E commerce implementatioin and evaluation.docx

E-COMMERCE: MEANING AND TOOLS

Conducting business electronically using networks and internet is known, as electronic commerce. Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services, and information via computer networks, including the internet. EC uses several technologies ranging from Electronic Data Interchange (EDI) to e-mail for commercial transaction processing.

EC applications began in early seventies with innovations, such as, electronic transfer of funds. However, the applications were limited to large corporations and a few small businesses. Then came Electronic Data Interchange (EDI), which expanded EC from financial transactions to other kinds of transaction processing and extended the types of participating companies from financial institutions to manufacturers, retailers, and other forms of business. Today, EC is rapidly outgrowing its limited operational sphere to everywhere in the entire globe.

Intranet, extranet, and requisite computer hardware and software are used in processing EC transactions. We will now discuss these tools individually.

Intranet Commerce

The use of intranet is increasing rapidly not only, as an internal communication system, but also, as a facilitator of electronic commerce. It uses internet-based technology to provide access to a variety of information on a firm, most of, which would otherwise

require multiple software licenses, substantial data conversion time, and different user interfaces. Intranets can facilitate electronic commerce inside a corporation, as they can be used in selling corporate products to employees and/ or selling or trading services and products among business units. Intranet can facilitate external trade as well.

Intranet can facilitate transaction processing in the following ways:

Efficient Transaction Entry

Wherever appropriate, data needed by systems to support financial functions are entered only once and are updated through electronic means, consistent with the timing requirements of normal business or transaction cycles. This helps in reducing errors in transactions, as they are now maintained electronically.

Common Transaction Processing

Common procedures are used for processing similar kinds of transactions, which permit the transactions to be reported in a consistent manner.

Consistent Internal Controls

Internal controls over data entry, transaction processing, and reporting are applied consistently throughout the system to ensure the validity of information and the protection of financial resources (Source: unknown).

Intranet is well suited to replace many paper-based information delivery systems within a firm, resulting in lower costs, easier accessibility, and greater efficiency. Client access to certain parts of a firm’s intranet via an extranet is a value-added service at relatively low cost that acts, as a powerful marketing and communication tool.

Extranet Commerce

The exact definition of an extranet is still evolving, but the most universally accepted one is a network that links business partners to one another over the internet by tying together

their intranets. The term ‘extranet’ comes from ‘extended intranet’. The main goal of extranet is to foster collaboration between organizations.

An extranet uses the same basic infrastructure components including services, TCP/IP1, e- mail, and web browsers as the internet. It makes communication over the internet secured. It links the company’s intranet with suppliers, customers, and trading partners. Extranet may be used, for example, to allow inventory databases to be searched by outsiders or to transmit information on the status of an order. An extranet enables people, who are located outside a company, to work together with the company’s internally located employees.

An extranet, like an intranet, is typically protected by a firewall and is closed to the public. It is open to selected suppliers, customers, and other business partners, who access it on a private wide area network over the internet or on a Virtual Private Network2 (VPN), which increases security and functionality.

E-COMMERCE: BENEFITS

Few innovations in human history encompass, as many benefits, as electronic commerce. The global nature of technology, low cost, opportunity to reach millions of people, interactive nature, variety of interaction possibilities and resourcefulness, and rapid growthof the supporting infrastructure, especially the internet, result in many benefits to organizations, individuals, and society. These benefits are just starting to materialize, but they will increase significantly, as EC expands.

We will discuss the benefits of EC in terms of:

  • Organisations
    • Consumers; and
    • Society

Let us begin with the benefits to organizations.

Organization

EC expands the market place to national and international markets. With minimal capital outlay, a company can easily and quickly locate more customers, best suppliers, and most suitable business partners worldwide. In addition, it:

    • decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information;
    • allows reduced inventories and overhead by facilitating ‘pull-type supply chain management’. In a pull-type system, the process starts from customer order and uses just-in-time processing. This allows product customization and lower inventory cost;
    • reduces the time between the outlay of capital and receipt of products and services;
    • supports business re-engineering process efforts. when processes are changed, productivity of sales people, knowledge workers, and administrators can increase by cent percent or more;
    • lowers telecommunications cost; internet is much cheaper than value-added networks

3(VANs);

    • helps small businesses to compete with large companies;
    • enables organizations to reach customers outside their immediate area at a minimum cost;
    • allows organizations to reach a wide range of suppliers, thereby reducing the cost of supplies and services;
    • permits the creation of efficient markets in an industry in, which buyers and sellers can share benefits;
    • allows companies to auction surpluses or obsolete products quickly with little expenses; and
    • facilitates global trade, allowing companies to penetrate foreign markets.

Consumers

EC:

    • provides customers with more choices; they can select from many vendors and from more products;
    • frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons;
    • allows quick delivery of products and services;
    • enables customers to shop or do other transactions 24 hours a day, year round, from almost any location;
    • permits customers to receive relevant and detailed information in seconds, rather than in days or weeks;
    • enables consumers to get customized products from PCs to cars at competitive prices;
    • makes it possible to participate in virtual auctions;
    • allows customers to interact with other customers in electronic communities and to

exchange ideas, as well as, compare experiences; and

    • capitalizes on the general movement from a market-centric to a customer-centric environment.

Society

EC:

    • enables more individuals to work from home and to do less travelling, resulting in less traffic on the roads and lower air pollution;
    • allows some merchandise to be sold at lower prices, so less affluent people can buy more and raise their standard of living;
    • enables people in third world countries and rural areas to enjoy products and services that otherwise are not available to them. This includes opportunities to learn professions and earn college degrees; and
    • facilitates delivery of public services, such as government entitlements, by reducing the cost of distribution and increasing the quality of the distributing system.

ELECTRONIC COMMERCE: LIMITATIONS

There are technical and non-technical limitations in the successful implementation of EC in the country. We will discuss the technical and non-technical limitations separately.

      1. Technical Limitations

The technical limitations are below mentioned:

  • there is lack of system security, reliability, standards, and communication protocols;
  • there is insufficient telecommunication bandwidth;
  • software development tools are still evolving and changing rapidly;
  • there are difficulties in integrating the internet and EC software with some existing applications and databases;
  • there is need for special web servers, in addition, to the network servers (additional cost);
  • there is possible problem of interoperability, meaning that some EC software do not fit with some hardware or are incompatible with some operating systems or other components; and
  • accessibility to the internet is still expensive and/or inconvenient for many potential customers.

However, these limitations can be overcome with time. Appropriate planning can help in minimizing them.

Non-Technical Limitations

Other than technical issues, there are non-technical issues that centre EC. These issues are given below:

  • many legal issues are yet unresolved;
  • government regulations and standards do not have a finesse enough for many circumstances;
  • benefits of EC, such as, web advertisements are difficult to measure. In addition, the methodologies for justifying EC are still in the developmental stage;
  • EC is still evolving and changing rapidly. Many people are looking for the situation

to stabilize before they can enter EC operation;

  • customers resist change. To switch from a real to a virtual store may be difficult for many people. It seems that people do not yet sufficiently trust paperless, faceless transactions;
  • there are not enough support services. For example, copyright clearance centres do not exist and quality evaluators or qualified EC tax experts are rare;
  • there is a perception that EC is expensive and unsecured, so many do not want to use it yet;
  • there is not yet sufficiently large number (critical mass) of sellers and buyers that is needed for profitable EC operations; and
  • EC could result in breakdown of human relations.

Despite these limitations, rapid progress is occurring in EC. As experience accumulates and technology improves, the ratio of EC benefits to cost will increase, resulting in a greater rate of EC adoption.