Unit-1

E-COMMERCE
Definition The paperless exchange of business information using Electronic Interchange (EDI), Electronic mail (e-mail), computer bulletin boards, Electronic Funds Transfer(EFT), and other Internet applications, e-commerce provides ways to exchange information between individuals, companies, countries and, computers. Definition from different perspectives: 1. Communication perspective: E-Commerce is the delivery of Information, products/devices or payments via telephone lines, computer networks or any other means. 2. Business perspective: E-Commerce is the application of technology towards the automation of business transactions and workflows. 3. Service perspective: E-Commerce is the tool that addresses the drive of firms, consumers and management to cut service costs, improving quality of goods and increasing the speed of service delivery. 4. Online perspective: E-Commerce provides the capability of buying and selling products and information on the internet and other online services. Types of E-Commerce Three general classes of E-Commerce Applications: 1. Inter- organizational Electronic Commerce: a) Supplier Management b) Inventory Management c) Distributed Management d) Channel Management e) Payment Management 2. Intra- Organizational Electronic Commerce a) Workgroup Communication b) Electronic Publishing c) Sales Force Productivity 3. Customer to- Business Electronic Commerce a) Social Interaction b) Personal Finance Management c) Purchasing Products and Information Types of Electronic Commerce

Inter-organizational

Intra organizational

Customer -to -business

There are three distinct general classes of electronic commerce applications: 1) Inter-organizational(business-to-business) 2) Intra organizational(within business) 3) Customer to-business

1. Inter-organizational electronic commerce From the inter-organizational perspective, electronic commerce facilitates the following business applications: A) Supplier management: Electronic applications help companies reduce the no. of suppliers and facilitate business partnerships by reducing purchase order (PO) processing costs and cycle times, and by increasing number of Pos processed with fewer people. B) Inventory management: Electronic applications shorten the order-ship bill cycle. If the majority of a businesss partners are electronically linked, information once sent by fax or mail can now be instantly transmitted. C) Distributed management: Electronic applications facilitate the transmission of shipping documents and enable better resource management by ensuring that the documents themselves contain more accurate data. D) Channel management: Electronic applications quickly disseminate information about changing operational conditions to trading partners.

E) Payment management: Electronic applications link companies with suppliers and distributors so that payment can be sent and received electronically. Example: Wal-Mart

2. Intra-organizational electronic commerce The purpose of intra-organizational applications is to help a company maintain the relationships that are critical to delivering superior customer value. How is this accomplished? By paying close attention to integrating various functions in the organization. From this perspective intra-organizational electronic commerce facilitates the following business applications: A) Workgroup communications: These applications enable managers to communicate with employees using electronic mail, videoconferencing, and bulletin boards. B) Electronic publishing: These applications enable companies to organize, publish, and disseminate human resources manuals, product specifications, and meeting minutes using tools such as the World Wide Web. C) Sales force productivity: These applications improve the flow of information between the production and sales forces, and between the firms and customers. 3. Customer-to-Business Electronic Commerce In electronically facilitated customer-to-business, transactions, customers learn about products through electronic publishing, buy products with electronic cash

and other secure payment systems, and even have information goods delivered over the network. From the customers perspective, electronic commerce facilitates the following electronic transactions: A) Social interaction: Electronic applications enable customers to communicate with each other through electronic mail, videoconferencing, and new groups. B) Personal finance management: Electronic applications like Quicken enable consumers to manage investments and personal finances using online banking tools. C) Purchasing products and information: Electronic applications enable consumers to find online information about existing and new products/services. Benefits Of E-commerce 1. To Organization a) Expands the market place b) Decreases the cost c) Reduced Inventories d) Expansive Customization e) Reduces the Time f) Business Processes become easier to handle g) Lowers Telecommunication cost h) Improved Customer Service i) Compressed Business Cycle and delivery j) Eliminate paper k) Expediting access to Information l) Reduce Transportation Costs 2. To Consumers a) 24 hours availability b) More choices in service and product c) Selection of products according to the budget d) Quick delivery of products and services e) Receiving quick and detailed information f) Participation in Virtual Auction g) Interaction with other customers h) Feedback of the product and services 3. To Society a) Less traffic on roads and lower air pollution b) People can buy more and increase their standard of living

c) People around the world can enjoy products and services of any country d) Facilitates delivery of public services such as healthcare, education etc. e) Availability of services and product at a reduced cost and improved quality Limitations of E-Commerce 1. Technical Limitations: a) Lack of system security, reliability, standards and some communication protocols b) Difficulty in integrating Internet and EC software with some existing applications and databases. c) EC software might not fit with some Hardware 2. Non-Technical Limitations a) High Cost b) Security and privacy c) Lack of trust and user resistance d) Lack of touch and feel online e) Legal Issues are unresolved and governing regulations and standards are not refined enough f) Most applications are not have enough sellers and buyers g) Breakdown of Human Relationships h) Accessibility to customers is still expensive or inconvenient. Electronic Commerce Framework 1. E-commerce applications are built on the existing technology, infrastructure- computers, communication networks and communication software forming the Information Superhighway. 2. Building blocks in the Infrastructure are: a) Common Business Services: Facilitates the buying and selling process b) Messaging and Information Distribution: Means of sending and retrieving Information c) Multimedia Content and network publishing: For creating a product and a means to communicate about it. d) Information Superhighway: Foundation for providing the highway system along which e-commerce travels. e) Two pillars supporting E-Commerce Applications and Infrastructure are: i) Public Policy: Govern issues Universal access, privacy and Information pricing ii) Technical Standards: Dictate nature of Information publishing, user interfaces and transport