Electronic Business

Electronic Business OMT II Mam SaimaGul Overview/Introduction to E-Business/ E-Commerce

Introduction to Ecommerce • E-Commerce has different definitions: • The use of electronic transmission mediums(telecommunications) to engage in the exchange, including buying and selling, of products and services requiring transportation, either physically or digitally, from location to location. • From a business process perspective, ecommerce is the application of technology toward the automation of business transactions and workflows. • From an online perspective, ecommerce provides the capability of buying and selling products and information on the internet and other online services. • From a service perspective, ecommerce is a tool that addresses the desire of firms, consumers and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. • All of the above definitions are valid.

Difference between E-Business and E-Commerce • All e-commerce is part of e-business. Not all e-business is e-commerce. • If there is a direct financial transaction involved with the electronic process using Internet technologies it is e-commerce. If there is a non-financial transaction with an electronic process using Internet technologies it is e-business. Any transaction with an electronic process using Internet technologies is e-business. • For example, ordering a book on Amazon.com is e-commerce and e-business. Creating a map with directions from your home to the post office on Google maps is e-business (no e-commerce involved).

Potential Benefits of E-Commerce: • Following are some of the benefits that businesses gain from engaging in e-commerce. • Internet and web based electronic commerce can reach a more geographically dispersed customer base. • Cost of purchases can be lowered. • Reduction in inventories. • Better customer service. • Lower sales and marketing costs. • Many More

Benefits to Customers • Consumers also gain benefits from Internet e-commerce. Some benefits that consumers may expect to receive are: • Increased choice of vendors and products. • Convenience from shopping at home or office. • Greater amounts of information that can be accessed on demand. • More competitive prices and increased price comparison capabilities. • Greater customization in the delivery of services(e.g many online news services allow their customers to “design” the look of their daily newspaper).

Types of E-Ccommerce Business Consumers Business Consumers

Business to Business(B2B)/ Inter-organizational E-Commerce • In this case both the buyers and sellers are business organizations. E.g. one company sells raw material and another manufacturing company buys raw material for manufacturing products etc. • From B2B perspective, E-commerce facilitates the following business applications: • Supplier management: Electronic applications facilitate business partnerships by reducing purchase order processing costs and cycle times and by increasing the no. of purchase orders processed with fewer people.

Contd. • Inventory management: Electronic applications shorten the order-ship-bill cycle. If the majority of a business’s partners are electronically linked, information once sent by fax or mail can now be instantly transmitted. Businesses can also track their documents to ensure that they were received, thereby improving auditing capabilities. • Payment management: electronic applications link companies with suppliers and distributors so that payments can be sent and received electronically. Electronic payments reduces clerical error, increases the speed at which companies compute invoices and lower transaction fees and costs.

Business to Consumer(B2C)/Intra-organizational E-Commerce • It is called business to customer delivery. In this case the seller is a business organization whereas the buyer is a consumer. Typically electronic stores are setup on the internet to sell goods to the consumer. e.g. www.amazon.com • Intra-organizational e-commerce facilitates the following business applications: • Workgroup communications: These applications enable managers to communicate with employees using e-mail, videoconferencing and bulletin boards. The goal is to use technology to increase the dissemination of information, resulting in better informed employees.

Contd. • 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. Online publishing reduce costs for printing and distributing documentation, faster delivery f information and reduction of outdated information.

Consumer to Consumer(C2C)/ Intermediaries and E-Commerce • This refers to situation where both the sellers and buyers are consumers. An online auction sites provides an effective means for supporting C2C ecommerce. e.g. ebay.com, pakiauction.com • Intermediaries (or electronic brokers) are economic agents that stand between the parties of a contract (or transaction), namely buyers and sellers, and perform functions necessary to the fulfillment of a contract. Most firms in the financial service sector including banks, insurance companies, mutual funds and venture capital firms, are intermediaries. • E.g. a customer can order flowers through online intermediaries that divert the order to regular stores for delivery. The flowers are shipped directly to the buyer’s home.

Contd. • In more complex cases, intermediaries create software that allows customers to view and choose cars(products) by computer, eliminating time-consuming trips to the car lot. These programs then provide valuable data to the car companies’ manufacturing and inventory systems that actually control the production and distribution of the car. • The result is more efficient production and distribution and lower prices.

Consumer to Business(C2B) • This is a new form of ecommerce in which a consumer specifies the requirements to business, which provides a product that meet that requirements. e.g. www.priceline.com • In C2B transactions, customers learn about products through electronic publishing, buy products with e-cash and other secure payment systems and even have information goods delivered over the network.

Component Based Development of E-Commerce

Introduction • There are some basic components that all e-commerce sites include, such as product or service description pages, a shopping cart - so that buyers can select and keep items from your product list till they generate a purchase order or an invoice, a payment mechanism – so that buyers can pay for your products online or offline. • E-commerce is an online trading mechanism in which all the business activities are carried out exclusively on the internet through a secure and reliable web site. The ecommerce components are features that are very essential for the success of this mechanism of trade and business. E-commerce cannot survive and propagate without managing these critical components:

1. Website • Your online connection to your prospects and customers. There are a number of places on the web to get "free" websites - although you may be required to display an advertisement. The design of your site is critical to the success of your business! If it does not look like a professional, legitimate business - NO ONE WILL ORDER ANYTHING - no matter how great the products you have. If you are serious about doing business on the web, either learn html, java, cgi, etc., or hire a professional to design your site.

1. Website (Contd.) • The website is the critical component through which the online client interacts with the ecommerce. If the web site is built professionally and have an authenticated look more people are attracted to the ecommerce mechanism. However if the website is poorly designed, it would repel the clients from the ecommerce mechanism no matter how strong it is. Therefore it is very necessary that the website is designed exclusively with utmost importance given to the design and pattern of the web site designs.

2. Merchant Account • Getting a merchant account is also very necessary for ecommerce and consider as a critical components.A merchant account is the one through which all the cash transaction activities take place through ecommerce (which allows you to accept major credit cards, electronic checks, etc). It is therefore vital for ecommerce to get a merchant account before starting this mechanism. Failure to get a merchant account would result in failure to initiate an ecommerce business as the cash transaction process could not take place. • In order to process credit card orders and eChecks from Internet customers, you will need to select an affordable merchant account provider. You can obtain an Online Merchant Account either from your bank or from one of many merchant account services available on the Internet.

3. Payment Transaction Software • Software which actually processes customer order information, address, credit card number, etc. The data is sent to a credit card authorization network which verifies that the credit card is valid and verifies that the shipping address matches the billing address. A possible warning sign that the card has been stolen is that the billing and shipping addresses do not match.

4. Different Ordering Methods • The ultimate goal of your e-commerce site is to make sales. Many people still don’t feel comfortable to make payments through online transactions. You would be better off if you include ordering processes by fax, telephone and ordinary mail. In fact, to have a telephone number for customer support and order is a must for any e-commerce site as it gives buyers some extra feelings of security. That way they know that they can always talk to a live person if anything goes wrong.

5. Web Server/Secure Server Connection • The internet sever also plays a critical role for ecommerce. It is important that the ecommerce sites are affiliated with well known servers to ensure security. https:// - Link to a special computer which encrypts confidential ordering data for customer protection. If your website collects sensitive information from your customers, you should use security systems like SSL (Secure Socket Layer). This guarantees that the data provided by your customer will not fall into the hand of a malicious hacker while transferring from his computer to the web server. This also will reassure your customers that you are truly concerned about the security of their personal and sensitive information .

5. Web Server/Secure Server Connection (Contd.) • You know you are on a secure server when the URL in your browser says "https://". The "s" stands for "secure." If ordering information is not sent via a secure server it can be intercepted by computer hackers. • Security protocols and digital signatures are also critical components for ecommerce. These are encryption techniques to secure the ecommerce websites from hackers and virus attacks. Security protocols should be developed using the latest programming techniques to ensure maximum security.

6. Hosting Account • You will need an account from a web hosting provider and you will need to register a domain name for your business (such as www.adamssite.com). To ensure security of online transactions, your E-Commerce Hosting account must have SSL capability -- which is provided by SSL Certificates.

7. Shopping Cart • Shopping carts is one of the major critical components for ecommerce mechanism. These are specially designed software that allow online viewers to buy and purchase products on a website. If this component is carefully designed, then it helps in to bring more business to the ecommerce business. The shopping carts provide a user friendly interface which enable online customers to buy products without much difficulty. As with your website's files, any shopping cart program you select will need to be uploaded to your hosting account and installed there. A good Shopping Cart Program will have its own online administrative webpage that allows you to easily add / remove product offerings and update information & pricing on each product.

8. Product Information • Buyers take their decision whether to buy a product from your site or not depending on the information that you provide. That’s why the product should have a clear and high-quality picture, short and detailed specifications. If necessary add attachments of diagrams, sketches, video etc. along with the product specification. Write clearly and prominently all sales terms and after sales supports terms, etc. • If you have many products, it is better to use an industry standard classification system to categorize your products. The goal is to have all the information related to the product available on the website, so that the customer can take a positive buying decision instantly.

9. Guarantees • As money back guarantees are becoming increasingly common on online sales you should consider prominently posting your money back guarantee on your website. Be sure to make your money back guarantee generous! Customers are becoming pickier on this issue. For example, if you sell knowledge base products like e-books, reports etc. make your hundred percent guarantees at least of two months. For tangible products, after sales warrantees should be also considerably generous. Customers should feel completely secured to buy at your website.

10. Privacy Policy • Your website must have a privacy policy. Customers are very concerned about the information that they are relaying to you. You must clearly explain them what you plan to do with the various information that you collect from your customers.

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Electronic Business