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E-Commerce


INTRODUCTION

Electronic commerce (E-commerce) is buzzword. Everybody is eager to know about it and wants to explore its ‘e’. In today’s e-world, e-peoples are using several other terms for e-commerce, for example 'electronic trading', 'electronic procurement', 'electronic purchasing' or 'electronic marketing', and others group of e-people are using broader terms such as 'electronic business'. Several definitions of e-commerce can be found today, some people believe that e-commerce is "The conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools", other believes that e-commerce is "The enablement of a business vision supported by advanced information technology to improve efficiency and effectiveness within the trading process". Simply the e-commerce is the name given to the business process of selling products, goods, and services over the Web and allows its company's catalog to be hosted on a Web server so that customers can visit their site, see what they are selling and then place orders. The majority of e-commerce sites ask customers / consumers to pay for the item / product using a credit card, and for that purpose they present forms that can safely and securely capture credit card information and perform automatic credit card authorization without human intervention.

 

 

  

Any business can have an e-commerce strategy. E-commerce strategy is purely depending on investments. A large e-commerce company for example can afford to buy a TV commercial; on the other hand a small e-commerce company for example can only be able to buy advertisement in the local papers only.
There are two ways to recognize the e-commerce today. One is Business to Consumer (B-to-C). http://www.amzon.com/ and http://www.marthastewart.com/ are the best example of B-to-C implementation. In case of B-to-C there is a direct connection between suppliers (business vendors) and the consumer. Consumer / customer can buy any product from supplier (business vendor) by paying electronically. This procedure commonly known as ‘shopping online’. B-to-C transactions are deemed OK when a valid credit card number is presented, and the majority of the time prices are fixed and non-negotiable. Amazon.com is famous for bringing the concepts of e-commerce in the mainstream. It optimizes e-commerce success and is one of the most famous retailers in the world. Other way to recognize the e-commerce is Business to Business (B-to-B). In this case suppliers (business vendors) are directly connected with another supplier (business vendor). It is the process of selling items to another business. B-to-B e-commerce usually suggests that there is some form of negotiated relationship between supplier and company and it's mainly used for corporate procurement. Microsoft Market is an excellent example of B-to-B implementation. Microsoft Market is Microsoft's internal procurement system. All Microsoft employees are now able to visit the Microsoft Market site and browse a list of products from preferred suppliers and then order. Microsoft Market case study can be found at
(http://www.microsoft.com/dns/ecommerce/msmarket.htm).


E-Commerce or E-Business
Many people are not clear about these two terms. E-commerce refers only to the process of selling goods and services online. If any business receive an order via online store, but then it phone up the supplier to replenish and shout across the room to a colleague/worker to pack the item. That business is not e-business. On the other hand if any business receive the order and its site automatically e-mails the supplier with a replenishment order, and then print shipping and packing notes at office without manual exercise then the business is called e-business. Basically any business is the e-business when it using an Internet technologies in their majority of business operations. By definition electronic business is "The conduct of business with the assistance of telecommunications and telecommunications-based tools".


Business Models
Business model is a way of describing the separate procedures and processes that a business has. Two types of business models can be identified on is offline business model and other is online business model. Online business model is about analyzing existing business processes and altering them so that they make the most of online technologies.


Electronic Commerce Phases
To understand the whole procedure of e-commerce from visitors browsing to shipments, it is necessary to divide the whole procedure into phases and these phases will then be helpful to understand e-commerce more clearly. Figure-1, will be shown the whole e-commerce phases-cycle. The flat boxes show the customer's activities and oval shows business processes not performed by the customers. It is important to note that all of these steps are not necessarily required. So its time to analyze these phases one by one.


Marketing:
Marketing is nothing but the targeting the consumers. The general goal of marketing is to target potential buyers and fascinate them to give your site a whirl. Marketing is foundation of any business. In case of e-commerce nothing is new except the medium i.e. Internet, which is targeting the consumers differently instead of advertisement on TV or on Newspapers. One more important thing on Net is building a community. The goal is to provide an environment that will fascinate the site visitors and attract them, so that they can come back repeatedly and regularly. For example including discussion forums, polls, surveys, chat, etc. in their site. Figure-1 shows the Marketing is the first step and it is not part of the e-commerce phases-cycle. It is above the e-commerce phases-cycle, because as mentioned earlier e-commerce strategy (e.g. Marketing etc.) is purely depending on investments.


Customer / Visitor:
Imagine e-commerce without customer or visitor. Visitor is the backbone in the e-commerce phases-cycle. In this case visitor is cyber-surfer, who has decided to type a particular URL (e.g. i.e. our site) or click on a link to visit our Web site. Here we have to take care of two types of visitors. In case of B-to-B, a visitor is actually a another business who need to have various purchasing options, including credit card, purchase order, and / or credit account (not payment). The seller may need to provide a purchase order number to the buyer. These kinds of issues will be discussed on EDI (Electronic Data Interchange), which provides agreed upon data interchange standards for business. In tradition B-to-C case, the visitor is an individual who is going to pay with a credit card and have the item shipped to him/her home.

 

Figure-1

Web Site Visit:
When visitor click on the Web site the game begin. Once a business site is downloaded, a number of things can happen to begin building the e-commerce experience for a customer. For example we can immediately begin tracking and profiling this consumer and based on the information, we can begin to target products that the consumer may be interested in. This phase begin the e-commerce shopping process.


Product Browsing:
Visitor will browse through the products available for sell. Typically visitor will browse through departments and then product within those departments. Sometimes visitor will search for particular product in our site to verify the rates etc. Once a potential customer goes through this shopping experience, he/she may be attracted with products on special sale, promotions, related or upgraded products, etc.


Shopping Basket:
In a supper store people are moving around the store and buying things they needed for example tooth paste, soaps, shaving stuff etc. and putting all the things in a shopping tray or shopping basket. Similarly in online shopping visitor need to select product and put it into a shopping basket. Shopping basket is simply a list of products, the shopper has selected, the quantities, price, attributes (size, color etc.), and other information related to the potential order. Shopping basket often offer options to clear the basket, remove the basket item, update the quantities etc.


Checkout:
Once visitor finished his/her shopping, he/she will begin the checkout process. On the B-to-C side of thing, the consumer will typically enter in his shipping and billing address information. The shopper might also add in additional information for a gifts greeting, gift wrapping, and other information for additional services.


Tax and Shipping:
Once the Business site knows, where the product is going to be shipped and billed, it can execute tow important rule calculations for taxes and shipping. Taxes can be as easy as simply charging for a state-tax (e.g. in United States, each State has its own tax rate) if the person is living in the same state. Sipping can be as simple as charging a flat fee or as complicated as calculating charges specific to each product purchased and correlated to distance the product has to be shipped (e.g. shipment of product to other country).


Payment:
Once we have a subtotal for the product purchase, and tax and shipping are calculated, we are ready for the shopper to present payment. This option is different for B-to-B and B-to-C. In B-to-C the typical purchase is via a credit card. Or depending on the situation, sometimes invoice option may be available. In B-to-B e-commerce, all options need to be available including purchase orders. Online processing of credit card is over the Internet via services such as CyberCash and HP-Veriphone. When using online processing, the credit card data is securely transmitted over the net, and a response is sent back indicating whether the card cleared or not.


Receipt:
Once the order has been placed, we might want to return a receipt to the purchaser. The receipt might be a reprint of the order on the screen or a listing e-mailed to the purchaser.


Process Order:
In this process stage, visitor leaves the show and we hit the back end of the e-commerce equation. If we didn’t automatically process the credit card, then the first call to order, is to process the financial transaction. Actually speaking here the business-rules take over. Here if the business is e-business every thing will automatically performed, otherwise phone, fax, etc. can be used to process the order.


Fulfill Order:
Once we have a valid order, it needs to be fulfill. This is actually most important business process. Many different scenarios come into play depending on the type of business you are in. If you are a traditional retailer with storefronts, there may be an issue of having central inventory to fulfill form. And even though 90% of the transactions are electronic, there will be those customers who need to make phone call or send an e-mail to the business.


Shipment:
The last and very important stage is the shipment of the order to the customer. In this case it may include the FedEx shipping number etc for the customer to track their shipment.



Electronic Commerce Related Issues / Definitions
Electronic Catalogues: Refers to means whereby sellers can communicate their offerings to potential buyers.
Electronic Data Interchange (EDI): Refers to a particular family of standards for expressing the structured data that represent EC transactions; and 'electronic auctions' for a particular set of mechanisms for setting prices.
Electronic Publishing: Electronic commerce in digital goods and services that are intended for consumption by the human senses. It encompasses a range of formats, including text, structured data, image, both raster/bit-map and vector, moving image (animation and video), sound, and combinations of the above ('multi-media').
Electronic Services Delivery (ESD): Electronic commerce in services, i.e. the provision of services with the assistance of telecommunications and telecommunications-based tools.


The Marketspace:
The concept of 'marketspace' is used to distinguish the 'location' in which electronic commerce is conducted, from conventional, physical marketplaces.
Merchant Account: A merchant account is a commercial bank account established by contractual agreement between your business and the banks we represent. A merchant account enables your business to accept credit card payments from your customers.


Address Verification Service:
Address Verification Service, OR "AVS' is a service that is built into the authorization process to alert the merchant to potentially fraudulent transactions. The numerical portion of a consumer's street address as well as his/her zip code is sent along with the transaction data and is matched against the address that is registered with the consumer's credit card from their issuer's bank. A response code is sent back with a code that indicates a match, partial match or complete mismatch. This information is simply reported back to the merchant and does not, in and of itself, result in a transaction being declined. The merchant then has the option to contact the customer to confirm the correct address before deciding whether or not they want to ship any goods.

 


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