E-commerce

Electronic commerce, commonly known as e-commerce or eCommerce, consists

of the buying and selling of products or services over electronic systems such as
the Internet and other computer networks. The amount of trade conducted
electronically has grown dramatically since the spread of the Internet. A wide variety
of commerce is conducted in this way, spurring and drawing on innovations in
electronic funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic data interchange (EDI), automated inventory
management systems, and automated data collection systems. Modern electronic
commerce typically uses the World Wide Web at least at some point in the
transaction's lifecycle, although it can encompass a wider range of technologies such
as e-mail as well.
A small percentage of electronic commerce is conducted entirely electronically for
"virtual" items such as access to premium content on a website, but most electronic
commerce involves the transportation of physical items in some way. Online retailers
are sometimes known as e-tailers and online retail is known as e-tail.
E-commerce or electronic commerce is generally considered to be the sales aspect of
e-business.

History
Early development
The meaning of "electronic commerce" has changed over the last 30 years. Originally,
"electronic commerce" meant the facilitation of commercial transactions
electronically, using technology such as Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT). These were both introduced in the late 1970s,
allowing businesses to send commercial documents like purchase orders or invoices
electronically. The growth and acceptance of credit cards, automated teller machines
(ATM) and telephone banking in the 1980s were also forms of e-commerce. From the
1990s onwards, e-commerce would additionally include enterprise resource planning
systems (ERP), data mining and data warehousing.
Perhaps the earliest example of many-to-many electronic commerce in physical goods
was the Boston Computer Exchange, a marketplace for used computers launched in
1982. The first online information marketplace, including online consulting, was
likely the American Information Exchange, another pre-Internet online system
introduced in 1991.
Web development
When the Web first became well-known among the general public in 1994, many
journalists and pundits forecast that e-commerce would soon become a major
economic sector. However, it took about four years for security protocols (like
HTTPS) to become sufficiently developed and widely deployed. Subsequently,
between 1998 and 2000, a substantial number of businesses in the United States and
Western Europe developed rudimentary web sites.
In the dot com era, e-commerce came to include activities more precisely termed
"Web commerce" -- the purchase of goods and services over the World Wide Web,
usually with secure connections, with e-shopping carts and with electronic payment
services such as credit card payment authorizations.
Although a large number of "pure e-commerce" companies disappeared during the
dot-com collapse in 2000 and 2001, many "brick-and-mortar" retailers recognized that
such companies had identified valuable niche markets and began to add e-commerce
capabilities to their Web sites. For example, after the collapse of online grocer
Webvan, two traditional supermarket chains, Albertsons and Safeway, both started e-
commerce subsidiaries through which consumers could order groceries online.
The emergence of e-commerce also significantly lowered barriers to entry in the
selling of many types of goods; many small home-based proprietors are able to use
the internet to sell goods. Often, small sellers use online auction sites such as eBay, or
sell via large corporate websites like Amazon.com, in order to take advantage of the
exposure and setup convenience of such sites.
$259 billion of online sales including travel are expected in 2007 in USA, an 18%
increase from the previous year, as forecasted by the "State of Retailing Online 2007"
report from the National Retail Federation (NRF) and Shop.org.
Timeline
 1990: Tim Berners-Lee wrote "The Worldwide Web browser" using a NeXT
computer.
 1994: Netscape released the Navigator browser in October under the code
name Mozilla. Pizza Hut offered pizza ordering on its Web page. The first
online bank opened. Attempts to offer flower delivery and magazine
subscriptions online. "Adult" materials were also commercially available, as
were cars and bikes. Netscape 1.0 in late 1994 introduced SSL encryption that
made transactions secure.
 1995: Jeff Bezos launched Amazon.com and the first commercial 24 hr.
internet only radio stations "Radio HK" and Netradio started broadcasting.
Dell and Cisco began to aggressively use Internet for commercial transactions.
eBay was founded by computer programmer Pierre Omidyar as AuctionWeb.
 1998: Electronic postal stamps can be purchased and downloaded for printing
from the Web.
 1999: business.com was sold for US $7.5 million (purchased in 1997 for US
$150,000) the peer-to-peer file sharing software "Napster" was launched.
 2000: The dot-com bust.
 2003: Amazon.com: first-ever full-year profit.

Forms
Contemporary e-commerce involves everything from ordering "digital" content for
immediate online consumption, to ordering conventional goods and services, to
"meta" services to facilitate other types of e-commerce.

Types of e-commerce
Ecommerce can be broken into four main categories: B2B, B2C, C2B, and C2C.
B2B (Business-to-Business)
Companies doing business with each other such as manufacturers selling to
distributors and wholesalers selling to retailers. Pricing is based on quantity of order
and is often negotiable.
B2C (Business-to-Consumer)
Businesses selling to the general public typically through catalogs utilizing shopping
cart software. By dollar volume, B2B takes the prize, however B2C is really what the
average Joe has in mind with regards to ecommerce as a whole.
Having a hard time finding a book? Need to purchase a custom, high-end computer
system? How about a first class, all-inclusive trip to a tropical island? With the advent
ecommerce, all three things can be purchased literally in minutes without human
interaction. Oh how far we've come!
C2B (Consumer-to-Business)
A consumer posts his project with a set budget online and within hours companies
review the consumer's requirements and bid on the project. The consumer reviews the
bids and selects the company that will complete the project. Elance empowers
consumers around the world by providing the meeting ground and platform for such
transactions.
C2C (Consumer-to-Consumer)
There are many sites offering free classifieds, auctions, and forums where individuals
can buy and sell thanks to online payment systems like PayPal where people can send
and receive money online with ease. eBay's auction service is a great example of
where person-to-person transactions take place everyday since 1995.
Companies using internal networks to offer their employees products and services
online--not necessarily online on the Web--are engaging in B2E (Business-to-
Employee) ecommerce.
G2G (Government-to-Government), G2E (Government-to-Employee), G2B
(Government-to-Business), B2G (Business-to-Government), G2C (Government-to-
Citizen), C2G (Citizen-to-Government) are other forms of ecommerce that involve
transactions with the government--from procurement to filing taxes to business
registrations to renewing licenses. There are other categories of ecommerce out there,
but they tend to be superfluous.

Success factors
In many cases, an e-commerce company survives not only based on its product, but
through a competent management team, post-sales services, well-organized business
structure, network infrastructure and a secured, well-designed website. The factors
can be divided between technical or organization aspects and direct service to the
consumer.
Technical and organizational aspects
1. Sufficient work done in market research and analysis. Like traditional models,
e-commerce implicates good business planning and the fundamental laws of
supply and demand.
2. A good management team armed with information technology strategy. A
company's IT strategy can involve the business re-design process.
3. Providing an easy and secured way for customers to effect transactions. Credit
cards are the most popular means of sending payments on the internet,
accounting for 90% of online purchases. In the past, card numbers were
transferred securely between the customer and merchant through independent
payment gateways. Such independent payment gateways are still used by most
small and home businesses. Most merchants process credit card transactions
on site through arrangements made with commercial banks or credit cards
companies.
4. Providing reliability and security. Parallel servers, hardware redundancy, fail-
safe technology, information encryption, and firewalls can enhance this
requirement.
 5. Providing a 360-degree view of the customer relationship, defined as ensuring
that all employees, suppliers, and partners have a complete view, and the same
view, of the customer. However, customers can react against a big brother
experience.
6. Constructing a commercially sound business model.
7. Engineering an electronic value chain focused on a "limited" number of core
competencies. Electronic stores have succeeded as either specialist or
generalist in aim.
8. Operating on or near the cutting edge of technology and staying there as
technology changes.
9. Setting up an organization of sufficient alertness and agility to respond quickly
to any changes in the economic, social and physical environment.
10. Providing an attractive website. The tasteful use of color, graphics, animation,
photographs, fonts, and white-space percentage may aid success in this
respect.
11. Streamlining business processes, possibly through re-engineering and
information technologies.
12. Providing complete understanding of the products or services offered, which
not only includes complete product information, but also sound advisers and
selectors.
Other standard necessities include honesty about its product and its availability,
shipping reliably, and handling complaints promptly and effectively. A unique
property of the Internet environment is that individual customers have access to far
more information about the seller than they would find in a brick-and-mortar
situation. (Of course, customers can, and occasionally do, research a brick-and-mortar
store online before visiting it, so this distinction does not hold water in every case.)

Customer experience
A successful e-commerce organization must also provide an enjoyable and rewarding
experience to its customers. Many factors go into making this possible. Such factors
include:
1. Providing value to customers. Vendors can achieve this by offering a product
or product-line that attracts potential customers at a competitive price, as in
non-electronic commerce.
2. Providing service and performance. Offering a responsive, user-friendly
purchasing experience, just like a flesh-and-blood retailer, may go some way
to achieving these goals.
3. Providing an incentive for customers to buy and to return. Sales promotions to
this end can involve coupons, special offers, and discounts. Cross-linked
websites and advertising affiliate programs can also help.
4. Providing personal attention. Personalized web sites, purchase suggestions,
and personalized special offers may go some of the way to substituting for the
face-to-face human interaction found at a traditional point of sale.
5. Providing a sense of community. Chat rooms, discussion boards, soliciting
customer input and loyalty programs (sometimes called affinity programs) can
help in this respect.
6. Owning the customer's total experience. E-tailers foster this by treating any
contacts with a customer as part of a total experience, an experience that
becomes synonymous with the brand.
 7. Letting customers help themselves. Provision of a self-serve site, easy to use
without assistance, can help in this respect. This implies that all product
information is available, cross-sell information, advice for product
alternatives, and supplies & accessory selectors.
8. Helping customers do their job of consuming. E-tailers and online shopping
directories can provide such help through ample comparative information and
good search facilities. Provision of component information and safety-and-
health comments may assist e-tailers to define the customers' job.

Taxation
From the inception of the Internet until the late 1990s, the Internet was free of
regulation by government in the United States at all levels, and also free of any
specially targeted tax levies, duties, imposts, or license fees. By 1996, however, that
began to change, as several U.S. states and municipalities began to see Internet
services as a potential source of tax revenue.
The 1998 Internet Tax Freedom Act halted the expansion of direct taxation of the
Internet, grandfathering existing taxes in ten states. In the United States alone, some
30,000 taxing jurisdictions could otherwise have laid claim to taxes on a piece of the
Internet. The law, however, did not affect sales taxes applied to online purchases.
These continue to be taxed at varying rates depending on the jurisdiction, in the same
way that phone and mail orders are taxed.
The enactment of this legislation has coincided with the beginning of a period of
spectacular Internet growth. Its proponents argue that the benefits of knowledge,
trade, and communications that the Internet is bringing to more people in more ways
than ever before are worth the tax revenue losses, if any, and that the economic and
productivity growth attributable to the Internet may well have contributed more
revenues to various governments than would otherwise have been received.
Opponents, on the other hand, have argued that the Internet would continue to prosper
even if taxed, and that the current federal ban on Internet-specific levies denies
government at all levels a much-needed source of revenue.

BENEFITS
Basic Benefits of E-Commerce
 increase sales - this is the first thing that people consider when dealing with e-
commerce
 decreasing costs
 increase profits
 understanding that profits is not the same as sales
 expands the size of the market from regional to national or national to
international
 Contract the market
 reach a narrow market
 target market segmentation allows you to focus on a more 
select group of customers and therefore have competitive advantages in
satisfying them
o Decreasing costs
 costs of creating the product
 marketing of promotional material
  costs of distribution e.g. Netscape allowing you to download instead of
waiting to get the CD by mail
 costs of processing (orders from the customers)
 repeat activities and information processing of handling customer phone
calls of handling sales inquiries
 determine product availability (inventory management)
 costs of storing information
 lowers telecommunication costs
 Other Benefits....
 Pull-type processing
 enables customization of products
 allows for innovative business models
 allows for a high degree of specialization
 reduces the time exposure
 supports BPR - Business Process Reengineering
 increases productivity
 improves customer service (in some cases)
Benefits to organizations that use e-Commerce with their business partners-
manufacturers and service companies
o minimizes Supply Chain inefficiencies
 reduces inventories
 reduces delivery delays
 enables efficient e-procurement
o builds more collaborative and stronger relationships with suppliers. This
includes streamlining and automating the underlying business processes,
enabling areas such as
 direct marketing, 
 selling, 
 customer services, (call centers)
 fulfillment, 
 procurement,
 replenishment and information management. 
Benefits to consumers that use e-Commerce (e-Business) 
 can buy when you want, from more locations (internet connected terminals)
more choices
 when you have more choices you can decide on a product with better features
at a more competitive price
 sometimes products are less expensive online
 can receive more information about the product, make a more informed
decision
o greater information leads to more confidence to make a purchase
decision
o more info also leads to enhanced customer satisfaction because the
customers has a better idea how to use the product
  quicker delivery (for online products)
quick delivery is important for people who want to use the product
immediately, as opposed to waiting longer - if they have to wait long, they
may pick a competitor's product
Benefits to society 
(When consumers and business use e-Commerce) 
 cocooning - more individuals can work offsite
 This decreases HR costs for companies because they can have smaller
office buildings, less parking spaces, fewer IT services, etc.
 less affluent people can buy more and increase standard of living (questionable
 says WTGR)
 facilitates delivery of public services (Toronto water bills online now)
sending out bill payment info is a significant cost for companies

Limitations of e-Commerce (e-Business) 

- You should understand some of the limitations and be able to explain these to a
potential client because not everyone is convinced the internet will be a major way to
conduct business
- example TV has been around for a long time - but only a small percentage of all
companies advertise on TV!!
- Radio - some very successful companies, like Sleep Country Canada advertise on
radio
Technical Limitations
 costs of a technological solution
 some protocols are not standardized around the world
 reliability for certain processes
 insufficient telecommunications bandwidth
 Software tools are not fixed but constantly evolving (i.e. Netscape 3, 4, 4.7,
4.75 etc.)
 integrating digital and non-digital sales and production information
 access limitations of dial-up, cable, ISDN, wireless
 some vendors require certain software to show features on their pages, which
is not common in the standard browser used by the majority
 Difficulty in integrating e-Commerce infrastructure with current
organizational IT  systems 
Non technical Limitations
 customer fear of personal information being used wrongly
 privacy issues
 customer expectations unmet
 rules and regulations (i.e. Jan 2004 Bill C6 - new privacy law)
 security and privacy
 vulnerability to fraud and other crimes
 lack of trust and user resistance
 fear of payment information being unsecured
 tactile limitations
 Schneider, 3rd ed. added "many businesses face cultural and legal obstacles"
 legal issues outstanding such as jurisdiction
 legal environment has many new and conflicting laws
 cultural obstacles
 linguistic challenges
 limitations of support services
 financial cost
 sourcing tech support in foreign languages
 lack of critical mass in certain market areas for sellers and buyers
 accessibility outside of urban/suburban and areas effects universality 
 higher employee training required being click and mortar 
 people's resistance to change
 people not used to faceless / paperless / non-physical transactions

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