UNIT-I INTRODUCTION OF E-COMMERCE

INTRODUCTION
Internet has become an important medium for doing global business based on the state of the art technology. New standards and new facilities are constantly emerging and their proper understanding is essential for the success of an operation, and especially for those who are assigned a duty to select, establish, and maintain the necessary infrastructure. E-commerce is a general term that refers to the combination of all commercial transactions executed over electronic media. It means doing Business online typically via the web. It is also called E-business, E-tailing & I-commerce E-commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks including the internet.

DEFINITION OF E-COMMERCE FROM DIFFERENT PERSPECTIVE

1. Communications Perspective EC is the delivery of information, products/services, or payments over the telephone lines, computer networks or any other electronic means. 2. Business Process Perspective EC is the application of technology toward the automation of business transactions and work flow. 3. Service Perspective EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. 4. Online Perspective EC provides the capability of buying and selling products and information on the internet and other online services.

BENEFIT OF E-COMMERCE
Access new markets and extend service offerings to customers. Broaden current geographical parameters to operate globally Reduce the cost of marketing and promotion. Improve customer service Strengthen relationships with customers and suppliers Streamline business processes and administrative functions

SCOPE OF E-COMMERCE
Marketing, sales and sales promotion Pre-sales, subcontracts, supply Financing and insurance Commercial transactions: ordering, delivery, payment Product service and maintenance Co-operative product development Distributed co-operative working Use of public and private services Business-to-administrations (e.g. customs, etc) Transport and logistics Public procurement Automatic trading of digital goods Accounting Dispute resolution

FEW STEPS TO SET UP BUSINESS ON THE WEB

The first requirement is an online store or commerce enabled website where goods or services can be described. On-line payment like payment through credit cards Packing and shipping after confirmation of order Customer service support like complaint, returns Regular promotion because without successful promotion your on-line business will fail.

IMPACT OF ELECTRONIC COMMERCE

Availability of Product, Quality and Price Information. Reduced Information Search Cost for Buyers In multi layer distribution models, each intermediary facilitates the coordination of the product distribution but adds to the coordination cost. As the role of Intermediaries in the value chain is reduced in electronic commerceDisintermediation Disintermediation reduces the coordination costs

Lets have a look at the change /impact e-commerce has brought over a period of time.

Traditional distribution Partial disintermediation Total Disintermediation

Traditional Distribution Chain

Manufacturer

Wholesaler

Wholesaler

Wholesaler

Retailer

Retailer

Retailer

Consumer

Consumer

Consumer

Partial Disintermediation of Distribution Chain

Manufacturer

Retailer

Retailer

Retailer

Consumer

Consumer

Consumer

Total Disintermediation of Distribution Chain

Manufacturer

Consumer

Consumer

Consumer

FORCES BEHIND E-COMMERCE

The following changes in the world scenario have paved the way to e-commerce applications. 1.Mass production to mass customization Globalization,competition MoreDemand&mass customization. E.g. car industry in India- earlier there were only few car brands like Fiat to Premier Ambassador to Hindustan Motors. The motto was more & more brands in the global market and more competition from Maruti (800, Zen, Omni Etc.), Santro, Fiat Uno have put these manufacturers in a back seat. Each company has many models and variants (a/c, non- a/c, petrol/diesel & other service based)

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2. Earlier, labour performed repetitive tasks now labour applies knowledge. System does not get lethargic & does not suffer from fatigue. 3. Vertical organizations to Horizontal or Matrix Organizations Knowledge oriented person cannot be set into barriers of hierarchical structure. So the knowledge-intensive business and organizations encourages free flow of strategic information up & down the hierarchy, openness & improved interconnection and relationship between employees or internal customers as well as external customers.

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4. Business was capital intensive, now it is knowledge intensive. 5. Heavy dependency on a systems & networks- This is due to state-of-art technologies at hand which are easy to handle & re-engineer. 6. Earlier businesses were product based but now product and services based. 7. Past: Physical Organization, Now: Virtual organizations

E-COMMERCE INDUSTRY FRAMEWORK

E-commerce applications are based on existing infrastructure of technology like computers, communication networks and communication software. E-commerce application is not possible without technology infrastructure. E-commerce application like supply chain management, remote banking, purchasing online marketing and advertising, home shopping, all are based on common business services infrastructure like security, authentication, electronic payment, catalogues etc. Message and information distribution is also essential part of E-Commerce framework. Ultimately, all E-commerce application flow through telecom cable, wireless and internet. The pillar of E-commerce framework is technical standards. We cannot imagine E-commerce revolution without technical framework.

BRIEF- HISTORY OF E-COMMERCE

There have been several key steps in the history of ecommerce. The first step came from the development of the Electronic Data Interchange (EDI). EDI is a set of standards developed in the 1960s to exchange business information and do electronic transactions. At first there was several different EDI formats that business could use, so companies still might not be able to interact with each other. However, in 1984 the ASC X 12 standards became stable and reliable in transferring large amounts of transactions. The next major step occurred in 1992 when the Mosaic web-browser was made available; it was the first point and click browser.

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The Mosaic browser was quickly adapted into a downloadable browser, Netscape, which allowed easier access to electronic commerce .The development of DSL was another key moment in the development to of e-commerce. DSL (Digital subscriber line) allowed quicker access and a persistent connection to the Internet. Christmas of 1998 was another major step in the development of e-commerce. AOL had sales of 1.2 billion over the 10 week holiday season from online sales. The development of Red Hat Linux was also another major step in electronic commerce growth. Linux gave users another choice in a platform other then Windows that was reliable and opensource. Microsoft faced with this competition needed to invest more in many things including electronic commerce.

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Napster was an online application used to share music files for free. This application was yet another major step in ecommerce. Many consumers used the site and were dictating what they wanted from the industry A major merger, in early 2000, between AOL and Time Warner was another major push for electronic commerce. The merger, worth $350 million, brought together a major online company with a traditional company In February 2000 hackers attacked some major players of e-commerce, including Yahoo, eBay and Amazon. In light of these attacks the need for improved security came to the forefront in the development of electronic commerce

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Expectations of higher prices as well as larger profits for ecommerce business are also present. Also, we will see a larger presence by experienced traditional companies, such as WalMart, on the Internet. It is believed companies in general will take this mixed strategy of having stores online and offline in order to be successful. It can be seen that there will be a large growth in Business-to-Consumer (B2C) e-commerce, which online businesses is selling to individuals. However, even though B2C electronic commerce may be the most recognizable there are different varieties.

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Today the largest electronic commerce is Business-to-Business (B2B). Businesses involved in B2B sell their goods to other businesses. In 2001, this form of e-commerce had around $700 billion in transactions. Other varieties growing today include Consumer-to-Consumer (C2C) where consumers sell to each other, for example through auction sites. Peer-to-Peer (P2P) is another form of e-commerce that allows users to share resources and files directly.

BUSINESS MODELS/E-COMMERCE TYPES

There are a number of different types of ECommerce B2B - Business to Business B2C - Business to Consumer C2B - Consumer to Business B2E - Business to Employee C2C - Consumer to Consumer

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B2B - Business to Business

This is e-commerce between businesses. The exchange of products, services or information between businesses on the internet is B2B ecommerce. The two businesses pass information electronically to each other. B2B e-commerce currently makes up about 94% of all e-commerce transactions. Typically in the B2B environment, E-Commerce can be used in the following processes: Procurement Order fulfillment Managing trading-partner relationships.

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Some examples of B2B websites include company websites, product supply and procurement exchanges, specialized or vertical industry portals, brokering sites, information sites, and banking and financial sites that provide information for its business customers and employees. For Example, Seekandsource.com is a very large Indian cross industry marketplace that is ideal for business buying and selling to a wide cross-section of industries.B2B needs to have inbuilt processes to integrate sellers and buyers system for delivering maximum benefits to trading partners.

B2C - Business to Consumer

This is business-to-consumer e-commerce. It may be defined as any business selling its products or services to consumers over the internet for their own use.Amazon.com, the online bookseller that launched its site in 1995 to sell books and other products directly to consumer. In addition to online retailers, B2B has grown to include services such as online banking, travel services, online auctions, real estate, health services, insurance and other services. Retailers do not have to integrate with their customers system though they need to track their preferences to keep their loyalty to their sites so as ensure their repeat visits.

C2C - Consumer to Consumer

This is Consumer-to-Consumer e-commerce. A virtual marketplace on the Internet in the form of a website enables sellers and buyers to meet and exchange goods, including used goods, at negotiated prices in C2C.such a site is known as an auction site, and it started out like a garage sale. The most famous site is eBay.com which started the C2C revolution. Many similar companies in other countries have been acquired by eBay. For example in India the auction site Bazee.com has recently been taken over by eBay.

C2B - Consumer to Business

Consumer to Business is a growing arena where the consumer requests a specific service from the business. Example: Harry is planning a holiday in Darwin. He requires a flight in the first week of December and is only willing to pay$250. Harry places a submission with in a web based C2B facility. Dodgy Brothers Airways accesses the facility and sees Harrys submission. Due to it being a slow period, the airline offers Harry a return fare for $250.

B2E - Business to Employee

Business to Employee e-commerce is growing in use. This form of e-commerce is more commonly known as an Intranet. An intranet is a web site developed to provide employees of an organization with information. The intranet is usually access through the organizations network, it can and is often extended to an Entrant which uses the Internet but restricts uses by sign on and password.

COMPARE AND CONTRAST B/W B2C & B2B

Some of the most significant differences between B2C and B2B include: - B2C has spot sourcing contract management that offers a flat retail rate for each item sold - B2B transactions entails direct-sourcing contract management which involves negotiating terms that establish prices and various other factors. This may include volume-based pricing, warranty coverage, carrier and logistics preferences. - B2C does not call for a business to spend money on a costly and extensive infrastructure. - B2B generally requires a tremendous upfront investment on security mechanisms and integrating the systems of the business as well as its partners, often resulting in an expensive, time consuming process.

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- B2C often involves user defined profiles and traditional online marketing strategies. - B2B e-commerce requires a number of complex processes such as studying order history data, understanding the preferences of trading partners, dealing with third-party payment records and other strenuous matters. - B2C e-commerce requires that businesses update their websites on a regular basis to reflect new products, discounts and prices. - B2B involves the integration of a variety of catalogs from different suppliers. The products in these catalogs must be properly formatted, priced and delivered to potential buyers in a consolidation manner. Such processes generally call for highly efficient business systems and advance analytic software.

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- B2C results in more seamless transactions as options such as cyber-cash allows the business to accept a wider variety of payment options - B2B generally deals with back-office connectivity and invoicing a number of different partners and suppliers. These are just a sampling of the many differences between B2B and B2C. Although B2B has its fair share of disadvantages, it does offer the benefit of good supply chain coordination. In addition, there are numerous third-party companies that offer products and services that can help B2B transactions run efficiently.

E-COMMERCE ARCHITECTURE
Business logic is "a requirement on the condition or manipulation of data expressed in terms of the business enterprise or application domain" and a business policy specifies the rules and conditions on when and where the business logic should be executed .The business logics and policies form the business processes which organizations specify how they run their business Currently, most e-commerce applications adapt three- tier architecture. The three-tier architecture has higher maintainability than the traditional one-tier or two-tier architectures because the components are well separated and the interface between components is well-defined.

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E-commerce systems, the three-tier architecture has many advantages over the one-tier and two-tier architectures in various ways. The separation of layers between user interface, business logic and database not only distinguish the functionalities between components but also provide additional information including the business data and the explicitly defined interfaces that used by business logics to communicate to the database.

Figure 1 One-Tier, Two-Tier and Three-Tier Software Architectures

Client (User Interface) User Interface

User Interface, Business Logic & Database

Server (Business Logic & Database)

Business Logic Layer

Database Management System

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In the three-tier architecture, user interface, business logic and database management are differentiated, as opposed to the mixture of functionalities in the one and two-tier architectures (Figure1)Three-tier architecture provides numerous advantages over one-tier and two-tier architectures for reverse engineering and design recovery. In one and two-tier architectures, the source code entities implementing different components are interweaved with each other. It is therefore very difficult to separate the business logic components from others because of the absence of the clear partition. In three-tier architecture, the business logic and business policy components are implemented in a separate layer (the middle layer) and communicate with the user interface (UI) and the database management systems (DBMS) via external APIs.

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This explicit division between different functionalities not only partitions business data, policy and logics code in the source code but also clearly points out the communication of the business data and the corresponding fetch/update operations (such as J2EE EJB and embedded SQL) to the DBMS. The three-tier architecture defines explicit interfaces to the DBMS and indicates the input and output data for the business logics.

E-COMMERCE- ESSENTIAL TIPS

Whether you run a small or large online business, the same basic rule applies: keep your visitors happy. After all, if you dont, your competitors surely will. Its a jungle out there, but these tips should go a long way in helping you achieve success with your e-commerce venture. 1.) Engage Your Audience There are a number of features you can incorporate to encourage interaction amongst your visitors. On todays highly advanced internet, interactivity is key. Combine this with original, quality content and you could have an e-commerce site that keeps your audience tuned in. This is how to convert repeat visitor into long-term customers.

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2.) Make Purchasing Simple This should go without saying, but the large number of failed e-commerce sites leads us to believe otherwise. Most internet users could do without the lengthy sales pitches, technical jargon, and all the bells and whistles that make it difficult to uncover hidden order pages. After all this time, many online merchants still fail to cut to the chase and give their customers the options that make them feel comfortable making a purchase. If want to drive home sales, get to the point, and do it quickly. 3.) Open the Doors to Communication When doing business online, you should make your contact information easily accessible. This includes email addresses, business addresses, tollfree phone numbers and fax number. By doing so, you are demonstrating the credibility that will instill the confidence consumers need to feel to do business. Potential customers will know that you are there to address their questions or concerns and by making various options available, you can target a larger market and their preferred communications channels.

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4.) Post Information in Fulfillment and Return Policies Before purchasing something online, most customers want to know how much an item costs, how it will get to them and when it will get to them. Most importantly, they want to know that they are covered if the item should be defective or damaged during transit. While publishing this information will not sell your products or services, if do not include these details, there is a great chance that you will end up losing sales. 5.) Travel the Low Road Surviving in the realm of online business requires detailed planning and sound budgeting. Therefore, it is important to consider all your low-cost budgeting endeavors before throwing money into most costly campaigns. There is a lot you can do, including networking, building strong partnerships and designing a website that is optimized for search engine traffic. Spend a little time researching some cost-effective avenues to promote your site and you will have a much better chance of coming out with your bottom line intact in the long run.

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6) Price for Profits Unreasonably low prices are great if youre in the non-profit business, but not when you are trying to generate steady revenues and brand loyalty. There are many ways to keep your customers around without sacrificing profits. It is up to you to determine how to achieve this while keeping a competitive edge and making profits in the process. 7) Others Specialize in on-line marketing. Exploit one product or idea to its fullest. Always make sure that your web-site is completely finished, spell checked, online and working properly before attempting to get indexed. People understand simple language. You must explain what you have to offer in simple terms and make ordering very easy. Take time to design an attractive site, but remember that in E-commerce the cosmetic aspects of your site are less important than the message(s) delivered through its content