Ecommerce

Submittedby: LiezlJeanSelibio

I.DEFINITION:
Electronic commerce, co mmonly known as ecommerce or eCommerce, or e businessconsistsofthebuyingandsellingofproductsorservicesoverelectronicsystems suchastheInternetandothercomputernetworks.Becauseoftheinternetthetransactions conductedelectronicallyhasgrownextraordinarily.

Modernelectroniccommercetypicallyusesthe WorldWideWeb atleastatsome pointinthetransaction'slifecycle,althoughitcanincludeawiderrangeoftechnologies suchasemailaswell.

Alargepercentageofelectroniccommerceisconductedentirelyelectronicallyfor virtual items such as access to premium content on a website, but most electronic commerceinvolvesthetransportationofphysicalitemsinsomeway.Onlineretailersare sometimesknownasetailersandonlineretailissometimesknownasetail.Almostallbig retailershaveelectroniccommercepresenceontheWorldWideWeb.

II.HISTORY
Earlydevelopment

Thehistoryofecommercedatesbackto1970,whenforthefirsttime,electronic datainterchange(EDI)andelectronicfundtransferwereintroduced.Sincethen,arapid growthofecommercehaspervadedalmosteveryotheraspectsofbusinesssuchassupply chainmanagement,transactionprocessing,Internetmarketingandinventorymanagement.

Themeaningofelectroniccommercehaschangedoverthelast30years.Originally, electroniccommercemeantthefacilitationofcommercialtransactionselectronically,using technologysuchasElectronicDataInterchange(EDI)andElectronicFundsTransfer(EFT).

Thesewerebothintroducedinthelate1970s,allowingbusinessestosendcommercial documentslikepurchaseordersorinvoiceselectronically.

Thegrowthandacceptanceofcreditcards,automatedtellermachines(ATM)and telephonebankinginthe1980swerealsoformsofelectroniccommerce.Anotherformofe commercewastheairlinereservationsystemtypifiedbySabreintheUSAandTravicomin theUK.

Fromthe1990sonwards,electroniccommercewouldadditionallyincludeenterprise resourceplanningsystems(ERP),anddatawarehousing.

Anearlyexampleofmanytomanyelectroniccommerceinphysicalgoodswasthe BostonComputerExchange,amarketplaceforusedcomputerslaunchedin1982.

Anearlyonlineinformationmarketplace,includingonlineconsulting,wasthe AmericanInformationExchange,anotherpreInternetonlinesystemintroducedin1991.

In1990,TimBernersLeeinventedtheWorldWideWebwebbrowserand transformedanacademictelecommunicationnetworkintoaworldwideeverymaneveryday communicationsystemcalledinternet/www.CommercialenterpriseontheInternetwas strictlyprohibiteduntil1991.

AlthoughtheInternetbecamepopularworldwidearound1994whenthefirst internetonlineshoppingstarted,ittookaboutfiveyearstointroducesecurityprotocolsand DSLallowingcontinualconnectiontotheInternet.

Bytheendof2000,manyEuropeanandAmericanbusinesscompaniesofferedtheir servicesthroughtheWorldWideWeb.Sincethenpeoplebegantoassociateaword "ecommerce"withtheabilityofpurchasingvariousgoodsthroughtheInternetusingsecure protocolsandelectronicpaymentservices.

III.TIMELINE
1979:MichaelAldrichinventedonlineshopping

1981:ThomsonHolidays,UKisfirstB2Bonlineshopping

1982:MinitelwasintroducednationwideinFrancebyFranceTelecomandusedfor onlineordering.

1984:GatesheadSIS/TescoisfirstB2ConlineshoppingandMrsSnowball,72,isthe firstonlinehomeshopper

1985:NissanUKsellscarsandfinancewithcreditcheckingtocustomersonline fromdealers'lots.

1987:Swregbeginstoprovidesoftwareandsharewareauthorsmeanstoselltheir productsonlinethroughanelectronicMerchantaccount.

1990:TimBernersLeewritesthefirstwebbrowser,WorldWideWeb,usingaNeXT computer.

1992:J.H.SniderandTerraZiporynpublishFutureShop:HowNewTechnologies WillChangetheWayWeShopandWhatWeBuy.St.Martin'sPress.ISBN0312 063598.

1994:NetscapereleasestheNavigatorbrowserinOctoberunderthecodename Mozilla.PizzaHutoffersonlineorderingonitsWebpage.Thefirstonlinebank opens.Attemptstoofferflowerdeliveryandmagazinesubscriptionsonline.Adult materialsalsobecomecommerciallyavailable,asdocarsandbikes.Netscape1.0is introducedinlate1994SSLencryptionthatmadetransactionssecure.

 1995:JeffBezoslaunchesAmazon.comandthefirstcommercialfree24hour, internetonlyradiostations,RadioHKandNetRadiostartbroadcasting.Delland CiscobegintoaggressivelyuseInternetforcommercialtransactions.eBayisfounded bycomputerprogrammerPierreOmidyarasAuctionWeb.

1998:Electronicpostalstampscanbepurchasedanddownloadedforprintingfrom theWeb.

1999:Business.comsoldforUS$7.5milliontoeCompanies,whichwaspurchasedin 1997forUS$149,000.ThepeertopeerfilesharingsoftwareNapsterlaunches.ATG Storeslaunchestoselldecorativeitemsforthehomeonline.

2000:Thedotcombust.

2002:eBayacquiresPayPalfor$1.5billion.NicheretailcompaniesCSNStoresand NetShopsarefoundedwiththeconceptofsellingproductsthroughseveraltargeted domains,ratherthanacentralportal.

2003:Amazon.compostsfirstyearlyprofit.

2007:Business.comacquiredbyR.H.Donnelleyfor$345million.

2009:Zappos.comacquiredbyAmazon.comfor$928million.RetailConvergence, operatorofprivatesalewebsiteRueLaLa.com,acquiredbyGSICommercefor$180 million,plusupto$170millioninearnoutpaymentsbasedonperformancethrough 2012.

2010:USeCommerceandOnlineRetailsalesprojectedtoreach$173billion,an increaseof7percentover2009

IV .TYPESOFECOMMERCE
1. Businesstobusiness (B2B) A type of ecommerce that is conducted

betweenbusinesses.Itcanbeopentoallinterestedparties(e.g.productexchange)or limitedtospecific,prequalifiedparticipants(privateelectronicmarket).

2.

Businesstoconsumer (B2C) Type of electronic commerce that is

conducted between businesses and consumers. This is the type of electronic commerceconductedbycompaniessuchasAmazon.com.

Example:Ahomeuserwishestopurchasesomegoodqualitywine.Theuseraccesses theinternetsitehttp://www.craigs.com.auandfollowsthelinkstoreadareporton therecommendedwines.Afterreadingthetastingnotestheuserfollowsthelinksto placeanorderalongwithdeliveryandpaymentdetailsdirectlyintothemerchant's inventorysystem.Thewineisthendispatchedfromthesupplier'swarehouseandin theoryisdeliveredtotheconsumerwithoutdelay.

3. ConsumertoBusiness (C2B) a type of electronic commerce where the consumerrequestsforaspecificservicefromthebusiness.

Example:HarryisplanningaholidayinDarwin.Herequiresaflightinthefirstweek ofDecemberandisonlywillingtopay$250.Harryplacesasubmissionwithinaweb based C2B facility. Budget Price Airways accesses the facility and sees Harry's submission.Duetoitbeingaslowperiod,theairlineoffersHarryareturnfarefor $250.

4.BusinesstoEmployee(B2E)Thisformofecommercecommonlyknownasan intranet.Anintranetisawebsitedevelopedtoprovideemployeesofanorganization with information. The intranet is usually accessed through the organizations

network,thoughitcanandisoftenextendedtoanapplicantwhousestheInternet butrestrictsusesbysignonandpassword. 5.ConsumertoConsumer(C2C)Thistypeofelectroniccommerceisusuallyina form of an auction site. An excellent example of this is found at Ebay, where consumersselltheirgoodsandservicestootherconsumers.Toaccommodatethis activity,severaltechnologieshaveemerged.Firstly,Ebayallowsallsellersandbuyers torateoneanother.Inthismanner,futureprospectivepurchasersmayseethata particularsellerhassoldtomorethan2,000customersallofwhomratetheseller asexcellent.Inanotherexample,aprospectivepurchasermayseeasellerwhohas previouslysoldonly4timesandall4ratethesellerpoorly.

6. BusinesstoMachine (B2M) The general idea is that companies can link to remotemachinesviatheinternet.

Example: AssumethatyoudriveatruckforCocaColaandthatitisyourjobisto refillCokemachinesthroughoutyourcommunity.Youstopatahighrisebuildingthat containsaCokemachineoneveryfloorWithB2Mtechnology,thefolksatCokeknow exactlyhowmanydrinksareineachmachinebytypeofdrink,andtheiraccounting systemproducesarestockingreportadvisingthedriveraccordingly.Inthismanner, CocaColacanmonitortheirmachinesfromafartodetermineiftheyneedrepairor restocking.Thisinformationisthenusedtoscheduleefficientdeliveryroutesthat allowyoutorestocktheappropriateCokemachinesjustintimebeforetheinventory isdepleted.

V .AdvantagesandDisadvantagesof ElectronicCommerce
Likeanyconventionalbusiness,electroniccommerceisalsocharacterizedbysome advantagesandinherentdrawbacks.Let'shavealookatsomeoftheseimportant

advantagesanddisadvantagesofelectroniccommerce.

AdvantagesofElectronicCommerce A.
1.Thegreatestandthemostimportantadvantageofecommerce,isthatitenablesa businessconcernorindividualtoreachtheglobalmarket.

2.Itcaterstothedemandsofboththenationalandtheinternationalmarket,asyour businessactivitiesarenolongerrestrictedbygeographicalboundaries.

3.Withthehelpofelectroniccommerce,evensmallenterprisescanaccesstheglobal marketforsellingandpurchasingproductsandservices.

4.Eventimerestrictionsarenonexistentwhileconductingbusinesses,asecommerce empowersonetoexecutebusinesstransactions24hoursadayandevenonholidaysand weekends.Thisinturnsignificantlyincreasessalesandprofit.

5.Givesthecustomerstheopportunitytolookforcheaperandqualityproducts.

6.Withthehelpofecommerce,consumerscaneasilyresearchonaspecificproductand sometimesevenfindouttheoriginalmanufacturertopurchaseaproductatamuch cheaperpricethanthatchargedbythewholesaler.

7.Shoppingonlineisusuallymoreconvenientandtimesavingthanconventionalshopping. Besidesthese,peoplealsocomeacrossreviewspostedbyothercustomers,aboutthe productspurchasedfromaparticularecommercesite,whichcanhelpmakepurchasing

decisions.

8.Forbusinessconcerns,ecommercesignificantlycutsdownthecostassociatedwith marketing,customercare,processing,informationstorageandinventorymanagement.

9.Itreducesthetimeperiodinvolvedwithbusinessprocessreengineering,customization ofproductstomeetthedemandofparticularcustomers,increasingproductivityand customercareservices.

10.Electroniccommercereducestheburdenofinfrastructuretoconductbusinessesand therebyraisestheamountoffundsavailableforprofitableinvestment.

11.Italsoenablesefficientcustomercareservices.

12.Ontheotherhand,Itcollectsandmanagesinformationrelatedtocustomerbehavior, whichinturnhelpsdevelopandadoptanefficientmarketingandpromotionalstrategy.

DisadvantagesofElectronicCommerce B.
Electroniccommerceisalsocharacterizedbysometechnologicalandinherent limitationswhichhasrestrictedthenumberofpeopleusingthisrevolutionarysystem.

1.OneimportantdisadvantageofecommerceisthattheInternethasstillnottouchedthe livesofagreatnumberofpeople,eitherduetothelackofknowledgeortrust.Alarge numberofpeopledonotusetheInternetforanykindoffinancialtransaction.Somepeople simplyrefusetotrusttheauthenticityofcompletelyimpersonalbusinesstransactions,asin thecaseofecommerce.Manypeoplehavereservationsregardingtherequirementto

disclosepersonalandprivateinformationforsecurityconcerns.Manytimes,thelegitimacy andauthenticityofdifferentecommercesiteshavealsobeenquestioned.

2.Anotherlimitationofecommerceisthatitisnotsuitableforperishablecommoditieslike fooditems.Peopleprefertoshopintheconventionalwaythantouseecommercefor purchasingfoodproducts.Soecommerceisnotsuitableforsuchbusinesssectors.Thetime periodrequiredfordeliveringphysicalproductscanalsobequitesignificantincaseofe commerce.Alotofphonecallsandemailsmayberequiredtillyougetyourdesired products.However,returningtheproductandgettingarefundcanbeevenmore troublesomeandtimeconsumingthanpurchasing,incaseifyouarenotsatisfiedwitha particularproduct.

3.Thus,onevaluatingthevariousprosandconsofelectroniccommerce,wecansaythat theadvantagesofecommercehavethepotentialtooutweighthedisadvantages.Aproper strategytoaddressthetechnicalissuesandtobuildupcustomerstrustinthesystem,can changethepresentscenarioandhelpecommerceadapttothechangingneedsofthe world.

VI.Businessapplications
Somecommonapplicationsrelatedtoelectroniccommercearethefollowing: Email Enterprisecontentmanagement Instantmessaging Newsgroups Onlineshoppingandordertracking Onlinebanking

 Onlineofficesuites Domesticandinternationalpaymentsystems ShoppingcartsoftwareTeleconferencing Electronictickets

Distribution channels
E-commerce has grown in importance as companies have adopted Pure-Click and Brick and Click channel systems. We can distinguish between pure-click and brick and click channel system adopted by companies. Pure-Click companies are those that have launched a website without any previous existence as a firm. It is imperative that such companies must set up and operate their e-commerce websites very carefully. Customer service is of paramount importance.

Brick and Click companies are those existing companies that have added an online site for e-commerce. Initially, Brick and Click companies were skeptical whether or not to add an online e-commerce channel for fear that selling their products might produce channel conflict with their off-line retailers, agents, or their own stores. However, they eventually added internet to their distribution channel portfolio after seeing how much business their online competitors were generating.

VII.Governmentregulations
IntheUnitedStates,someelectroniccommerceactivitiesareregulatedbythe FederalTradeCommission(FTC).Theseactivitiesincludetheuseofcommercialemails, onlineadvertisingandconsumerprivacy.TheCANSPAMActof2003establishesnational standardsfordirectmarketingoveremail.TheFederalTradeCommissionActregulatesall formsofadvertising,includingonlineadvertising,andstatesthatadvertisingmustbe truthfulandnondeceptive.UsingitsauthorityunderSection5oftheFTCAct,which prohibitsunfairordeceptivepractices,theFTChasbroughtanumberofcasestoenforce thepromisesincorporateprivacystatements,includingpromisesaboutthesecurityof consumerspersonalinformation.Asresult,anycorporateprivacypolicyrelatedtoe commerceactivitymaybesubjecttoenforcementbytheFTC.

TheRyanHaightOnlinePharmacyConsumerProtectionActof2008,whichcame intolawin2008,amendstheControlledSubstancesActtoaddressonlinepharmacies.

VII.Forms
Contemporaryelectroniccommerceinvolveseverythingfromordering"digital"contentfor immediateonlineconsumption,toorderingconventionalgoodsandservices,to"meta" servicestofacilitateothertypesofelectroniccommerce.

Ontheconsumerlevel,electroniccommerceismostlyconductedontheWorldWideWeb. Anindividualcangoonlinetopurchaseanythingfrombooksorgroceries,toexpensive itemslikerealestate.Anotherexamplewouldbeonlinebanking,i.e.onlinebillpayments, buyingstocks,transferringfundsfromoneaccounttoanother,andinitiatingwirepayment toanothercountry.Alloftheseactivitiescanbedonewithafewstrokesofthekeyboard.

Ontheinstitutionallevel,bigcorporationsandfinancialinstitutionsusetheinternetto exchangefinancialdatatofacilitatedomesticandinternationalbusiness.Dataintegrityand securityareveryhotandpressingissuesforelectroniccommercetoday.

IX.Impactonmarketsandretailers
Economistshavetheorisedthatecommerceoughttoleadtointensifiedprice competition,asitincreasesconsumers'abilitytogatherinformationaboutproductsand prices.ResearchbyfoureconomistsattheUniversityofChicagohasfoundthatthegrowth ofonlineshoppinghasalsoaffectedindustrystructureintwoareasthathaveseen significantgrowthinecommerce,bookshopsandtravelagencies.Generally,largerfirms havegrownattheexpenseofsmallerones,astheyareabletouseeconomiesofscaleand offerlowerprices.Theloneexceptiontothispatternhasbeentheverysmallestcategoryof bookseller,shopswithbetweenoneandfouremployees,whichappeartohavewithstood thetrend.