B2C E-COMMERCE

The following are some examples of technologies and applications used for providing service and support: o E-mail confirmation: In most cases, the e-mail confirmation provides the customer with a confirmation number that the customer can use to trace the product or service. E-mail confirmation promises the customer that a particular order has been processed and that the customer should receive the product/ service by a certain date. o Periodic news flash: They used to give customers with the latest information on the company or on a particular product or offering.

o Online Surveys: Their results can assist the e-commerce site to provide better services and support to its customers based on what has been collected in the survey, even though online surveys are mostly used as a marketing tool.
o Help desks: They provide answers to common problems or provide advice for using products or services. They are used for the same purpose as in traditional businesses. o Assured secure transactions & assured online auctions: They guarantee customers that the e-commerce site covers all the security and privacy issues. As many customers still do not feel comfortable conducting online business, the security and privacy services are especially important

Amazon.com
Amazon.com is one of the leaders in B2C e-commerce. Amazon.com opened its virtual stores in July 1995 with a mission to use the Internet to transform book buying into the fastest and easiest shopping experience possible. Amazon.com offers numerous products and services including books, CDs, videos, DVDs. toys, games, electronics, free electronic greeting cards, online auctions, and much more. In addition to an extensive catalog of products, Amazon.com offers a wide variety of other shopping services and partnership opportunities.Amazon.com's business model is based on the merchant model . By creating customer accounts, using shopping carts, and using the 1-click technology, Amazon.com makes the shopping experience fast and convenient. E-mail is used for order confirmation and customer notification when new products that suit a particular customer become available. Allowing customers to post their own book reviews, creates an open forum between the storefront and its customers.

Using Amazon.com a prospective shopper can do the following:

Search for books, music, and many other products and services
Browse virtual aisles in hundreds of product categories from audio books, jazz, and video documentaries to coins and stamps available for auction. Get instant personalized recommendations based on the shopper's prior purchases as soon as the shopper logs on. Sign up for the Amazon.com e-mail subscription service to receive the latest reviews of new titles in categories that interest the customer. Amazon.com offers a safe and secure shopping experience by guaranteeing its shopping and auction services. It also offers 24-hour-a-day, 7-days-a-week help desk services to assist shoppers who experience difficulties.

Advantages of B2B :

Direct interaction with customers.

Focused sales promotion.

Building customer loyalty.

Scalability.

Savings in distribution costs.

Tools and Techniques at the disposal of B2B

1.Use of pricing as a tool : eg:-Apple e-commerce site

2. Use of application service provider model.

3. Use of generic models which are known for efficiency as well as personalized attention to various business customers. 4. Use of comparison shopping

Common elements of B2B Exchanges

Element
Centralized market space Standardized documentation Price quotes,price history,and after the sale information provided Confidential transaction between business

Benefit
Neutral an nonaligned with seller or buyer Users are prequalified and regulated Pricing mechanism is self regulating

Clearing and settlement services provided

Business models for B2B applications.

1.Sell-side marketplaces:In the sell-side marketplace model, organizations attempt to sell their products or services to other organizations electronically, from their own private e-marketplace and/or from a third-party site. This model is similar to the B2C modeling which the buyer is expected to come to the sellers site, view catalogs, and place an order. In the B2B sell-side marketplace, however, the buyer is an organization. Examples are major computer companies such as Cisco, IBM, and Intel. 2. Buy-Side Marketplaces : The buy-side marketplaces a model in which organizations attempt to buy needed products or services from other organizations electronically, usually from their own private e-marketplace.

3. Electronic Exchanges : E-marketplaces in which there are many sellers and many buyers are called public exchanges (in short,exchanges). They are open to all, and frequently are owned and operated by a third party.

INTRABUSINESS AND BUSINESS-TO-EMPLOYEES

E-commerce can be done not only between business partners,but also within organizations. Such activity is referred to as intrabusiness EC or in short,intrabusiness. Intrabusiness can be done between : 1. A business and its employees(B2E): Companies are nding many ways to do business electronically with their own employees. They disseminate information to employees over the intranet, for example take training classes electronically. In addition, employees can buy discounted insurance, travel packages, and tickets to events on the corporate intranet, and they can electronically order supplies and material needed for their work. Also, many companies have electronic corporate stores that sell a companys products to its employees, usually at a discount.

INTRABUSINESS AND BUSINESS-TO-EMPLOYEES

2. E-Commerce Between and Among Units Within the Business (c-commerce): Large corporations frequently consist of independent units, or strategic business units (SBUs),which sellor buymaterials, products, and services from each other. Transactions of this type can be easily automated and performed over the intranet. An SBU can be considered as either a seller or a buyer. An example would be company-owned dealerships, which buy goods from the main company. This type of EC helps in improving the internal supply chain operations 3. E-Commerce Between and Among Corporate Employees : Many large organizations allow employees to post classied ads on the company intranet, through which employees can buy and sell products and services from each other.

Customer-to-Customer E-Commerce
E-commerce refers to e-commerce in which both the buyer and the seller are individuals (not businesses). C2C is conducted in several ways on the Internet, where the best-known C2C activities are auctions. 1.C2C AUCTIONS : Regardless where people are, in dozens of countries, selling and buying on auction sites is exploding. Most auctions are conducted by intermediaries, like eBay.com. Consumers can select general sites such as eBay.com or auctionanything.com, and they can use specialized sites such as buyit.com or bid2bid.com. 2. CLASSIFIED ADS : People sell to other people every day through classied ads in newspapers and magazines. Internet-based classied ads have one big advantage over these more traditional types of classied ads: They offer a national,rather than a local, audience. This wider audience greatly increases the supply of goods and services available and the number of potential buyers. For example,infospace.com/info.cls2k contains a list of 3 million job openings and about500,000 cars, compared with the much, much smaller numbers you might nd locally.

Customer-to-Customer E-Commerce
Like their counterparts in printed media, classied ad Web sites accept no responsibility for the content of any advertisement. Advertisers are identied bye-mail address. A password is used to authenticate the advertiser for future changes in an ad. Most classied ads are provided for free. The major categories of classied ads are similar to those found in the newspaper: Vehicles Real estate Employment General merchandise Collectibles Computers Pets Tickets Travel

Customer-to-Customer E-Commerce
3. PERSONAL SERVICES : Numerous personal services are available on the Internet (lawyers, handy helpers, tax preparers, investment clubs, dating services).Some are in the classied ads, but others are listed in specialized Web sites and directories. Some are for free, some for a fee.Be very careful before you purchase any personal services. Fraud or crime could be involved. Inforocket.com is another example

4. SUPPORT SERVICES TO C2C : When individuals buy products or services from individuals, they usually buy from strangers. The issues of ensuring quality,receiving payments, and preventing fraud are critical to the success of C2C. One service that helps C2C is payments by companies such as Paypal.com Another one is escrow services,intermediaries that take the buyers money and the purchased goods, and only after making sure that the seller delivers what was agreed upon, deliver the goods to the buyer and the money to the seller (for a fee).

Consumers-to-businesses (C2B)
In C2B (also called a reverse auction or demand collection model), consumers make known a particular need for a product or service, and suppliers compete to provide the product or service to consumers. An example is Priceline.com(travel,telephone,mortgages) where the customer names a product and the desired price, and Priceline tries to nd a supplier to fulll the stated need.Another example is reverseauction.com(travel,autos,consumer electronics)

E-government
As e-commerce matures and its tools and applications improve, greater attention is being given to its use to improve the business of public institutions and governments (country, state, county, city, etc).E-government is the use of Internet technology in general and e-commerce in particular to deliver information and public services to citizens, business partners and suppliers, and those working in the public sector. E-government applications can be divided into three major categories: Government-to-Business is the online non-commercial interaction between local and central government and the commercial business sector, rather than private individuals (G2C).example http://www.dti.gov.uk is a government web E-government site where businesses can get information and advice on e-business 'best practice'. Government-to-Citizen is the communication link between a government and private individuals or residents. Such G2C communication most often refers to that which takes place through Information and Communication Technologies (ICTs), but can also include direct mail and media campaigns. G2C can take place at the federal, state, and local levels.One such Federal G2C network is USA.gov: the United States' official web portal, though there are many other examples from governments around the world. An example is electronic benets transfer (EBT),in which governments (usually state or national) transfer benets, such as Social Security and pension benets, directly to recipients bank accounts or to smart cards.

E-government
Government-to-employees

(abbreviated G2E) is the online interactions through instantaneous communication tools between government units and their employees. G2E is one out of the four primary delivery models of e-Government .G2E is an effective way to provide E-learning to the employees, bring them together and to promote knowledge sharing among them It also gives employees the possibility of accessing information in regard to compensation and benefit policies, training and learning opportunities and civil rights laws. G2E services also include software for maintaining personnel information and records of employees .G2E is adopted in many countries including the United States, Hong Kong and New Zealand

Government-to-Government (abbreviated G2G) is the online non-commercial interaction between Government organizations, departments, authorities. Its use is common in the UK, along with G2C, the online non-commercial interaction of local and central Government and private individuals, and G2B the online non-commercial interaction of local and central Government and the commercial business sector. Note:G2G is currently not too much in India.

Mobile commerce (m-commerce): When e-commerce is done in a wireless environment, such as using cell phones to access the Internet, we call it m-commerce.

These devices utilize wireless networks to connect cell phones and handheld devices to the web. It provide access to anyone, anytime and anywhere, using wireless devices. Wireless Application Protocol define the standard for how content from the internet is filtered for mobile communication. WAP takes a client server approach. It incorporates a relatively simple microbrowser into the mobile phone requiring only limited resources on the mobile phone

Features of E-commerce
Ubiquity it is available everywhere, at work, at home, and elsewhere via mobile device, anytime Marketplace is created or extended beyond traditional boundaries and removed from a geographic location. Shopping can take place anywhere. Customer convenience enhanced Global Reach: ( total number of users or customers an e-commerce business can have ) Commerce is enabled across cultural and national boundaries seamlessly and without modification. Marketplace includes potentially billions of consumers and millions of businesses world wide Universal standards: The technical standards of the Internet, and therefore of conducting ecommerce, are shared by all of the nations in the world. Easily find all the suppliers, prices, and delivery terms of a specific product anywhere in the world Richness: Information that is complex and content rich can be delivered without sacrificing reach. ECommerce technologies have changed the traditional tradeoff between Richness and the Reach. The Internet and web can deliver to an audience of millions rich marketing messages in a way not possible with traditional technologies like radio, TV and magazines. Interactivity: E-commerce technologies allow two-way communication between the merchant and the consumer. It make the consumer a co- participant in the process of delivering goods to the market.(which is not possible in other mediums like TV , radio) Similar to face-to-face experience but on a massive global scale Information density: The total amount and quality of information available to all market participants is vastly increased and is cheaper to deliver. Personalization/Customization: E-commerce technologies enable merchants to target their marketing messages to a persons name, interests, and past purchases. They allow a merchant to change the product or service to suit the purchasing behavior and preferences of a consumer.

Traditional commerce versus E-commerce

Although the goals and objectives of both e commerce and traditional commerce are the same selling products and services to generate profitsthey do it quite differently. The major difference is the way information is exchanged and processed: In e-commerce there may be no physical store, and in most cases the buyer and seller do not see each other. The Web and telecommunications technologies play a major role, in ecommerce. Traditional commerce presents product information by using magazines, flyers. On the other hand, e commerce presents by using web sites and online catalogs. Traditional commerce communicates by regular mail, phone yet e-commerce by e-mail. Traditional commerce checks product availability by phone, fax and letter.However, ecommerce checks by e-mail, web sites, and internal networks. Traditional commerce generates orders and invoices by printed forms but e commerce by email, and web sites. Traditional commerce gets product acknowledgments by phone and fax. On the other hand, ecommerce gets by email, web sites, and EDI. It is important to notice that currently many companies operate with a mix of traditional and ecommerce. Just about all medium and large organizations have some kind of e-commerce presence. The followings are some examples, Toys-R-Us, WalMart Stores, GoldPC, and Vatan Computer

E-Business Strategies
The four generic business strategies for achieving a profitable business are : Differentiation : involves setting your firm or product apart from the competition by establishing some unique property or consumption experience that your competitors do not have. Cost : A firm that adopts a cost strategy must have a unique set of business processes, a unique resource, or a low cost supplier. It is essential that other firms in the marketplace do not have access to, or cannot duplicate, this because it will allow them to charge a lower price while still making a profit. Scope : A scope strategy sets out to compete in all markets around the globe, rather than just locally or regionally. Focus : A focus strategy on the other hand, is a plan to compete within a narrow market segment or product segment. Specialization strategists seek to become the premier provider in a small market segment or niche. E Business Strategy can be summarized as the strategies governing E Businesses through calculated information dissemination. Information dissemination has been widely regarded as the forte of ebusiness, which uses information technology in a most efficient manner

E-Business Strategies
E business gives a business the opportunity to open its portal to the global market and become a part of the global business community. The most important feature of e-business is that the helps businesses move on to the international scene at minimal cost but with maximum efficiency .A state-of-the-art E Business Strategy would generally include:

1.Supply chain management: effective management of the supply chain can be handled with the help of e-business strategies, which will ensure better coordination between the wholesalers and the retailers of various products. Better integration of the supply chain right from the source till the final delivery of the product can be effectively implemented using e-business strategy. Everything ranging from automobiles to electronic gizmos can be bought over the Internet in a hassle free manner under the aegis of sound supply chain management.
2. Customer service and customer relationship management: effective e-business

strategies would involve better customer service and customer relationship management ensuring the highest level of consumer satisfaction. E business is targeted at providing the customer-friendly services, which would include the timely delivery of goods right at the doorstep of the consumer.

E-Business Strategies
Inventory and service management integration: E-business strategies can also help in better inventory and service management integration through formulating specific plans for inventory accumulation and purchasing machinery and equipment which will avoid unnecessary purchases which can lead to higher expenditures entailing different tax implications. Tactical operations alignment: tactical operations directed towards short-term goals as opposed to strategic planning aimed at long term goals can be better coordinated implementing the e-business strategies.

The tools and pillars of e-business strategies include : Acceptance of payments over the Internet, online advertising, on-line trading and auction deals over the Internet. E-business strategies will also differ for small and medium-sized businesses. Apart from regular sources, e-business strategies can generate revenue from maintenance of current channel integrity, revenue made from paid marketing alliances, revenues derived from franchisees and subscriptions.

Driving Forces of E-commerce

The various environmental business pressures on companies today can be grouped into three categories : market , social and technological Market and Economic Pressure : Business is a pressure game.Following are few parameters which works as driving force for market: Strong Competition : competition is the part of any business Global Economy : in present scenario world becomes a global village and there are standard norms in market for business. Extremely low labour cost in some countries Frequent changes in market demands Increasing expectations of consumers Awareness among consumers

1. 2. 3. 4. 5. 6.

Driving Forces of E-commerce

Social and Environmental Pressures :Society,environment and government are the part of business.These are the factors which works like driving force for ecommerce Government regulations Reduction in government subsidies Rapid Political changes Technological Pressures : This is the most critical factor for e-commerce.In present time every day new,cheap and more secure technology is coming to market,making e-commerce cheap and secure medium of doing business. Rapid technological changes New technologies Information overload

1. 2. 3.

1. 2. 3.

Driving Forces of E-commerce

4. Digital convergence: Convergence has two dimensions: a) Convergence of content : It enables sophisticated information publishing and browsing tools.It facilitates the creation of a computer and network infrastructure that enables the coordination and integration of business processes. b) Convergence of transmission : Convergence of transmission compresses and stores digitized information so that it can travel through existing phone ,wireless and cable wiring systems.Convergence of transmission results in easier access to networks and in the creation of new,low cost delivery channels for new and old products aimed at either existing customers or new customers segments.

The Driving Forces of Electronic Commerce

Business pressures Organizational responses The role of Information Technology (including electronic commerce)

Major Business Pressures

Market and economic pressures
Strong competition Global economy Regional trade agreements (e.g. NAFTA) Extremely low labor cost in some countries Frequent and significant changes in markets Increased power of consumers Changing nature of workforce Government deregulation of banking and other services Shrinking government budgets subsides Increased importance of ethical and legal issues Increased social responsibility of organizations Rapid political changes

Societal and environmental pressures

Technological pressures

Rapid technological obsolescence Increase innovations and new technologies Information overload Rapid decline in technology cost Vs. performance ratio

Organizational Responses
External Environment, Social, Economic, Political, etc

Organization Structure and the Corporate Culture

The Organizations Strategy

Management and Business Process

Information Technology

Individual and Roles Framework for Organizational and Societal Impacts of Information Technology

Business Process Reengineering

Reducing cycle time and time to market Empowerment of employees and collaborative work Knowledge management Customer-focused approach Business alliances virtual corporation

Everything Will Be Changed

Improving Direct Marketing

Product promotion New sales channels Direct savings Time-to-market (reduced cycle time) Customer service Brand or corporate image

Other Changes in the Workplace

Transforming Organizations Work will change
Technology learning Organizational learning

Redefining Organization New product capabilities New business models

Other Changes in the Workplace (cont.)

Impacts on Manufacturing Pull processing, mass customization, shorter cycle time, integration (ERP), electronic bidding and procurement Impacts on Finance and Accounting Electronic payment systems, electronic cash, automating back office, home banking, electronic stock trading Human Resource Management Electronic recruiting, training, distance learning

Component of E Commerce
components

Institution

Process

Networks

Institutions of E Commerce : Institutions plays major role in the success of ecommerce .Institutions like Government,merchants, manufacturers, suppliers ,consumers ,banks and financial institutions are the key to implement to e-commerce. The role of these institutions are given below.

Government: Despite the importance of technological and skill infrastructures,it

is the politics of Governance initiatives that probably hold the key . E-commerce projects have made slow progress in many Countries because they don't serve the political selfinterests of the major stakeholders,senior public officials and government . Government is responsible to make the policy and rules of e commerce in any country .

Component of E Commerce Merchants: As we know that every institute in e-commerce must be equally
competitive for the success of the e-commerce . Merchants are very essential part of any type of business,they must show willingness and courage to implement ecommerce in their traditional business . Merchants holds the key for the success of the e-commerce since they are going to invest the money .

Suppliers: Suppliers are equally important component of e-commerce , they

must have suitable infrastructure to support the e-commerce then only they can get the benefits of e-commerce technology .

Consumers: we know that consumer are key of any business so consumers

must aware about the latest development in e-commerce . It is very essential to change the mind set of consumers.So they can start using the e-commerce then only it will be successful

Banks: Now a days banks

are rapidly going for e-commerce to make their working efficient . ATM or 24-hours tellers are electronic terminals that let our bank almost anytime. To withdraw cash ,make deposits,transfer funds between accounts .

Component of E Commerce
Process of E-commerce: The successful implementation of the e-commerce
depends on perfect processes of the E-commerce . Some very important parts of the process are as follows :
Marketing Sales Payment Support and Services

The complete business is the game of the marketing now a days , so marketing process should be compatible to e commerce . Now more and more marketing becomes on-line and web base. Sales are another important department of business activities so it must support e-commerce Now a days Mode of payments becomes electronic. Mostly Transactions take place online through Cyber Cash . Merchants are tie-ups with banks for online payment ,credit and debits cards. After sale service and support is the backbone of any business so more and more companies using the e-commerce to provide this service through telephone ,mail and internet .

Interdisciplinary nature of EC
A multidisciplinary approach is necessary in order to understand e-commerce because no single academic discipline covers all facts of the e-commerce phenomenon. E-commerce is primarily a technologically driven occurrence, including information technologies developed over the past 50 years, with the Internet and the Web at the core. However, beyond the infrastructure are the business purposes that drive the phenomenon: the changing business models and strategies that will transform old companies and spawn new ones.

To understand e-commerce, one must understand some basic business concepts such as: industry structures, business models, firm and industry value chains, and consumer behavior. They must also comprehend the nature of electronic markets and information goods. Finally, the impact on society must be considered: global e-commerce can have consequences for individuals concerning their intellectual property and privacy rights. Public policy issues such as equal access, equity, content control, and taxation will need to be addressed. So the major disciplines of EC are:

Interdisciplinary nature of EC
Marketing : Many issues of marketing in traditional commerce are relevant to EC for eg:advertisement strategies,cost benefits of various advertisement strategies.Other issues are unique to EC,like online marketing strategies to interactive kiosks.

Computer sciences : Many issues like languages,multimedia and network technology Consumer behavior and psychology : consumer behavior is the key to success of B2C trade and so is the behavior of the seller Finance : the financial markets and banks are one of the major participant in EC.Issues such as using the internet as a substitute for a stock exchange and fraud in online stock transactions are part of this field.
Economics : EC is influenced by economics forces and has a major impact on world and country economies. Management information systems(MIS) : It is responsible for the deployment of EC.It covers issues ranging from system analysis to system integration,planning,security and payment systems.

Interdisciplinary nature of EC
Accounting and auditing :The back office operations of electronic transactions are similar to other transaction in some respect but different in others.For eg :auditing electronic transactions presents a challenge for the accounting profession. Management : EC efforts need to be managed properly and because of the interdisciplinary nature of EC,its management may require new approaches and theories Business law and ethics : legal and ethical issues are extremely important in EC,especially in a global market. Others : Several other disciplines are involved in various aspects of EC to a lesser extent for eg:linguistics.Also EC is of interest to engineering,health care,communication and entertainment publishing.

Advantages of E-Business
Top concerns for CEO's in today's business environment are: the threat posed by competitors controlling costs finding new opportunities improving responsiveness better customer focus and service E-business is capable of delivering these benefits.Business of all sizes in all sectors are using the Internet in many different ways - to work with partners and suppliers, for procurement, for internal activities such as knowledge sharing and new product development, and much more. Advantages : Worldwide Presence:This is the biggest advantage of conducting business online. A firm engaging in e-business can have a nationwide or a worldwide presence. IBM was one of the first companies to use the term e-business to refer to servicing customers and collaborating with business partners from all over the world. Dell Inc., too, had a flourishing business selling PCs throughout the U.S., only via telephone and the Internet till the year 2007.

Advantages of E-Business
Amazon.com is another success story that helps people buy internationally from third parties. Hence, worldwide presence is ensured, if companies rethink their business with regard to the Internet. Cost-effective Marketing and Promotions: Using the web to market products guarantees worldwide reach at a nominal price. Advertising techniques, like pay per click advertising, ensure that the advertiser only pays for the advertisements that are actually viewed. Affiliate marketing -- where customers are directed to a business portal because of the efforts of the affiliate, who in turn receive a compensation for their efforts meeting with success -- has emerged on account of e-business. Developing a Competitive Strategy Firms need to have a competitive strategy in order to ensure a competitive advantage. Without an effective strategy, they will find it impossible to maintain the advantage and earn profits. The strategy that the firms can pursue, can be a cost strategy or a differentiation strategy.

Advantages of E-Business
For instance, till the year 2007, Dell Inc. was selling computers only via the Internet and the phone. It adopted a differentiation strategy by selling its computers online and customizing its laptops to suit the requirements of the clients.

Better Customer Service E-business has resulted in improved customer service. Many a time, on visiting a website, the customer is greeted by a pop-up chat window. Readily available customer service may help in encouraging the customer to know more about the product or service. Moreover, payments can be made online, and products can be shipped to the customer without the customer having to leave the house.
Curtailing of Transaction Cost The nature of online business is such that, the costs incurred for every transaction to go through smooth and sound, there is no acting middleman. Websites are sufficiently loaded with directions to facilitate stress-free transactions. Simple and succinct instructional tabs, generally, save the potential buyer from any hassels.

Advantages of E-Business
The mode of payment is predetermined, promising security to the customer. Overhead Costs Are Reduced An E-business, essentially, is independent of costs that are incurred due to business having a physical entity. Utility bills and other expenses are manageable. You also cut back on costs incurred for hiring personnel and retaining them with competitive incentives topped with abundant facilities. Running an e-business is highly convenient as the proprietor does not require to rent another site to execute the business.

Benefits of EC
i. Benefits to Organizations Global Reach EC expands marketplace to national and international markets.With minimal capital outlay,a company can easily and quickly locate more customers,the best suppliers,and the most suitable business partners worldwide. Cost Reduction EC decreases the cost of creating,processing,distributing,storing,and retrieving paper-based information for example,by introducing an electronic procurement systems,companies can cut the purchasing advt. Costs by as much as 85%. Highly specialized business: for example www.dogtoys.com Supply Chain Improvements & Customization : EC allows reduced inventories and overhead by facilitating pulltype supply chain management.In pull type system the process starts from customer orders and uses just in time manufacturing Lower Communication Costs : the internet is much cheaper than VAN Others : improved customer service,simplified processes,increased productivity,eliminating paper,reduced transportation costs

ii.

iii. iv.

v. vi.

Benefits of EC
i. ii. iii. iv. v. vi. vii. Benefits to Consumers Ubiquity : EC allows customers to shop or do other transaction 24 hrs a day,all year round,from almost any location More Products and Services Cheaper Products and Services : by allowing consumers to buy from many places and conduct quick comparisons Instant Delivery : for example in case of digitized products Information Availability : Customers can get relevant and detailed information in seconds rather than in days or weeks Participation in Auctions : allows to participate in virtual auction Electronic Communities : allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences eg: Gamers Voice. An active community using a Facebook group to tackle antivideo games policies and media. A good example of what a Facebook group can be.

Benefits of EC
viii Customized Products and Services ix EC facilitates competition which results in substantial discounts i. Benefits to Society Higher Standard of Living :EC allows some merchandise to be sold at lower prices,so less affluent people can buy more and increase their standard of living EC enables more individuals to work from home and to do less traveling for shopping resulting in less traffic on roads and lower air pollution EC enables rural areas to enjoy products and services that otherwise are not available to them.This includes opportunities to learn profession and earn college degrees EC facilitates delivery of public services such as healthcare,education,and distribution of government social services at a reduced cost and improved quality.Health care for example can reach patients in rural areas .

ii. iii.

iv.

Limitations of EC

Communication Gateways
Basically there are two types of Gateways in E-Commerce : Payment Gateway , Security Gateway Payment Gateway:A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks.It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor. Some of the main features of a payment gateway include: Software application designed especially for E-Commerce, although it can be used to authorize payments in traditional brick and mortar businesses. Encryption of payment and personal data. Communication between the financial institutions involved and the business and the customer. Authorization of payments.

How payment gateways work

A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction. A customer places order on website by pressing the 'Submit Order' or equivalent button, or perhaps enters their card details using an automatic phone answering service. If the order is via a website, the customer's web browser encrypts the information to be sent between the browser and the merchant's web server. This is done via SSL (Secure Socket Layer) encryption.

The merchant then forwards the transaction details to their payment gateway. This is another SSL encrypted connection to the payment server hosted by the payment gateway. The payment gateway forwards the transaction information to the payment processor used by the merchant's acquiring bank. The payment processor forwards the transaction information to the card association (e.g., Visa/MasterCard).

How payment gateways work

If an American Express or Discover Card was used, then the processor acts as the issuing bank and directly provides a response of approved or declined to the payment gateway. Otherwise, the card association routes the transaction to the correct card issuing bank. The credit card issuing bank receives the authorization request and sends a response back to the processor (via the same process as the request for authorization) with a response code. In addition to determining the fate of the payment, (i.e. approved or declined) the response code is used to define the reason why the transaction failed (such as insufficient funds, or bank link not available) The processor forwards the response to the payment gateway. The payment gateway receives the response, and forwards it on to the website (or whatever interface was used to process the payment) where it is interpreted as a relevant response then relayed back to the cardholder and the merchant. The entire process typically takes 23 seconds. The merchant submits all their approved authorizations, in a "batch", to their acquiring bank for settlement via their processor. The acquiring bank deposits the total of the approved funds in to the merchant's nominated account. This could be an account with the acquiring bank if the merchant does their banking with the same bank, or an account with another bank. The entire process from authorization to settlement to funding typically takes 3 days.

Security Gateway
A system which acts as the communications gateway between external untrusted systems and trusted hosts on their own sub network . It provides security services for the trusted hosts when they communicate with external untrusted systems. When a security gateway is providing services on behalf of one or more hosts on a trusted subnet, the security gateway establishes the Security Association and provides security services between the security gateway and the external systems. In this case, the gateway uses the IP Authentication Header, while all of the systems behind the gateway on the trusted subnet may take advantage of IP Authentication Header services without having to implement them.

UNIT II

Business To Business E Commerce

Business-to-business (b2b) Transactions

We call this category market-link transaction.

Also known as Interorganizational e-commerce.

It refers to the full spectrum of e-commerce that can occur between two organizations.
This includes purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management &service and support. Businesses, governments, and other organizations depend on computer-tocomputer communication as a fast, economical, and a dependable way to conduct business transactions. B-to-B transactions include the use of EDI and electronic mail for purchasing goods and services, buying information and consulting services, submitting requests for proposals, and receiving proposals.

B2B and EDI

EDI developed in 1960s as a means of accelerating the movement of documents pertaining to shipments and transportation. In mid-1980s, the technique was used in may industries automotive, retail, international trade etc. It is still growing now and is set to become the standard by which organizations will communicate formally with each other in ecommerce

Inter-organizational electronic commerce (b2b)

The inter-organizational electronic commerce facilitates the following: Supplier management

Electronic applications enhance business partnerships by reducing purchase order (PO) processing costs and cycle times, and by increasing the number of POs processed with fewer people.

Inventory management

Electronic applications helps to reduce inventory levels, improve inventory turns, and eliminate out-of-stock problems. EC can shorten the order-shop-bill cycle and can also track their documents to ensure that they were received.

Inter-organizational electronic commerce (b2b)

Distribution management

Electronic applications facilitates the transmission of shipping documents such as bills of lading, purchase orders, advanced ship notices, and claims and enable better resource management by ensuring the documents themselves contain more accurate data.
Channel management

Electronic applications can quickly disseminate information about changing operational conditions to trading partners. Technical, product, and pricing information that once required repeated telephone calls and countless labor hours can now be posted to electronic bulletin board.
Payment management

Electronic applications link companies with suppliers and distributors so that payments can be sent and received electronically. Electronic payment reduces human error, increases the speed at which companies compute invoices, and lower transaction costs.

Categories of B2B e-commerce1.Supplier centric- A supplier sets up the e-com market place. Various customer/buyer businesses interact with supplier at its e-com market place. Supplier may provide customized solutions & pricing and different pricing schemes to fit the needs of buyers businesses. Eg. Intel and Cisco have been exploiting the benefits of supplier-centric e-com.

2. Buyer-centric e-com-Major business with high volume purchase capacity create an e-com market place for purchase and acquisition by starting a site on their own. The online electronic commerce marketplace is used by the buyer for placing requests for quotations (RFQs) and carrying out the entire purchase process. This kind of facility may be utilized by high volume and well recognized buyers, as they may have adequate capacity and business volumes to lure suppliers to bid at the site. e.g. General Electric Information Systems(GEIS) initiated a website for posting invitations for tenders & other accompanying documents.

3. Intermediary-centric e-commerce- In this the third party sets up

e-com market and attracts both buyer and seller businesses to interact with each other. The buyers & sellers, both benefit from the increased options in terms of pricing, quality, availability and delivery of goods. Third party e-com acts as a hub for both supplier and buyers, where buyers place their request for the quotations and sellers respond by bidding electronically, leading to a match and ultimately to a final transaction. Intermediary reduces the need for buyers and sellers to contact a large number of potential partners on their own. Information available from the intermediarys database allows a buyer to screen out unsuitable sellers and to compare the offering of many different potential sellers quickly, conveniently and inexpensively. Eg.Honeywell International (Myplant.com) and General Electrics Trading Process Network (TPN), IndiaMart.com.

Consumer

Suppliers server (Electronic Store)

Consumer

Consumer Product Catalog Customer Info

Consumer

B2C E-commerce

B2B E-commerce

Supplier centric E-Commerce

Buyers server (Electronic Store)

Supplier

Supplier Supplier Information

Buyer centric E-Commerce

Business Customer
Intermediarys Electronic Store

Business supplier

Business Customer Supplier Info Customer Info

Business supplier

Intermediary centric E-Commerce

Entities of B2B E-Commerce

The selling company - with marketing management perspective The buying company - with procurement management perspective Electronic intermediary - a third party intermediating service provider Network platform - such as internet,intranet and extranet Communication platform - such as EDI and comparison shopping Back-end information system - possibly implemented using the intranet and ERP(enterprise resource planning systems)

Electronic Data Interchange

EDI is a way of substituting electronic transactions for paper ones. It is a means to streamline procedures and improve efficiency and productivity. In EDI, the computer applications of both sender and receiver have to agree upon a common format of business document which is being sent as a data file over the communication channel. EDI can be used to electronically transmit documents such as purchase orders, invoices and other standard business correspondence between trading partners. EDI can also be used to transmit financial information and payments in electronic form.

Some Definition of Electronic Data Interchange (EDI) the transmission, in a standard syntax, of unambiguous information of business or strategic significance between computers of independent organizations. the interchange of standard formatted data between computer application systems of trading partners with minimal manual intervention. the electronic transfer, from computer to computer, of commercial and administrative data using an agreed standard to structure an EDI message. the electronic transfer from one computer to another of computer processable data using an agreed standard to structure the data.

Layered architecture of EDI

Layered architecture of EDI

The architecture of EDI is divided into four layers1. Application Layer 2. Standards translation Layer 3. Transport Layer 4. Physical Network Infrastructure Layer 1. Application Layer-

The application layer also called the semantic layer. The Semantic layer describes the Business application that is driving EDI. For a procurement application, this translates into request for quotes, price purchase orders, acknowledgements, and invoice. This layer is specific to a company, and the software it uses. i.e. the user interface and content visible on the screen are tailored or customized to local environment.The information seen at EDI semantic layer must be translated from a company-specific form to a more generic or universal form so that it can be sent to various trading partners,who could be using a variety of software applications at their end.

Layered architecture of EDI

To achieve this the company must follow the universal EDI standards eg X12(ANSI), EDIFACT(United Nations Economic Commission for Europe). If the sender and receivers of company want to exchange some files then requires a compatible standards of Electronic Data Interchange.The Sender who want to send a data use a software application with EDI and exchange data in EDI format so that at the receivers end the receiver can read it. The EDI standards are very important in exchange of data because at sending end a sender manipulate data by EDI as in receiving end data is manipulated by EDI. 2. Standard LayerThis layer of EDI architecture defines the structures of the business form and some content which are related with the application layer. This layer of EDI has no mean without application layer so we can say that EDI applications and standard layer are interlinked. For instance,a purchase order name field in an X12 std might be specified to hold a max of 50 characters.An application using 75-character field length will produce name truncation during the translation from the application layer to the standard layer

Layered architecture of EDI

3. Transport LayerEDI transport layer is a non electronic way of sending the business form from one company to another company. This non electronic way may be registered mail, postal services or private career, telecommunications, fax etc. Now a days the transportation method is more complex with compare to e-mail. 4. physical LayerThe physical layer of EDI also called the infrastructure layer. This layer defined the component communication path for EDI data transaction. What are the structure of ecommerce supported EDI in which information can be build and what are the communication established over which EDI data transfer from one customer to another customers.

EDI in Action
EDI takes what has been a manually prepared form or a form from a business application, translates that data into a standard electronic format, and transmit it. At the receiving end, the standard format is untranslated into a format that can be read by the recipients application. Hence, output from one application becomes input to another through the computer-to-computer exchange of information. Result is elimination of delays and errors inherent in paper-based transaction.

Buyer

Seller

Purchase request initiated in the organization

Finance department

Finance department Bill

Payment Purchasing department Order delivery Paper-based mailroom Paper-based mailroom Sales department

Order confirmation

Inventory and warehousing

Receiving department Product delivery

Shipping department

Manufacturing department

Information flow without EDI

Information flow without EDI

The figure shows information flow when paper documents are shuffled between organizations via mailroom.When the buyer sends a purchase order to a seller,the relevant data must be extracted from internal database and recorded on hard copy.This hard copy is then forwarded to seller after passing through several intermediate steps.Seller receive information in form of letters.This information is manually entered into the internal information systems of recipient by data entry operators.This method has following disadvantages: 1.This process generates a considerable amount of overhead in labor costs and time delays. 2.The reproduction of information also increases risk of errors caused by incorrect data entries. 3.This practice of converting digital data into hard copy data that is reconverted into electronic information again on receiving end generates costs.

Buyer

Seller

Purchase request initiated in the organization Payment

Finance department

Billing details

Finance department

Purchase-order
delivery

Purchasing department

EDI-capable computer

EDI-capable computer

Sales department

Automated- Order confirmation

Inventory and warehousing

Receiving department Product delivery

Shipping department

Manufacturing department

Information flow with EDI

Information flow with EDI

The EDI transactions for a purchase,shipment,and corresponding payment are as follows: 1.Buyers computer sends Purchase Order to sellers computer. 2.Sellers computer sends Purchase Order Confirmation to buyers computer. 3.Sellers computer sends Booking Request to transport companys computer 4.Transport companys computer sends Booking Confirmation to sellers computer 5.Sellers computer sends Advance Ship Notice to buyers computer 6.Transport companys computer sends Status TO SELLERS COMPUTER 7.Buyers computer sends Receipt Advice to sellers computer 8.Sellers computer sends Invoice to buyers computer 9.Buyers computer sends Payment to sellers computer In sum,firms are adopting EDI as a fast,inexpensive and safe method of sending invoices,purchase orders,custom documents,shipping notices, and other frequently used business documents.

An EDI enabled procurement process is given below:

Request for quotation Quotation Purchase Order

Buyers Application program for purchasing

Purchase order acknowledgement Shipping notice Invoice

Seller's Application program for order processing

Status request/response
Payment remittance advice

Accounts Payable

Accounts Receivable

EDI is most suited in the area where any of the following characteristics exist:A large volume of repetitive standard actions. Very tight operating margins. Strong competition requiring significant productivity improvements. Operational time constraints. Trading partners request for paperless exchange of documents.

Technical data Interchange EDI E-mail (Communication)

Mass customization (demand-driven manufacturing)

Network-enabled Business Practices

Virtual & team based enterprise Outsourcing & coordination of logistics

Document workflow systems

Video conferencing

Components of EDI systems

1.EDI standards 2.EDI Software 3.N/w Infrastructure for communication
EDI Standards: Data that is exchanged electronically must be transformed into a standard widely accepted format. This format requires some standards which have been developed as the EDI standards. One of the most widely accepted standard is the UN/EDI FACT (United Nations Standards for EDI for Administration Commerce and Transport) announced by the United Nations in 1987.Common EDI standards dictate syntax and standardize on the business language.They basically specify transaction set.EDI standards are very broad and general however EDI messages share a common structure: i)Transaction set(it is equivalent to a business document such as purchase order.) ii)Data segments(are logical groups of data elements that together convey information such as invoice terms etc) ii)Data elements(are individual fields such as purchase order number,unit price etc) EDI software: consists of computer instructions that translate the information from unstructured, company-specific format to structured EDI format. EDI software at receiving end receives the message and translates it from the standard format to the company specific format. Thus major functions of EDI software are data conversion, data formatting and message communication.

EDI system consists of four software components:

1. The application software or business application is the software being used at sending and receiving computers for data input and output respectively ie software produces and processes the information and documents. 2. The translation software or EDI translators perform the important function of translating business data from company specific formats to standard formats and vice versa. 3. The EDI service software is concerned with processing the translated EDI document in a way that it become compatible for transmission over computer network. This EDI service software is concerned with timestamping of documents, sending acknowledgement of receipt to sender, keeping track of document on network and maintaining integrity of the data. 4. The network access software allows the computers at the sending and receiving ends to access the computer and communications channel for the transmission of the message.

Sender
Application Software Translation Software EDI Service Software N/w access Software

Private Network or Value Added Network (VAN) or the Internet

Application Software Receiver

Translation Software

EDI Service Software

N/w access Software

 Network infrastructure for communications: EDI documents are electronically exchanged over communication networks which connect the trading partners to one another. The communication networks used may be private networks, value added networks (VAN) or the internet.

Benefits of EDI
1. The delay associated with making documents is eliminated. 2. Since data is not repeatedly keyed, the chances of error are reduced. 3. Time required to re-enter data is saved. 4. Labor cost can be reduced because data is not re-entered at each step. 5. Because time delays are reduced, there is more certainty in information flow. 6. It generates acknowledgement whenever an EDI message is received & it is electronically transmitted to the sender. 7. EDI message can be immediately processed by the receiving computer without any human intervention or rekeying.

EDI applications in business

1.International trade 2.Financial EDI (eg:Bank Checks,EFT,ACH Transfers) 3.Health care and Insurance EDI 4.Manufacturing/Retail Procurement using EDI