Objectives:
After going through this unit, you will be able to:
∙ Discuss what is E-Commerce and the different models of E-Commerce
∙ Explain BPR & E-commerce
∙ Discuss the process of creation of E-Commerce sites.
Structure:
1.1 Overview of E-Commerce
1.2 Models of E-Commerce
1. Business - to - Business (B2B)
2. Business - to - Consumer (B2C)
3. Consumer - to - Consumer (C2C)
4. Consumer - to - Business (C2B)
5. Business - to - Government (B2G)
6. Government - to - Business (G2B)
7. Government - to - Citizen (G2C)
1.3 Scope of E-Commerce
1.4 Advantages and Disadvantages of E-commerce
1.5 Creation of E-Commerce sites
1.7 Summary
1.8 Keywords
1.1 INTRODUCTION
In general, people understand E-commerce as just shopping on internet. The technical term says trading on Internet but e-commerce has a much broader scope and encompasses many more business activities other than just web shopping. In E-commerce not only Internet is used but other media is equally have contribution to complete the processes on it.
A good definition of e-commerce would mention the use of electronic data transmission to implement or enhance any business process.
E-commerce is mainly associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network.
A more complete definition is: E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals.
Basically there are two types of Commerce:
1. Traditional Commerce
2. Electronic Commerce
The commerce where transaction happens physicaly within customer and seller is termed as Traditional commerce while the commerce in which transaction is done using various electronic payment modes is called as the electronic commerce.
Following are the differentiating points for Traditional Commerce and E-Commerce
In the broadest sense, E-Commerce refers to all online transactions. Just as e-commerce increases sales opportunities for the seller, it increases purchasing opportunities for the buyer. Ultimately its beneficial for both. Businesses can use e-commerce in their purchasing processes to identify new suppliers and business partners. E-Commerce provides buyers with a wider range of choices than traditional commerce, because they can consider many different products and services from a wider variety of sellers. E-Commerce can make products and services available in remote areas.
1.2 MODELS OF E-COMMERCE
Creating an e-commerce solution mainly involves creating and deploying an e-commerce site. The first step in the development of an e-commerce site is to identify the e-commerce model.
Depending on the parties involved in the transaction, e-commerce can be classified into 4 models. The major different models of e-commerce are:
∙ Business - to - Business (B2B)
∙ Business - to - Consumer (B2C)
∙ Consumer - to - Consumer (C2C)
∙ Consumer - to - Business (C2B)
∙ Business - to - Government (B2G)
∙ Government - to - Business (G2B)
∙ Government - to - Citizen (G2C)
Let us look at each of them in detail.
1. Business-to-Business (B2B) Model
B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. About 80% of e-commerce is of this type, and most experts predict that B2B e-commerce will continue to grow faster than the B2C segment.
The B2B model involves electronic transactions for ordering, purchasing, as well as other administrative tasks between houses. It includes trading goods, such as business subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model, business may exist between virtual companies, neither of which may have any physical existence. In such cases, business is conducted only through the Internet.
Fig. Business-to-Business (B2B) Model
Image source : https://www.tutorialspoint.com/e_commerce/images/
Let us look at the same example of www.amazon.com. As we know, www.amazon.com is an online bookstore that sells books from various publishers including Wrox, O’Reilly, Premier Press, and so on. In this case, the publishers have the option of either developing their own site or displaying their books on the Amazon site (www.amazon.com), or both. The publishers mainly choose to display their books on www.amazon.com at it gives them a larger audience. Now, to do this, the publishers need to transact with Amazon, involving business houses on both the ends, is the B2B model.
Consider a hypothetical example. ABC company sells automobile parts and XYZ company assembles these part and then sells the automobile to customers. XYZ Company comes across the Web site of ABC and finds it suitable. XYZ therefore, requests for more information about ABC and finally, decides to purchase automobile parts automobile from ABC. To do this, XYZ places an order on the Web site of ABC. After ABC receives the order details, it validates the information.. As soon as the order is confirmed, the payment procedures are settled. Finally, ABC sends an acknowledgement of payment to XYZ and delivers the goods as per the shipment details decided between the two organizations.
The advantages of the B2B model are:
∙ It can efficiently maintain the movement of the supply chain and the manufacturing and procuring processes.
∙ It can automate corporate processes to deliver the right products and services quickly and cost effectively.
The B2B model is predicted to become the largest value sector of the industry within a few years. This is said to be the fastest growing sector of e-commerce.
2. Business-to-Consumer (B2C) Model
The B2C model involves transactions between business organizations and consumers. It applies to any business organization that sells its products or services to consumers over the Internet. These sites display product information in an online catalog and store it in a database. The B2C model also includes services online banking, travel services, and health information.
Consider a hypothetical example in which a transaction is conducted between businesses organization and a consumer. A business house, LMN Department Store, displays and sells a range of products on their Web site, www.lmn.com. The details information of all their products is contained in the huge catalogs maintained by LMN Department Stores. Now, a consumer, William Ward, wants to buy a gift for his wife. He therefore, logs on to the site of LMN Department Stores and selects a gift from the catalog. He also gets the detailed information about the gift such as, the price, availability, discounts, and so on from their catalog. Finally, when he decides to buy the gift, he places an order for the gift on their Web site. To place an order, he needs to specify his personal and credit card information on www.lmn.com. This information is then validated by LMN Department Store and stored in their database. On verification of the information the order is processed.
Therefore, the B2C model involves transactions between a consumer and one or more business organizations.
Fig. B2C Model
Image source : https://www.tutorialspoint.com/e_commerce/images/b2c.jpg
The example of the www.amazon.com site also involves the B2C model in which the consumer searches for a book on their site and places an order, if required. This implies that a complete business solution might be an integration solution of more than one business model. For example, www.amazon.com includes the B2B model in which the publishers transact with Amazon and the B2C model in which an individual consumer transact with the business organization. The B2C model of e-commerce is more prone to the security threats because individual consumers provide their credit card and personal information n the site of a business organization. In addition, the consumer might doubt that his information is secured and used effectively by the business organization. This is the main reason why the B2C model is not very widely accepted. Therefore, it becomes very essential for the business organizations to provide robust security mechanisms that can guarantee a consumer for securing his information.
3. Consumer-to-Consumer (C2C) Model
The C2C model involves transaction between consumers. Here, a consumer sells directly to another consumer. eBay and www.bazee.com are common examples of online auction Web sites that provide a consumer to advertise and sell their products online to another consumer.
However, it is essential that both the seller and the buyer must register with the auction site. While the seller needs to pay a fixed fee to the online auction house to sell their products, the buyer can bid without paying any fee. The site brings the buyer and seller together to conduct deals.
Fig. C2C Model
Image source : https://www.tutorialspoint.com/e_commerce/images/c2c.jpg
Let us now look at the previous figure with respect to eBay. When a customer plans to sell his products to other customers on the Web site of eBay, he first needs to interact with an eBay site, which in this case acts as a facilitator of the overall transaction. Then, the seller can host his product on www.ebay.com, which in turn charges him for this. Any buyer can now browse the site of eBay to search for the product he interested in. If the buyer comes across such a product, he places an order for the same on the Web site of eBay. eBay now purchase the product from the seller and then, sells it to the buyer. In this way, though the transaction is between two customers, an organization acts as an interface between the two organizations.
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4. Consumer-to-Business (C2B) Model
The C2B model involves a transaction that is conducted between a consumer and a business organization. It is similar to the B2C model, however, the difference is that in this case the consumer is the seller and the business organization is the buyer. In this kind of a transaction, the consumers decide the price of a particular product rather than the supplier. This category includes individuals who sell products and services to organizations.
Fig: C2B Model
image source : https://www.tutorialspoint.com/e_commerce/images/c2b.jpg
For example, www.monster.com is a Web site on which a consumer can post his bio-data for the services he can offer. Any business organization that is interested in deploying the services of the consumer can contact him and then employ him, if suitable.
Let us look at another example of the C2B model. William Ward needs to buy an airline ticket for his journey from New York to New Jersey. William needs to travel immediately. Therefore, he searches a Web
site for a ticket. The Web site offers bidding facility to people who want to buy tickets immediately. On the Web site, William quotes the highest price and gets the ticket.
In addition to the models discussed so far, five new models are being worked on that involves transactions between the government and other entities, such as consumer, business organizations, and other governments. All these transactions that involve government as one entity are called e-governance. The various models in the e-governance scenario are:
∙ Government-to-Government (G2G) model: This model involves transactions between 2 governments. For example, if the American government wants to by oil from the Arabian government, the transaction involved are categorized in the G2G model.
∙ Government-to-Consumer (G2C) model: In this model, the government transacts with an individual consumer. For example, a government can enforce laws pertaining to tax payments on individual consumers over the Internet by using the G2C model.
∙ Consumer-to-Government (C2G) model: In this model, an individual consumer interacts with the government. For example, a consumer can pay his income tax or house tax online. The transactions involved in this case are C2G transactions.
∙ Government-to-Business (G2B) model: This model involves transactions between a government and business organizations. For example, the government plans to build a flyover. For this, the government requests for tenders from various contractors. Government can do this over the Internet by using the G2B model.
∙ Business-to-Government (B2G) model: In this model, the business houses transact with the government over the Internet. For example, similar to an individual consumer, business houses can also pay their taxes on the Internet.
image source : https://www.tutorialspoint.com/e_commerce/images
1.3 SCOPE OF E-COMMERCE
The field of E-Commerce is broad. There are many E-Commerce applications. To execute these applications, companies need the right information, infrastructure, and support services. E-Commerce applications are supported by five support areas:
∙ People: Sellers, buyers, intermediaries, information systems and other employees, and any other participants.
∙ Public policy: Legal and other policy and regulating issues, such as privacy protection and taxation that are B2C online transactions where the buyers and sellers usually do not know each other.
∙ Support services: Many services are to support to E-Commerce. These range from payments to order delivery and content creation.
∙ Business partnerships: Joint ventures, e-marketplaces, and business partnerships of various sorts are common in E-Commerce. These occur frequently throughout the supply chain. The supporting infrastructure includes hardware, software and networks, ranging from browsers to multimedia.
All of these E-Commerce components require good management practices. This means that companies need to plan, organize, motivate, device strategy, and reengineer processes as needed.
1.4 ADVANTAGES AND DISADVANTAGES OF E-COMMERCE
Advantages of E-Commerce
E-Commerce is beneficial not only for seller and customer but its also beneficial for society ,environmental sustainability point of view.
Advantages to Organizations
∙ Using e-commerce, organizations can get opportunities to develop business at national as well as international level. With minimum capital investment. An organization can easily locate more customers, best suppliers, and suitable business partners across the globe.
∙ E-commerce helps organizations to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.
∙ E-commerce improves the brand image of the company.
∙ E-commerce helps organization to provide better customer services.
∙ E-commerce helps to simplify the business processes and makes them faster and efficient. ∙ E-commerce reduces the paper work.
∙ E-commerce increases the productivity of organizations. It supports "pull" type supply management. In "pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.
Advantages to Customers
∙ It provides 24x7 support. Customers can enquire about a product or service and place orders anytime, anywhere from any location.
∙ E-commerce application provides users with more options and quicker delivery of products.
∙ E-commerce application provides users with more options to compare and select the cheaper and better options.
∙ A customer can put review comments about a product and can see what others are buying, or see the review comments of other customers before making a final purchase.
∙ E-commerce provides options of virtual auctions.
∙ It provides readily available information. A customer can see the relevant detailed information within seconds, rather than waiting for days or weeks.
∙ E-Commerce increases the competition among organizations and as a result, organizations provides substantial discounts to customers.
Advantages to Society
∙ Customers need not travel to shop a product, thus less traffic on road and low air pollution.
∙ E-commerce helps in reducing the cost of products, so less affluent people can also afford the products.
∙ E-commerce has enabled rural areas to access services and products, which are otherwise not available to them.
∙ E-commerce helps the government to deliver public services such as healthcare, education, social services at a reduced cost and in an improved manner.
1.5 ETHICS AND E-COMMERCE
Ethics is an important element in all aspects of computing, but proves to be a real problem in the development and delivery of electronic commerce systems. There are many aspects of ethics that can affect electronic commerce systems, but perhaps the most notable and worrying to both consumers and developers is that of trust. In a world where so much information is transmitted and shared electronically, ethical standards that in general society are applied to this medium, are often ignored or forgotten. This paper will discuss some of the ethical considerations that should be considered in electronic commerce and offer the possible solutions that can encourage developers to consider ethical considerations and prove excellence and trust to the consumer.
Successful electronic commerce in one instance has (as was missing in the Halifax Bank example) a requirement and duty to ensure that personal privacy and security when into a website. It must try and prevent any of this information being available to unauthorized users. Often e-mail messages are only transferred using plain text and they can very easily be scanned using specialist-filtering software. However when subscribing to an Internet Service Provider, users are unlikely to be told this by the company.
One of the most common and also the most lucrative ways in which electronic commerce businesses act unethically is through the use of marketing staff. Electronic commerce businesses buy information about individuals, their personal details, shopping habits and web page visitation listings. This can be done with or without the individual’s knowledge by using different computing technologies.
A large number of web sites, which require users to create a member name, also ask for personal details. These details are then often sold on to companies to aid in the marketing and selling of their products. The concern over Internet security, particularly with the electronic commerce has placed the computer and Internet industry in a difficult position.
There are numbers of technologies and techniques that are now being used in an unethical manner in support of electronic commerce like Cookies, Email as Commodity, etc. It seems that nothing will stop the unethical behavior of some companies unless there is strong legal backing to the elimination of this privacy invasion. One of the major issues in relation to electronic commerce is how to attract potential customers to particular web sites. These mean that, on-line companies will resort, to any method, in order to get users to visit their site, whether it is ethical or not.
1.6 KEYWORDS
∙ E-commerce - Electronic Commerce would mention the use of electronic data transmission to implement or enhance any business process.
∙ BPR - Business process reengineering - It can be defined as "Rapid and radical redesign of strategic, value added business processes-and the systems, policies and organizational structures that support them-to optimize work flows and productivity within an organization.”
∙ B2B model - Business – to – Business model is the type of e-commerce that deals with relationships between and among businesses.
∙ B2C model - Business – to – Consumer model involves transactions between business organizations and consumers
∙ C2C model - Consumer – to- Consumer model involves transaction between consumers. ∙ C2B model - Consumer – to – Business model involves a transaction that is conducted between a consumer and a business organization.
1.6 SUMMARY
In this unit, we have described the basic things related to e-commerce and terms related to it. Here are the main points:
∙ E-commerce would mention the use of electronic data transmission to implement or enhance any business process.
∙ Basically there are two types of Commerce:
1. Traditional Commerce
2. Electronic Commerce
The commerce in which money flows by hands of customer and merchant is considered as the Traditional commerce while the commerce in which there is electronic flow of money by using various electronic payment methods is called as the electronic commerce.
∙ The major different models of e-commerce are:
∙ Business - to - Business (B2B)
∙ Business - to - Consumer (B2C)
∙ Consumer - to - Consumer (C2C)
∙ Consumer - to - Business (C2B)
∙ Business - to - Government (B2G)
∙ Government - to - Business (G2B)
∙ Government - to - Citizen (G2C)
∙ E-Commerce applications are supported by five support areas: People, Public policy, Support services, and Business partnerships.
∙ BPR can be defined as "Rapid and radical redesign of strategic, value added business processes-and the systems, policies and organizational structures that support them-to optimize work flows and productivity within an organization.
∙ Ethics is an important element in all aspects of computing, but proves to be a real problem in the development and delivery of electronic commerce systems. There are many aspects of ethics that can affect electronic commerce systems.
Source : https://www.tutorialspoint.com/e_commerce/e_commerce_advantages.htm
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