E-commerce is short for electronic commerce.

It is similar to traditional commerce system which involves the activities of selling and buying, but it perform these operations using any electronic medium like, TV, fax, radio or internet. Today internet has captured all the e-trade demand with its comparatively greater features, so here we will consider only internet as an e-commerce source.

Categories of E-commerce

There are 3 basic categories of e-commerce:

Business-to-Business (B2B) Business-to-Consumer (B2C)

Business-to-Business (B2B) E-commerce plays an important role in enhancing and transforming relationships between and among businesses.

Some B2B applications are:

Supplier Management: Electronic applications in this area aid in expediting business partnerships through the reduction of purchase order (PO) processing costs and cycle times, and by maximizing the number of POs processed with fewer people.

Inventory Management: Electronic applications make the order-ship bill cycle shorter. For instance, if most of a business's partners are linked electronically, any information sent by mail can be transmitted instantly. Businesses can easily keep track of their documents to make sure that they

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were received. Such a system improves auditing capabilities, and helps reduce inventory levels, improve inventory turns, and eliminate out-of-stock occurrences.

Distribution Management: Electronic-based applications make the transmission of shipping documents a lot easier and faster. Shipping documents include bills of lading, purchase orders, advance ship notices, and manifest claims. E-commerce also enables more efficient resource management by certifying that documents contain more accurate data.

Channel Management: E-commerce allows for speedier dissemination of information regarding changes in operational conditions to trading partners. Technical, product and pricing information can be posted with much ease on electronic bulletin boards.

Payment Management: An electronic payment system allows for a more efficient payment management system by minimizing clerical errors, increasing the speed of computing invoices, and reducing transaction fees and costs.

Business-to-Consumer (B2C) Business-to-Consumer e-commerce involves customers gathering information, purchasing, and receiving products over an electronic network. The consumer uses electronic commerce in the following economic transactions:

Purchasing products and information: Electronic applications make it possible for consumers to look up online information about existing and new products/services. Personal finance management: In this field, electronic applications aid the consumers in managing investments and personal finances through the use of online banking tools. Chow.net is a good example of B2C electronic commerce application, particularly of purchasing products online.

Consumer-to-Consumer (C2C) electronic commerce It involves consumers selling directly to other consumers.

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e.g eBay is an example of a C2C e-commerce site; customers buy and sell items directly to each other through the site. The growth of C2C is responsible for reducing the use of the classified pages of a newspaper to advertise and sell personal items.

E-commerce benefits

Benefits to Organization
Expends the marketplace to national and international markets. Decrease the cost of creating, processing, distributing, storing and retrieving paper-based information. Allows reduced inventories and overhead by facilitating "pull" type supply chain management. The pull type processing allows for customization of products and services which provides competitive advantages to its implementers. Reduce the time between the outlay of capital and the receipt of products and services. Support Business Processes Reengineering (BPR) efforts. Lowers telecommunication cost the internet is much cheaper than Value Added Networks (VANs).

Benefits to Society
Enables more individual to work at home, and to do less traveling for shopping, resulting in less traffic on the roads, and lower air pollution. Allows some merchandise to be sold at lower prices benefiting the poor ones. Enables people in Third World countries and rural areas to enjoy products and services which otherwise are not available to them. Facilities delivery of public services at reduced cost, increases effectiveness, and/or improves quality.

Benefits to Consumer
Enables customers to shop or do other transactions 24 hours a day, all year round from almost any location.

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Provides customers with more choices. Provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons. Allows quick delivery of products and services in some cases, especially with digitized products. Customers can receive relevant and detailed information in seconds; rather than in days or weeks. Makes it possible to participate in virtual auctions. Allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences. Electronic commerce facilitates competition, which results in substantial discounts.

Limitations of E-commerce

Technical Limitations Lack of sufficient system's security, reliability, standards, and communication protocols. Insufficient telecommunication bandwidth. The software development tools are still evolving and changing rapidly. Difficulties in integrating the Internet and electronic commerce software with some existing applications and databases. The need for special Web servers and other infrastructures, in addition to the network servers (additional cost). Possible problems of interoperability, meaning that some E-commerce software does not fit with some hardware, or is incompatible with some operating systems or other components.

Non-Technical Limitations Cost and justification (35% of the respondents)

The cost of developing an EC in house can be very high, and mistakes due to lack of experience, may result in delays. There are many opportunities for outsourcing, but where and how to do it is not a simple issue. Furthermore, to justify the system one needs to deal with some intangible benefits which are difficult to quantify. Security and Privacy (17% of the respondents)

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These issues are especially important in the B2C area, and security concerns are not truly so serious from a technical standpoint. Privacy measures are constantly improving too. Yet, the customers perceive these issues as very important and therefore the E-commerce industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, fairly secure. Lack of trust and user resistance (4%)

Customers do not trust an unknown faceless seller, paperless transactions, and electronic money. So switching from a physical to a virtual store may be difficult.

Other limiting factors o o o o o o o Lack of touch and feel online. Many unresolved legal issues. Rapidly evolving and changing E-commerce. Lack of support services. Insufficiently large enough number of sellers and buyers. Breakdown of human relationships. Expensive and/or inconvenient accessibility to the Internet.

TRADITIONAL COMMERCE VS E-COMMERCE

Some major comparisons between the traditional commerce methods and modern E-Commerce are listed below: Traditional Commerce Cost is greater due to taxes, advertisement and employees. Product market is limited because of geographical constraints. It requires product advertisement on various mediums. E-Commerce Average cost is much lower than traditional type. Product market is across the world because of non-physical aspects. Developers of the websites also makes adds on domains.

Cost

Market

Advertisement

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Time

It requires more time to go outside, to choose, compare and evaluate product. Less accessible due to time or geo-graphical constraints. People trust it more because of physical transactions. Customers support centers support their customers. Feedback from customers takes a lot of time. Fewer customers can be interacting with at a time because of less physical limitations.

It takes less time to choose and make comparison between several products. Products can be accessed at any time and from almost anywhere. Due to lake of awareness this is less popular among people.

Accessibility

Reliability

Support

No physical support centers available.

Feedback

Feedback is immediate by certain website features. Website s are especially designed for multi-users.

Interactivity

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"Most people think that e-commerce means online shopping, but web shopping is only a small part of the e-commerce picture." (Weiss, 1997) E-commerce is a broad term describing the electronic exchange of business data between two or more organisation computers. Some examples might be the electronic filing of your income tax return, on-line services like Prodigy, and on-line billing for services or products received. E-commerce also includes buying and selling any item over the Internet, electronic fund transfer, smart cards, and all other methods of conducting business over digital networks. The primary technological goal of e-commerce is to integrate businesses, government agencies, and contractors into a single community with the ability to communicate with one another across any computer platform. (Edwards. 1998) Introduction of e- commerce Electronic commerce has developed very rapidly in the last year and has left some people wondering what it is all about. This paper is designed to help people understand the history and some key concepts behind e-commerce. Although e-commerce ranges from online trading of stocks and bonds to the electronic filing of your tax return, this report is focused towards small business owners contemplating the addition of a business-to-consumer or business-to-business storefront online or future entrepreneurs that are in the planning phases of a possible on-line venture. I will present some of the key advantages and disadvantages as well as introduce some web sites that have met with success. Through this report I am trying to convey as much information as possible to small business owners in order to help make the transition of implementing e-commerce as smooth as possible. The Internet is proving to be a great equaliser, allowing the smallest of businesses to access markets and display a presence that allows them to compete against the giants in the industry.

The three major e-commerce categories are: 1) Business-to-consumer (B2C) electronic commerce 2) Business-to-Business (B2B) electronic commerce 3) Consumer-to-Consumer (C2C) electronic commerce Business-to-consumer (B2C) electronic commerce A form of e-commerce in which customers deal directly with an organization and avoid intermediaries. This reduces the inventory overhead and hence reduces the investment of Business. It involves retailing products and services to individual consumers. e.g. Barner&Noble.com, which sells books, software and music to individual consumers, is an example of B2C e-commerce. Dell is another example of B2C e-commerce, people can specify their own unique computer online and dells assembles the components and ship the computer directly to the consumer within five days. Dell doesn't inventory computers and

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doesn't sell through intermediate resellers or distributors. The saving is used to increase Dell profit and reduce consumer prices. Business-to-Business (B2B) electronic commerce It involves sales of goods and services among businesses. It is a subset of e-commerce where all the participants are organizations. B2B e-commerce is a useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs. The organizations reduced the time involved with their order management and quoting process by over 50 percent by implementing a B2B e-commerce system that automates the exchange of information between the two firms. Consumer-to-Consumer (C2C) electronic commerce It involves consumers selling directly to other consumers. e.g eBay is an example of a C2C e-commerce site; customers buy and sell items directly to each other through the site. The growth of C2C is responsible for reducing the use of the classified pages of a newspaper to advertise and sell personal items. E-commerce applications are: Retail and Wholesale Manufacturing Marketing Investment and Finance Electronic retailing - the direct sale from business to consumer through electronic storefronts. Cybermall - a single Web site that offers many products and services at one Internet location.

History of e-commerce Electronic commerce was built on a foundation that was started more than 125 years ago withWestern Union's money transfer as an example of telegraph technology. In the early 1900 the advent of credit cards as a payment system revolutionised the process of automated commerce functions. In the mid 80's the introduction of the ATM card was the latest improvement to electronic commerce. The Internet was conceived in 1969 when the Department of Defence began funding the research of computer networking. The Internet, as a means for commerce, did not become reality until the 1990's. Its popularity grew when it proved to become a fast and efficient means to conduct long distance transactions, as well as a means to distribute information. (Baxton, 1998)

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Electronic Commerce originated in America in the mid 1990's. It was recognised as a quick and efficient method of selling products across network. An act titled "The Federal Acquisition Streamlining Act of 1994" first gave authority for the governments to use Ecommerce. Ever since that day, more and more businesses are connecting with the Internet, and this was seen as the next step forward into the future. The traditional approach of buying and selling products is a long-winded method. It begins with one company sending out an order form requesting products, which is posted and a couple of days later is received by the other company (supplier). The supplier will then dispatch the goods, along with an invoice for payment that will be settled at a later date. This process could takes a number of weeks to complete. With the new approach it provides the customer with a wider variety of products to choose from, compared to the traditional approaches such as through catalogues and shops. It also enables them to complete the transaction within a matter of minutes via the Internet. E-commerce provides organisations with a new chance to increase their productivity and improve the general competitiveness in the market place. The number of people accessing the Internet on a daily basis is continuously on the increase. Yet reports in America suggest that at present only 2% of the 4.8 million businesses on the Internet are actually involved with Ecommerce. It is only a matter of time before more and more businesses hear about these developments and start to understand the possibilities of E-Commerce. It was predicted in 1996 that sales over the Internet would reach more than $546 billion by the year 2000. One of the most important technologies that make up E-Commerce is the Electronic data Interchange (EDI). This is the exchange of business information (order forms and invoices between two or more computers in standard format. EDI enables the customer and supplier to send order forms, invoices and methods of payment at the touch of a button. The main benefits for businesses when using EDI are that it saves time and money, reduces the chance of errors in the documentation, which in turn increases productivity. Millions of organisations are using EDI as a form of communication, no matter whether they are a small, medium or large sized corporations.
Economic impact

E-commerce will change the face of business forever. Companies that are thousands of miles away can complete business transactions in a matter of seconds as well as exchange information. Dell computers sells more than $14 million worth of computer equipment a day from its web-site. (NUA Internet Surveys. 1999). By taking their customer service department to the web Federal Express began saving $10,000 a day. The Internet provides businesses with the opportunity to sell their products to millions of people, 24 hours a day. (Baxton, 1998) The United States leads the world in Internet usage and e-commerce sales. "Without a doubt, the Internet is ushering in an era of sweeping change that will leave no business or industry untouched. In just three years, the Net has gone from a playground for nerds into a

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vast communication and trading center where some 90 million people swap information or do deals around the world. Imagine: It took radio more than 30 years to reach 60 million people, and television 15 years. Never has a technology caught fire so fast." (Edwards, 1998)
Advantage

Speed Saving International Distribution Customer Service

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The number one advantage that e-commerce possesses is speed. The Internet and World Wide Web gives businesses opportunities to exchange messages or complete transactions almost instantaneously. Even with the slowest connections, doing business electronically is much faster than traditional modes. With increased speeds of communication, the delivery time is expedited and that makes the whole transaction from start to finish more efficient. Even more significant is the fact that information appearing on the Internet can be changed rapidly. This gives business owners the ability to inform customers of any changes to the service that you are offering. This also allows for you to update marketing and promotional materials as often and as frequent as you would like. The second advantage of the electronic commerce is the opportunity it offers to save on costs. By using the Internet, marketing, distribution, personnel, phone, postage and printing costs, among many others can be reduced. You can start doing business in cyberspace for as little as $100. Most businesses will spend more than this but compared to the cost of opening a physical store front, the savings are tremendous. These funds can then be diverted to marketing and adverting of your product or service. "Saving money is just the start. The ultimate prize is the creation of new wealth: As the Net tears down the walls of geography, companies are creating entirely new businesses and tapping markets they never could have reached before. Network Associates in Santa Clara, Calif., for instance, doesn't market its anti-virus software in many countries outside the U.S. because it's too expensive. But recently its first sale of a new help-desk software product came from a bank in Spain, which downloaded it and ordered a 30-seat license. "That's the marketing power you get online, 'says division manager Zach Nelson.' Instant sale. No cost.'" (Hof, 1998) Cyberspace knows no national boundaries. That means you can do business all over the world as easily as you can in your own neighborhood. Because everyone is connected in cyberspace by the Internet, information is transmitted at the speed of sound or the speed of light, depending on your connection. Either way, distance becomes meaningless, which makes you able to link to anyone on the globe and anyone on the can link to you. The ability to provide links makes doing business on the Internet attractive to customers in any part of the world. Using the web to provide customer support is an excellent vehicle Advantages. E-Commerce offers low cost for the customers in comparison with travelling and buying the products in person. It may prove expensive however, if importing goods into the country. Commercial companies do not have to use privately managed computer networks, it is possible to have independent networks. This has been more accessible due to the increase in user population on the Internet. There is a greater opportunity to work from home and many businesses choose to do so. This has proved advantageous for buying and selling on the Internet, resulting in fast and efficient transactions. Due to on-line banking, it will be possible to make easy transactions safely and directly, although at present there is a concern for the security.

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 It is possible to have speedy implementation and through the use of marketing, competitors have chosen to join together and have increased collaboration between companies helping the industry sector. Software products are available to guide many businesses. They are designed to grow with the company, although less expensive software works well on lower traffic sites. This is an example of a good marketing tool, which can be tailored to each individual company. Often if businesses suffering financially, E-Commerce can improve low profit margins, with a little extra income. Also, with the use of special offers and promotions, advertising is simple. An e-commerce organisation has the ability (and the necessity) to constantly update pricing details and availability of stocks, plus the need to advertise new products as they come in. Quick updating is major method of gaining an advantage on competition, especially where goods which regularly innovate (e.g. the electronics market) are involved. New products will not have to sit around on shelves for long periods of time before they can be sold.
Disadvantage

Privacy and Security Willingness to Pay Technical Challenges Organisational Commitment A potential source of trouble is customer concerns with privacy and security. Anything sent over the Internet is sent through several different computers before it reaches its destination. The concern regarding Internet security and privacy is that unscrupulous hackers can capture credit card or checking account data as its transferred or break into computers that hold the same information. Security on the Internet is much like security for your home. There is a point when the effort outweighs the advantages. As with your home you usually stop adding security features when you feel safe. Making a customer feel safe is what is important in doing business on the Internet.

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E-commerce is presaged on the assumption that the participants will pay for what they buy. There has been a noted reluctance among net users to actually pay, particularly for the digital goods and services. As a result, much of the current business on the Internet is funded using business models other than user-pays, primarily advertising and sponsorship. If a company is selling something, then they need to find a way to accept payment that is not only convenient for them, but most, importantly convenient for the customers. Setting up a simple web site can be very inexpensive, but a simple web site thus may not be so simple if it is to be effective. A functional web site with online ordering requires expertise in four different areas. If a business owner does not have HTML, CGI scripting, ODBC, and special programs for online clearing options experience, they many want to consider outsourcing. Outsourcing is the utilization of a third party service company to provide the missing pieces to complete the total functionality of the business. This is a cost-effective way to allow a site to get up and running much faster and concentrate on the product or service rather than getting overwhelmed with the technical challenges. (De Courey, 1999) Finally, a possible disadvantage to e-commerce is not having a strong organisational commitment. A functional web site that is going to be successful will soon need additional resources in technology and skills. E-commerce is evolving at a very rapid rate and the business owner must be willing to evolve with it. Newer and more advanced technology will cost more, but should be supplemented by additional revenues. Also, the company must be willing to change the entire business or start a new one when they can see the need for change. "Yahoo! Started as a commercial operation in 1995, with a simple, if homogenous, list of Web sits to help people navigate the Web. But like the Web itself, Yahoo! Is changing fast. The once amazing ability to search the entire World Wide Web became prosaic in a Net instant, so Yahoo!, at the tender age of two years, began reinventing itself as a place to trade stocks, make travel reservations, and conduct commerce. It is even profitable, valued by investors at an almost unthinkable $5.4 billion - -more than Apple, Circuit City, Dow Jones, or Maytag." (Hof, 1998) E-commerce shows how difficult it can be to provide secure transactions for goods. Although, advances are showing the fears are decreasing. When choosing to use E-commerce, developing customised software may prove expensive. Through tradition, customers have always chosen to shop for their products. Now the Internet is accessible, it may be some time before customers are completely reliant on the Net. If the popularity increases, the Government may consider even taking a share in taxes. There many be considerable problems with bandwidth because of the expansion of the Internet, and if WebPages take long time to download, customers may use the telephone. This may deter the customers from busing, as most products are bought on impulse. It must be well designed to cope with any increase on demand, as well as competition being increasingly high. Therefore, it often takes time to reap benefits. For E-commerce to be successful, money needs to be initially spent to attract customers to the product.

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 Any maintenance needs to be under confidentiality, so ideas are not leaked to competing companies. Businesses want reasonable set-up and maintenance costs. For an example of this, changing all of the prices on an E-commerce site can be a lengthy business if every product is there and the pages are coded in HTML. This means that the sites must be properly set up by a professional which is a costly business. For example, Scott. Associates Internet Design charges $450 per day for web site design. For a full database / transactional site, Online Marketing charge $3000.
Ecommerce and Marketing

To ensure that the millions of organisational websites achieve maximum exposure, there is an urgent need to advertise their products via links on the Internet. There are number of ways that users can obtain information about the various products available from each individual organisation. One way is to use the Search Engines. It is vital that the organistions feature their products on as many search engine lists as possible. An alternative is to advertise the products by having numerous links from other relevant websites. One of the most common ways to advertise is to use the 'Banner Advertising' method. This method displays an advert in the shape of a banner, which links the customer directly to the website by the click of a button. The banner can often be animated; however, this can prove costly at times. To enable these organisations to take full advantage of the power of advertising, it could prove valuable to employ an advertising consultant. Their role is to advise the organisation on Web Page design or on possible upgrades to their existing systems, which in turn will enhance their sales of the products and services. Marketing has proved successful on the Internet with millions of businesses becoming more and more dependent on this form of media. Reports have shown that there is a continuing increase in sales over the past few years and predictions for the Year 2000 are estimated to reach a staggering $7.17 billion (Forrester Research). As well as promoting your website through the use of the Internet, it is important to sell the products to potential customers by advertising elsewhere. These include using magazines, business cards and stationary to name a few. This is to ensure that each and every organisation can achieve worldwide status. Ease of navigation confusing navigation will make customers turn away from the web site. Good, clear, uncluttered design. Sign posting of pages which contain e-commerce needs to be clear. Takes download times into consideration. Java or non-Java? Some browsers do not support this programming language and so the site should not rely on it. Images should be reduced to smallest possible download size (as in file size, not image size.) It must be easier to buy this product online than anywhere else." This is a tall order unless the item is especially lower in price than on the high street.

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Keep number of images on one page to a minimum. Text should be clear and concise. Direct link to the primary site index from every other page in site. Categories should be broken down clearly and consistently. "Shopping basket" required. This is necessary to allow consumers to purchase multiple items from multiple pages without having to "cut and paste" information into an order form. Make best offers visible on index page to attract customers to them than having to "stumble" upon them. Keep information in manageable chunks. The E-commerce site should gather information about the consumer each time the user visits the page, such as the products or services that they are seeking. This information can then be added to a consumer profile, in turn determines which items will be displayed on the index page the next visit. This styling leads to a tailor made page which will be more friendly and interesting to a customer and also builds in product placement-esc features. The more a browser searches through the company databases, the more products s / he will find which interest him / her next time s / he visits, which in turn increases the amount of time s / he will spend on the page. He will return to the site for a "quick look" at items, knowing that something interesting to him will be on the primary page. The organisation itself gains through this because it can specifically target consumers with new items when they become available. This takes very little effort once set up. Also, the more time a consumer spends looking at the pages the more likely he is to spend money there. There is also the issue of one-to-one discussion. When purchasing an item through other remote means (i.e. telephone ordering from a catalogue) a customer knows that he can gain further information about the product through simply asking. This builds confidence into the system. By setting up chat facilities within a site to allow customers to converse both with members of sales staff and also other customers, this feeling can be recreated and even improved upon. Keeping information about customers whom repeatedly order items form the site will improve their shopping experience. Upon ordering an item first time, a customer can be given a number. This number refers to some of their personal details within the main database. Although this cannot be used for credit card details (for obvious reasons), name, address, e-mail address and telephone number can all be stored for recall. Thus when he next orders an item, the customer can simply enter his account number and credit card details rather than the full string of information. This information can be utilised further. A clothes site could, for example, keep a customer's measurements on file and automatically send the correct sized clothes without details having to be repeatedly input. This can be carried a step further into a personalised shoppers will make them want to return to the site more often and spend more money. A further step to take is to spread the word of the site. This can be done through submitting details to search engines, advertising banners on other sites, and also through the less considered medium of the newsgroups. If the site can maintain a presence on these

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newsgroups with people regularly stating that service is high quality, then more visitors will come to shop. This functions in a similar way to word of mouth in a non-virtual community.
Ecommerce and Taxes

One of the current debates that are happing throughout America and the UK at present, is the urgency to resolve the issue of tax. It is still unclear to many organisations how taxation works over the Internet. This mainly effects the selling and buying of products and services through E-commerce. In 1997, an official report was published titled "The Framework for Global Electronic Commerce". This stated that it was requested by the Federal Government that no new changes in tax laws and regulations were to be administered, concerning the Internet, and that only the existing laws are kept. At present, there are several areas where tax is put into practice. Firstly, the users are charged for the access to the Internet via their Internet Service Provider (ISP). Secondly, when users make a purchase over the Internet they are subjected to extra charges for getting the products delivered to their door, and in some areas tax is also added when users download software from the Internet. In October 1998, a new law was finally established called "Internet Tax Freedom Act". It is there to ensure that the government can not at time impose taxes on the use of the Internet, and especially when dealing with E-Commerce. This Act will hopefully protect sales over the Internet and stop unexpected taxation from local governments.
Future Rest assured the future of e-commerce is intact and ever changing. "Like electricity, antibiotics, or the car, the Internet is a verolutionary technology. "(France, 1999) It is quite evident that ecommerce is only gaining speed. With Internet traffic doubling every 100 days the digital economy is alive and growing. The huge growth of virtual communities are shifting the economic power from the large corporations to the smaller businesses. "Virtual communities erode the marketing and sales advantages of large companies. A small company with a better product and better customer service can use these communities to challenge larger competitors- something it probably could not do in the real world." (CommeraceNet, 1999) With many of the technological advances in the banking, on-line trading and retail industries, e-commerce will soon become the foundation of our life just as radio, telephone and television have in the past. The future of e-commerce is up to us to us to be a success, as the leader of the most powerful country in the World once said. "If we establish an environment in which electronic commerce can grow and flourish, then every computer will be a window open to every business, large and small, every where in the world." Bill Clinton

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Brokerage Model
The Brokerage Model in e-commerce, in essence, mirrors the offline brokerage model where the broker acts as a third party connecting sellers and buyers to a transaction and charges fees for their services (Rappa, 2005). The advantage of e-commerce affords brokers the ability to connect buyers and sellers globally in contrast to the offline world where a broker may be restricted to a certain region within their local market. For example, in the offline world, a mortgage broker who connects people looking to purchase a house with financial institutions who sell Mortgages, may be restricted to their local area, hence creating a finite group of potential buyers. In contrast, as a result of the Internets inherant globalisation (Flew, 2008) an e-commerce mortgage broker has the potential to reach people located outside their local area, in other states and other countries, drastically increasing the number of potential buyers, their ability to connect more buyers with sellers, and thus make better profits. It is well documented that eBay is one of the most succssful Auction Brokers in e-commerce. As suggested by Rappa, eBay, like most companies on the Web, employ a number of business models in order to make money (Rappa, 2005). While the dominant model they leverage is the Brokerage model, eBay also utilise the affiliate, advertising and community business models to sustain their presence in e-commerce.

Within the Brokerage model there are a number of subset models. These areMarketplace exhange, Buy/Sell fulfillment, Demand Collection system, Auction Broker, Transaction Broker, Distributor, Search Agent and Virtual Marketplace(Rappa, 2005, pg2). eBay is an Auction Broker. An Auction Broker, defined by Rappa "conducts auctions for sellers (individuals or mechants). Broker charges the seller a listing fee and commission scaled with the value of the transacton. Auctions vary widely in terms of the offering and bidding rules" (Rappa, 2005, pg 2). Under their brokerage model eBay makes its money from "listing, feature and final value fees that are collected when an item listed is sold" (Caban, 2007). In 2008, eBay introduced a fixed price format listings to compliment their existing auction-style format listings that drastically reduced costs for its members, encouraging more items to be listed for sale (ebayinc.com.au/news). In 2010, they introduced in the US market, following growth success in other international markets, further discounts to their pricing, offering free listing for auction-style listings with a start price of $0.99 for those sellers who list items occassionally and as low as $0.03 for its members that list items regularly (http://www.ebayinc.com/content/press_release/20100126006330). According to their website http://www.ebay.com, eBay charges insertion fees and final value fees for both auction-style and fixed price listings. These are the basic costs of selling an item. In addition, they offer optional feature fees, referred to as "upgrades that boosts sales" that includes Reserve price fees, But it Now fees, Listing upgrade fees and Seller tools. The value of the insertion fees vary depending on the starting price or reserve price and poduct category. For example, insertion fees for auction-style format listings can range from $0.10 for a price of $0.01-%0.99 to $200 for a price of $200 or more. eBay's 2010 insertion fees are depicted in the table below. The final value fee is calculated at 9% of the

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total amount of the sale with ([http://pages.ebay.com/help/sell/fees.html]).

maximum

charge

of

$250.00

Insertion Fees for auction-style format listings Starting or reserve price $0.01$0.99 $1.00$9.99 $10.00$24.99 $25.00$49.99 $50.00$199.99 $200.00 or more Source: http://pages.ebay.com/help/sell/fees.html#if_auction Insertion Fee $0.10 $0.25 $0.50 $0.75 $1.00 $2.00

E-business Model Based on the Relationship of Transaction Types Government Business Consumer Business Consumer 17 Info Mediary Model: An organizer of virtual community is called an information intermediary or info-mediary, who helps customers to collect, manage, and maximize the value of information about consumers. Date about consumers and their buying habits are extremely valuable especially when that information is carefully analyzed and used to target marketing campaigns. Some firms are able to function as info-mediaries by collecting and selling information to other businesses. Community Model: E-communities (or electronic communities) are formed when groups of people meet online to fulfill certain needs, which include personal interests, relationship, entertainment and transactions. Of course, e-communities are not confined to just individuals but businesses as well. E-communities cater to groups of people who come on-line to serve their common interest and needs, exchange information, share interest,

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trade goods and services, entertain and seek help. Value Chain Model: Value chain moves businesses away from discrete streams of data about the product being made to one unified pool of information one that even extends outside the company to suppliers and customers. The goal is to develop full and seamless interaction among all members of the chain., resulting in lower inventories, higher customer satisfaction and shorter time to market. Brokerage Model Its Characteristics The characteristics of brokerage model are as follow: The price- discovery mechanism is its key-principle. It is a meeting point for sellers and buyers. Auctions and exchange are the modes of transactions. It is a Free Market. It consists of Global Network of Buyers &Sellers. It is Virtual Marketspace enabled by the Internet. 18 It encompasses all types of organization now. Aggregator Model Classic wholesales and retailers of goods and services are increasingly referred to as etailers. Sales can be made on list prices or through auction. In some cases, the goods and services are unique to the web and not have a traditional brick- and mortar storefront. Following are some of the aggregator models: 1. Virtual merchant. 2. Catalog merchant 3. Surf-and turf. 4. Bit vendor 5. Subscription model.

The Aggregator Model

The Driving Forces for E-Commerce
Market and Economic Pressures 1. Strong competition: Now competitions the part of any business and companies are implementing new techniques every day to bear their competitors. E-Commerce is one of the tools of recent days, which is adopted by the companies. 2. Global Economy: In Present Scenario world becomes a global village and there are standard patters in market for business, so every country must follow these norms. There is huge gap between the growth rate of developed and developing nation, so more and more developed nations are investing in every part of world. E-Commerce is the need of such a scenario.

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3. Extremely Low Labour Cost in Some Countries: Now this the common feature of business that companies are having manufacturing units in one are of the world and the same products is marketed in other part of the world. Definitely some medium is required to maintain it and e commerce is providing such medium. 4. Frequent Changes in Market demands: As we discussed above that the age of techolnology so any change which takes place in part of the world, rapidly reflects every where so e-commerce it the tool which is necessary to sustain in present fast changing world. 5. Increase Expectation of Consumers: The expectation of consumers about quality and services are very high, so it works like driving force for e-commerce. 6. Awareness Among Consumers: Awareness Among Consumers: Now consumers are well aware. Internet, print media and electronic media keep update the consumers about new products and their rates. Societal And Environmental Pressures 1. Government Regulations: Every country have its own rules and regulations but now a days almost every country have well defined cyber laws which provides a right environment for the e commerce. 2. Reductions in Government subsidies: Now world is very open, some countries provides lot of rebate in tax and in other forms to do business. But some other countries reducing the soaps for business. E-commerce provides the opportunity to take these challenges. 3. Rapid Political Changes: Whenever government changes n any country there are some changes in guidelines and polices towards the business. It is also work as driving force for the e-commerce. Technological Pressures Rapid Technological Changes: Technology is the factor, which provides e-commerce an opportunity to become and perfect solution for business. New Technologies: New and secure technology available in the market, which provides an easy, cheap and secure platform for the e-commerce. Information Overload: By using e-commerce we can easily efficiently manage information about the product and other business related things. This is a cheap and secure medium for managing important information. Digital Convergence: The digital revolution has made it possible for digital devices to communicate with one another. The Internet's massive growth during the past decades- a creation of market forces- will continue. Steady increase in computer power and decreasing cost made navigation on the internet.

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Growth of e commerce
The global Internet audience continues to grow rapidly, with the worldwide base of broadband Internet users (including fixed and wireless) in the 2 billion range as 2013 began. This vast base of Internet users encourages businesses to innovate in order to offer an ever-evolving array of online services. Sectors that are growing very rapidly online include the sale of entertainment, event tickets, travel, apparel and consumer electronics. The most powerful trends on the Internet include access via wireless devices, migration of entertainment to the web and cloud-based software as a service. Today, as a result of the recent recession, consumers are more focused than ever on finding the best prices. Consequently, e-commerce firms that offer high value at low prices are well positioned to prosper. The standout winner in e-commerce continues to be Amazon, where sales have soared thanks to aggressive discount pricing, free shipping for its Prime members and an ever-growing variety of merchandise categories. Amazons revenues rose by 27% in 2012 to $61.0 billion. Books, movies, music and other media now account

for the minority of Amazons sales, while electronics and general merchandise bring in the largest share by far. Amazons sales outside of North America are booming as

well. Clearly, there is growing adoption of online consumer purchases throughout the worlds major economies, and the soaring number of broadband users is paving the way. Analysts at eMarketer reported American e-commerce sales in 2012 of an estimated $343 billion. This figure includes online retail sales, travel sales ($119 billion) and digital downloads, but not sales of tickets to events or online gambling. Global Internet retail sales exceeded $1 trillion for the first time in 2012, up 21.1% from 2011. For 2013, the AsiaPacific region is expected to see 30% growth in online sales, reaching $433 billion. China alone is expected to be the second largest e-commerce market in the world with $181 billion (up 65% from 2012) behind the U.S., which should hit $384 billion in 2013. Plunkett Research estimates global travel sales online at $320 billion for 2012. Online advertising in 2012 in the U.S. reached $37.3 billion, according to eMarketer, accounting for 24% of all advertising spending in America. Online advertising leader Googles recent results are a good indicator of the strong growth in online advertisi ng. The firm saw revenues soar 21.3% in fiscal 2012, to $46.0 billion (not including its acquisition of Motorolas mobile division). Growth in broadband subscriptions worldwide continues at a strong pace. The number of American homes and businesses with broadband access capabilities topped 90 million by the end of 2012, thanks in part to modest monthly fees at Internet service providers. This number does not include mobile broadband users, estimated at another 180 million. A significant evolution is taking place in the world of business, as more and more telecommunications move to the Internet. VOIP continues to grow in popularity. Meanwhile, the concept of unified communications threatens to completely revolutionize business communications by combining all communications into one screen on the desktop, including phone, fax, e-mail, instant messaging, voice mail and teleconferencing. Voice communications will be digitized and archived, just as e-mail is today. A users communications tools will move seamlessly from the desktop to the mobile device. Convergence: The Internet is about saving time (and therefore saving money), and the potential of the Internet has barely been tapped. New methods of taking advantage of efficiencies are becoming widely accepted, as access to high-speed broadband Internet connections becomes commonplace. Users of the Internet (both business and consumer) are multiplying around the globe, and many companies are earning terrific profits in the process of serving those users. The long-awaited phenomenon of convergence of entertainment, computing and communications arrived around 2004 when enough consumers had subscriptions to broadband to create a true mass market and new online

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service offerings proliferated. The smartphone (and tablet) revolution accelerated this trend. Now, the latest televisions come equipped with built-in Internet connections. This is going to create radical changes in the way TV viewers obtain their movies and TV programming over the near term. For example, subscribers to Netflix are able to stream downloaded movies directly to their Internet-connected TV sets. Top selling product and services categories online include travel, clothing and accessories, books, music, videos, electronics and specialty foods. In these markets, online shopping amounts to a significant share of sales. Meanwhile, many of the worlds largest storefront retailers operate some of the most-visited Internet sites. For example, online traffic is extremely strong at the sites of Wal-Mart, Target, Best Buy, J.C. Penney, Home Depot, Lowes, Macys, Kohls, Cabelas and Barnes & Noble. A Brief History of the Online Sector: The e-commerce and Internet sector has evolved rapidly, going through several distinct stages since its beginnings in the 1970s: The Internet Is Born: First, there were the early days, when the Internet was seen by many as a realm for techies only, one that would produce few, if any, commercial enterprises. Initially designed in 1973, the Internet was a series of communication protocols written by Vinton Cerf as part of a project sponsored by the U.S. Department of Defenses Defense Advanced Research Projects Agency (DARPA). The first demonstration of a threenetwork Internet protocol-based connection occurred in November 1977. Eventually, a wellenabled Internet was rolled out in 1983, primarily as a failsafe method of defense communications and as a means for researchers at various universities to communicate. The Web Is Created: Next, the World Wide Web and the coding language of HTML were conceived in 1989 and implemented between 1990 and 1993 by Tim Berners-Lee, enabling a never-ending hyperlinked cyberworld where sharing unlimited data became user-friendly thanks to the magic of linked pages. The Boom Ensues: Starting in 1993 and 1994, entrepreneurs and financiers realized that hyperlinked, electronically posted data could be commercialized with vast, global potential. A dramatic revolution in retailing, publishing and entertainment was visualized, one in which consumers and business people alike would eagerly pay for the convenience of online shopping, trading and viewing of published data. An economic boom ensued, the likes of which hadnt been seen since the beginnings of earlier technological breakthroughs: electricity, the railroad, the telephone, the automobile and the passengercarrying airliner. Thousands of hopeful new businesses were launched. Capitalization for these new Internet-enabled companies ranged from cash-strapped ventures launched in garages with Visa card credit lines, to companies like WebVan that received vast sums from professionally managed venture capital firms only to fail miserably. Roughly 6,000 new firms of significant size raised a cumulative total of more than $100 billion in venture capital in the boom period (1994-2000). About 450 of these companies sold their stock to the public via IPOs (initial public offerings). Stock markets soared and instant billionaires were made, although many of those stocks later plummeted. Venture funds that cashed out early reaped phenomenal gains, and financiers easily found additional investors for new venture capital pools. Companies with little or no sales and profits, led by the success of Netscapes IPO, found eager buyers for their newly issued stocks. The NASDAQ index of stocks rose to 5,000 by early in the year 2000, and the Chairman of the Federal Reserve warned of exuberant optimism. Some said this boom couldnt lastothers said it was the beginning of a new economy that would last forever. The Bust: In mid-2000, the Internet industry entered a bleak and dreary phase after the NASDAQ collapsed in March, bringing the entire sector to its knees. By October 10, 2002, the NASDAQ was down to 1,108 from a high of 5,132 in March 2000. Hundreds of thousands of people lost their jobs. Stock portfolio values plummeted. Thousands of firms closed their doors, filed bankruptcy, downsized or were scooped up at bargain prices by competitors. Sellers of hardware, software, consulting and telecommunications services

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suffered mightily. Entrepreneurs found it nearly impossible to raise funds to launch or sustain their businesses. The dream of a new economy became a nightmare for some profits still matter; business cycles still happen. The Reality Phase: By early 2003, this sectors dark clouds were abating, and a reality phase was taking shape. Well-conceived, Internet-based businesses were proving their value. Consumers had become devoted fans of buying over the Internet. Businesses of all types were finding that the Internet creates true operating efficiencies and drives profitability. For example, while most of the airline industry suffered terribly in recent years, value-based discount airlines Southwest and JetBlue enjoyed superior financial performance, in no small part because of their use of e-commerce to efficiently book reservations and sell tickets online. Efficiency is the most important factor in the ecommerce and Internet sectors newfound success. Consumers find the Internet to be a terrific way to efficiently expend their shopping and banking efforts. Travelers find the Internet to be an efficient way to book hotels rooms, flights and rental cars. Consumers of all types use eBay to look for bargains, autotrader.com to look for cars at great prices and iTunes to download music. Corporate procurement managers find the Internet to be the most efficient way to purchase needed goods and inventory. Hundreds of millions of people worldwide find e-mail, instant messaging and VOIP telephony to be the most efficient ways to communicate. Low Costs Fuel the Steady Global Growth Phase: Today, access to fast Internet, both wired and wireless, is available at bargain prices in a growing footprint across the globe. Even in relatively undeveloped nations, both consumers and businesses have grown to rely on the Internet for everyday needs. The second billion set of users worldwide has been reached, and the third billion is clearly in sight over the mid term, as cheaper devices continue to proliferate. Mobile computing is accelerating at blazing speed thanks to moderately-priced smartphone plans offering fast Internet access. Meanwhile, the cost of developing and maintaining web sites has plummeted, opening the door to millions of self-funded entrepreneurs, and making it easier for venture capital firms to fund startups using low amounts of cash. Trends such as open software and cloud computing, along with modular software development tools, have made it easier, faster and cheaper to start sophisticated web sites.

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E-Commerce Trends in Industrial Manufacturing

Best practices from B2C ecommerce sites can help industrial manufacturers reduce costs and increase sales online.
Adoption of e-commerce by industrial manufacturers has been unexpectedly slow, due to challenges such as the need to custom configure products, offer complex promotions involving specific terms and conditions, and execute multiple bulk orders quickly. However, when implemented effectively, e-commerce delivers an engaging, buyer-centric online experience while allowing industrial manufacturers to reduce administrative costs, increase sales and improve brand loyalty. They can do so by adopting best practices in B2B ecommerce such as targeting customers with buyer-specific promotions, recommendations and messages, increasing brand visibility through social networking and opening new markets and channels through alternate business models such as mobile commerce. Consider a large U.S.-based HVAC manufacturer that asked Cognizant to help revamp its ecommerce portal from multiple standalone applications for functions such as search, order and cart processing to a single rich Internet application-based portal. Among the capabilities provided were better navigation and robust cart capabilities; improved pricing and availability; multiple search and display options and marketing tools to help cross-sell and up-sell products. Within one year of its implementation, the manufacturer saw online orders rise 300% and parts sales rise by close to 150%.

The three key drivers of an industrial manufacturing e-commerce solution are expediting the shopping process, enhancing the customer experience and taking advantage of future trends and tools. The customer must be able to effectively search for products and quickly complete their purchase. Industrial manufacturers must make it easy to find products. For instance, display recently viewed and purchased items and popular customer buys, provide multiple search options and the ability to filter on the basis of specific attributes. It is also important to make the checkout process easy, convenient and quick. Personalizing the site to reflect each customer's needs and providing a rich online experience help enhance the customer experience and to make it easier to shop. Personalization requires providing customer-focused marketing campaigns and promotions such as banners, recommendations and special offers. Just as vendors have done in the B2C space, industrial manufacturers can display customer-specific promotions prominently on the home page to up-sell and cross-sell products.

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A rich online experience visually guides shoppers between steps, lets them easily search for, filter and compare products, and see comments by others (or contribute their own comments) via social media. This increases customer satisfaction as well as the size and frequency of online orders.

Leverage the Latest Tools and Techniques Mobile commerce

As e-commerce and in-store channels converge with mobile networks, customers will be able to check promotions, product descriptions and reviews by past purchasers via their mobile and smart phones. Making it easy for them to also purchase via these devices requires single-click check-out with a seamless flow of payment and shipping information between the seller's ecommerce and m-commerce engines.

Analytics
Sellers should have a real-time view into the Web store and into marketing campaign performance, and be able to monitor lead conversion and Web site metrics to maximize the site's effectiveness. They should also be able to analyze cart abandonment, the performance of promotions and campaigns and have visibility into live transactions and customers details to identify up-sell opportunities. Using the same skills and capabilities that have revolutionized B2C ecommerce, industrial manufacturers are enhancing the customer experience while reducing costs and maximizing their revenue.

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