E Commerce

Posted by : Unknown Monday, July 1, 2013

E-COMMERCE

INTRODUCTION:

Business/Commerce is an act where buyer and seller agree upon and make transactions each exchanging with some compensation.

E-Commerce is like a shop which is permanently open all the days in the year. This makes the Internet the ideal place to do Business in. Electronic commerce is much broader and encompasses many more business activities than just Web shopping. Some people and businesses use the term electronic business or e-business, when they are talking about electronic commerce in this broader sense.

In addition to buying or selling online, companies engage in many other activities that keep them in business. In many cases, sellers will customize or create a product to a customer's specifications. They must examine their needs, identify products that might meet those needs, and evaluate those products. Next, buyers must order the selected product, arrange for delivery, and pay for the product. In many cases, buyers have to maintain contact with the seller for warranty and other maintenance on the product. When you think broadly about commerce, you see that it can involve individuals, business companies, not-for-profit organizations, and governmental entities as both buyers and sellers.

HISTORY:

Electronic Commerce (or e-commerce) really began as Electronic Data Interchange (EDI), the application-to-application transfer of business documents between computers. Many companies use EDI to exchange business documents. EDI uses telephone lines as a fast, inexpensive, and safe method for sending purchase orders, invoices, shipping notices, and other frequently used business documents. It eliminates the need for sending paper documents via mail, faxes, or telexes. EDI is a major contributor to creating a paperless office environment.

Companies that exchange documents by EDI are called "trading partners". EDI requires that its trading partners evaluate business procedures and invest in and learn about special software and hardware, communications, standards, audit issues, and legal support necessities. EDI does require investment up front.

THE BUSINESS PROCESS:

The Buyer:

You can examine any commercial transaction from either the buyer's or the seller’s viewpoint. The elements of commerce in which a buyer will engage are shown.

The Seller:

Each action taken by a buyer engaging in commerce has a corresponding action that is taken by the seller. Shown are the elements of commerce from a seller's viewpoint.

TRADITIONAL Vs ELECTRONIC COMMERCE:

In many cases, business processes use traditional commerce activities very effectively, and these processes cannot be improved on by technology. Retail merchants have years of traditional commerce experience in creating store environments that help convinced customers to buy. This combination of store design, layout, and product display knowledge is called merchandising. Many salespeople have developed skills that allow them to identify customer needs and to find products or services that meet those needs. The arts of merchandising and personal selling can be difficult to practice over an electronic link.

Role of E-Commerce in Reducing Transaction Costs:

Businesses and individuals can use electronic commerce to reduce transaction costs by improving information flows and increasing coordination of actions to reduce uncertainty.

Consider an employment transaction. The agreement to employ a person has high transaction costs for the seller. Individuals make a high investment in learning and adapting to the culture of their employers. If the job involves a move, the new employee can incur very high costs, including actual costs of the move and related costs, such as the loss of a spouse's job. If a sufficient number of employees throughout the world can telecommute, or perform their job tasks from any location by using electronic commerce technologies, then many of these transaction costs can be eliminated.

Technology Overview:

HARDWARE SUPPORT (PACKET SWITCHING NETWORK):

Several technologies must be in place for electronic commerce to exist. The most obvious one is the Internet. Beyond that system of interconnected networks, many other sophisticated software and hardware components are needed to provide the required support structure: database software, network switches and hubs, encryption hardware and software, multimedia support, and, of course, the Web.

Although circuit switching works well for telephone calls, using the same technique for sending data across a large network or a network of networks does not work well. Establishing point-to-point connections for each pair of sender/receivers is both expensive and difficult to manage. The Internet employs a less expensive and more easily managed technique to move data between two points. This method is called packet switching. In a packet switching network, files and messages are broken down into packets that are labeled electronically with codes that indicate both their origin and destination. Packets travel from computer to computer along the network until they reach their destination. The destination computer collects the packets and reassembles the original data from the pieces in each packet. The diagram illustrates a packet-switched network. Computers performing this task are often called routers, and the programs that determine the best path to follow are called routing algorithms.

Software Support (The Markup Languages):

Of course, the most popular use of the Internet is the Web. Web pages number in the millions and this topic discusses how Web pages are constructed.

Historically, the term markup has described annotations and handwritten notes found on manuscript pages that tell a compositor or typist how a particular page should be laid out or typeset. A universally used set of copyedit symbols exists for marking up paper manuscripts. Similarly, electronic pages are marked with tags to govern the display and formatting of text elements.

Three markup languages are:

SGML (Standard Generalized Markup Language), the grandfather of the markup languages.

HTML (Hyper Text Markup Language), a derivative of SGML.

XML (Extensible Markup Language), the newest derivative of SGML.

SGML, HTML, and XML are the three most important markup languages:

SGML is the parent language from which both HTML and XML were derived. Each language has a unique purpose. SGML is a Meta language that is useful for defining an almost endless supply of markup languages.

HTML is particularly useful for displaying Web pages.

XML-currently the least visible language-defines data structures important for a wide range of data exchange activities, including electronic commerce.

Fire-Walls and Network Security

A fire-wall is defined as software or hardware that allows only those external users with specific characteristics to access a protected network. Typically a fire wall allows insiders to have full access to services on the outside while granting access from the outside on a selective basis, based on user names and passwords, internet IP address, or domain name. Fire-walls are an important consideration for those in the financial services industry.

PROS & CONS:

Merits:

Advertising can be done well on the Web.

The costs of handling sales inquiries, providing price quotes, and determining product availability can be reduced.

It increases purchasing opportunities for the buyer and seller.

Increases speed and accuracy with which businesses can exchange information.

Provides buyers with a wider range of choices and is available 24 hours a day, every day.

Provides buyers with an easy way to customize the level of detail in the information they obtain about a prospective purchase.

De-merits:

Many companies have had trouble recruiting and retaining employees with the technological, design, and business process skills needed to create an effective electronic commerce presence. The difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into the software that enables electronic commerce.

Many businesses face cultural and legal impediments to electronic commerce.

Some consumers are still fearful of sending their credit card numbers over the Internet.

Consumers are simply resistant to change and are uncomfortable viewing merchandise on a computer screen rather than in person.

CONCLUSION:

Most of the disadvantages of electronic commerce stem from the newness and the rapidly developing pace of the underlying technologies. These disadvantages will disappear as electronic commerce matures and becomes more available to and accepted by the general population and takes E-Commerce towards the winning post of a challenging journey.