INFORMATION TECHNOLOGY PROJECT ON

Recent Developments in
E-commerce

TABLE OF CONTENT
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 1. INTRODUCTION
2. HISTORY
3. FEATURES OF E-COMMERCE
4. CATEGORIES OF E-COMMERCE
5. IMPACT OF E-COMMERCE

• ADVANTAGES OF E-COMMERCE
• DISADVANTAGES OF E-COMMERCE

6. E-COMMERCE CYCLE
7. E-COMMERCE INFRASTRUCTURE
8. E-COMMERCE TRENDS
9. BASIC SECURITY ISSUES
• E-COMMERCE SECURITY TECHNOLOGY
• E-COMMERCE TOOLS
• E-COMMERCE SAFETY TECHNIQUES
10. POLICY IMPLICATIONS
11. APPLICATIONS OF E-COMMERCE
12. TEN MOST SIGNIFICANT DEVELOPMENTS OF E-COMMERCE
13. MYTHS OF E-COMMERCE
14. FUTURE TRENDS
15. IRCTC- CASE STUDY
16. REFERENCES

1. INTRODUCTION

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Electronic commerce, commonly known as e-commerce or e-commerce, consists of the buying
and selling of products or services over electronic systems such as the internet and other computer
networks. The amount of trade conducted electronically has grown extraordinarily since the spread
of the Internet. A wide variety of commerce is conducted in this way, spurring and drawing on
innovations in electronic funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic data interchange (EDI), inventory management systems, and
automated data collection systems. Modern electronic commerce typically uses the World Wide
Web at least at some point in the transaction's lifecycle, although it can encompass a wider range
of technologies such as e-mail as well.[ 1 ]

A large percentage of electronic commerce is conducted entirely electronically for virtual items
such as access to premium content on a website, but most electronic commerce involves the
transportation of physical items in some way. Online retailers are sometimes known as e-tailers
and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce
presence on the World Wide Web.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of
the exchange of data to facilitate the financing and payment aspects of the business transaction

More generally, e-commerce is a new way of doing business and it already affects such large
sectors of the economy as business services, communications, finance and retail trade (altogether
over 25 per cent of Australia’s GDP). Currently around 80 per cent of total e-commerce activity is
between or among businesses [ 2 ]

2. HISTORY
History of ecommerce dates back to the invention of the very old notion of “sell and buy”,
electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991
when the Internet was opened to commercial use. Since that date thousands of businesses have
taken up residence at web sites.

The meaning of electronic commerce has changed over the last 30 years..Originally, electronic
commerce meant the facilitation of commercial transactions electronically, using technology such
as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both
introduced in the late 1970s, allowing businesses to send commercial documents like purchase
orders or invoices electronically. The growth and acceptance of credit cards, automated teller
machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce.
From the 1990s onwards, electronic commerce would additionally include enterprise resource
planning systems (ERP), data mining and data warehousing.

Although the Internet began to advance in popularity among the general public in 1994, it took
approximately four years to develop the security protocols (for example, HTTP) and DSL which
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allowed rapid access and a persistent connection to the Internet. In 2000 a great number of
business companies in the United States and Western Europe represented their services in the
World Wide Web. At this time the meaning of the word ecommerce was changed. People began to
define the term ecommerce as the process of purchasing of available goods and services over the
Internet using secure connections and electronic payment services. Although the dot-com collapse
in 2000 led to unfortunate results and many of ecommerce companies disappeared, the “brick and
mortar” retailers recognized the advantages of electronic commerce and began to add such
capabilities to their web sites (e.g., after the online grocery store Webvan came to ruin, two
supermarket chains, Albertsons and Safeway, began to use ecommerce to enable their customers to
buy groceries online). By the end of 2001, the largest form of ecommerce, Business-to-Business
(B2B) model, had around $700 billion in transactions.

Ecommerce has a great deal of advantages over “brick and mortar” stores and mail order catalogs.
Consumers can easily search through a large database of products and services. They can see
actual prices, build an order over several days and email it as a “wish list” hoping that someone
will pay for their selected goods. Customers can compare prices with a click of the mouse and buy
the selected product at best prices. [http://www.ecommerce-land.com/history_ecommerce.html]

Online vendors, in their turn, also get distinct advantages. The web and its search engines provide
a way to be found by customers without expensive advertising campaign. Even small online shops
can reach global markets. Web technology also allows to track customer preferences and to deliver
individually-tailored marketing.

History of ecommerce is unthinkable without Amazon and Ebay which were among the first
Internet companies to allow electronic transactions. Thanks to their founders we now have a
handsome ecommerce sector and enjoy the buying and selling advantages of the Internet.
Currently there are 5 largest and most famous worldwide Internet retailers: Amazon, Dell, Staples,
Office Depot and Hewlett Packard. According to statistics, the most popular categories of products
sold in the World Wide Web are music, books, computers, office supplies and other consumer
electronics. [ 3 ]

3. FEATURES OF E-COMMERCE
E-commerce has various features like :

3.1 Ubiquity : Available everywhere

3.2 Global Reach : e-commerce technologies enable a business to easily reach across
geographic boundaries.

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3.3 Universal Standards : e-commerce is made possible through hardware (Internet) and
software/content (World Wide Web)

Standards make it much easier to build business from existing technologies (protocols TCP/IP).

3.4 Richness : e-commerce can deliver video, audio, animation, etc.

3.5 Interactivity : Consumer/user can interact with the websites content and accordingly take
decisions.

3.6 Information Density : reduces information costs (less paper work, less labour required)
raises the quality of information (electronic data less error prone)

3.7 Personalization/Customization : The technology allows personalized messages to be

delivered to individuals as well as groups.

4. CATEGORIES OF E-COMMERCE

4.1 B2B (Business-to-Business)

Electronic commerce that is conducted between businesses is referred to as Business-to-

business or B2 B.B2B can be open to all interested parties (e.g. commodity exchange) or limited to
specific, pre-qualified participants (private electronic market).

Automates supply

Increases business efficiency.

Example: www.cisco.com, www.metalsite.com www.shop2gether.com

4.2 B2C (Business-to-Consumer)

Businesses selling to the general public typically through catalogs utilizing shopping cart
software,like the ones managed by Amazon Yahoo and Charles Schwab & Co.

The activities tracked are consumer search, frequently asked questions and service and support.

Example: www.amazon.com , www.autobytel.com , www.eDiets.com

4.3 P2P(Peer-to-peer)

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Exchanges involve transactions between and among consumers. These can include third party
involvement, as in the case of the auction website Ebay.

Example: www.priceline.com ,www.owners.com , www.monster.com

4.4 C2C (Consumer-to-Consumer)

Involves when consumers band together to present themselves as a buyer in group.It provides a
way for consumers to sell each other , with the help of an online market maker such as the auction
site eBay. It is estimated to be over $5 bn market.

Example: www.speakout.com , www.ebay.com , www.infoRocket.com

Four Categor
Business o

Business
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B2B Page 6
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Fig. 2 Publishers order
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5. IMPACT OF E-COMMERCE
It has redefined the way we do business, the way we communicate and even the way we live our
lives. All the commerce related activities have gone electronic reshaping the global market
Amazon orders
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scenario. Now, need for new institutional framework has come up. Also, there is a need to use the
new technology in an optimal and efficient manner.

5.1 ADVANTAGES OF E-COMMERCE

from publishers
• There have been developments of new markets across borders. Thus, the traditional
limitation of the geography has been overcome.
• High efficiencies in resource utilization have been achieved through e-commerce.
• Cost savings could be significantly increased as it requires less number of resources, but at
the same time gives higher returns.
• Knowledge is also enhanced leading to further development.

Consumers buy
• We are able to conduct business 24 X 7 X 365 because there is no boundation of place and
time. So, everyone is able to work according to his/her convenience.
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• Larger purchases per transaction because of bulk deals.

thousands of Harry
• Low cost is involved in acquiring, serving and retaining customer.

Potter books from Page 7

Amazon
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 • Customer control the interaction thus eliminating the role of a sales person, and hence
reducing the cost.
• Extended enterprise is easy to build as no tangible assets are involved.
• Improved customer service can be provided.
• There is technology based customer interface leading to higher customer satisfaction.
• Improved customer relations because of direct interaction with the customer.
• People can shop in different ways as they feel comfortable.
• It allows customer self service and customer outsourcing.
• Access to the global marketplace has been made available even to the smaller firms.

5.2 DISADVANTAGES OF E-COMMERCE

With many advantages e-commerce also has certain disadvantages to it :

• Time for delivery of physical products is huge as compared to other forms of business.
• Physical product, supplier & delivery uncertainty always exists because every thing is virtual
before the actual product is delivered.
• Privacy, security, payment, identity and contract remain under a constant threat of cyber-
crime.

6. E-COMMERCE CYCLE
Steps involved in electronic transactions

Step 6.1 : The customer places an order on the merchant’s website by entering information .

Step 6.2 : Verifies the information by using digital sign and clicking on submit button.

Step 6.3 : Information is encrypted and sent to Merchant’s server.

Step 6.4: After receiving information merchant’s server decrypt and forward it to merchant’s bank
over secure and dedicated lines.

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 E-comm

Fig. 3

Order placed

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Fig. 4

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Order delivered to customer

7. E-COMMERCE INFRASTRUCTURE

7.1 Technology infrastructure: This is both an enabler and driver of change.The hardware
backbone of computers, routers, servers, fiber optics, cables, modems, etc. provide half of the
technology equation.The other half includes the software and communication standards including
the core protocols for the www.

7.2 Capital Infrastructure: Deals with getting the money to launch new businesses and
finding the right people to build the business plan and seek funding sources.

7.3 Media infrastructure: The e-commerce managers must make choices about the types of
media employed(e.g., print, audio , video), the nature of the media and editorial policy(including
style, content, look and feel).

7.4 Public Policy Infrastructure: All the decisions related to strategy, technology, capital
and media are influenced by laws and regulation, i.e., public policy decisions. It not only affects
specific business but also direct and indirect competitors

E-Comme
Services

Fig. 5
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 Customizatio

Fig. 6

8. E-COMMERCE TRENDS

8.1. Internet use is growing faster than any other technology in recent history.

Internet use worldwide is growing fast. Between 1993 and 1997, the number of Internet hosts
(computers connected to the Internet) grew from 1 million to 20 million; by 2001 that figure is
expected to rise to 120 million.

Estimates of the value of global Internet commerce range from 1.3% to 3.3% of global gross
domestic product by 2001 — equivalent in size to the economies of Australia and the Netherlands
added together.

8.2.The intensity of Internet use roughly reflects levels of economic

development.

Canada, Nordic countries and the United States adopted Internet technologies most rapidly. Many
other countries in the European Union, Australia, Hong Kong Special Administrative Region of
China, Japan, New Zealand, the Republic of Korea, Singapore, and Taiwan Province of China
have now almost caught up with the early adopters.

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In developing countries across South-East Asia, Argentina, Brazil, China, and in some island states such as
Barbados, Fiji and Tonga, uptake of the Internet has also been growing rapidly since about 1996, although
growth continues to be hindered by problems with telecommunications infrastructure.

It seems unlikely, however, that the Internet will have any significant impact on countries that consciously
discourage Internet use during the next few years.

8.3. The Internet is a powerful tool for trade.

Using the Internet to lower communications costs and reduce time-to-market for goods and services exports
makes it a very valuable medium for firms engaged in international trade. Its ability to deliver information
of almost any sort in digital format at low cost offers significant efficiencies that firms can pass on to
customers in the form of lower prices. It can also help manage supply chains for goods and services in
cross-border trade, cutting overheads associated with marketing, transport and distribution.

The Internet also creates new opportunities to raise service levels, which are increasingly the key to
successful business-to-business and business-to-consumer trading.

8.4. The Internet is an emerging global trading platform.

As Internet technology advances and overcomes problems with reliability and speed, it is likely to be used
in almost every conceivable way to trade goods and services.

Many large firms now integrate on-line technology into their older proprietary Electronic Data Interchange
(EDI) systems, and are building new Internet-based business systems for supply chain management and
other inventory control.

Other trading systems, such as financial and commodity markets, are now in the early stages of moving to
an Internet base. New supply and demand aggregation services, such as buying-groups and on-line auctions
are leading markets in directions that were not feasible before the advent of the Internet.

8.5. The real impact is still to be seen.

As more and more countries use the Internet for trade, learning and social interaction, and as the number of
industries affected by it grows strongly, it seems inevitable that the Internet’s influence on international
trade will grow very quickly.

Despite its portrayal as a popular communications medium (e-mail, games, chat), there are many more
business-to-business than social transactions on the Internet; the ratio is as much as 4-to-1, according to US
surveys. The Internet’s biggest impact will come from efficiency improvements it introduces within firms
that use the Internet to streamline product and market research, improve production and marketing efforts
around the world, form and develop business alliances and better integrate the entire value chain, from
suppliers to end-customers.

These business benefits suggest that the impact on trade will continue to grow — and outstrip benefits to
individuals.

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8.6. Where are the areas of strongest growth?

Although the sale of goods — such as books and music — is the most visible area of e-commerce growth,
the biggest advances so far are in the supply and distribution of services. These include software services,
finance, education, entertainment and professional services.

Manufacturing companies, too, are beginning to use the Internet to manage global supply chains that radiate
from the United States, Europe and parts of East Asia.

Trade distribution and logistics industries deal with two flows: a flow of goods and a ‘counter-flow’ of
information about the goods and about their movement. The efficiency of these industries is being
dramatically improved by Internet-based methods of moving information allowing them to reduce transport,
insurance and border administrative costs.

These supply-chain efficiencies have made global direct retailing of consumer products such as clothing,
processed foods and health products possible.

The Internet seems set to become a major marketing tool for at least some commodities and enable
producers, buyers and marketing authorities to develop closer relationships with final overseas customers
and to improve information flows in price-sensitive markets.

8.7. Small and rural businesses may be among the biggest beneficiaries.

By reducing transaction costs, the Internet provides unprecedented opportunities for small- and medium
sized firms to trade across borders.

Lower transaction costs also provide opportunities for many rural and regional communities to revitalise
their economic bases. Skilful use of the Internet can create opportunities by giving farmers, small business
people and communities the capacity to present a regional image to the world, create focal points for
inquiries about local businesses and their offerings, create global businesses and develop new products and
services.

8.8. Measuring benefits is a problem.

It is easy to measure increases in sales and the ratio of revenue to costs in the new sales that are generated.
But many of the benefits that the Internet offers are intangible and difficult to measure. For example, how
should a firm measure the benefit of forming strategic alliances across the Internet to develop new products
or service new markets? How should the competitive advantage of instant global contact and 24-hour
customer access be measured? What value should be placed on improved access to tender or specification
documentation?

These opportunities may not have a direct dollar value and might never feature in estimates of on-line
trading, but nevertheless are very important.

8.9. Trade is trade

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Internet commerce, like all other forms of exchange across borders, can be affected for good or ill by
domestic policies.

There is a wide variety of potential barriers to e-commerce but, so far, the traditional barriers of taxation of
trade are probably the least concern. The Organization of Economic Cooperation and Development (OECD)
Ministerial Meeting in 1998 reaffirmed that the policy of the industrialised countries will be not to tax the
trans-border movement of information across the Internet. Of course, goods and services which transit
borders as a result of an Internet exchange are still subject to border regulations, such as tariffs.

There are, however, other potential barriers to the openness of e-commerce markets. In some countries,
there are restrictions or heavy taxes on the advertising or delivery of financial services, and restrictions on
Internet competition with (monopoly) telephone services. Some countries have strict controls or heavy taxes
on public presentation of information about companies. In some countries, controls on the dissemination of
culturally sensitive materials are effective in limiting access.

9. SECURITY ISSUES IN E-COMMERCE

9.1 BASIC SECURITY ISSUES

9.1.1 Authentication

The process by which one entity verifies that another entity is who he, she, or it claims to be. Tools
used digital signature etc.

9.1.2 Authorization

The process that ensures that a person has the right to access certain resources

9.1.3 Auditing

The process of collecting information about attempts to access particular resources, use particular
privileges, or perform other security actions

9.1.4 Technologically Complex

Because selling products on the Web is so dependent on technology, significant technological

expertise is required to secure an e-commerce site

9.1.5 Many More Potential Attackers

Because the Internet allows a website to be accessed by a worldwide base of customers, it also
allows it to be accessed by a worldwide base of hackers and criminals.

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9.1.6 Much More Potential Damage

Be2cause an e-commerce website is functionally the equivalent of a large single store, the scale of
crimes is far larger than for any single outlet of a chain of physical stores

9.2 E-COMMERCE SECURITY TECHNOLOGY

Several technologies can be employed to help reduce the risk to companies and their customers
when completing e-commerce transactions

9.2.1 Passwords: Identify who is trying to access a website or part of a website

9.2.2 Encryption: Encodes and decodes information transmitted over the Internet

9.2.3 Public Key Infrastructure: Encryption software uses pieces of additional software
called keys to ensure that only the creators and the intended recipients can access it.

Security

Fig. 7

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 Cryptograp

Fig. 8

9.3 E-COMMERCE TOOLS

9.3.1 Digital signature :

An identifying code that can be used to authenticate the identity of the sender of a document

9.3.2 Hash :

A mathematical computation that is applied to a message, using a private key, to encrypt the
message

9.4 E-COMMERCE SAFETY TECHNIQUES

• Keep systems patched

• Response team Layered security
• Controlling access
• Role-specific security

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 • Monitoring

10. POLICY IMPLICATIONS

E-commerce cuts across most policy areas and will pose considerable challenges in the following
areas:

10.1 Competition policy : The Internet and e-commerce has the potential to increase
competition by expanding geographical markets and making it easier for new entrants to enter
markets. However, the existence of increasing economies of scale and of 'network' externalities
may deter competition and allow monopoly power to develop. A more detailed discussion of the
problems involving e-commerce and competition law policy is contained in this OECD paper,
competition Issues in Electronic Commerce, 20 October 2000.

10.2 Consumer and privacy protection policy : In order to foster confidence in the use
of e-commerce, it is important that consumer protection and privacy issues be addressed. The
international nature of the Internet requires a global response to consumer protection. To this end
the OECD has been working with member countries towards an internationally co-ordinated
approach to consumer protection. The Australian Government, as a member of the OECD, will be
seeking to implement these guidelines. Measures currently being implemented by the
Commonwealth Government can be found on the Government's E-commerce Consumer
Sovereignty Site. On 6 December 2000, the Australian Parliament passed an amendment to the
Privacy Act to increase protection of consumers using the Internet.

10.3 Tax policy : E-commerce may undermine the ability of governments to raise the revenues
required to finance public services, especially in the case of the GST.3 The OECD is currently
considering recommendations on the tax treatment of e-commerce. Details of the Committee on
Fiscal Affair's conclusions and recommendations are contained in the Annex to this press release:
OECD Progress Towards Achieving an International Consensus on the Tax Treatment of E-
commerce, 12 February 2001.

10.4 Trade policy : The ease of e-commerce across national borders makes it easier to evade
tariffs and other trade policy measures. It also makes local enforcement of national laws more
difficult (e.g. censorship, consumer protection and copyright). Consumers may be unaware that
prices quoted on the Internet do not take account of tariffs, copyright laws and other regulations
that apply when the products enter Australia.

10.5 Labour market policy : The growth of e-commerce will lead to changes to the
composition of jobs by transforming the organisation and the operation of value chains.5 E-
commerce will also impact on employment at the micro, sectoral and aggregate level. (See again

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the OECD report, The Economic and Social Impacts of Electronic Commerce, Chapter 4:
Electronic commerce, jobs and skills.)

10.6 Education and training policy : E-commerce changes the mix of skills required by
people to perform economic and other activities on line thereby affecting the demand for skills. E-
commerce will accelerate the existing multi-skilling trends in the workforce. The Department of
Education Training and Youth Affairs (DETYA) and NOIE are together developing programs to
widen the base of skills required for the further development of electronic-based systems. More
details are provided in the discussion paper, Information and Communications Technology (ICT)
Centre of Excellence, June 2001.

10.7 Regional development policy : Regions or regionally based businesses are more likely
to succeed in the global market if they are major investors in new technology, export focussed and
competent in the use of IT and e-commerce. The importance of e-commerce to regional businesses
is highlighted in E-commerce in Rural Areas: Case Studies.

11. APPLICATIONS OF E-COMMERCE

E-commerce finds applications in numerous fields like :

• Some common applications related to electronic commerce are:

• E-mail and messaging
• Content Management Systems
• Documents, spreadsheets, database
• Accounting and finance systems
• Orders and shipment information
• Enterprise and client information reporting
• Domestic and international payment systems
• Newsgroup
• On-line Shopping
• Messaging
• Conferencing

12.TEN MOST SIGNIFICANT DEVELPOMENTS OF E-

COMMERCE
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The Software & Information Industry Association has come out with what they’re calling the top
ten most important ee-ommerce developments of the last decade. Google, launched in September
of 1998, ranks amongst the highest

The SIAA list of the ten most significant e-commerce developments of the last 10 years:

1. Google
2. Broadband Penetration of US Internet Users Reaches 50 Percent
3. eBay Auctions
4. Amazon.com
5. Google AdWords
6. Open Standards (HTML 4.0 released)
7. Wi-fi
8. User Generated Content
9. iTunes
10. Blackberry

12.1 Google (Sept. 1998) : Google did more to fundamentally change the way we use the
Internet than any other event in the last 10 years. The simple search engine that began with a
couple of smart guys is now used by 30% of Internet users to help find precisely what we’re
looking for online, map our world, create simple yet highly targeted advertisements and much
more. Americans conducted 6.9 billion searches online in February 2007 and nearly half of those
were on Google. Google is widely recognized as the world's best search engine because it is fast,
accurate and easy to use. The company also serves corporate clients, including advertisers, content
publishers and site managers with cost-effective advertising and a wide range of revenue-
generating search services. Company’s core mission: to organize the world's information and make
it universally accessible and useful.

12.2 Broadband Penetration of U.S. Internet Users Reaches 50% (June 2004) :
When the Information Superhighway first opened, it felt more like an old dirt road — until
broadband released its full potential. Available and affordable broadband took longer than
expected to arrive — but when it finally reached 50% penetration in 2004, a milestone was reached
that signaled a dramatic change in how commerce gets done online, how consumers use and share
content, and how the world communicates. It took broadband roughly 4 years to reach 50% — but
it is estimated that it will reach 90% penetration of Internet users by the end of the year.

12.3 eBay Auctions (Launched Sept. 1997) : eBay showed us that the Internet could be
used to reach massive national — and even global — markets better and faster than ever before.
The launch empowered hundreds of thousands of power sellers to quit their day jobs and work
exclusively online. Individuals could also compete directly with each other in ways unimaginable
in a physical market.

12.4 Amazon.com (IPO May 1997) : Amazon showed the world what an online store
would look like and made online shopping popular through its ease of use and wide selection.
Amazon’s public offering told the world that online commerce is legitimate and here to stay. It
signaled the increasingly important role that eCommerce would play in the American economy.
Amazon.com, a Fortune 500 company, opened its virtual doors on the World Wide Web in July
1995. Amazon.com operates retail websites and offers programs that enable third parties to sell

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products on their websites. Retail websites include www.amazon.com, www.amazon.ca,
www.amazon.de, www.amazon.fr, www.amazon.co.jp, www.amazon.co.uk, www.joyo.com,
www.shopbop.com, and www.endless.com. Amazon provides services for third-party retailers,
marketing and promotional services, and web services for developers. In addition, other websites,
including www.a9.com and www.alexa.com that enable search and navigation and
www.imdb.com, a comprehensive movie database are provided.

12.5 Google Ad Words (2000) : Key word advertising has become the biggest online
advertising vehicle, representing 40 percent of that market and$6.8 billion in revenue. Keyword
ads are the simplest and most cost-effective mechanism to reach targeted audiences, affordable to
eventhe smallest business.

12.6 Open Standards (HTML 4.0 released — 1997) : The standards for the web
embodied in HTML are overseen by the World Wide Web Consortium, which is not controlled by
any company or government. The formats are open, well documented and designed to work with
different software and hardware. It has probably been the most influential and important data
standard in the history of publishing. Open standards can grow an entire industry, leaving more
room and more opportunity for everyone.

12.7 Wi-Fi (802.11 launched - 1997) : From desk to board room to beach, connectivity is
never lost and communication is never delayed. The development of Wi-Fi removed the
limitations of desktops and cables and shifted focus toward mobile solutions. Wireless Internet
enabled road warriors to be connected anywhere in industries like real estate, transportation, travel,
and financial services.

12.8 User-Generated Content (YouTube 2005) : Right now it is impossible to say what
the full ramifications of the “citizen journalist” era will be — but the dramatic impact of YouTube
tells us more than any other recent development. At first a playground for kids with video cameras,
YouTube is now the embodiment of Web 2.0. It is a must-be-seen place for presidential
candidates, a battleground in the copyright wars, a vital distribution point for major media — and
most of all, a place where anyone…absolutely anyone…can deliver a message to the world.

12.9 iTunes (2001) : In the aftermath of Napster and the P2P battles, iTunes legitimized the
digital music industry, revolutionizing the music industry. The importance of CDs declined while
music as digital content grew, leading to developments in everything from Digital Rights
Management software to increased bandwidth use. Today, more than US$2 billion worth of music
was sold online or through mobile phones in 2006 (trade revenues), almost doubling the market in
the last year. Digital sales now account for around 10% of the music market.

12.10 BlackBerry (1999) : The BlackBerry makes communication instantaneous,and mobile.

A comprehensive communications device creates a new mobile business culture. Giving road
warriors the freedom to move to any location and maintain connectivity increases cooperation and
efficiency. By having the web in the palm of your hand, Internet connected devices enable e--
commerce anywhere,anytime.

13.THE MYTHS OF E-COMMERCE

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Along with any new enterprise, invention, or variation on the familiar come myths. Some of the widely-held
myths about e-commerce are:

1. “E-commerce is 5% technology and 95% business”

2. “E-commerce will replace purchasing.”

3. “E-commerce is a zero-sum game.”

4. “E-business represents Interesting Opportunities but for the distant future.”

5. “E-commerce is only about exchanges.”

The impact of e-commerce will be significant and the time to get prepared is now. The objective of this
white paper is to educate the readers and dispel some of the myths concerning e-business so that they are in
a better position to adopt this new way of doing business.

13.1 Myth 1: “E-Commerce Is Primarily About Technology”

(“E-commerce is 5% technology and 95% business”)

E-commerce is primarily about technology. That is what most people, including those in the electronics
industry, are saying. Vice President Al Gore preaches it, and Alan Greenspan has taken up the ‘technology’
mantra. They say, “e-commerce is the embodiment of new technology.” I believe that these learned men are
WRONG. Business is still business, and ecommerce is just business adopting new methods to improve
efficiency. E-commerce and the Internet (because they are so tightly entwined, let’s just call them E-C)

are five percent technology and 95 percent business, where business can easily be defined as
AGREEMENT among the participants. Agreement in business encompasses many things, often boiling
down to: you agree to sell and I agree to buy. The identity of what is being bought, at what price, and on
what termsare important ingredients of our transaction. There are other, almost automatic, ingredients.
Many are encompassed in the Uniform Commercial Code. Others fall under the Rubric of Standard
Business Practice, such as verbal orders vs. written ones. Transacting business has always taken agreement
among the participants. E-commerce is simply business as usual in which we are substituting ‘technology’
for five percent of what we’ve always done in the past. That technology is dramatic, but it isn’t
complicated. E-commerce as we know it today was technically possible in 1970. All of the technical pieces
were in place: telephone lines, modems, mainframes, mini-computers and programming languages. It was a
proprietary world. One company controlled long distance, and another controlled 90 percent of the
computer mainframe marketplace. The rule of the day was, “My way, the right way, the only way,”
resulting in a “Tower of Babel” environment in which no one computer could communicate with and
understand another computer. Ecommerce might have been slower but it would have worked. In 1973, there
surfaced a group of widely dispersed, intelligent and interested individuals who were financed by the
biggest spender of them all, the U.S. Department of Defense. These academics and scientists wanted their
computers to ‘talk’ to each other, and they wanted to break the computer manufacturer’s proprietary
stranglehold so that any manufacturer’s computer could talk to another manufacturer’s computer.

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To achieve this goal, this group agreed to communicate using a set of predetermined rules. It was five
percent using technology and 95 percent agreement on the process. Think of it as adopting a Uniform Code
of Communication. E-commerce really started with ARPANET, which is E-C’s true inflection point. It was
the participants’ agreement on how to achieve a goal that eventually succeeded in their destroying the
computer communications’ Tower of Babel-not the technology.

They learned from experience until TCP/IP and its inherent addressing scheme whereby every ‘resource’ on
the network has a unique address (URL = Universal Resource Location) is today the guts of what makes the
whole e-commerce world operate smoothly and accounts for two percent of the e-commerce effort. Three
percent of the e-commerce effort is attributable to the Internet browser adapted from the old publishing
standard, Page Markup Language.

E-commerce is the result of using communication facilities, computers, and programs to permit instant
interaction between any two or more resources on the network, no matter where on the planet they are
located. What business is doing is substituting a new way of executing business transactions for an old way-
and benefiting from the improved efficiencies. The telephone and airplane were technologic tools that
improved business transaction efficiency when compared to the telegraph and train. To harvest the potential
results of E-C, the electronics industry will require more agreement, not less, than it has in the past.

Technology’s five percent of e-commerce is in place and is being used by other industries. What is not in
place in the electronics industry is agreement on adopting a Uniform Interactive Communication Code, to
be used by all electronics industry participants for the transacting of business over this new medium. One
set of rules may be no better than another set, but it is crucial that there be only one set of rules or one
standard. That will take agreement and that gets us back to business. E-commerce is still five percent
technology and 95 percent business, and the electronics industry has a large business issue on its plate that
must be resolved before it can, as an industry, enjoy the benefits of e-commerce. Achieving that essential
agreement requires the services of a neutral third party can bring all of the interested parties together and
work toward agreement and not one set of rules over another set of rules. Fortunately, the electronics
industry has IPC and its experience in bringing strong-willed interests together to establish standards that, in
the end, benefit the whole industry. E-commerce is not technology, but it is agreement on a set of
transaction rules. That is what business is all about.

13.2 Myth 2: “E-Commerce Will Replace Purchasing”

The purchasing function has undergone a series of evolutionary changes. Twenty or 30 years ago, the
purchasing function might best have been described as driving down the cost of materials or equipment,
period. The perceived benefits to the purchasing agent, because of the selling process, included long
luncheons, sports tickets, and vacations. As the electronics industry - and business for that matter - began to
embrace quality as a matter of survival, to be embraced by rapidly changing technology, the purchasing
professional (no longer the “buyer”) turned his attention to other metrics. These metrics, not surprisingly,
included quality, on-time delivery, and product innovation, probably best described as lowest total cost in
use. And today? As outsourcing kicks into hyper-growth and the supply chain gains ever more significance,
purchasing professionals are evolving into relationship managers. Industry suppliers and their performance
can literally make or break the customer. Overarching these trends are generational changes. The accepted

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business practice of the three-martini dinner and a long night out with the supplier has been supplanted.
Now it’s, “I need the information 24/7, because I have to coach my son’s baseball game.”

13.2.1 Where do e-commerce and e-business fit in?

When a company embraces an e-commerce mentality this may be viewed by the Purchasing Department as
a threat, since it may perceive a diminishing role in the procurement process. However, the reality is that the
buyer will likely take on an expanded role in the purchase order placement process. Now both product
knowledge and PO placement are available 24 hours.

Extensive product databases exist online that allow the buyers to access data sheets, crossreference product,
address upgrades, deal with obsolescence, and locate hard-to-find products at night ... right after the Little
League game. For a more knowledgeable materials management person, there is less dependence on
design/product/quality engineering in working up a Bill of Materials. In the Order Placement arena, a buyer
now has fingertip access to a large number of suppliers for product availability, pricing, delivery and terms.
Offers can be effectively analyzed and business partnerships formed to exchange product and business data
on a regular basis. Phone calls, faxes, and visits will be reduced as trust is developed based upon
performance. Sophisticated databases will allow buyers to easily track vendor performance via a large
number of metrics to obtain the lowest cost of ownership. The e-commerce model changes a buyer’s role
from inefficiently shopping POs to a large number of suppliers via ineffective communication methods into
one of managing a BOM in a reduced amount of time. This new role creates a flexible, better informed
individual and renders the Procurement Department an integral component of the entire manufacturing
process.

13.3 Myth 3: “E-Commerce Is a Zero-Sum Game”

You’ve operated a successful - maybe even market-leading - business for decades.You’ve built a bond with
your customers through face-to-face sales and quality customer service. Now the bold new world of e-
commerce and the electronic marketplace has dawned and you view it as a threat to all your hard-won
efforts. Should you be worried? Are the projected savings these electronic marketplaces are talking about
going to come solely at your expense? Is ecommerce going to crush your margins? Is e-commerce a zero-
sum game?

You do have reasons to be concerned but only if you stand on the sidelines. Over the next few years, B2B e-
commerce is projected to explode. Even if you discount the most conservative projections by 50 percent, the
numbers are still enormous! While some businesses will fail, most businesses will benefit from the
inevitable changes e-commerce will deliver. E-commerce in the electronics manufacturing market is about
improving the effectiveness and efficiency of the supply chain by automating processes. The savings you
hear so much about are estimated to come from a reduction in transaction costs, a reduction in inventory
costs, and a reduction from the resulting migration toward using standardized parts. The savings within each
of these categories may be small at one or two percent but in the mega-billion dollar world of electronics
manufacturing, the numbers are truly significant.

Because they’re a bit less complicated, early e-commerce models within the electronics manufacturing
supply chain have focused on auctions. These auctions are competitive environments where sellers have
been forced to compete at lower prices, and thus they have created savings for buyers. Other than finding a

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few new customers, these auctions sites have offered little economy to the seller. From a seller’s
perspective, these auction sites may be viewed as a zero-sum game.

13.3.1 Auctions

Online auction sites that help buyers lower their costs based on price alone are not enough. Online auctions
will soon incorporate other essential factors into the bidding process, including supplier standards,
international currency exchange, shipping costs, financing, credit, insurance, delivery times, and other
associated details of the supply chain. These essential elements will help buyers make more informed
decisions. Price alone will not be the driving force for buyers when they select a seller.

Following auction sites where the focus is cost reduction via the dynamic of the auction environment, the
next wave of e-commerce models will offer significantly greater levels of integration for both buyer and
seller. These full-scope B2B marketplaces will become an important and valuable trading vehicle including
cataloging, collaborative supply chain planning, forecasting, engineering change management, and much
more. At the same time, these activities will be integrated within the buyer’s and seller’s underlying
logistics infrastructure. The benefits of better communication between buyer and seller will offer efficiency
to both parties.

If you are a buyer, it is easy to imagine the benefits and savings these electronic marketplace and auctions
will drop to your bottom line. If you are a seller, it’s understandable that you would view the new world of
the electronic marketplace as a threat, but the Internet and the electronic marketplace present great
opportunities for you. Forward-thinking selling organizations will soon embrace e-commerce and the
electronic marketplace to lower their costs and strengthen customer relationships. You may get a few bumps
and bruises, but e-commerce will not be a zero-sum game for those willing to step onto the playing field.

13.4 Myth 4: “E-Business Represents Interesting Opportunities ...

But For the Distant Future”

(“E-Commerce will go away. It’s a passing fad.”)

More than 100 years ago, the technological convergence of steam power, mechanical engineering and
material sciences led to the industrial economy. There were naysayers back then-

“Railroads will only encourage the common people to move around needlessly.”

-The Duke of Wellington

Today we have seen a similar convergence of technology, computing, communication and content
technologies, which is fueling the new electronic economy through e-business. There are still naysayers.

“I don’t think other companies are doing much more than we are. There is no need

to hurry this.”

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- Fortune 500 CEO

Herein lies one of the central myths regarding e-commerce and, more broadly speaking, ebusiness. The
myth centers on the notion that once the hype surrounding e-business subsides, everyone will go back to
business as usual. Alternatively, e-business may be a wave of the future but not the present. Therefore, it is
not something that deserves executive mind-share right now.

There are several fundamental reasons why e-business is not only the wave of the future, but very much a
competitive threat and opportunity facing companies today. We shall attempt to shed light on this issue
from multiple perspectives. First, we will discuss changes to several underlying economic assumptions,
which are in turn driving e-business.

Secondly, we will explore these changes in the context of their impact on key business value drivers.
Thirdly, we will review the marketplace response to e-business and trace the irreversible path that e-
business is taking.

13.4.1 Changes to Economic Assumptions Degree of Vertical Integration

Traditional Economic Assumption: The costs of interaction and collaboration are sufficiently high to
warrant increasing levels of vertical integration. Evolving Economic Reality: The trend toward a
frictionless economy with significantly lowered costs of interaction and collaboration are driving ‘best-of-
breed’ specialization and network-based value delivery.

This trend is clearly evident in several industries-notably, in automotive manufacturing, electronics

manufacturing, the computer software industry, etc. Given the ubiquity of the Internet and decreasing costs
of information sharing, many of the traditional barriers to effective dynamic partnering and best-of-breed
approaches are collapsing. Companies are refocusing on core competencies and looking to partner and/or
outsource areas of their business that fail to provide clear and sustainable competitive differentiation.

13.4.2 Access to Information

Traditional Economic Assumption: Accessing customer and supplier information is both difficult and
expensive, which translates to customer lock-in and profit opportunities for suppliers.

Evolving Economic Reality: Competitive advantage based on information asymmetry will prove to be
short-lived. Traditionally, companies enjoyed higher returns given the high costs associated with searching
for alternative suppliers, comparing pricing, effectively gauging supplier capabilities, etc. However, this is
rapidly changing. Customers no longer require physical proximity to perform supplier screening or high-
level due-diligence. Material positions, price transparency, and performance metrics provide objective and
easy-to-assemble measures of business capability. Customers continue to demand more information
transparency and increasingly turn to global providers. Both customers and suppliers become better

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informed, resulting in competitive differentiation based on innovation, delivery capability, defensible
pricing and value-added services.

13.4.3 Time to Market

Traditional Economic Assumption: Entering a market requires both the establishment and coordination of
physical assets, means of design, production, sales, service, and delivery. Evolving Economic Reality:
Market entry in the electronic economy can be greatly accelerated by adopting virtual means to achieve
traditional business functions. In today’s e-business environment, new entrants can enter markets far more
rapidly than ever before, achieve scale more quickly and take market share from incumbents almost
immediately. Competing on Internet time and at Internet speed is becoming a reality for most businesses.
growth in fabless semiconductor business and the adoption of other virtual manufacturing models simply
underscores this trend.

Nimble new competitors based in the new economies can create compelling value

propositions, which boast of faster product, lower prices, improved quality and global reach. Companies
anchored in the traditional set of assumptions are being forced to respond.

13.4.4 Impact On Key Value Drivers

These changing economic assumptions within the context of the electronic economy have direct impact on
economic value-add for manufacturers. Three primary value levers are exercised through the adoption of e-
business. The associated value propositions can be quite compelling and span many of the key dimensions
of business performance and success. In this context, e-business is clearly much more than just an electronic
sales channel or an MRO procurement alternative, as many have defined it to be. Those who have been
willing to adopt an e-business perspective are seeing tangible economic results:

• New Channels/Global Reach

• Improved Customer Relationships

• Improved Time-to-Market

• Effective Supply Chain Management

• Strategic Supplier Management

• Lower COGS

• Improved Purchasing Processes & Practices

• Increased Working Capital Turnover

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• Reduced Physical Infrastructure

• Improved Asset Utilization

13.4.5 Irreversible Path Of Change Currently Underway

Several factors suggest that e-business is well underway and very much a reality today:

• Infrastructure to conduct e-business is largely in place within the United States and is in rapid deployment
mode globally. The Internet is a mass medium.

• Regulatory environment has been favorable for the most part.

• Business applications are rapidly being developed and deployed to help companies bridge the gap between
e-business potential and realizable benefits.

• Competition continues to heat up, with e-business adoption acting as a key lever for competitive
differentiation.

• E-business and globalization are tightly coupled and mutually reinforcing.

• Economic benefit through the adoption of e-business can be significant and is being realized by pioneers
and pragmatists alike.We are past the early adopter stage.

Given the continued investment in tools, technology, and e-business infrastructure, the barriers to e-business
adoption continue to fall and the competitive threats associated with complacency continue to rise.

13.4.6 Conclusion

Technological convergence is having a profound impact on businesses, much as other converging forces
had during the industrial economy. The emergence of the electronic economy and fundamental changes in
economic assumptions are driving the need for ebusiness. The bottom-line impact has significant potential
and is being realized by many companies today.We are on an irreversible path down the e-business
adoption curve, and companies are faced with both an opportunity and a threat. However companies
perceive ebusiness, there is precious little time to continue standing on the sidelines.

13.5 Myth 5: “E-Commerce is Only About Exchange”

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E-commerce is about business processes as well. E-commerce is a win/win for all participants. It is about
technology integration.

The Internet brings buyers and sellers closer together to exchange goods and services. Resultant trades are
then made electronically and shipped traditionally. There are three distinguishing layers in ecommerce,
which help realize the power brought to today’s economy by the Internet.

The features of an exchange are order matching, settlement and fulfillment. Net markets are like trading
posts where products change ownership. B2B e-commerce goes through several internal business processes
before realization of the trade. The ultimate power and use of the Internet is to extend the enterprise
boundary through B2B integration to achieve end-to end visibility of the whole commerce chain. The best
companies integrate with their best suppliers, partners, and customers to create a virtual super-corporation.
This extended enterprise creates significant competitive advantages for all constituents and barriers to entry
for new comers.

Exchange is about executing orders after the purchasing decision has been made, but it is a myth that this is
the sum-total of e-commerce. B2B e-commerce includes purchasing decisions and approval processes
inside the enterprise. The real work of the extended enterprise, however, takes place before any purchasing
decision can be made.

Knowledge of conditions of inventory, work in progress, planning, and forecasting is needed in order to
make optimal decisions. Enterprises collaborate and share information from deep inside each collaborating
business with the foresight to integrate enterprises across certain markets; this is the foundation of B2B
collaborative e-commerce.

Buyers Sellers

13.5.1 Exchange

The actual order exchange is the most visible function, since it is right at the heart of B2B e-commerce. It
involves execution of the order after the purchasing decision has been made. The features of an exchange
are order matching, settlement, and fulfillment.

13.5.2 Order Matching

Order matching usually takes two major forms: static and dynamic pricing, depending on the liquidity of the
exchange.

13.5.3 Static Pricing

Static pricing is also called catalog ordering. The pricing itself can be either prefixed by suppliers or pre-
negotiated between suppliers and buyers. This is currently the preferred route for most purchasing in the
printed circuit board industry.
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13.5.4 Dynamic pricing

Dynamic pricing is mostly used for true commodity products, because orders can be matched instantly. In
dynamic pricing, the exchange matches the order in real time as bids and quotes come into the marketplace
and prices are then adjusted automatically.

13.5.5 Settlement

Today, typical exchanges use third parties for settlement such as Purchasing-Cards, escrow payment
through banks, and B2B payment networks. But because average order sizes usually vary between $50,000
and $250,000 for most exchanges, instant settlement is the preferred method for both parties.

13.5.6 Fulfillment

Fulfillment is the most complicated, costly step in the process, but also is the step with the greatest savings
for buyers and sellers. B2B orders are critical for the buyer, since the buyer may have a customer waiting or
a plant down waiting for the part. The simplest fulfilment can be shipping and delivery, but in its most
complex form there are many aspects of supply chain management to be considered.

The future trend is toward very low-cost services for order matching and settlement. Simple exchange of
orders is not a glamorous business. The myth that e-commerce is only about order exchange may depict
current industry status rather than the nature of e-commerce as it is emerging. Most businesses are just
starting to examine e-commerce solutions and the exchange is certainly the most visible for those starting
out on the journey.

13.5.7 B2B E-Commerce

A business is a collection of many individuals. Decision-making is a process. B2B ecommerce offers

significant value beyond the order-matching events in an exchange. For example, the New York Stock
Exchange supported $7.3 trillion in trading, but generated only $101 million revenue in 1998. However,
Merrill Lynch, a linked brokerage house, had revenue of more than $1000 million in 1998. Companies like
Merrill Lynch have taken their businesses way beyond the simple exchange of contracts. Companies such as
Merrill Lynch help their customers make educated decisions. The difference is knowledge, value offered,
and trust. Similarly, B2B e-commerce and the best exchanges are fast developing additional features such as
supplier sourcing, requisition routing and approval, content management, and collaboration among
businesses.

13.5.8 Supplier Sourcing

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An early first step in B2B commerce is supplier selection/qualification to secure quality, availability, price,
and capacity. Today’s buyers need to know more about their suppliers than ever before. This can be a long
process. For high tech products used in the printed circuit board industry, information is frequently
proprietary for both processes and methods. Fortunately some of the new design and collaboration tools
being developed massively aid in this task. And the new e-catalogs being produced are revolutionizing the
task of providing buyers with the most comprehensive information possible. Much of the information is
dynamic and can be automatically linked to laboratory information management systems for real time
access to analytical and statistical data.

13.5.9 Requisition Routing and Approval

The purchasing enterprise typically has an internal approval process to align the interests of employees and
the business. E-commerce software generally incorporates the approval process into an automated paperless
workflow. Requests are routed to the appropriate managers for their approval and there is a major increase
in control of the supply chain and a consequent reduction in maverick spending.

13.5.10 Content Management

The catalog documents product, price, and sometimes live availability information. Some large customers
currently host their own multi-vendor catalogs behind their firewalls but this is likely to change as
complexity and outsourcing increases. Companies are able to add proprietary content and rules to the
catalog to control purchasing behavior both inside and outside their organizations. Some suppliers will only
show their content to selected customers. Some customers will not allow their suppliers to show certain
content to the competition. All of these requests, and more, are being accommodated in the new modern
exchanges and B2B purchasing platforms.

13.5.11 Collaboration

There are, of course, many relationships among trading partners in the B2B world. Most parties have some
form of real-time information systems they would like directly linked to systems of record on both ends.
This linking process over the Internet eliminates inefficiencies and information gaps caused by duplicate
and redundant data entry. The ability to assist collaboration between trading partners represents a
tremendous opportunity for net-market makers. B2B e-commerce represents the full range of business
processes and interactions between trading partners such as searching, financing, ordering, tracking,
receiving, inspecting, installing, testing, maintaining, and selling redundant stock or equipment. Advanced
collaboration and program management software available today gives e-commerce more teeth to bring
relevant context, community attributes, and enhanced value. E-commerce can address the full range of
processes that characterize business-to-business interaction. Each enterprise becomes part of larger supply
and demand chain that is dependent on many of these processes.

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13.5.12 Extended Enterprise through B2B Integration

E-commerce can integrate enterprises seamlessly into linked chains of commerce to provide customers
tightly integrated supply and demand chains. It can facilitate the rapid exchange of relevant information
leading to improved purchasing behavior and substantially lower costs. For example, buyers would like to
know capacity, inventory levels, quality metrics, lead-times and status of work in progress. In turn,
suppliers would like to know inventory levels, performance data, work in progress, and forecast
information. By synchronizing customers’ demands and forecasts with suppliers’ planning, and delivery
logistics, true auto replenishment and major combined inventory reductions can be achieved. Such true
automation across enterprises is starting to enhance productivity enormously. True automation can only be
achieved through tight B2B integration and close collaboration using the integrative power of the Internet.
A few visionary companies, such as Cisco Systems and Sun Microsystems, are already well advanced in
establishing extended enterprises to compete in the new Internet economy. An extended enterprise
combines the Internet’s power with new business structures and processes to eliminate old corporate
boundaries and geographical restrictions. It networks commerce chains to create seamless paths of
communication among partners, suppliers, manufacturers, retailers, and customers. These companies are
moving beyond simple order exchanges toward tightly integrated extended B2B enterprises. The digital
economy is here and it is driving major competitive advantages. Cisco Systems is often quoted as a leading
example of how a company can leverage the power of an extended enterprise. The company claims to save
over $175 million annually. Yet Cisco puts its customers first - more than 80 percent of Cisco product
orders are now placed via the Internet, translating to $36.7 million in business per day. Supply partners
fulfil more than half of these orders directly. And customer satisfaction ratings have soared since the
company implemented this online ordering process. Extended e-commerce allows Cisco and others to
provide superior customer service: the promise of consistent, on-time, quality products, with lower costs.
Customers place orders on a web-based front end, and they are promised delivery dates based on live
availability data from their suppliers. Order fulfillment is then driven by the company’s ability to
immediately communicate orders to the enterprise members who then manufacture, test, and deliver
products at unprecedented costs and speeds. In an extended enterprise, each supplier and partner can
securely access key business information and each is empowered to make informed decisions to best serve
customers. The benefits include:

• Faster inventory turns throughout the commerce chain, reducing both inventory carrying costs and
overall product cost base

• Enhanced customer satisfaction through online order entry and configuration

• Flexibility to design, ramp up, and retire products rapidly in response to customer and market demand

• Shorter engineering-to-production cycle time to increase market share

• Ability to sustain product quality while outsourcing major portions of the fulfilment process

13.5.13 Win/Win
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B2B relationships are about collaboration. E-commerce enhances B2B relationships by extending
enterprises and creating new virtual corporations. In these virtual corporations individual companies can
concentrate on their own links in the demand and supply chains while taking advantage of recombinant
business models. A close collaboration of highly skilled and specialized companies operates in
synchronization. Together, they deliver the very best products and services to their customers as a vertically
integrated company. Specialization is the result of the Internet economy and synchronization delivers
ecommerce values effectively. In these new chains of commerce, if any one partner fails, the commerce
chain fails and the virtual corporation fails. For these reasons, most e-commerce infrastructure companies
emphasize “many-to-many” business models, which emphasize the equality of all participants.
Intermediaries, or e-commerce net-market makers, emphasize their neutrality and offer services and added
value for both buyers and suppliers.

13.5.14 Technology Integration

To unleash the maximum power of e-commerce, customers’ systems may need to be reengineered to add
value in a cost-effective way. E-commerce solutions enable enterprises to conduct transactions online with
suppliers, business partners, and customers through web-based interactive applications, supported by
secure and robust systems and network infrastructure. Today’s e-commerce has four major building blocks:
Internet infrastructure, enterprise application, marketplace, and collaboration.“Internet infrastructure”
includes web servers, routers, security controllers, Internet connections, databases, operation systems, and
middleware. “Enterprise applications” include ERP/MRP, HR, finance, and inventory management systems.
“Marketplace” includes order matching, settlement, fulfillment, logistics, and warehousing. “Collaboration”
includes product data management (PDM), product content management, supply chain management, CPFR,
and quality. Today, no one software company offers a complete solution, so it is left to net-markets or
individual companies to put this jigsaw together. The creation of an e-hub can easily cost in excess of $30
million and can make it extremely challenging to put the jigsaw together.

13.5.15 Summary

E-commerce consists of three distinguishing layers: exchange, B2B e-commerce, and the extended
enterprise. The myth and perception that e-commerce is only about exchanges may depend on where you
are standing. Most businesses are only at the stage of the exchange. Large companies are moving quickly
toward true B2B e-commerce . Very few are establishing extended enterprises. The ultimate power of e-
commerce will be realized by extended enterprises in which specialists tightly integrate into a commerce
chain to form a virtual corporation. E-commerce can be a winning proposition for all participants.

14. FUTURE TRENDS :

While both the number of new Internet users in the US and the number of online buyers are only
growing at single-digit rates, eMarketer estimates that online sales in 2006 increased a hefty 25%.

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Baby boomers and digitally literate young adults, coupled with the spread of broadband access, are
changing the way people shop online—and how Web merchants market to them.

The Retail E-Commerce report tracks the trends that are invigorating B2C marketing and sales,
including unprecedented consumer involvement in product comparison sites, peer opinions, social
networks, discussion boards and blogs. At the same time, higher broadband penetration is
empowering Web merchants to experiment with product visualization tools that give customers a
greater sense of products that have traditionally only been evaluated up close in stores.

14.1 WIRELESS INTERNET:

Microsoft, aol and amazon.com are in the lead in marketing wireless communications: aol wants to
make instant messaging available to all its customers and amazon is already selling books using
palm pilots. WAP (wireless application protocol) will be developed for use for wireless pages,
instead of HTML.

14.2 PORTALS:

Portals are sites that combine a portfolio of basic content, communication, and commerce sites. for
the most part, they started out as search engines. there are two different types:

broad-based portals: sites that serve everyone. they include Yahoo!, AOL, MSN, Excite, Snap,
Lycos, AltaVista, LookSmart, About.com, Juno, Earthlink, etc.

vertical portals: sites that focus on a particular content category, commerce opportunity, or
audience segment, with a broad set of services. examples include CBS Sportsline, CNNfn,
Garden.com, eBay, Amazon.com, Blue Mountain Arts, CNET, etc.

14.3 SMART CARD:

A credit card with a built-in microprocessor and memory used for identification or financial
transactions. When inserted into a reader, it transfers data to and from a central computer. It is
more secure than a magnetic stripe card and can be programmed to self-destruct if the wrong
password is entered too many times. As a financial transaction card, it can be loaded with digital
money and used like a travelers check, except that variable amounts of money can be spent until
the balance is zero.

15. CASE STUDY – “INDIAN RAILWAYS”

IRCTC (INDIAN RAILWAY CATERING AND TOURISM

CORPORATION LTD.) - ONLINE TICKETING SYSTEM
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 The Indian railway catering and tourism corporation limited (IRCTC).

• Provides Catering and Hospitality services at Station , on train, at other locations.

• Promote International and Domestic tourism.
• Information and Commercial publicity
• Global Reservation Systems

Indian Railway Information System.

• PNR Enquiry
• Train between important stations
• Train Schedules
• Information about Special Trains.
• Train fares and Seat Availability etc.

www.indianrailways.gov.in

INDIAN RAILWAYS E-TICKETING SYSTEM

Centre for Railways Information System ( CRIS )

In collaboration with IRCTC launched railway ticketing services on 3rd August, 2002 . It also
provides 24 helpline and e-mail support to assist customers with time table enquiries, train timings,
e-mail alerts etc.

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 www.irc

Fig. 9

Some Facts and Estimation

• This website handles approx. 1.3 million enquiries per day.

• Started with a daily average of 115 bookings per day.
• Currently over 2500 tickets are daily book.
• More than 100 foreign tourists use website weekly.

REFERENCES : Websiteof IRCTC acts as Net MarketPla

1. Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure.
Suppliers : Indian Railways for trainticket
McGraw-Hill. ISBN 0-07-247875-6.
2. Frieden, Jonathan D. & Roche, Sean Patrick (2006-12-19), "E-Commerce: Legal Issues of
the Online Retailer in Virginia", Richmond Journal of Law & Technology 13(2),

Taxi or Cab serviceProvider.

<http://law.richmond.edu/jolt/v13i2/article5.pdf>

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Hotel RoomReservation.
 Kessler, M. (2003). More shoppers proceed to checkout online. Retrieved January 13, 2004
Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the
Way We Buy, Sell and Get the Things We Really Want, Hardcover, The Penguin Press, 246
pages. ISBN 1-59420-077-7.

Seybold, Pat (2001). Customers.com. Crown Business Books (Random House).ISBN 0-609-
60772-3.

Miller, Roger (2002). The Legal and E-Commerce Environment Today, Hardcover, Thomson
Learning, 741 pages. ISBN 0-324-06188-9.

3 History Of Ecommerce,Electronic commerce aka ecommerce history ,Amazon.com Company

History,History of Amazon.com,About Staples.com,History of Office Depot,Quarterly Retail
Ecommerce Sales 4th QUARTER 2,History of Dell

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