What is E-Commerce?

1. ?

There exists no exact definition of
e-commerce. Generally it is described as any kind of business transaction where
information is exchanged electronically.

To some people it means shopping at a website
and buying products online, to other people it means just designing a web page
in a way to increase the customers' interest. It does not necessarily describe
a process of ordering and paying online.

Electronic trading, in which a supplier
provides goods or services to a customer in return for payment is just one
special case of electronic commerce.

Other equally valid examples include internal
transactions within a single company

or provision of information to an external
organisation without any charge.

E-commerce is concerned with attracting new
customers and therefore it involves advertising, public relations and collecting
information for and about customers.

It's not enough to get an online order for a
product, it's also necessary to have this product and to deliver it to the
customer. So e-commerce includes, besides of interacting with customers
electronically, all the things a "normal" business would also need.

Categories of E-Commerce

There are 3 categories of e-commerce:

-     
business-to-business (B2B)

-     
business-to-consumer (B2C)

-     
business-to-administration

-     
consumer-to-administration

An example in the business-to-business category
would be a company that

uses an electronic way for ordering from its
suppliers, receiving invoices and

making payments.

The business-to-consumer category means
selling things to consumers via Internet. It is the most well-known form of e-commerce.

The business-to-administration category
covers all transactions between companies and government organisations.

The same category exists for consumers and administration,
though it is rather seldom.

As the B2C category is the most popular one, we
will talk about it.

Advantages of E-Commerce

The following list describes of what may be
the main advantages of e-commerce:

-     
lower transaction costs (if an e-commerce site is
organised well, you won't even need any office equipment  – however, it is
rather seldom)

-     
availability (people from everywhere and at any
time of the day can visit your site, get information and put orders)

-     
large quantity of information (a company can build
a very large catalogue with a lot of information on the web – just think of
Amazon with it's 3 Mio. articles)

-     
providing "up-to-date" information (you
can update your site quickly and make important information available in time)

-     
comparing prices and products

-     
quickness (the customers' orders and enquiries can
be handled immediately)

Disadvantages of E-Commerce

There are a lot of hard aspects about
e-commerce as the recent failures in this branche show:

-     
making people to visit your site (getting traffic
to come to your web site)

-     
how do you make yourself different from a (large)
competition

-     
getting people to buy something at your site (people
usually feel VERY uneasy about buying via Internet)

-     
you still need money (capital) to maintain your
system and provide an effective customer support

So e-commerce does not mean that you can make
profits easier than in a "normal" business. You have to manage all the
activities concerned with marketing, finance, distribution, purchase and public
relations.

These problems are the most relevat ones as
competition grows all the time and people still try to avoid buying online.
Stories about hackers using your credit card number or even large companies making
losses in trying themselves in e-commerce – all this makes people even more
sceptical about buying anything online.

However, this problems are also common in the
old economy. So there are a few other hard aspects about e-commerce:

-     
legality (concerning international e-commerce
companies; business contracts are defined differently by law in every country)

-     
ownership (the copyright problem is a very big one)

-     
privacy and security

What is Popular With E-Commerce?

Here you can see a list of products most
popular with B2C e-commerce in Austria.

There were about 700.000 people who bought
something via Internet in Austria in the year 2000.

Regardless of the rather bad development of
the technology stock markets during the past few months, the number of people
using internet to purchase products is likely to rise even more this year.

If we turn to the practical side of the whole
thing, what are the most relevant details about

Building an E-Commerce Site

First of all, you need what your:

-     
suppliers (this is not different from a normal
company – without good suppliers and efficient ways of purchasing goods you
cannot offer products)

-     
prices (as price comparisons are very easy on the
internet, you must have more competitive prices than the competition)

-     
customer relations (it means communicating with
your (potential) customers efficiently – via e-mail, forums, chat-rooms,
FAQ-pages, ... – try to provide as much information as possible)

-     
fulfillment and service (as for every other company
in the "real" world you must provide quick and correct handling of
the customers orders as well as an effective online-service)

will be.

Implementing an E-Commerce Site

Now you can step on to creating your site.

Generally there are 3 possibilities how you
can do this:

-     
enterprise computing (E
C means that you have to purchase your own software and hardware and hire your
own team of developers and supporters just to create and maintain your site –
big firms which are very frequently visited by customers would usually do this).

-     
virtual hosting services (VHS means that all the facilieties required (such as the necessary hard-
and software, security, ...) is provided and maintaned by another firm, for
payment, of course. Usually it is a company specialised in providing VHS).

-     
simplified e-commerce (Here
you just pay a company specialised in developing e-commerce systems to create a
simple site for you. You must already have the necessary hard- and software. The
basic functions of a simplified e-commerce system include displaying a product
catalogue, allowing users to browse through it and allowing them to buy items from
it).

Most of the B2C e-commerce companies use one
of these systems. And there are too many who just implement the simplified
solution and forget about offering online customer support and help and even
keeping the site up-to-date.

A lack of customer support is only one of the
reasons why e-commerce is in a crisis now.

Trends for the future

As you can see on the graph the purchase rates
are rising steadily. A recent study found out that most e-commerce website
owners are generally optimistic. Three-quarters say their online market is
expanding, while two-thirds say their ability to attract new customers is
improving. Half of those polled say they are also seeing increased loyalty from
past customers. So, as the customers get used to e-commerce, it becomes more
popular. It may not replace the common way to buy and sell products but for
most companies it offers new ways to reach their customers.

E-Commerce

Categories of
E-Commerce

Benefits
of E-Commerce

v lower transaction costs

v availability

v large quantity of information

v providing "up-to-date"
information

v comparison of prices and products

v quickness

Disadvantages
of E-Commerce

v hard to make yourself "visible"

v hard to differ from competition

v hard to make people buy something

v money

v legality

v ownership

v privacy and security