DIHE MIS SIR

SHAHAB

FUNDAMENTALS OF ELECTRONIC COMMERCE

E-Commerce supports the complete seller to buyer relationship. It includes promoting and
communicating company and product info to a global user base, accepting orders and
payment for goods and services online, delivering S/W and info products online, providing
ongoing customer support, and engaging in online collaboration for new product
development.

Through e-commerce, we can do developing, marketing, selling, delivering, servicing, and

paying for products and services purchased by internetworked, global virtual communities
of customers, with the support of a worldwide network of business partners.
E-commerce systems rely on the resources of the internet, intranet and extranets and
other computer networks to support every step of this process. E.g.
e-commerce can include interactive marketing, ordering and payment processes on the
WWW,
extranet access of inventory databases by customers and suppliers,
intranet access of customer records by sales reps and customer service,
and involvement in product development via internet newsgroups and e-mail exchanges.

Foundations of E-Commerce:
The Internet, Inranets and Extranets provide vital E-Commerce links b/w the components
of a business and its customers, suppliers, and other business partners. This allows
companies to engage in three basic categories of E-Commerce applications such as :
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Internal Business Processes (IBP)

Business-to-Consumer Commerce (B2C):

In B2C, business must develop attractive electronic market places to entice (means Moah
Lena in urdu) and sell products and services to consumers. For example, companies may
offer multimedia Web sites that provide virtual storefronts, and virtual shopping malls,
interactive order processing, and secure electronic payment systems.

Retailing on the Web:

Web sites are created equal as far as “location” is concerned. No site is any closer to its
customers. To attract the customers following factors are important:
1) Performance and Service efficiency:
2) Personalization
3) Socialization
4) Look and Feel of the site
5) Incentives to purchase

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6) Security and Reliability

PERFORMANCE AND SERVICE EFFICIENCY:

A site must be efficiently designed to have an easy access, shopping with sufficient
server power and telecommunications capacity b/c the people don’t want to be kept
waiting when browsing, selecting or paying for products in an electronic store.

PERSONALIZATION:
It encourages you to make return visits. Many sites register you as a customer. Some
sites automatically record your visits and build similar user interest profile. On the next
visit to that site, you are welcomed and guided to your area of interest.

SOCIALIZATION:
Giving online customers with similar interests, a feeling of belonging to a unique group of
like-minded people, helps build customer loyalty and value. Example includes
discussion forums and chat rooms, product focus groups etc.

LOOK AND FEEL:

Web sites can offer you an attractive virtual storefront. For example, Oracle Software
lets shoppers browse product sections, select products, drop them into a virtual
shopping cart, and go to a virtual checkout stand to pay for the order.

INCENTIVES:
Web stores must offer
shoppers incentives to buy and return e.g. coupons, discounts, special offers etc. Some
sites provide you with an electronic wallet where you can accumulate coupons, receipts
and credit card info. for future use.

SECURITY AND RELIABILITY:

As a customer of a Web store, you must feel confident that your credit card, personal
info., and details of your transactions are secure from unauthorized use. Timely
execution of orders filled as you requested are important measures of a Web store’s
reliability.

Note: Amazon.com is an example of a company on the WWW that consistently

receives high marks for customer service.
Amazon is one of the biggest and best virtual bookstores on the web.

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The search engine for finding the books is quick and accurate. The ordering process is
easy and fast. Confirmation is quick, and notifications are accurate and friendly.
Delivery is prompt. Orders are carefully wrapped and accompanied by hand written
notes that explain any changes in the order.

Other few top rated retail Web sites are:

Autoweb Interactive www.autoweb.com
Aotoweb is an online resource for buying and selling new and used cars. It also has a
database of thousands of used cars across the country(USA).
Cdnow www.cdnow.com
It is the biggest music retailer on the web.
Barnes and Noble www.barnesandnoble.com
It is the largest chain of book superstores.

Etc.

Business-to-Business Applications:

This category of E-Commerce involves both

1) Electronic Business market places
2) Direct market links b/w businesses.

e.g. Many companies offer the business community a variety of marketing and product
info on WWW.

Others also rely on Electronic data Exchange (EDI) via the Internet or Extranet for direct
exchange of business transactions b/w computers with their business customers and
suppliers.
B2B e-commerce is the whole sale side of the commercial process. For example,
suppose a company wants to build and sell a product to other businesses. Then it must
buy raw materials and a variety of contracted services from other companies. The
interrelationships with other businesses needed to, build and sell a product, makeup a
network of business relationships, called supply chain.

 Supply Chain Management (SCM):

SCM is a Business Mgmt Process.

It is a mgmt concept which integrates the mgmt of supply chain processes.
The goal of SCM is to cut costs, increase profits, improve performance in
relationships with customers and suppliers, and develop value aided services that
give a company a competitive edge.
SCM has following three business objectives:
- Get the right product to the right place at the least cost.

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- Keep inventory as low as possible and still offer superior customer service.
- Reduce cycle times.

SCM simplify and accelerates operations e.g.

- How customer orders are processed and automatically filled through the
system
- How raw material are acquired and delivered for manufacturing
processes.
Components of SCM:
- Supplier Mgmt:
It uses e-commerce to reduce the no. of suppliers and get them to become
partners in business.
- Inventory Mgmt:
It uses e-commerce to shorten the order-ship-bill cycle and keep inventory
level to a minimum.
- Distribution Mgmt:
It uses EDI to move documents related to shipping, P.O., Advanced ship
notices etc.

- Channel Mgmt:
It uses E-mail. Bulletin board system, and news groups to quickly
disseminate information about changing operational conditions to trading
partners.

- Payment Mgmt:
It uses electronic funds transfer to link company and the systems suppliers
and distributors so that the payments can be sent and received
electronically

- Financial Mgmt:
It uses e-commerce systems to enable global companies to manage their
money in various foreign exchange accounts.

- Sales Force mgmt:

It uses sales force automation methods to improve the communication and
flow of info among the sales, customer service, and production functions.

 Electronic Data Interchange (EDI):

EDI is an E-Commerce System.
It involves the electronic exchange of business transaction documents over
computer networks b/w trading partners ( organizations and their customers and
suppliers).

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Data representing a variety of business transaction documents (e.g. P.O., invoices,
request for quotations, and shipping notices) are electronically exchanged b/w
computers using standard document msg formats.
EDI software is used to convert a company’s own document formats into
standardized EDI formats as specified by various industry and international
protocols.
EDI is an almost example of complete automation of an electronic commerce
process.

 Formateed transaction data are transmitted over network links directly b/w
computers, w/o paper documents or human intervention. Besides direct network
links b/w the computers of trading partners, third party services are widely used.
Value-aided telecommunications carriers like GE Info Services, IBM Advantis, and
Sterling Software offer a variety of EDI services.
For example, they provide electronic mailboxes for temporary storage of EDI
documents sent by a company’s business partners. Many of these EDI provider
are beginning to provide secure EDI services over the internet.

 EDI eliminates the printing, mailing, checking, and handling by employees of

numerous multiple-copy forms of business documents.

 Benefits of EDI:
Some of the benefits are
-Reductions in papers , -Postage, -Labor Costs, Faster flow of transactions,
-Reduction in Errors,
- Increase in productivity, -Support of Just-in-Time (JIT) inventory policies , and
-Reduction in Inventory levels.
For example, a study by RJR Nabisco determined that processing a paper P.O.
using their old system costs $70 which is dropped to less than a Dollar using EDI.

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