Computer Application into Business-II

Name: Muhammad Sumair s/o Ghulam Muhammad Registration # 15801 Course: Computer Application into Business II Submitted to: Sir Moin Day / Timing: Friday, 11:00 to 13:00 Date: September 30, 2011 Assignment # 01

Present By: Muhammad Sumair Reg # 15801

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Topic What is e-commerce New Invention History of e-commerce Over view of e-commerce in Pakistan Low Literacy Rate Misconceptions about e-commerce in Pakistan Mistrust Traditionalist nature of Pakistani society Access to technology Access to internet services Lack of e-transaction support in Pakistan Poor transportation/distribution channels Conclusion

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Barriers of E-Commerce in Pakistan

What is e-commerce?
Electronic commerce, commonly known as e-commerce, e-commerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use 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 one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well. A large percentage of electronic commerce is conducted entirely in electronic form for virtual items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as etailers and online retail is sometimes known as e-tail. Almost all big retailers are now electronically present on the World Wide Web. Electronic commerce that takes place between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that takes place between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service involved. The sale or purchase transaction is completed electronically and interactively in real-time such as in Amazon.com for new books. However in some cases, an intermediary may be present in a sale or purchase transaction such as the transactions on eBay.com. 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 business transactions.

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New Invention:
Among the wonderful inventions of twentieth century, Internet has come to wield immense influence on our lives. From reading newspapers to monitoring the performance of companies on stock exchange, from learning the first aid techniques when in emergency to learning the recipe of making a cake when guests visit, and from listening to music to keeping abreast of the latest cricket scores, our lives have got increasing intertwined with internet. Doing business online is yet another application of internet, which is changing the way business is done. The term electronic commerce or E-commerce may loosely be defined as doing business over the internet, selling goods and services which are delivered offline as well as products which can be digitized and delivered online such as computer software, videos, and music. E-commerce in its wider sense encompasses all transactions involving business organisations, governments, or consumers that are done online through internet. However, the narrower view of E-commerce focuses only on transactions between Business and Consumers (Business to Consumer E-commerce or B-to-C E-commerce) and among two or more businesses (Business to Business E-commerce or B-to-B E-commerce). Banking, entertainment, telecommunications, and manufacturing industries globally have already started using E-commerce business models, and have been reaping the benefits in terms of greater revenues and lesser costs. Within these industries, Internet is used for four major tasks with respect to E-commerce: Firstly, attracting new customers through online marketing and advertising; secondly, serving existing customers via customer service and support function; thirdly, developing new markets and distribution channels for existing products; lastly, developing new information-based digitised products, which are then transmitted online. Like every new technology, the potential uses of E-commerce were at first over-hyped, leading to the Dot Com Boom of 1996-2000, which was briefly followed by a crash that kicked many companies out of business; thereby, temporarily tarnishing the promising role of internet as an effective and state-of-the-art medium of business. However, with the survivors of the crash and the new comers doing well these days, the quantum of business online is expanding with rapid pace. In Pakistan the size of E-commerce is small and uncertain at the moment. Yet as in most developed countries of the world, it is expected that with the realization of full potential of this new mode of commerce in future, it is bound to gain a sizable chunk of business in Pakistan as well, due to the several potent advantages that E-commerce enjoys over the conventional mode of commerce like its open structure that surpasses all geographical barriers, low costs of transactions, low barriers to entry and improved access to information, besides more efficient management of supply and distribution.

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Computer Application into Business-II

History of E-commerce
Originally, electronic commerce was identified as 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. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. In 1990, Tim Berners-Lee invented the WorldWideWeb web browser and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited by NSF until 1995. Although the Internet became popular worldwide around 1994 with the adoption of Mosaic web browser, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services

Overview of e-commerce in Pakistan

When the government started an information-technology (IT) and e-commerce initiative in early 2000, the banks were expected to lead the way into e-commerce. However, although the banking sector is the leading spender on information communications technology, the most progress in ecommerce has been in e-government. Some business-to-business (B2B) portals are available, but they are designed more for information than transactions. Half of the countrys 7,000 commercial-bank branches, including 90% of the branches in urban areas, had been computerized by August 2006. Many banks and exchange companies offer online funds transfers from overseas, such as for workers remittances. A few of banks offer mobile-phone banking, where customers can pay utility bills using their mobile phones. The National Institutional Facilitation Technologies (NIFT), an automated check-clearing house, was operating in 14 cities in August 2006, and it processed 60m checks per year in 2005/06. NIFT is a public-private company owned 51% by banks. Internet merchant accounts (used for processing financial transactions of Internet vendors) were permitted by the State Bank of Pakistan (the central bank) in February 2001. However, inadequate infrastructure and security concerns remain, and in mid-2006 only Citibank (US) offered these accounts, which were used by airlines, mobile companies, Internet service providers and merchants. The transactions that do occur use international credit cards, which are
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processed outside Pakistan. Users of Internet merchant accounts undertaking transactions outside Pakistan need to submit electronic forms for transactions valued at US$500 or more to their banks, which must then submit the same in consolidated form on a monthly basis to the central bank. In December 2005 the Central Board of Revenue, the tax authority, started allowing electronic filing of sales tax and federal excise returns by registered private and public companies. At that time, it said that it expected about 1,500 large taxpayers out of 22,000 to use the facility. Government efforts to promote the IT sector include the establishment of the Information Technology and Telecommunications Division in July 2000, various incentives, and the commitment of resources for education and infrastructure building. The Ministry of Science and Technology launched the National Information Technology Policy in August 2000. It was developed by a team that included working groups on the following: human-resource development; IT in government and databases; IT market development and support; IT fiscal issues; telecoms, convergence and deregulation; cyber law, legislation and intellectual-property rights; IT research and development; Internet development; software export; e-commerce; and incentives for IT investment. Total spending (by the government and private sector) on information, communications and technology in Pakistan was US$10bn during 2005/06. Various e-commerce projects and initiatives were underway in the public and private sectors in August 2006. The government said in May 2004 that it has planned new IT and e-commerce projects worth well over PRs4.5bn up to 2007, and by then it aims to produce 100,000 graduates a year in IT studies from the seven new IT universities it has already set up. Pakistan is part of the 15-member Asia Pacific Council for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. The council aims to support the United Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and Electronic Business, a non-governmental organization that promotes trade facilitation, electronic business policies and activities in the AsiaPacific region. The parts that now constitute Pakistan were among the least developed regions of India prior to 1947, and the last to be conquered by the British, according to an eminent Pakistani economist Dr. Kaiser Bengali. The British rule in Sind, Baluchistan and NWFP lasted about 100 years and these regions were considered the periphery of the British Raj in India. At the time of independence in 1947, the overall literacy rate in India was 12.2%, and the parts that became Pakistan probably had an even lower rate of literacy in single digits. However, currently the growth of E-commerce in Pakistan is hampered by a number of factors, which are discussed below. These barriers must first be removed for E-commerce to grow in the country.

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Low Literacy Rate:

Pakistans Literacy rate is 50% and according to National Education Educational Policy, in literacy rate, the placement of Pakistan among the Muslim world is 31 out of 35 counties and globally 134 out of 180 countries. About 25 percent of children are not enrolled in primary schools and 50 percent of those enrolled, drop-out before completing primary school. The dropout rate is almost 50% which is very high! High dropout rate has been identified as one of the major contributing factors to this dismal state of educational scenario in Pakistan. Education in Pakistan is overseen by the government Ministry of Education and the provincial governments, whereas the federal government mostly assists in curriculum development, accreditation and some financing of research. The education system in Pakistan is generally divided into five levels: primary (grades one through five); middle (grades six through eight); high (grades nine and ten, leading to the Secondary School Certificate or SSC); intermediate (grades eleven and twelve, leading to a Higher Secondary (School) Certificate or HSC); and university programs leading to graduate and advanced degrees. The literacy rate ranges from 87% in Islamabad to 20% in the Kohlu District. Between 2000 2004, Pakistanis in the age group 5564 had a literacy rate of almost 30%, those aged between 4554 had a literacy rate of nearly 40%, those between 2534 had a literacy rate of 50%, and those aged 1524 had a literacy rate of more than 60%. These data indicate that, with every passing generation, the literacy rate in Pakistan has risen by around 10%. Literacy rates vary regionally, particularly by sex. In tribal areas female literacy is 7.5%. Moreover, English is fast spreading in Pakistan, with 18 million Pakistanis (11% of the population) having a command over the English language, which makes it the 9th Largest English Speaking Nation in the world and the 3rd largest in Asia. On top of that, Pakistan produces about 445,000 university graduates and 10,000 computer science graduates per year. Despite these statistics, Pakistan still has one of the highest illiteracy rates in the world.

MISCONCEPTIONS ABOUT E-COMMERCE IN PAKISTAN:

Most people in Pakistan have developed wrong conception of E-commerce. They take a very limited view of E-commerce, restricting it to only those products which may be digitized and transmitted online through internet and the payments for which is also made online through credit cards. This narrow view excludes the other three main functions of E-commerce outlined above i.e. attracting new customers, serving existing customers, and developing new markets and distribution channels for existing products. This misconception is among the main reasons that
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have held most Pakistani entrepreneurs with existing conventional business back from entry into the cyberspace.

MISTRUST:
Among the most important impediments to the growth of E-commerce in Pakistan is the issue of trust. Counterfeiting and distribution of below par products in the face-to-face transactions is a common problem in the country. How can people be expected to trust the sellers whom they do not know, and who would deliver goods online/offline after the payment is made. The issue of trust is further aggravated by the lack of confidence people have with respect to the security and privacy of their personal information like credit cards, home addresses, phone numbers etc. The emergence of trustworthy web-based companies, with support/guarantees from Government or trustworthy multinational companies, in the county is required to dispel these fears of the consumers.

TRADITIONALIST NATURE OF PAKISTANI SOCIETY:

A large number of people in Pakistan will take a long time to come round to the idea that they can order goods and make payments through internet from their homes without physically going out. This is due to the fact that on-site commerce has a socializing effect, which is altogether absent from E-commerce. In a strongly relationship-oriented society like Pakistan, people tend to form individual relationships and long term associations with the businessmen and vendors. These relationships are maintained over the years and may not be easily replaced by the anonymity of the E-commerce transactions. Moreover, most of the retail business in Pakistan is conducted through small local enterprises rather than chains of departmental stores. These small local businesses are run by relatively less educated entrepreneurs who are least eager to embrace the new technology.

ACCESS TO TECHNOLOGY:
In order to undertake E-commerce transactions, one must be connected to the World Wide Web, for which possession of a personal computer (PC) or a laptop is a basic requirement. Although the prices of computer hardware have declined in the past few years, yet a personal computer is still not affordable by vast majority of the people of the country. Besides a personal computer, a telephone line or cable line are also required for a user to get connected to the World Wide Web. Thus, high costs of computer hardware are proving to be a bottleneck to the growth of the Ecommerce in the country.

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Computer Application into Business-II

ACCESS TO INTERNET SERVICES:

It is true that in the past few years there has been a significant increase in the number of internet users in Pakistan, with some observers claiming that in Pakistan the internet access is now available to 800+ cities, towns and villages covering almost 97 per cent of the population. Even if this, seemingly exaggerated, estimate is accepted, the per hour cost of internet use in Pakistan, along with the common problems of low speeds and getting disconnected frequently, render this wide accessibility of internet useless. For e-commerce to flourish we need high speed, cheap and reliable internet connections available to the vast majority of the population.

LACK OF E-TRANSACTION SUPPORT IN PAKISTAN:

Online payment systems are an essential part of e-commerce, which require, inter alia, possession of personal credit cards by consumers. However, few people in Pakistan have personal credit cards. Among the various reasons people avoid getting credit cards from banks include possibility of unnecessarily getting into the debt trap. The unpopularity of personal credit cards in Pakistan is responsible for the weak e-support infrastructure, forcing the use of old mechanism of money transfer like, cash payments, cheques, and postal orders which may work as viable substitutes to credit card for a short term to accommodate limited existing commerce of the country but cannot be relied upon for long.

POOR TRANSPORTATION/DISTRIBUTION CHANNELS:

An essential part of e-commerce is establishment of cheap, quick and reliable transportation channels for the physical distribution of those products which cannot be digitized and distributed online. In Pakistan, the Pakistan Postal Service, despite its extensive network and large number of employees is inefficient, to say the least; hence, unreliable. The private courier services, on the other hand, are expensive. In the absence of any reliable and economical distribution channel, the web-based companies in Pakistan will be faced with the challenge of delivering their products at the doorsteps to their consumers without adding to price of the product.

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Conclusion:
Now a days e-commerce is much more important for development the economy of country, e-commerce save time as well as money. We have discussed almost all the barriers of e-commerce I think illiteracy rate of Pakistan is the most important barrier of e-commerce in Pakistan, because if the literacy of Pakistan will increase then the ratio of transaction and foreign exchange will increase. We have 58% literacy rate in Pakistan including the people who can write their names and read the news paper. Including the 34% are in age of 55-60. More than 60% of population of Pakistan lives in villages its also effect in Pakistan and the mindset of people is still same, they are willing to spend time in market rather then save their time. People have resource of internet in their villages and cities but still people is facing the problems of disconnect and other problems. We

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