e-Commerce Guide
Electronic Commerce is exactly analogous to a marketplace on the Internet. Electronic Commerce (also referred to as EC, e-commerce eCommerce or ecommerce) consists primarily of the distributing, buying, selling, marketing and servicing of products or services over electronic systems such as the Internet and other computer networks. The information technology industry might see it as an electronic business application aimed at commercial transactions; in this context, it can involve electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. Electronic commerce typically uses electronic communications technology of the World Wide Web, at some point in the transaction's lifecycle, although of course electronic commerce frequently depends on computer technologies other than the World Wide Web, such as databases, and e-mail, and on other non-computer technologies, such as transportation for physical goods sold via e-commerce.
According to the October 2006 Forrester Research report entitled, "US eCommerce: Five-Year Forecast And Data Overview, "Nontravel online retail revenues will top the quarter-trillion-dollar mark by 2011. The driver of this growth? A segment of the most active Web shopping households that is approximately eigh million strong. This group of consumers is extremely comfortable with technology and values convenience above all else in the online retail experience. As retailers begin to wade through their copious data warehouses and understand the who, what, when, where, why, and how of this segment, they will benefit from targeting these customers."
History
The meaning of the term "electronic commerce" has changed over the last 30 years. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), where both were introduced in the late 1970s, for example, to send commercial documents like purchase orders or invoices electronically.
The 'electronic' or 'e' in e-commerce refers to the technology/systems; the 'commerce' refers to be traditional business models. E-commerce is the complete set of processes that support commercial business activities on a network. In the 1970s and 1980s, this would also have involved information analysis. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of e-commerce. However, from the 1990s onwards, this would include enterprise resource planning systems (ERP), data mining and data warehousing.
In the dot com era, it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web, usually with secure connections (HTTPS, a special server protocol that encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic payment services, like credit card payment authorizations.
Current Trends
Today, e-commerce encompasses a very wide range of business activities and processes, from e-banking to offshore manufacturing to e-logistics. The ever growing dependence of modern industries on electronically enabled business processes gave impetus to the growth and development of supporting systems, including backend systems, applications and middleware. Examples are broadband and fibre-optic networks, supply-chain management software, customer relationship management software, inventory control systems and financial accounting software.
Are You Ready To Go Online?
Companies that have decided on how to portray their business online must assess whether they have the most efficient information technology (IT) solutions to execute their online exporting programs. IT embodies a range of computer systems and software applications for managing a firm's web site, as well as personnel records, back end databases, etc. With more and more cyber attacks on government and corporate sites, companies should invest in security technologies to protect themselves and their customers from identify theft and denial of service.
An IT assessment should answer the following questions:
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What is the firm’s current IT usage? Is it at capacity? What are the plans for additional ITinvestment to upgrade existing systems?
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What business applications are best suited to move on line for B2B or B2C electronic?
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What does the cost/benefit analysis of all possible projects involving IT show?
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What are possible current and future security issues and what is the action plan for correcting problems?
Types of E-Commerce Web Sites
Electronic commerce offers much promise to U.S. firms interested in using the Internet as another vehicle for exporting. However, the marketing executive should be familiar with the steps necessary to make the firm's web site e-export capable. Many U.S. companies have a web site that fulfills one or more marketing functions tailored to their business specialties. These sites feature one or more of the following characteristics (Note: all of the sites given as examples below have been internationalized or have localized mirror sites to facilitate cross-border e-commerce):
Transactional Site
People who shop online are most familiar with this type of website. A transactional site may be an electronic storefront for a brick-and-mortar retailer or a catalog business, (e.g., Lands’ End) , or a manufacturer showroom for those wishing to sell directly to the public (e.g., Dell Computer). Transactional sites conduct full “end-to-end” transactions via the website, allowing customers to search for, order, and pay for products online as well as allowing them to contact the company for after-sales service. The most sophisticated sites create efficiencies by integrating the transaction process with back-office systems such as accounting, inventory, sales and others (e.g., Amazon ).
Information Delivery Site
This site generates sales by promoting corporate awareness rather than facilitating online transactions. Its function is similar to a brochure, providing information about the product or service and contact information on how to proceed with a purchase. Because this site is often static and doesn’t require the software systems necessary for online transactions, it is less expensive to design and maintain than the transactional site. An information delivery site is ideal for companies that market products and services that cannot be provided online or goods that cannot be sold online (e.g. Ford, Caterpillar ).
A modified version of this site permits the buyer to shop online for the best price from competing vendors providing the identical product, e.g., authorized dealers of Honda America. Information on options available for a particular model allows the buyer to “visualize” the configuration and obtain an estimated price for the vehicle.
E-marketplaces
These sites are market-makers: they bring buyers and sellers together to facilitate transactions. Participation in a brokerage often provides an efficient way of finding a customer without the expense of building a proprietary transactional website. Types of brokerages include auctions (e.g. eBay ), virtual malls (www.virtualmall.com) and matching services (www.buyusa.gov).
