E-commerce is the use of electronic communication and digital information processing technology in business transactions to create, transform and redefine relationships for value creation between or among organisations and individuals.
It simply refers to the buying and selling of products, services and information via computer networks including internet.
E-commerce is concerned with system and business processes that support –
creation of information sources
movement of information over global networks
effective and efficient interaction among producers, consumers, intermediaries and seller
It utilizes electronic networks to implement daily economic activities such as pricing, payments, contracting, shipping and delivery.
Features of E commerce →
Ubiquity – It is everywhere i.e. e-commerce is not restricted to a physical place.
Global reach – It is possible to conduct business transactions worldwide.
Universal Standards – E-commerce makes use of Internet and World Wide Web to reach customers which has the same technical standards worldwide.
Richness – E-commerce provides rich content in form of interactive graphics, videos, animations etc.
Interactive –A two way communication between business and customers is possible.
Personalisation and customization – It allows for personalization and customization of products.
Information density – E-commerce technologies provide useful and quality information thereby reducing information costs.
Driving forces behind E commerce
The Major Driving forces behind the growth of E-commerce are
Global Customers – Presense of customers of a product worldwide.
Global Products – Demand for foriegn products by customers.
Global Operations – Development of Transnational and Multinational Corporations
Global Resources – Use of foreign raw material, labour, machines for production
Global Collaborations – Joint ventures, Mergers, Strategic Alliances
Global Competition – Race to capture market share in developing countries
Factors Affecting E-commerce –
Key drivers of e-commerce may be categorized in terms of 4 key business environment factors which influence the e-commerce industry. They are
1. Technological Factors –
State of telecommunication infrastructure
Access to new technological developments
Bandwidth availability and Internet rates
2. Political Factors –
Number and type of government initiatives to support use and development of modern technology
Discouraging rules and regulations of the government
Ability of the government to to adapt and plan for technological growth and development
3. Social Factors –
Literacy level of the people and penetration rate of PC`s
Number of internet users
Willingness and ability of the people to adopt new technology
4. Economic Factors –
Economic growth of the country
Average income of the people
Cost of Hardware and Software
Cost of access to telecom infrastructure
Commercial Structure and Innovative
Traditional Commerce Vs E-commerceTraditional CommerceE – CommerceRole of middleman add up to the overhead costIt is cost effective. Total overhead cost is comparative by lessLess convenient. Customer has to directly visit the outlet.Convenient due to online browsingBusiness has to incur a lot of expenses to expandEasy to expand the size of marketRole of middleman cut down the profitsHelps to increase the sales of the organisation and greater profits by cutting down costsPhysical inspection of goods is possibleDoes not allow physical inspection of goods while purchasingBusiness is opened for a limit time24/7 service is availableIt is suitable for perishable productsIt is not suitable for perishable goodsFace to face interaction between business and customer is possibleInteraction between the business and customer is through a computerIt involves manual processing of business transactions, therefore there are more chances of a clerical errorAutomated processing of business transactions to minimizes or eliminates human errorsIt takes a lot of time and money to introduce a new product and get proper feedbackIt is easy to introduce a new product on website and get immediate feed backLimited reachGlobal reach
Issues in implementing E CommerceMacro Environment Issues (external to an org.)Micro Environment Issues (internal or within) Poor Internet infrastructurePassive attitude of Top management towards use of new technology Poor Technology infrastructureInter-Operability of existing systems with mordern technologies Poor Commercial infrastructureLack of Skilled personnelPoor Security infrastructureLack of a Successful Business Model
Advantages of E commerce
Advantages to business –
Increased potential market share and global reach
It is easy to expand market with minimal capital outlay
It enables a business to procure material and services from other companies
It shortens or even eliminates marketing distribution channels, making products cheaper and vendor’s profit higher
It enables customization of products
Low cost advertising cost and entry barriers
It allows lower inventories and other cost savings like cost of creating, processing, distributing, storing and retrieving paper based information
No 24 hour time constraint
It is easier to launch a new product online
Advantages to Consumers –
It enables 24/7 access
It saves time, money and effort
It provides more choices i.e. wide range of products and services
Price and Product comparisons are available online
Improved buying experience and delivery processing
It provides a global market place
It enables personalization and customization of products and services
Customer enjoy benefits of a competitive environment
A typical E-Commerce Model – Marketing & ResearchOnline Surveys, Search Engines, Social Media, Private Browsers, Feedback forms, Planning and forecastingInformation ExchangeBanner Ads, Interactive Ads, Website, E-catalogueOrder PlacementOnline order processing, Browsing, Customized ordersPayment & Delivery Electronic payment system, online delivery, physical shipments and delivery processingCustomer ServiceE-CRM, Telephone support, FAQ sheets, Online support, Live chat, After sale service
Business Applications of E commerce – Real EstateOnline BankingE-TailingStock TradingE- ProcurementImport & ExportOnline diagnosis and TreatmentHotels & TourismOnline Education & TrainingAdvertising & Promotion
E-commerce Models –E-commerce ModelsExampleB2B – Business to BusinessOracle, Alibaba, QualcommB2C – Business to ConsumerIntel, Dell, SnapdealC2C – Consumer to ConsumerOLX, Quikr, Ebay
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