliers, products that could be
included in catalogue.
How does it integrate with traditional services?
As E-Commerce matures and more traditional businesses enter the electronic
marketplace, it will become difficult to distinguish the E-Commerce merchant from
traditional merchant. Although some firms operate exclusively as E-Commerce
merchants, it appears that the greatest opportunities are for established firms that venture
into E-Commerce as a means to refine existing business processes and gain new
customers.
E-Commerce may complement or replace traditional commercial activities, depending
upon the industry and the functions. Because it is both a threat and an opportunity for
various industries, it is worthwhile to:
1. Study how E-Commerce can integrate into operations. Determine needs and
capabilities. E-Commerce operations may shadow traditional operations to
provide redundant services such as product information distribution.
2. Develop an E-Commerce strategy into the business and marketing plans.
Understanding how an E-Commerce system will strategically fit with the firm's

existing operations will help to allocate the management and financial resources
necessary for it to be a success. In the long-run, there have to be resources to setup and sustain a system, making it work best for the type of operation that will be
managed.
3. Monitor competitors, suppliers, and customers' movements into E-Commerce.
Special attention to their capabilities will help determine areas of E-Commerce
that need development.
4. Establish a consistent operations review process. E-Commerce technology and
operations are constantly evolving. Changes in technology frequently introduce
opportunities to refine or create new services.
Forces

affecting E-Commerce