E-COMMERCE

Is buying & selling of product/service, exchange of information via

network & Internet (electronic media i.e. paperless exchange) using
rules & regulations of national & international trade & commerce.
•Communication perspective = Includes creation, processing &
storing of information & electronic payment
•Business perspective = Automation of business transactions
included in trade cycle (to reduce product cycle time)
•Service perspective = To cut service cost in order to increase
quality of service (Customer relationship management) & reduce
response time (=order processing + delivery time of product).
•Online perspective = Buying & selling products/services online
of globalization.
 E-Business
E-commerce + collaboration within business partners + conducting
electronic transactions with in the organization
E-business is e-commerce (front office application) +internal
information system (back office application)
The internal business processes in e-business addresses management
functions(forecasting, planning, directing) & business functions
(marketing, supply chain management, customer relationship
management)
EC Partial or Pure
Dimensions of EC are: Product (service) sold,processes,delivery agent
For pure EC all dimensions are digital but in partial a mix of digital &
physical dimension is present
 SCOPE OF E-COMMERCE
Various types of application of E-commerce based on transaction type
are :
1. B2B (Inter-organizational)
 Supply chain management (i.e. reduced purchase order
 Inventory management
 JIT(Material form supplier will be ordered only if
production plant can sell it i.e. market risk is passed on
through the supplier chain)
 Quick Retailing
 Distribution management : to move document related to
purchase order, shipment notice)
Channel Management : disseminate info. About changing
operational conditions (pricing, product, technology to trading
partners)
Payment Management :
2. Intra-Organization
 Work-group communication : for better informed employee
 Electronic Publishing : to reduce cost of printing & for
distribution management, to save delivery time, reduce
outdated info
 Sales Force Productivity : (To improve info. flow
between sales, customer & production functions) i.e. linking
the sales force with regional offices to access market
intelligence & competitors info).
 3–B2C
Social Interaction : (news group )
Personal Finance Management : Online banking
Internet commerce : Online malls
4 – C 2 B Maruti true value
5- C 2 C : Auction sites
6- Non-business EC : required by government
EC applications may be classified as:
1. Buying & selling goods & services called electronic market
2. Facilitating inter & Intra-organization flow of info, collaboration
& communication called Inter-organizational system
3. Providing customer service
 ELECTRONIC MARKETING
Trade cycle consists of
Search of appropriate product/service & negotiation on
price
Execution (order processing) & payment
After sales activity
Is an Inter-organization information (IOI) sys/network (concerned
with search & negotiation phase of trade cycle)
Electronic market cover 2 points of trade cycle
Internet Commerce covers all phases of trade cycle.
Objective of IOI is efficient routine transactions between 2
organization (I.e. order, bill & payment over EDI or extranet)
Ex. Airline reservation system to locateTypes
seat,ofwhere electronic
Interorganizational sys
market
(IOS)
is available to agents not to customers
Electronic procurement -EDI
-Extranet
-EFT (electronic fund transfer)
-Shared Database
-Electronic Supply-Chain mgt
 INTERDISCIPLINARY NATURE OF EC
Marketing : to reduce Adv. cost
Computer science :
Consumer behavior : for success of B 2 C trade
Finance : for e-payment & online banking
Economics : Theories of micro & macro economics are to be
considered in case of EC
MIS : Information management is major use of EC.
Auditing : back office of electronic transactions is same as that of
conventional transaction
Management :
Laws of National & International Trade :
 BENEFITS OF EC
To Organization:
Globalization
Electronic procurement reduces cost of purchase
Reduced inventory
Initiates business process re-engineering
Reduced response time (order processing time + delivery time)
Reduced production time through automated transaction
Product promotion
 New sales channel with bi-directional communication
To Customers :
24 hrs. market
High quality, quick delivery of product & low cost product
Wide variety of products
Participation of customers in virtual auctions
To Society:
Increased living std.
Online education
Online health care
Easy access to product/services
 LIMITATIONS OF EC
Technical :
Lack of security
Insufficient telecommunication bandwidth
Problem in integration between database, EC s/w & Internet
VAN (value added network) is not used for EC as user has to pay
rent for mailbox which is not the case in case of Internet
Non-technical :
Cost & justification : It is difficult to qualify the value of Adv. &
customer relationship. One has to decide whether to outsource the
EC or to choose in-house EC
Privacy, Patent issues :
Legal & regulatory issues :
Lack of trust & user resistance
 DRIVING FORCE OF EC
Market & economic pressure :
•Strong competition
•Low labor cost
•Frequent & significant change in customer behavior
•Increased power of customers
•Global economy
Society & environmental : Technological changes :
•Shrinking Gov. subsidy on products •Technology obsolescence
•Increased legal issues related to EC •Innovation
•Rapid political changes •Information overload
•Decreasing technology
cost
Above changes cause un-stability & orgn. Initiates critical response
activities :-
1. BPR -to reduce time to market for the product
-Decentralized decision making by employee as they have
direct access to market through the Internet
-Knowledge management : for public
-Customer focused approach : Individualistic
products
-Business alliance : Virtual corporations & supply chain
mgt.
-EC for service/ product at any place / time /mode of payment
-Business Alliances (Virtual corporation, joint venture)
-Continuous improvement
-to improve productivity,
-to improve change management
-Total Quality mgt.
-JIT
-Strategic Information system for competitive advantage
 IMPACT OF EC
Improvement in Direct marketing
New distribution channels
Reduced trade cycle time
Customer service, customer can trace the status of their
package
Other Marketing –related impacts
Earlier advertisement was direct but now customer may click
on checkbox & get detail of specific product
Transforming organization
The organization should keep learning the new technologies
to be implemented
Changing nature of work
Where number of employee is reduced & concept of
outsourcing of work to countries with significantly low wages
Impact on Manufacturing
demand driven production & design
Impact on Finance
EFT, electronic cash etc.
Education through distance learning & recruitment through
electronic market with a number of Co’s acting as agent for
employees database