Information about Electronic 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 wide introduction of the Internet. A wide variety of commerce is conducted in this way, including things such as 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 eventually involves physical items and their transportation in at least some way.
E-commerce or electronic commerce is generally considered to be the sales aspect of e-business.
The 'electronic' or 'e' in e-commerce refers to the technology/systems; the 'commerce' refers to traditional business models. E-commerce is the complete set of processes that support commercial business activities on a network. In the 1970s and 1980s, this would also have involved information analysis. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of e-commerce. However, from the 1990s onwards, this would 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.
Today, it encompasses a very wide range of business activities and processes, from e-banking to offshore manufacturing to e-logistics. The ever growing dependence of modern industries on electronically enabled business processes gave impetus to the growth and development of supporting systems, including backend systems, applications and middleware. Examples are broadband and fibre-optic networks, supply-chain management software, customer relationship management software, inventory control systems and financial accounting software.
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; accordingly 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, a 18 percent increase from the previous year, as forecasted by the "State of Retailing Online 2007" report from the National Retail Federation (NRF) and Shop.org.[1]
Naturally, the e-commerce vendor must also perform such mundane tasks as being truthful 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.)
Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers such as use Drop shipping or Affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Examples include numerous sellers on eBay.
Virtual marketers can sell some non-digital products and services successfully. Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letterbox — such as music CDs, DVDs and books — are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot-com companies, has historically concentrated on this field.
Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.
Purchases of pornography and of other sex-related products and services fulfill the requirements of both virtuality (or if non-virtual, generally high-value) and potential embarrassment; unsurprisingly, provision of such services has become the most profitable segment of e-commerce.
There are also many disadvantages of e-commerce, one of the main ones is fraud. This is where your details (name, bank card number, age, national insurance number) are entered into what look to be a safe site but really it is not. These details can then be used to steal money from you and can be used to buy things on line that you are completely unaware of until it is too late. If this information is leaked into the wrong hands, people are able to steal your identity, and commit more fraud crimes under your name.
Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings — most notably clothing — and products where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S. Also, the recycling program Cheapcycle sells goods over the internet, but avoids the low value-to-weight ratio problem by creating different groups for various regions, so that shipping costs remain low.
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 eventually involves physical items and their transportation in at least some way.
E-commerce or electronic commerce is generally considered to be the sales aspect of e-business.
History
Early signification
The meaning of the term "electronic commerce" has changed over the last 30 years. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), where both were introduced in the late 1970s, for example, to send commercial documents like purchase orders or invoices electronically.The 'electronic' or 'e' in e-commerce refers to the technology/systems; the 'commerce' refers to traditional business models. E-commerce is the complete set of processes that support commercial business activities on a network. In the 1970s and 1980s, this would also have involved information analysis. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of e-commerce. However, from the 1990s onwards, this would 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.
Activities
In the dot com era, it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web, usually with secure connections (HTTPS, a special server protocol that encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic payment services, like credit card payment authorizations.Today, it encompasses a very wide range of business activities and processes, from e-banking to offshore manufacturing to e-logistics. The ever growing dependence of modern industries on electronically enabled business processes gave impetus to the growth and development of supporting systems, including backend systems, applications and middleware. Examples are broadband and fibre-optic networks, supply-chain management software, customer relationship management software, inventory control systems and financial accounting software.
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.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; accordingly 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, a 18 percent increase from the previous year, as forecasted by the "State of Retailing Online 2007" report from the National Retail Federation (NRF) and Shop.org.[1]
Success factors
In many cases, an e-commerce company will survive not only based on its product, but by having a competent management team, good post-sales services, well-organized business structure, network infrastructure and a secured, well-designed website. A company that wants to succeed will have to perform two things: Technical and organizational aspects and customer-oriented. Following factors will make business of companies succeed in e-commerce:Technical and organizational aspects
- Sufficient work done in market research and analysis. E-commerce is not exempt from good business planning and the fundamental laws of supply and demand. Business failure is as much a reality in e-commerce as in any other form of business.
- A good management team armed with information technology strategy. A company's IT strategy should be a part of the business re-design process.
- 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 today process credit card transactions on site through arrangements made with commercial banks or credit cards companies.
- Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement.
- 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 may not appreciate the big brother experience.
- Constructing a commercially sound business model.
- Engineering an electronic value chain in which one focuses on a "limited" number of core competencies -- the opposite of a one-stop shop. (Electronic stores can appear as either specialist or generalist if properly programmed.)
- Operating on or near the cutting edge of technology and staying there as technology changes (but remembering that the fundamentals of commerce remain indifferent to technology).
- Setting up an organization of sufficient alertness and agility to respond quickly to any changes in the economic, social and physical environment.
- Providing an attractive website. The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect.
- Streamlining business processes, possibly through re-engineering and information technologies.
- Providing complete understanding of the products or services offered, which not only includes complete product information, but also sound advisors and selectors.
Naturally, the e-commerce vendor must also perform such mundane tasks as being truthful 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:- 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.
- 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.
- 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.
- 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.
- Providing a sense of community. Chat rooms, discussion boards, soliciting customer input and loyalty programs (sometimes called affinity programs) can help in this respect.
- 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.
- 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, advise for product alternatives, and supplies & accessory selectors.
- 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.
Problems
Product suitability
Certain products or services appear more suitable for online sales; others remain more suitable for offline sales. While credit cards are currently the most popular means of paying for online goods and services, alternative online payments will account for 26% of e-commerce volume by 2009 according to Celent.[2]Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers such as use Drop shipping or Affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Examples include numerous sellers on eBay.
Virtual marketers can sell some non-digital products and services successfully. Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letterbox — such as music CDs, DVDs and books — are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot-com companies, has historically concentrated on this field.
Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.
Purchases of pornography and of other sex-related products and services fulfill the requirements of both virtuality (or if non-virtual, generally high-value) and potential embarrassment; unsurprisingly, provision of such services has become the most profitable segment of e-commerce.
There are also many disadvantages of e-commerce, one of the main ones is fraud. This is where your details (name, bank card number, age, national insurance number) are entered into what look to be a safe site but really it is not. These details can then be used to steal money from you and can be used to buy things on line that you are completely unaware of until it is too late. If this information is leaked into the wrong hands, people are able to steal your identity, and commit more fraud crimes under your name.
Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings — most notably clothing — and products where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S. Also, the recycling program Cheapcycle sells goods over the internet, but avoids the low value-to-weight ratio problem by creating different groups for various regions, so that shipping costs remain low.
Acceptance
Consumers have accepted the e-commerce business model less readily than its proponents originally expected. Even in product categories suitable for e-commerce, electronic shopping has developed only slowly. Several reasons might account for the slow uptake, including:- Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and credit card fraud.
- Lack of instant gratification with most e-purchases (non-digital purchases). Much of a consumer's reward for purchasing a product lies in the instant gratification of using and displaying that product. This reward does not exist when one's purchase does not arrive for days or weeks.
- The problem of access to web commerce, mainly for poor households and for developing countries. Low penetration rates of Internet access in some sectors greatly reduces the potential for e-commerce.
- The social aspect of shopping. Some people enjoy talking to sales staff, to other shoppers, or to their cohorts: this social reward side of retail therapy does not exist to the same extent in online shopping.
- Poorly designed, bug-infested e-Commerce web sites that frustrate online shoppers and drive them away.
- Inconsistent return policies among e-tailers or difficulties in exchange/return.
See also
References
- Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure. McGraw-Hill. ISBN 0-07-247875-6.e-Business%20and%20e-Commerce%20Infrastructure&rft.aulast=Chaudhury&rft.aufirst=Abijit&rft.date=2002&rft.pub=McGraw-Hill">
-
id="CITEREFFriedenRoche2006">Frieden, Jonathan D. & Sean Patrick Roche (2006-12-19), "E-Commerce: Legal Issues of the Online Retailer in Virginia", Richmond Journal of Law & Technology 13 (2), <[1]
- Kessler, M. (2003). More shoppers proceed to checkout online. Retrieved January 13, 2004
- Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want, Hardcover, The Penguin Press, 246 pages. ISBN 1-59420-077-7.
- Seybold, Pat (2001). Customers.com. Crown Business Books (Random House). ISBN 0-609-60772-3.
External links
The external links in this article or section may require cleanup to comply with Wikipedia's content policies.
Please [ improve this article] by removing excessive or inappropriate external links. Please remove this tag when this is done. (talk)- An early survey of electronic commerce from The Economist
- Practical eCommerce
- Ecommerce Times
- North American Consumer Project on Electronic Commerce (NACPEC)
- Internet Retailer News
Aspinwall Classification System (Leo Aspinwall, 1958) classifies and rates products based on five variables:- Replacement rate (How frequently is the product repurchased?)
- Gross margin (How much profit is obtained from each product?)
..... Click the link for more information.Service can refer to:- Public services, services carried out with the aim of providing a public good
- A penetrant, as defined by a building code
- Service (Systems Architecture), the provision of a discrete business or technology function within a systems environment; i.
..... Click the link for more information.as a college campus, industrial complex, or a military base. A CAN, may be considered a type of MAN (metropolitan area network), but is generally limited to an area that is smaller than a typical MAN.
..... Click the link for more information.Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically.
The term is used for a number of different concepts:
..... Click the link for more information.Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from
..... Click the link for more information.Internet marketing, also referred to as online marketing or Emarketing, is marketing that uses the Internet. The Internet has brought many unique benefits to marketing including low costs in distributing information and media to a global audience.
..... Click the link for more information.Online transaction processing, or OLTP, refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing.
..... Click the link for more information.This article needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article.
..... Click the link for more information.- For , see .
Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture/supply delay is
..... Click the link for more information.World Wide Web (commonly shortened to the Web) is a system of interlinked, hypertext documents accessed via the Internet. With a web browser, a user views web pages that may contain text, images, videos, and other multimedia and navigates between them using hyperlinks.
..... Click the link for more information.E-mail (short for electronic mail; often also abbreviated as e-mail, email or simply mail) is a store and forward method of composing, sending, storing, and receiving messages over electronic communication systems.
..... Click the link for more information.This article or section may contain original research or unverified claims.Please help Wikipedia by adding references. See the for details.
This article has been tagged since September 2007.
..... Click the link for more information.This article needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article.
..... Click the link for more information.Electronic funds transfer or EFT refers to the computer-based systems used to perform financial transactions electronically.
The term is used for a number of different concepts:
..... Click the link for more information.A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services that the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services.
..... Click the link for more information.An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities and agreed prices for products or services with which the seller has already provided the buyer.
..... Click the link for more information.
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction.
..... Click the link for more information.automated teller machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller.
..... Click the link for more information.worldwide view of the subject.Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone.
Please [ improve this article] or discuss the issue on the talk page.
..... Click the link for more information.Enterprise Resource Planning systems (ERPs) integrate (or attempt to integrate) all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration.
..... Click the link for more information.Data mining can be defined as "the nontrivial extraction of implicit, previously unknown, and potentially useful information from data".[1] Data mining may also be defined as "the science of extracting useful information from large data sets or databases".
..... Click the link for more information.A data warehouse is the main repository of an organization's historical data, its corporate memory. It contains the raw material for management's decision support system. The critical factor leading to the use of a data warehouse is that a data analyst can perform complex queries
..... Click the link for more information.Boston Computer Exchange was the world's first e-commerce company, and dominated electronic trading in used computers in the US in the 1980s. The Boston Computer Exchange, also called the BCE and BoCoEx
..... Click the link for more information.The "dot-com bubble" was a speculative bubble covering roughly 1995–2001 (with a climax in 2000) during which stock markets in Western nations saw their value increase rapidly from growth in the new Internet sector and related fields.
..... Click the link for more information.World Wide Web (commonly shortened to the Web) is a system of interlinked, hypertext documents accessed via the Internet. With a web browser, a user views web pages that may contain text, images, videos, and other multimedia and navigates between them using hyperlinks.
..... Click the link for more information.https is a URI scheme used to indicate a secure HTTP connection. It is syntactically identical to the http:// scheme normally used for accessing resources using HTTP.
..... Click the link for more information.protocol is a convention or standard that controls or enables the connection, communication, and data transfer between two computing endpoints. In its simplest form, a protocol can be defined as the rules governing the syntax, semantics, and synchronization of communication.
..... Click the link for more information.encryption is the process of transforming information (referred to as plaintext) to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key.
..... Click the link for more information.Shopping cart software is software used in e-commerce to assist people making purchases online, analogous to the American English term 'shopping cart'. In British English it is generally known as a shopping basket, almost exclusively shortened on websites to 'basket'.
..... Click the link for more information.
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction.
..... Click the link for more information.
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