e-Commerce

INTRODUCTION

Internet has become an important medium for doing global business based on the state of the art technology. Electronic commerce has two major aspects: economical and technological. New standards and new facilities are constantly emerging and their proper understanding is essential for the success of an operation, and especially for those who are assigned a duty to select, establish, and maintain the necessary infrastructure. In the emerging global economy, e-Commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. The integration of information and communications technology (ICT) in business has revolutionized relationships within organizations and those between and among organizations and individuals. Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs. However, to facilitate e-Commerce growth in these countries, the relatively underdeveloped information infrastructure must be improved. Among the areas for policy interventions are: High Internet access costs, including connection service fees, communication fees, and hosting charges for websites with sufficient bandwidth;

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Limited availability of credit cards and a nationwide credit card system;

Underdeveloped transportation infrastructure resulting in security problems and insufficient security

slow and uncertain delivery of goods and services; Network safeguards; Lack of skilled human resources and key technologies (i.e., inadequate professional IT workforce);

Content restriction on national security and other public

policy grounds, which greatly affect business in the field of information services, such as the media and entertainment sectors. It is recognized that in the Information Age, Internet commerce is a powerful tool in the economic growth of developing countries. While there are indications of ecommerce patronage among large firms in developing countries, there seems to be little and negligible use of the Internet for commerce among small and medium sized firms. DEFINITIONS AND CONCEPTS Electronic commerce or e-Commerce refers to a wide range of online business activities for products and services. It also pertains to any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.
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A more complete definition is: E-Commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. E-Commerce is an emerging concept that describes the process of buying and selling or exchanging of products, services, and information via computer networks including the internet. Definition of E-Commerce from Different Perspective 1. Communications Perspective EC is the delivery of information, products/services, or payments over the telephone lines, computer networks or any other electronic means. 2. Business Process Perspective EC is the application of technology toward the automation of business transactions and work flow. 3. Service Perspective EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery. 4. Online Perspective EC provides the capability of buying and selling products and information on the internet and other online services. Benefit of e-Commerce

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Access new markets and extend service offerings to customers Broaden current geographical parameters to operate globally Reduce the cost of marketing and promotion Improve customer service Strengthen relationships with customers and suppliers Streamline business processes and administrative functions Scope of E-Commerce Marketing, sales and sales promotion Pre-sales, subcontracts, supply Financing and insurance Commercial transactions: ordering, delivery, payment Product service and maintenance Co-operative product development

Distributed co-operative working Use of public and private services

Business-to-administrations (e.g. customs, etc) Transport and logistics Public procurement Automatic trading of digital goods Accounting Dispute resolution History of E-Commerce

e-Commerce
The history of e commerce is a history of how Information Technology has transformed business processes. Some authors will track back the history of e commerce to the invention of the telephone at the end of last century. EDI (Electronic Data Interchange) is widely viewed as the beginning of ecommerce if we consider ecommerce as the networking of business communities and digitalization of business information. Large organizations have been investing in development of EDI since sixties. It has not gained reasonable acceptance until eighties. EDI has never reached the level of popularity of the web-based ecommerce for several reasons: High cost of EDI prohibited small businesses and mediumsized companies from participating in the electronic commerce; Slow development of standards hindered the growth of EDI; The complexity of developing EDI applications limited its adaptation to a narrow user base. Concepts of Electronic Commerce Electronic commerce is narrowly defined as buying and selling products/services over the Internet. The concept has been broadened to include all business activities of a sales cycle. The distinction between E-Commerce and E-business has become blurred. Ecommerce and Electronic Commerce has been used interchangeably, Electronic Business, however, has not been a widely accepted terminology.
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David Kosiur described the Components of Electronic Commerce in three dimensions (Processes, Institutions and Networks) in his 1997 book Understanding Electronic Commerce. We expand Institutions as E-Commerce Players, Networks as Technologies and add Markets as the fourth dimension of E-Commerce.

E- Commerce in Action

How e-Commerce Works The consumer first moves through the internet to the merchants web site. At the web site, the consumer is briefly given an introduction to the product or services the merchant offers. It is at this point that the consumer makes the decision to visit the web store by clicking on a link or button located on the web page. After choosing to visit the web store, the consumer is typically connected to an online transaction server located somewhere else
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on the internet which runs software commonly referred to as a shopping cart application. The shopping cart application has been setup by the merchant to display all products and services offered, as well as calculate pricing, taxes, shipping charges, etc. From there, the consumer decides that he wants to purchase something, so he enters all pertinent credit card information and a sales order is produced. Depending on the ecommerce implementation, the sales order can now take two totally different paths for confirming to the consumer that the order is officially placed. Scenario 1 The consumers credit card information goes directly through a private gateway to a processing network, where the issuing and acquiring banks complete or deny the transaction. This generally takes place in no more than 5-7 seconds and the consumer is then informed that the order was received, the credit card was authorized, and that the product will ultimately be shipped. Scenario 2 The consumers entire order and credit card information is electronically submitted back to the merchants server (usually via email, FTP, or SSL connection) where the order can be reviewed first and then approved for credit card authorization through a processing network. The consumer then receives an email shortly afterwards, confirming the order being received, the credit card

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being authorized, and status on when the product will exactly be shipped. In both scenarios, the process is transparent to the consumer and appears virtually the same. However, the first scenario is a more simplistic method of setting up a shopping cart application and does not take into consideration any back office issues that may delay shipment (i.e., items out of stock, back orders, orders submitted after office hours or during holidays, etc.). Most of the e-Commerce Manager relies on the second scenario to handle all of its ecommerce orders. This second scenario keeps the consumer accurately informed throughout the entire ordering process. There are several basic steps you will need to accomplish before becoming e-Commerce Enabled. Getting a Merchant Bank Account Web Hosting Web Design Considerations Registering a Domain Name Obtaining a Digital Certificate FORCES FUELING E-COMMERCE There are three major forces fueling e-Commerce. They include:
1. 2. 3.

Economic forces Marketing and customer interaction forces Technology, particularly multimedia convergence
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1. Economic Forces One of the most evident benefits of e-Commerce is economic efficiency resulting from the reduction in communications costs, low-cost technological infrastructure, speedier and more economic electronic transactions with suppliers, lower global information sharing and advertising costs, and cheaper customer service alternatives. 2. Market Forces Corporations are encouraged to use e-Commerce in marketing and promotion to capture international markets, both big and small. The Internet is likewise used as a medium for enhanced customer service and support. It is a lot easier for companies to provide their target consumers with more detailed product and service information using the Internet. 3. Technology Forces The development of ICT is a key factor in the growth of ecommerce. For instance, technological advances in digitizing content, compression and the promotion of open systems technology have paved the way for the convergence of communication services into one single platform. This in turn has made communication more efficient, faster, easier, and more economical as the need to set up separate networks for telephone services, television broadcast, cable television, and Internet access
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is eliminated. From the standpoint of firms/businesses and consumers, having only one information provider means lower communications costs. TYPES OF E-COMMERCE

There are a number of different types of E-Commerce B2B - Business to Business B2C - Business to Consumer C2B - Consumer to Business B2E - Business to Employee C2C - Consumer to Consumer B2B - Business to Business E-Commerce has been in use for quit a few years and is more commonly known as EDI (electronic data interchange). In the past EDI was conducted on a direct link of some form between the two businesses where as today the most popular connection is the internet. B2B e-Commerce currently makes up about 94% of all e-

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Commerce transactions. Typically in the B2B environment, ECommerce can be used in the following processes:

Procurement; order fulfilment; Managing trading-partner relationships. E-Commerce technologies have allowed even the smallest businesses to improve the processes for interfacing with customers. They are now able to develop services for individual clients rather than provide a standard service. An alternative way of thinking of B2B e-Commerce is to think of it as being used to:

Attract, develop, retain, and cultivate relationships with Streamline the supply chain, manufacturing, and procurement

customers;

processes, and automate corporate processes to deliver the right products and services to customers quickly and cost-effectively;

Capture, analyze, and share, information about customers and

company operations, in order to make better decisions. B2C - Business to Consumer This is where the consumer accesses the system of the supplier. It is still a two way function but is usually done solely through the Internet. B2C can also relate to receiving information such as share prices, insurance quotes, on-line newspapers, or weather forecasts. The supplier may be an existing retail outlet such as a high street store; it has been this type of business that has been successful in using eCommerce to deliver services to customers. These
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businesses may have been slow in gearing-up for e-Commerce compared to the innovative dot.com start ups, but they usually have a sound commercial structure as well as in-depth experience of running a business - something which many dotcoms lacked, causing many to fail. C2B - Consumer to Business Consumer to Business is a growing arena where the consumer requests a specific service from the business. B2E - Business to Employee Business to Employee e-Commerce is growing in use. This form of e-Commerce is more commonly known as an Intranet. An intranet is a web site developed to provide employees of an organisation with information. The intranet is usually access through the organisations network, it can and is often extended to an Entrant which uses the Internet but restricts uses by sign on and password. C2C - Consumer to Consumer These sites are usually some form of an auction site. The consumer lists items for sale with a commercial auction site. Other consumers access the site and place bids on the items. The site then provides a connection between the seller and buyer to complete the transaction. The site provider usually charges a transaction cost. In reality this site should be call C2B2C. B2A is the least developed area of e-Commerce and it relates to the way that public sector organisations, at both central and local level,
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are providing their services on-line known as e-Government, it has the potential to increase the domestic and business use of eCommerce as traditional services are increasingly being delivered over the Internet. CHALLENGES IN ELECTRONIC COMMERCE For more than two decades, organizations have conducted business electronically by employing a variety of electronic commerce solutions. In the traditional scenario, an organization enters the electronic market by establishing trading partner agreements with retailers or wholesalers of their choosing. These agreements may include any items that cannot be reconciled electronically, such as terms of transfer, payment mechanisms, or implementation conventions. After establishing the proper business relationships, an organization must choose the components of their electronic commerce system. Although these systems differ substantially in terms of features and complexity, the core components typically include:

Workflow Application: A forms interface that aids the user

in creating outgoing requests or viewing incoming requests. Information that appears in these forms may also be stored in a local database.

Electronic Data Interchange (EDI) Translator: A mapping

between the local format and a globally understood format.

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Communications: A mechanism for transmitting the data; Value-Added Network (VAN): a store and forward

typically asynchronous or bisynchronous

mechanism for exchanging business messages Using an electronic commerce system , a retailer may maintain an electronic merchandise inventory and update the inventory database when items are received from suppliers or sold to customers. When the inventory of a particular item is low, the retailer may create a purchase order to replenish his inventory. As the purchase order passes through the system, it will be translated into its EDI equivalent, transmitted to a VAN, and forwarded to the suppliers mailbox. The supplier will check his mailbox, obtain the EDI purchase order, translate it into his own local form, process the request, and ship the item. These technologies have primarily been used to support business transactions between organizations that have established relationships (i.e. retailer and the wholesaler). More recently, due largely to the popularity of the Internet and the World Wide Web, vendors are bringing the product directly to the consumer via electronic shopping malls. These electronic malls provide the consumer with powerful browsing and searching capabilities, somewhat duplicating the traditional shopping experience. In this emerging business-to- consumer model, where consumers and businesses are meeting electronically, business relationships will have to be automatically negotiated.
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The Challenge As the information technology industry moves towards the creation of an open, competitive Electronic Marketplace, it must provide an infrastructure that supports the seamless location, transfer, and integration of business information in a secure and reliable manner. This Marketplace will be used by all application domains to procure commodities and order supplies. As such, electronic commerce applications will require easy-to-use, robust, security services, a full suite of middleware services, and data and protocol conversion services. Using this Electronic Marketplace, a purchasing agent will competitively procure supplies, a manufacturer will obtain product or parts information, and a consumer will procure goods and services. Security Issues Ensuring security of payments and privacy of online transactions is key to the widespread acceptance and adoption of e-commerce. While the appropriate policies are in place to facilitate ecommerce, lack of trust is still a barrier to using the Internet to make online transactions. Security of electronic communications is a major control issue for companies engaged in electronic commerce. It is essential that the commerce related data of buyers and sellers be kept private when they are transmitted electronically. The data being transmitted also must be protected against being purpose fully altered by someone other than the sender.
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Much online commerce continues to be handled through private EDI networks usually run over VANs. VANs (Value Added Networks) are relatively secure and reliable. Thus high availability computing requires a security infrastructure for electronic commerce and electronic business. Large public networks, including the internet, are more vulnerable because they are virtually open to anyone and because they are so huge that when abuses do occur, they can have an enormously wide spread impact. When the internet becomes part of the corporate networks, the organisations information systems can be vulnerable to actions from outsiders. There are some typical types of computer crimes that hakers commit on the internet on a regular basis. That is why Internet security measures like encryption and firewalls are so vital to the success of electronic commerce and other business uses of the internet. Building Blocks In the heterogeneous, distributed environment that makes up this Electronic Marketplace, information and services will be accessible via methods that are as wide and as varied as the vendors and consumers that populate and use them. No longer will interoperability be achieved by using a single set of standards. Competing technologies will always be available, and quite often there will be no clear winner. Instead, emerging middleware technologies will complement the suite of standards and standards

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to provide seamless location, transfer, and integration of business information. One can imagine that over time, the Electronic Marketplace will be populated with a myriad of products and services. To aid the consumer in finding useful and necessary information from amongst the vast sea of resources that will ultimately be available, advances in resource discovery technologies will be critical. Key components that will be necessary to advance resource discovery techniques are distributed naming and directory services. Distributed naming services provide an environment that allows functions to move transparently among computing platforms. Coupling this feature with directory services provides a method for organizations to dynamically register business capabilities as they move on and off the information highway. As the amount of information that can be exchanged grows, traditional communications protocols will give way to a set of faster and more reliable protocols. Middleware communications will be used to hide the complexity of the underlying communications protocols. Applications will require programmable interfaces to message queuing, database access, remote procedure calls, and object request brokers. It is imperative that the communications infrastructure be able to support these and future services in a flexible and efficient manner. The seamless location and transfer of information will allow consumers and providers to exchange business information, but
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will not provide for the integration of that information into their business processes. Current data translation practices allow for a syntactic translation of information, which works well when semantic differences can be settled out of band. In the Electronic Marketplace, where entire business paradigms must be established electronically, it will be necessary to carry both the semantics and syntax of data elements through the data translation process. Security services will be imperative in the daily operation of the Electronic Marketplace. Applications will require a full suite of end-to-end security services, including authentication, integrity, confidentiality, non-repudiation, and access control. The first three services can be achieved through public-key cryptosystems that employ digital signature, encryption, and key exchange technologies. Non-repudiation can be added through the use of a certification authority. Upon user authentication, traditional access control or role-based access control methods can be employed to define access rights. Perhaps the biggest challenge in creating this Electronic Marketplace problems will be to by overcome competing current security interoperability caused

algorithms, message formats, and certificate management systems. Security is a prime example of a situation where competing solutions exist and there is no clear winner in sight. Recent work in the area of cryptographic APIs promises to provide a welldefined, high-level interface to security services, regardless of the complexity of the underlying algorithms. Differences in message
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formats and certificate management systems must similarly be overcome, either through standards, or through the use of mediators and facilitators. Solutions To directly address the issues of building an information infrastructure that will support an Electronic Marketplace, the National Institute of Standards and Technology has established two cooperative, complementary programs. The CAIT, under the guidance of industry participants, identifies, develops, and demonstrates critical new technologies and applications. The ECIF provides a laboratory environment that supports technology transfer through rapid prototypes, pilots, the integration of key infrastructure components and services, and the demonstration of existing and emerging Electronic Commerce technologies. Through on-going projects in the areas of database access, facilitators and mediators, resource discovery, secure messaging, and integration technologies, the CAIT and ECIF focus on the following:

Where enabling services and technology are not yet

commercially available, NIST fosters joint research projects aimed at bringing together the research community and the vendor community. This joint fellowship provides vendors with the tools they need to quickly implement emerging technologies

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while researchers remain focused in their development of new technologies.

Where components are commercially available, NIST creates

test beds and pilots aimed at achieving interoperable solutions. These solutions are achieved by demonstrating interoperability among

middleware

technologies,

standards

and

defect

standards. Promotes technical awareness via presentations, publications, E-COMMERCE COMMUNITIES In a word, its community that will drive e-Commerce in the future. We certainly have the technology to build great business-toconsumer and business-to-business ecommerce applications into our business models. And attributes such as viable application design, integration with business processes, and overall performance matter. But those who invest in community will see a large increase in repeat business, improved support functions, and the opportunity to go after new forms of e-Commerce revenue. A successful community strategy must embrace the idea of moving the one on-one communication that occurs offline into the virtual world of e-Commerce. Such a strategy currently requires multiple technical approaches. However, community solutions will soon become more integrated and far-reaching. demonstrations, and consulting.

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The tools that form online communities include discussion or forum software, chat functions, instant messaging, two-way mailing lists, online collaboration tools, audio, video, and more. We must choose to invest slowly at first and increase our community commitment over time. For example, the online version of some inquiry might be fulfilled simply via a pop-up notification window on my return visit, assuming your e-Commerce application was enabled to take a feedback. Or, in a more sophisticated version, you might make a customer service representative available via video and audio. The same type of solutions can be enabled for business-to-business transactions. Online business is much more exacting, and those participating usually have a darn good idea of what they want. Better to let me contact you and supply my long-distance requirements. The feedback should be supplied without a long or scripted marketing pitch, too. Community is also a wise strategic investment in other ways. Suppose one set up a moderated discussion group or a two way mailing list to get people talking about their products. Consumers will often have good ideas about product improvements or good or bad experiences with the product. By implementing these types of open communication, a company may gather ideas about new product offerings, improvement of existing products, or methods of bolstering support, all of which will likely yield repeat business.
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Online conversation with business partners will also give net positive results. A private discussion area or secured online meetings can go a long way toward building stronger relationships between companies. This will also serve to potentially drive new business opportunities for both parties. Building community has to be at the heart of any successful eCommerce strategy. Certainly we cannot totally mimic offline human interaction in an online setting. However, e-Commerce settings today are very inhuman in nature; we need to factor in the human part of the equation if e-Commerce is to be successful. CONSUMER ORIENTED E-COMMERCE E-retailing essentially consists of the sale of goods and services. Sometimes we refer to this as the sale of tangible and intangible goods. We can divide tangible goods into two categories: physical goods and digital goods. Examples of physical goods would be a book, a television set, a video recorder, a washing machine, etc. Examples of digital goods are software and music, which may be downloaded from the internet. The sale of intangible goods is sometimes called e-servicing. Examples of services that may be sold are information such as the most recent stock prices, the most recent foreign exchange rate or education. Entertainment such as games that would be played on the internet is also examples of eservices. So are the sales of services such as telecommunication services or banking services. The sales of tangible and intangible goods are all referred to as customer oriented e-Commerce or e22

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retailing, if they are sold directly to the consumer who is the end user. Here we discuss the sale of tangible goods. Lets see the difference between Traditional Retailing and ERetailing Traditional Retailing Before we begin a discussion of e-retailing, it would be useful to look at some aspects of traditional retailing. This helps to identify some essential characteristics of retailing. Traditional retailing essentially involves selling to a final customer through a physical outlet or through direct physical communication. This normally involves a fairly extensive chain starting from a manufacturer to a wholesaler and then to the retailer who through a physical outlet has direct contact with the final customer. Examples of physical outlets that retailers currently use are: Malls Generalized stores (e.g. department store) Specialized stores Franchise stores It is useful to reflect that even in traditional retailing we have moved away from just using a static physical outlet within which a customer can have direct contact with the retailer. Thus, more recent forms of traditional retailing include direct mailing telemarketing
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door-to-door sales vending machines Direct mailing to a customer normally involves sending a brochure or catalogue to a customer. The customer browses through this catalogue and then carries out mail ordering. In some respects, this notion of browsing through a catalogue is a forerunner of eretailing. Direct mailing, telemarketing, door-to-door sales, or the use of vending machines includes other forms that have actually moved away from a physical fixed outlet and in a way are intermediate forms of the movement away from traditional physical retailing outlet to the virtual retailing we see on the internet. E-Retailing The internet has allowed a new kind of specialization to emerge. Instead of specializing just in a special product line, they allow specialization in particular classes of customers and sellers. Thus, we see lastminute.com, which allows last minute purchases of travel tickets, gift, and entertainment to be matched against last minute sellers of the same items. Here, we see specialization not in a product line but in a class of purchasers and a class of sellers. This kind of specialization would not have been possible before we had the internet. In addition to these specialized stores, we also get generalized estores Where a store sells several product lines under a single management. Examples of these generalized stores include JC
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penny and Walmart. We also have the electronic counterpart of malls or e-malls. Emalls essentially provide a web-hosting service for your individual store much in the way that mall provide a hosting service in the sense of a physical location for your store. Examples of these e-malls are Yahoo! Store, GEOShops and CNET Stores: In the future we may see the equivalent of franchise stores developing. One new class of business that is developing very quickly on the internet is the e-broker. The e-broker does not sell directly to a customer but brings the customer in touch with a particular supplier, so that a given set of criteria specified by the customer is satisfied. For example, the customer may want to buy goods at the cheapest price and so the e-broker would then do a search to find the supplier that would provide the cheapest goods. Or, a customer may want to find a particular kind of goods and the e-broker sets about determining which supplier would provide those goods. This area of e-broking is likely to grow very greatly in the near future. Benefits of E-Retailing To the customer... Customers enjoy a number of benefits from e-retailing. The first of these is convenience. It is convenient for the customer as he does not have to move from shop to shop physically in order to examine goods. He is able to sit in front of a terminal and search the net and

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examine the information on goods. The second aspect of convenience he gets is in terms of time. Normally, the traditional shop has an opening time and a closing time and the customer can only visit the shop within these periods. On the net, the customer can choose at any time to visit a site to examine the goods that are available and actually carry out his purchasing at ones own convenient time. The third type of convenience that the customer gets is that he has access to a search engine, which will actually locate the products that he describes and also the site where they may be available, or perhaps even locate the sites where they may be available at the best price. The second type of benefit to customers is better information. The Internet and the World Wide Web are essentially communication media that allow retailers to put on quite extensive information related to their products, which is available to the customers. Furthermore, since the customer can look at several sites, he will be able to obtain different pieces of information from each site to build a far better picture for him about the products that he is interested in. In some sites, there are customer reviews of different products as well as reviews by the business itself. An example of this can be found on Amazon.com. This allows-the customer to finesse his requirements before actually making the purchase. It also gives different sources of information. The third type of benefit that the customer gets is competitive pricing. This is due to two factors.
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The first is lowered costs to the retailer because he does not have to maintain a physical showroom, he does not have to hire several shop assistants, and these savings can be passed on to customers in the form of reduced prices. Secondly, competitive pricing pressure that arises from the fact that the customer is now able to look at prices at several sites. Therefore, the pressure is always there on the retailer to maintain a competitive price for his products. The third benefit is customization. The customer can actually specify the features of the products that he would like and thus in some cases it is possible that the retailer may allow a customized product to be delivered. An example of this is on the Dell site. The computer site allows shoppers to custom specify their own computer software and hardware configurations. Thus, the customer is able to select exactly what he wants. This ability to get the business to deliver a product that the customer specifies he wants is the essence of C2B ecommerce. The benefits of e-retailing to the customer include Convenience Better information Competitive price Customization Shopping anywhere, anytime

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So with e-retailing, the customer can shop anywhere around the globe without being restricted to his local vicinity. He could, for example, purchase goods over and have them delivered to a domestic address. He can also shop, as mentioned earlier at any time. These are very considerable benefits of e-retailing to the customer. These benefits could see larger and larger numbers of customers move more and more of their shopping on to eretailing sites in the future. To the Business... There are a number of benefits of e-retailing to the business itself. The first of these is global reach. The retailer now is no longer restricted to customers who are able to reach the store physically. They can be from anywhere around the globe. The retailer must, of course, deliver the goods of a purchase to the customer. We see later that has an impact on the types of goods that are most easily handled through e-retailing. The second benefit is better customer service. The use of email and the use of electronic interchange of messages between the customer and the retailer allow better communication between the customer and the retailer. These allow one to easily inquiries and deal with complaints. These also allow a much more rapid response time than was possible in the days of faxes and postal mail.

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The third benefit is the lowered capital cost to the retailer. The retailer does not have to maintain showrooms; he can probably have lower inventories. Thus, while Amazon.com lists over a few million titles, it keeps an inventory of a few thousand best selling titles only. Therefore, the retailer has lower warehousing costs. He does not have to have many shop assistants who are physically answering questions and Showing the customer goods. The fourth benefit to the retailer is mass customization. Based on requests by the customers, the retailer is now able to carry out mass customization with reduced time to market for the customized products. The next advantage is targeted marketing. The retailer is now able to pick on a specific targeted group of customers and direct marketing towards these customers. The retailer is also able to provide more value-added services in the way of better information, add-on services to basic services, or add-on options to products that he is selling. The last advantage to the retailer consists of different new forms of specialized stores that he is now able to utilize. The benefits to the e-retailer are

Global reach & Better customer service Mass customization & Targeted marketing

Low capital cost

More value-added services

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New forms of specialized stores and niche marketing The future of E-Retailing When one examines e-retailing, one can distinguish between two trends, namely Technologies that help you see and experience the product better, e.g. virtual reality, Java 3D, etc. Technologies that help you not to see at all but use an intelligent agent (or mobile agent) that does all the shopping tasks for you. Summary: E-retailing essentially consists of the sale of goods and services. Sometimes we refer to this as the sale of tangible and intangible goods.
MODEL FOR E-COMMERCE & INFORMATION SUPERHIGHWAY

There are basically seven types of models for E-business. The EBusiness model would be closely tied to the mission of the organization. Once the organization has decided what it aims to do one of the models that have been explained below may be adopted. ELECTRONIC PAYMENT SYSTEMS Electronic payment is an integral part of electronic commerce. Broadly de-fined, electronic payment is a financial exchange that takes place online between buyers and sellers. The content of this exchange is usually some form of digital financial instrument (such as encrypted credit card numbers, electronic checks, or digital cash) that is backed by a bank or an intermediary, or by legal tender. Three factors are stimulating interest among financial institutions in electronic payments: decreasing technology costs

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reduced operational and processing costs, and increasing online commerce. The desire to reduce costs is one major reason for the increase in electronic payments. Cash and checks are very expensive to process, and banks are seeking less costly alternatives. It is estimated that approximately 56 percent of consumer transactions in the United States are cash and 29 percent are check. Credits, debits, and other electronic transactions account for about 15 percent of all consumer transactions, and are expected to increase rapidly. Electronic transactions numbered 33 billion in 1993 and are expected to climb to 118 billion by the year 2000. For the same period, paper transactions are forecast to show very modest growth, from 117 billion in 1993 to 135 billion in the year 2000. Banks and retailers want to wean customers away from paper transactions because the processing overhead is both labors intensive and costly. The crucial issue in electronic commerce revolves around how con-sumers will pay businesses online for various products and services. Currently, consumers can view an endless variety of products and services offered by vendors on the Internet, but a consistent and secure payment capability does not exist. The solutions proposed to the online payment problem have been ad hoc at best. For instance, in one method marketed by Cyber Cash, users install client software packages, sometimes known as electronic wallets, on their browsers. This software then
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communicates with electronic cash registers that run on merchants Web servers. Each vendors client works with only that vendors own server software, a rather restrictive scenario. Currently, merchants face the unappealing option of either picking one standard and alienating consumers not subscribing to a standard or needing to support multiple standards, which entails extra time, effort, and money. Today, the proliferation of incompatible electronic payment schemes has stifled electronic commerce in much the same way the split between Beta and VHS standards stifled the video industrys growth in the 1970s. Banks faced similar problems in off-line commerce in the early nineteenth century. Many banks issued their own notes, and a recurrent problem was the tendency of some institutions to issue more notes than they had gold as backing. Further, getting one bank to honour anothers notes was a major problem. Innovations in payment methods involved the creation of new financial instruments that relied on backing from governments or central banks, and gradually came to be used as money. Banks are solving these problems all over again in an online environment. The goal of online commerce is to develop a small set of payment methods that are widely used by consumers and widely accepted by merchants and banks. This chapter offers a brief examination of the various types of electronic payment systems. It then provides an overview of the business, consumer, and legal implications of electronic payment systems.
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Overview of the Electronic Payment Technology Electronic payments first emerged with the development of wire transfers. Early wire transfer services such as Western Union enabled an individual to deliver currency to a clerk at one location, who then instructed a clerk at an-other location to disburse funds to a party at that second location who was able to identify himself as the intended recipient. Cash was delivered to the customer only after identity was established. In this scenario, there was no banking environment; Western Union was a telegraph company. Assurance of payment relied on the financial stability of the firm. Security was pro-vided to the extent that Western Union was a privately controlled transmission facility used to send messages about funds transfer; its lines were not shared with the public, and transactions were private. Authentication was provided only by a signature at the other end of the transmission that verified that the intended party had indeed received the funds. During the 1960s and early 1970s, private networking technology has enabled the development of alternative electronic funds transfer (EFT) systems. Electronic funds transfer systems have shortened the time of payment instruction transfer between banks, and in the process have reduced float. However, EFT systems have not changed the fundamental structure of the payment system. Many of the so-called payment innovations over the past two decades have been aimed at minimizing banking costs such as reserve requirements, speeding up check clearing, and minimizing
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fraud. However, the consumer rarely interacted with the early EFT systems. Recent innovations in electronic commerce aim to affect the way consumers deal with payments and appear to be in the direction of a real-time electronic trans-mission, clearing, and settlement system. Consumer electronic payment systems are growing rapidly, but the opportunities are scarcely tapped. In the United States, it is estimated that only 3 percent of the $460 billion supermarket industry is transacted on credit or debit cards. Only 1 percent of the $300 billion professional services area is transacted electronically. Less than 12 percent of business at gasoline service stations is electronic and less than 1 percent of fast food restaurants have magstripe readers. The educational market alone is more than $100 billion today, only 6 percent of which is transacted electronically. Even more important is the predicted growth ahead. Electronic or Digital Cash Electronic or digital cash combines computerized convenience with security and privacy that improve on paper cash. The versatility of digital cash opens up a host of new markets and applications. Digital cash attempts to replace paper cash as the principal payment vehicle in online payments. Although it may be surprising to some, even after thirty years of developments in electronic payment systems, cash is still the most prevalent consumer payment instrument. Cash remains the dominant form of payment for three reasons: lack of consumer trust in the banking
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system; inefficient clearing and settlement of noncash transactions; and negative real interest rates on bank deposits. These reasons behind the prevalent use of cash in business transactions indicate the need to re-engineer purchasing processes. In order to displace cash, electronic payment systems need to have some cash-like qualities that current credit and debit cards lack. For example, cash is negotiable, meaning that it can be given or traded to someone else. Cash is legal tender, meaning that the payee is obligated to take it. Cash is a bearer instrument, meaning that possession is proof of ownership. Cash can be held and used by anyone, even those without a bank account. Finally, cash places no risk on the part of the acceptor; the medium is always good. In comparison to cash, debit and credit cards have a number of limitations. First, credit and debit cards cannot be given away because, technically, they are identification cards owned by the issuer and restricted to one user. Credit and debit cards are not legal tender, given that merchants have the right to refuse to accept them. Nor are credit and debit cards bearer instruments; their usage requires an account relationship and authorization system. Similarly, checks require either personal knowledge of the payer, or a check guarantee system. A really novel electronic payment method needs to do more than recreate the convenience that is offered by credit and debit cards; it needs to create a form of digital cash that has some of the proper-ties of cash.

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LEGAL ASPECTS OF E- COMMERCE The world is used to conducting business and commerce on signed paper documents. Two millennia of commerce have been based on the written document with its value authorized by the signature of a duly authorized officer. The current legal practice has paper documents and signatures affixed thereon as its foundation. Electronic documents and messages, without the familiar signatures and marks, have changes the scene. However, trade still wants to be assured that the electronic world is safe. The EC system must, therefore, offer at least the same level of reliability as that which obtains in the paper world notwithstanding the significant difference between the concepts embodied in electronic messages and paper documents. It is well known that frauds do take place in the traditional paper based commercial transaction. Signatures can be forged, paper document can be tampered with, and even the most secure marks, impression, emblems and seals can be forging. But then these are known, and trade as well as the legal community knows how to deal with these problems. Companies set aside funds to take care of losses due to such frauds. The EC world, on the other hand, exposes us to issues, which were hitherto unknown, since they are directly the outcome of creating documents electronically, transmitting them over world wide computer communication networks. Trading partners exchange documents electronically. They need to convince themselves that
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such documents are authentic when received over networks, and that their authentication can be established in case of dispute. Transactions may be electronic, but the key concept of admissibility of evidence and evidential value of electronic documents, which are central to the law, remain the same. There must be a way to prove that a message existed, that it was sent, was received, was not changed between the sending and receiving, and that it could not be read and interpreted by any third party intercepting or deliberately receiving it. The security of an electronic message, legal requirement, thus gets directly linked to the technical methods for security of computers and networks. From the legal angle, there is a further complication because the electronic message is independent of the actual medium used for storage transmission. The message can be stored on a floppy, a magnetic disk, or an optical disk. Likewise, it may be transmitted over a Local Area Network, a Wide Area Network, a private Value Added Network or the Internet. The physical medium could be coaxial cable, radio link, optical fibre or a satellite communication channel. The legal issues of EC have generated tremendous interest among technologists, traders and legal experts. Many of the early EDI experiments, and even production systems went into operation without any legal interchange agreement between trading partners, between VANs and their customers. No laws for EC existed; in fact they are still in the making. In India, too the Indian Customs
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EDI system (ICES) Project got off theground in 1995 without any EC/EDI law in existence, or even a proper interchange agreement. Legal Issues for Internet Commerce Internet commerce raises legal issues through the provision of the following services: Online marketing Online retailing ordering of products and services Financial services such as banking and trading in securities. Exchange of electronic messages and documents EDI, electronic filing, remote employee access, electronic transactions. Trade and commerce over the Internet give rise to several legal issues as given below. Copyright and the Internet Copyright developed in the printed world to protect the economic interests of creative writers. Copyright law protects only the expression of an idea and idea itself. In due course it protect the originality of artists and innovators too. In recent times, however, the subject matter of copyright has further expanded. For example, the Copyright Designs and Patent Act, 1988 in the UK, allows protection of the following subject matter: Original literary, dramatic, musical and artistic works; the typographical arrangement of published editions of literary, dramatic or musical works; sound recordings; broadcasts; cable programs These have been broadly classified into two groups as
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author works and media works by Hector L. McQueen. The multimedia capability of websites enables all types of work to be published on the Internet in the sense that copies can be distributed to users/customers. The problems, however, is that unlike a paper copy, this copy can be readily duplicated and distributed further by the recipient. If the material is in the public domain there are no difficulties. But the copyright law applies to the downloaded matter, much the same way it applies to physical copies.

Issues Related to Jurisdiciary The Internet allows anyone to set up a Website anywhere in the world. Its location could, however, be interpreted to decide the jurisdiction of disputes especially in EC. A Website may accept orders from visitors to the site as part of an Internet store or a shopping mall. For example, amazon.com is a bookstore retailing books. A court law may rule that the location of the Website determines the jurisdiction for that business. This is based on accepted legal practice. Jurisdiction determines which laws would be acceptable. EC on the Internet will grow if the parties doing business know what rules will govern what rules govern their activities. Service Provider liability

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Many ISPs provide users access to shared websites, Usenet news, E-mail distribution list etc. These facilities can because by their users to upload unlawful, defamatory, copyright or trademarks infringing material. Unlawful material includes banned publications, hate propaganda, pornography and obscene material, without ISP having chance to review it. Liability for materials distributed in the Internet may be different for the Website operators, and the ISPs. AN ISP could be held liable for the bulletin boards, and for aiding and abetting the commission of an offence such as the distribution of photography. Similarly, third-party liability for defamation, web sites, etc: Thus the concerns include libel and defamation, liability for infringement of third-party rights, liability for hosting of unlawful materials. EIGHT STEPS TO PLAN SUCCESSFUL E-COMMERCE Good plans are simple plans. They are also measurable, their implementation is accountable, he resources to deliver the plan are available and there is a time-frame for the plan to be delivered. Whatever planning process an organisation uses, expect that the company will not control the direction in which online services evolve. The customer will decide what works and what doesnt. Respond Fast If the plan is to respond to customer wishes, then the most successful plan will be the one that responds fastest. This means
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that every component of the plan should be built with the intention of proving a principle. Ask yourself if your customers want this? If they do, then a more robust version can be built. If they dont, then you can redirect your time and resources and use the knowledge gained to good effect elsewhere. Test out Your Plan In the online marketplace everything is a test until its proven by the customer. Successful testing follows a simple rule: Test one Thing at a Time Only test changes that can be measured directly. If a test includes more than one change, its almost always impossible to measure the effect of each one. Test to learn from the customer and to improve one step at a time. Challenge Internal Assumptions Remove internal processing costs to make dramatic improvements to profit margins. Analyse each sales process to clarify what it is that staff spend time doing. In particular, look for processes in which information is transferred. Focus on Customer, Supplier & Distributor Benefits Whats in it for customers, suppliers and distributors? Have you asked what theyd like? The webs very good at research. Are you offering them a new way to use an existing service or a completely new service? Is it faster, cheaper, more convenient or just new and online? What new information do they get? Decide what you can reliably offer each group now and plan a phased introduction of
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more complex services. Complexity often arises from integrating tried and tested stand-alone services. Give Good Reasons to Use Online Services Not all customers will automatically move to an online service simply because its there. Equally, in a services early stages it may not make good sense to risk overwhelming a new online channel by quickly moving large numbers of customers over to the new service. If you prefer customers to use an online channel, find ways to: Inform them that it is there (they may not know this) Tell them how to change over Incentives the swap to make it worthwhile Introduce the new service as a special privilege beta test programme CONCLUSION Just as e-mail has come to dominate our lives in communication with anyone around the globe, e-Commerce is fast emerging as a way of transactions between parties doing business nationally and internationally. At the turn of the last millennium, e-Commerce created excitement in the hallowed corridors of Harvard Business School as well as the poorest lanes of Hoshiarpur, Punjab, India. The reasons for this are not far to seek. The two powerful concept of anytime-anywhere and virtualization of the companies have demonstrated their tremendous potential to improve business reach, to reduce costs and cycle times, and to enhance productivity in organizations
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across the globe. Consequently, consumers can hope for better comfort and greater value-for-money. In todays economic scenario, the market place is increasingly global and competitive with the growth of internet and web based technologies. As mentioned above the turn of the last millennium saw the emergence of what is, probably, the most powerful paradigm that the world has witnessed in recent years eCommerce. Advances in communications and computing, and the realization of the power of the internet have made e-Commerce the most revolutionary instrument for improving the productivity of both corporations and individuals. Therefore, the business process requires efficient coordination of information between partners/suppliers/support partners and customers. This objective is achievable if the networks of these parties integrate them effectively to be able to communicate better and faster for transacting business. Without e-Commerce, the transaction cycle becomes long resulting in delayed response and higher cost, resulting in decreased customer satisfaction. Internet provides a faster information highway to transact business. Thus e-Commerce is a method to gain and maintain competitive advantage in business transactions. It is a new way of conducting, managing and executing business transactions and services through electronic media and networks. It is a modern methodology that addresses the needs of organisations, consumer, banks and

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financial institutions to cut costs while improving the quality of goods and services and improving the delivery system. Instead of the traditional paper based transactions in commerce, the electronic media like computers and communication networks, web-sites, e-mails are restored to. The World Wide Web allows suppliers to create a web presence for providing product and service information directly to the customer. A customer can go directly to a vendor to download the latest information with no human intervention. Many businesses establish this type of web presence through an Internet Service Provider (ISP). The ultimate purpose of e-Commerce is to ensure better customer satisfaction which is an overall psychological state that reflects the evaluation of a relationship between the customer/consumer and a company-environment-product-service.

REFERENCES

1.

http://www.raifoundation.org

2. The Hindu Speaks on Management Volume II

3. 4.

e-Commerce and e-Business, from www.eprimers.org The Power of E-Commerce, www.infy.com

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5. Introduction to computers-2, IDE, University of Kerala

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