e-commerce

1. E-COMMERCE NOTES
Reference: Electronic Commerce - From Vision to Fulfilment, 3rdEdition, Elias M. Aw ad.
Chapter - 1 E-COMMERCE
Definition of E-commerce:
 Selling of goods and services on the retail level with anyone,anywhere via the internet.
 Includesnew business opportunities-greaterefficiency & more effective exchange of goods.
Advantages:
1. Lower cost to E-merchant:
 Reduces logistical problemsmanagement of flow of goods(origin to customer)
 Gives small business equalvisibility with giants like Amazon.com, etc.
 Transaction via internet (1 penny) is very cheap compared to bank ($1.10).
2. Economy:
 E-commerce is economic.
 No rental of physical store space,insurance or infrastructure investment.
 Requirements: an idea, a unique product & well designed Web storefront
3. Higher margin:
 E-commerce => higher margin.
 E.g.: processing ofconventional airline ticket-$8 while for e-ticket only $1.
 Also business gains more control & flexibility & saves time.
4. Better customer service
 E-commerce => better & quicker customer service.
 Customers can have direct access to their accounts overWeb=>they will become happy.
 Saves time, might not be cheap
5. Quick comparison shopping:
 E-commerce helps consumers to comparison shop.
 We can enter keywords like “lady’s dress for database search of web stores for the best
buys.
6. Productivity Gains:
 E-commerce => Productivity Gains
 Weaving web throughout an organisation => increase in Productivity
7. Team work:
 E-commerce => working together.
 E.g.: e-mailhow people communicate- exchange info. & work on solutions.
 Transformed way of interaction of organisation with the customers, suppliers, vendors and
business partners.
 More interaction => better results => higher payoff for the business.
8. Growth in knowledge market:
 E-commerce helps to create knowledge markets.
 Small groups in big firms are funded to develop new ideas.
9. Information sharing convenience and control:
 E-markets can improve info. sharing b/w merchants & customers & promote quick
deliveries.
 Merchants & customers save money.
 No traffic jams/crowds/carrying of heavy shopping bags.
 Control-another major driving factor.
 Customers can also access their bank accounts via web.
10. Customization
 Digital products are highly customizable.
 Easy to recognise, revise or edit.
 Products can be differentiated and matched according to individuals needs.
Issues and Constraints
1. Cost factor:
 To set up an e-commerce infrastructure we need cash.

2. E-COMMERCE NOTES
Reference: Electronic Commerce - From Vision to Fulfilment, 3rdEdition, Elias M. Aw ad.
 Beyond a website, we need n/ws, servers,terminals, s/w, staffing & training.
 Anotherissue: Increase in transaction costs due to new intermediaries like electronic malls.
2. Security factor:
 With spamming, spying, file corruption, and malicious misuse no company can afford to do
business online without protection via firewalls, specialized antivirus products,etc.
 Cyber-customers are afraid of credit card theft and identity theft.
 The goal of an online merchant is to assure customers secure lines and secure sites that protect
privacy.
3. System and data integrity:
 Data protection and integrity of the s/m that handles data is important.
 Viruses cause unnecessary delays,file backups, storage problems, etc.
 Hackers accessing files and corrupting accounts is also a serious issue.
4. System scalability:
 Website acts as an interface b/w business and customers.
 By statistical analysis,it is confirmed whether the customers are 1-time or recurring.
 If the company is crowded with customers beyond their expectation, website performance
may experience degradation, slowdown and eventually loss of customers.
 So, a Website must be scalable/ upgradable.
5. E-commerce is not free:
 E-commerce has favoured large business with deep pockets and smart funding.
 Small retailers won’t be able to compete with e-commerce giants on price or product offering.
 E.g.: Brand loyalty.
 Brands are expected to lower search costs,build trust and communicate quality.
 Users remain suspicious ofsearch engines for locating product info. instead of purchasing
dot.com brands.
6. Fulfilment and customer related problems:
 Shipping delays,merchandise mix-ups and website crashing.
 Delivery of products during heavy shopping seasons.
 Customers may lose confidence in e-commerce.
 Customer relations management (CRM) => taking measures to fulfil customer needs.
 Recently “click’n brick” business is at demand.
7. Products people resistbuying online:
 For some products people like to “road-test” the product before making a purchase.
 E.g.: sofa road test-to sit on it, feel texture of the fabric, etc=> not possible via online shopping.
 A combination of traditional & e-commerce strategies is ideal in situations when a business
process involves a commodity requiring personal inspection.
 E.g.: Sony 52”TV ->1st visit a retailerthen buy online.
8. Cultural, Language and Trust Issues:
 When e-commerce & internet went global, there was a pressure to adopt e-marketing, e-
products and interfaces to cultural expectations and constraints.
 Culture set of norms and innate values of a community, a society,or a region.
 E.g.: eastern European countries bouquet-odd no.of flowers
N. Americadozen of roseseven
 A firm launching a business in a new country must be aware of the culture as well as the
language of the culture.
 Trust is anotherissue that needs to be addressed.
 Internet unreliable environment with a great no. of users.
9. Corporate vulnerability:
 The availability of product details, catalogs and other info. about a business through its
Website makes it vulnerable to access by the competition.
 Web farming: idea of extracting business intelligence from competition’s Web pages.
10. Lack of a blueprint for handling e-commerce:
 A continuing shortage of e-literate people in the workplace.
 Tough time to attract people .
11. High-risk of Internet Startup:
 Most Internet startups fail because of,
- Lack of sound business strategy,

3. E-COMMERCE NOTES
Reference: Electronic Commerce - From Vision to Fulfilment, 3rdEdition, Elias M. Aw ad.
- Disproportionate investment of time and resources,
- Inappropriate merchandise