Electronic Commerce

E-commerce e-Commerce is a general concept covering any form of business transaction or information exchange executed using information technologies. E-commerce can take place between companies, between companies and their customers or between companies and public administration. e-Commerce includes electronic trading of goods, services.

Classification of EC field by nature of transaction Business to business transaction(B2B): Most EC today is of this type. It include IOS (Inter Organizational Information System) transaction and electronic market transaction between organization. Business to consumer (B2C): These are retailing transaction with individual shoppers. Consumer to consumer ( C2C): In this category consumer sells directly to consumer.e.g. selling residential property, cars etc.

Benefits of EC Benefits to organization: electronic commerce expand the marketplace to national and international markets. With minimum capital outlay, a company can easily and quickly locate more customers, best suppliers and most suitable business partners worldwide. EC decrease the cost of creating, processing, distributing, storing and retrieving paper based information. EC reduce the time between receipt of products and services.

Benefits to consumers EC enable customers to shop or do transaction 24 hours a day, all year round from almost any location. EC provide customers with more choice they can select from many vendors and from more products. EC provide customers with less expensive products and services by allowing them to shop in many places and conduct quick comparison. In some cases such as digitized product EC provides quick delivery. Customers can receive relevant and detailed information in seconds rather than day or weeks. EC possible to participate in virtual auctions.

Benefits to society EC enable more individuals to work at home and to do less traveling for shopping, it result less traffic on roads and lower air pollution. EC enable people in rural areas to enjoy products and services that otherwise not available to them. EC facilitate delivery of public services such as health care, education.

Limitation of EC Technical limitation: Lack of system security, reliability, standard and some communication protocol. The software development tools are still evolving and changing rapidly. Vendor may needs special web server and other infrastructure in addition to network server. Some EC software not fit with some hardware or may be incompatibles with some OS.

Non technical limitation: Cost and justification: the cost of developing EC can be very high. Security and privacy: These issues are especially important in b2C area. EC industry has a long and difficult task of convincing customers that online transaction and privacy are secure. Lack of trust and user resistance: customer does not trust an unknown seller, paperless transaction and electronic money. so switching from physical to virtual stores may be difficult. Other limitation factors: Lack of touch and feel online. Some customers like to touch items such as clothes and like to know exactly what they are buying. EC as a discipline is still evolving and changing rapidly. Many people are looking for stable area before they enter into it. EC could result in a breakdown human relationship.

Categories of e-Commerce Electronic Market Electronic Data interchange

Electronic market An electronic market is an attempt to use information technologies to provide geographically dispersed traders with information necessary for the fair operation of the markets. electronic market can bring together product, price and service information from many or most suppliers of a particular class of goods or in specific trade sector. An electronic market is an information system that provides facilities for buyers and sellers to exchange information about price and products. The principle function of an electronic market is to facilitate the search for the required product or services.

An electronic market is the use of information technology to present a range of offering available in a market segment so that purchaser can compare the price ( and other attributes) of the products and make purchase decisions. Electronic market increase the efficiency of the market, it reduce the search cost for the buyers and make it more likely that buyers will continue the search until the ‘ best buy’ is found. E.g. Airline booking system. the primary use of electronic market is to locate an available seat, for the journey the customer wants to make, at a time that is convenient and a price that is acceptable. The electronic market then allow the deal to be executed an payment to be made.

Usage of electronic markets Airline booking system Financial market – to buy stocks and shares. Online travel agents that provide an interface for clients to access airline booking system. Online auction sites. Online bookshop to find the one with the lowest price for specific title.

Inter organizational Information system IOS involves information flow among two or more organizations. Its major objective is efficient transaction processing such as transmitting orders, bills, and payments using EDI or extranet. All relationship are predetermined there is no negotiation. In contrast electronic market seller and buyers negotiate, bid, agrees on order. IOS is a system encompassing several business partners. It include company and its suppliers or customers. Information is exchanged over communication network using prearranged formats, so there is no need for telephone calls, paper documents or business correspondence.

Distinctive feature of Inter organizational system and electronic markets Inter organizational systemElectronic market Customer/ supplier relationship is determined in advance and it will be ongoing relationship based on multiple transaction. customer/ seller linkage is established at time of transaction and may be for one transaction.

Inter organizational system may be built around private or public accessible network Electronic market are typically built around public network. Joint guideline and expectation of each party are formulated so each knows how the system is to be used and when transaction will be submitted and received by each business partner. No joint guideline are drawn in advance.

EDI EDI can be used to electronically transmit documents such as purchase order, invoices, shipping notice and other standard business correspondence between trading partners. EDI can also be used to transmit financial information and payments in electronic form. EDI is a way of substituting electronic transaction for paper ones. EDI provide a standardized system for trade transaction so that they can be communicated directly from one computer system to another without the need of printed orders and invoice and the delays and errors implicit in paper handling. It is used by organization that make regular transaction. Sector where EDI extensively used in supermarket chains which use EDI for transaction with their suppliers.

EDI is used in number of sectors for regular transactions. EDI system require EDI standards, EDI software, EDI network and trading community. Once data entered into the buyer’s computer system and transmitted electronically the same data get entered into the seller’s computer, without the need for reentry. this is referred as application to application EDI. Paper based business communication create number of problem they are: Increased time Low accuracy High labour cost EDI consists of standard electronic message format for common business documents such as request for quotation, purchase order, invoice etc.

Benefits of EDI The transfer of information from computer to computer is automatic, there is no need to re-entry information. Data is only entered at source. Customer service is improved. The quick transfer of business documents and marked decrease in error allow order to met faster. Information is managed more effectively. Business Relationship with trading partner can improved.

Components of EDI EDI standard EDI software Communication network

EDI standard EDI make business application on the computer of one organization to communicate directly with the business application on the computer of another organization. Exchange of information should be independent of hardware, software. It extract data from the business application and to transform it into standard format this standard data when received at destination is interpreted and automatically delivered to the recipient application in acceptable form. UCS ( Uniform Communication standard) for retail sector, TDI ( Trade data interchange ) for warehousing, ODETTE ( Organization for data exchange by Tele Transmission in Europe) for automobile industry, DISH ( Data Interchange for shipping). These standard are industry dependent. X12 committee of American National Standard Institute (ANSI) developed standard for all business.

Un / EDIFACT ( EDI for Administration, commerce and transport ) standard buy UN for international trade.

EDI Software EDI software consists of computer instruction that translate the information from unstructured, company specific format to the structured EDI format and then communicate the EDI message. EDI software also receive the message and translate from standard format to company specific format. Function of EDI software are data conversion, data formatting and message communication. Any file transfer protocol can be used to transport standard EDI message. X.400 Message Handling System ( MHS ). It store and forward message and generation of delivery reports. EDI software like any other software undergoes regular updates to provide new feature and capabilities as well as to make using it easier