E-COMMERCE PROS AND CONS

One thing that you’ll discover after working in e-commerce is that there are pluses and minuses to doing business on the Web. The second discovery you will make is that there are e-commerce professionals and hopefully you will be a certified one soon and there are e-commerce con artists.

It can be said that the advantage (Pros) to doing business on the Web are a result of the hard work of e-commerce professionals. Most of the disadvantages and hazards to doing business on the web are caused and amplified by the people we are referring to as the e-commerce con artists.

PROS ADVANTAGES OF E-COMMERCE

E-commerce trends and technologies are constantly changing. Staying up to speed on the latest e-commerce standards and techniques is a constant learning experience for e-commerce professionals. For those who are willing to do the work, the web can offer the following benefits over traditional commerce.

v  INSTANT WORLDWIDE AVAILABILITY. An e-commerce web site is available globally, constantly. Only the largest businesses are able to achieve this with traditional commerce.

v  EASIER ENTRY INTO NEW MARKETS. You don’t need to physically bring your company and therefore your products into new parts of the world. As more and more people join the web community they will bring your product to themselves by visiting your web site.

v  DIRECT INTERACTION BETWEEN BUYER AND SELLER. There’s no need to contract a middlemen or find a reseller to get your goods to your buyers. Buyers can access your business directly through your web site.

v  REDUCED OVERHEAD. Opening a store in a new area can be a risky venture. This risk is minimized in an e-commerce business model, where overhead is limited to the web site and fulfillment staff and geographical coverage in a brick-and-mortar sense is not an issue.

v  REDUCED PAPERWORK. Because transactions are conducted completely electronically there is little or no need for paper.

v  NEW BUSINESS OPPORTUNITIES. As a new media for commerce and with its low start-up costs, e-commerce on the internet has the potential to inspire many innovative business models.

v  IMPROVED MARKET ANALYSIS. The community of internet users can be surveyed to determine the probable success of a potential new product.

v  IMPROVED PRODUCT ANALYSIS. The internet can be used to locate extensive information about nearly any product or class of product. Sellers and buyers on the internet have the ability to be much better informed than they are in traditional commerce.

v  AVAILABILITY OF VAST STORES OF KNOWLEDGE AND EXPERT (AS WELL AS NOT-SO-EXPERT) ADVICE. Many e-commerce sites offer reviews of products, sometimes from experts and sometimes from users often both.

CONS

E-commerce Con artists on the other hand approach commerce on the web with a gold rush mentality. Rather than taking the time to research the unique culture, concerns and rules of the internet, these get-rich-quick believers rush in assuming that internet business is the same as traditional business, only faster and with millions of dollars to be made overnight.

As an e-commerce professional, it’s your responsibility to make sure that web sites that you create are as secure as they can be and that you (and as a result your business) are a responsible internet citizen. Online businesses have to work hard to earn the trust of customers so they can gain useful information about how to better serve them. The following section explores these important e-commerce concerns and issues in more detail.

MODELS FOR E-COMMERCE

Two types of e-commerce make up nearly all the e-commerce activity on the web, business –to-consumer (B2C) and business-to-business (B2B).

Although there are naturally many more of the web who would be primarily classified as consumers (at least by businesses) the B2B e-commerce market is currently larger in terms of dollars spent. The B2B market reached an estimated $137 billion in 2000, whereas B2C reached approximately $10 billion. Let’s explore each of the two e-commerce business models in more detail.

BUSINESS-TO-CONSUMER

The B2C business model is commerce transacted between a business and a consumer. This model is characterized by high margins and low volume. This means that each individual shopper is not expected to buy more than one of any given item and is further expected to make relatively modest purchase, generally under $100. As in a traditional retail store, the margin (price markup on purchase) is high.

BUSINESS-TO-BUSINESS

B2B commerce transacted between separate businesses. It’s similar to bulk rate buying in that it’s characterized by high volume and low price margins. A business is likely to need large quantities of an item, such as desk calendar for every employee or enough paper towels to stock six rest rooms for several months. Because such customers buy in bulk and buy repeatedly a B2B company is able to offer products at a lower margin.

THE SEVEN KEYS TO E-COMMERCE SUCCESS

Creating an e-commerce site can be very simple if you have the right elements in place. However the process can also be extremely arduous if the project is not planned properly. A knowledgeable management staff with realistic expectations is key to e-commerce success.

A successful e-commerce management team must address al aspects of the project start to completion. In the effort there are seven key ingredients to e-commerce success.

1.      Generating demand.

2.      Ordering

3.      Fulfillment

4.      Payment processing

5.      Service and support

6.      Security

7.      Community

These elements are discussed in the following sections.

GENERATING DEMAND

If you expect customers to visit your site. You will need to create awareness of your products and services. There are several methods for generating awareness and demand, including Web advertising, traditional advertising and direct email.

ORDERING

After demand has been generated the true test begins. Can you turn your visitors into buyers? The ordering process on your site must be as straightforward and efficient as possible. If it’s too cumbersome a potential buyer may abandon the process midstream. Keep the forms as short and simple as possible.

FULFILLMENT

After an order has been placed stay in communication with the customer until it has been fulfilled. Immediately send an automatic email to the customer verifying the order information. In addition provide a phone number and e-mail address where the customer can reach a customer support representative to inquire about the status of the order. If applicable provide a tracking number for the package, so the customer can check with the shipping company on the status of the shipment. Ensure that the package is shipped in a timely manner and that the packaging material is sufficient to prevent damage.

PAYMENT PROCESSING

Arguably the most important part of the process us actually transferring funds from the buyer to your company. By far the most common method is via credit card, but there are other options worth trying. The more options you give a customer the more likely they are to purchase from your site.

The three models for payment processing in e-commerce on the web are; Credit card model, Cash model and Check model.

SERVICE AND SUPPORT

It’s extremely important to provide excellent customer support so you can generate trust and loyal customer base. It a customer does not know how to contact your after submitting an order, he or she will wonder whether the shipment will ever arrive. It’s essential to have clearly accessible help area on your site. Include instructions on how to use all of the features on your site---browsing products, changing account information , viewing order status , returning items, cancelling an order and so on---and provide contact e-mail and phone number information.

More advanced customer support software is also available. The Land’s End customer support area features an automatic call back request feature, a live chat feature and co-browsing capabilities. These features are powered by Cisco system Intelligent contact Management Solutions.

SECURITY

Security is a major concern for online shoppers and it should be an e-commerce company number are priority. Credit card numbers and home addresses are stolen from web site database with alarming frequency so you must do everything possible to safeguard your data from unauthorized access. Use certificates, attachments that provide proof of identification from a well known vender such as VeriSign and use SSL technology to encrypt the data sent across the internet.

COMMUNITY

One of the most important and least tangible aspects of e-commerce success is creating a sense of community at an online store. There are many books on this subject and entire courses are available to study it, still it remains an elusive goal for many sites. The most successful e-commerce sites such as Barnes and Noble (www.bn.com) have made significant efforts in the area of community building via the use of message boards, notifications e-mail, personal pages and customer.

E-COMMERCE TRENDS AND FORECASTS

E-COMMERCE TRENDS AND FORECASTS

Studies of web usage and e-commerce growth show that the web is a growing market. All indications are that the web user population will continue to grow rapidly in the next 5 to 6 years. In addition even though the web population is currently dominated by English speakers the number of users in other parts of the world is growing. The web has already become an important part of the millions of people’s lives.

THE RAPIDLY GROWING WEB

Let’s take a look at some of the statistics that illustrate the growth of the web which gathers information from a variety of freely available sources on the web

Ø  In 1999 almost half of the internet users worldwide were outside of the U.S  and Canada , the number for 2000 will probably push this over the 50 percent mark.

Ø  Women are closing the gap in internet shopping. In 1995 the represented about 36 percent of internet shoppers, today the number is 41 percent.

Ø  In 1999, 40 percent of the adult population of the U.S and Canada were using the internet regularly. That number has been growing steadily since 1995.

Ø  The average user spends 5 hours and 28 minutes per week on the web

DOMINANT TRENDS IN THE EVOLUTION OF E-COMMERCE

As use of the web for purchasing goods becomes more widespread and global there are several dominant trends that will shape the evolution of e-commerce internationalization, standardization, personalization, instant fulfillment, mobile internet access, custom pricing and intelligent. The following sections describe these trends in detail.

INTERNATIONALIZATION

The expectation is that the user population of the web will continue to grow very rapidly and become more global. This internationalization of the web means that businesses conducting e-commerce on the web need to address the needs of non-English speakers if they want to access this global market. More information on the needs of non-English speakers can be found at the W3Cs internationalization site.

STANDARDIZATION

The growing number of electronic transaction on the web also requires the adoption of e-commerce standards by every company that wants to be a major player in the marketplace. These standards include data interchange and such user protection as meaningful privacy statements and trustworthy security system.

PERSONALIZATION

Personalization refers to the growing practice of gathering information about established customers and providing a personalized web site for them when they return to your site. Information on products or topics in which users are interested cab be presented as soon as they arrive at your site. This helps build loyalty. Amazone.com is a good example of a site that tailors information to the user.

INSTANT FULFILLMENT

A trend in the purchase of digital products, such as software is instant fulfillment. Instant fulfillment means that the user receives the product almost immediately after he or she purchases it—via download from the web. Not only have online software venders begun to offer the services, but e-book venders such as Barnes and Noble are also conducting order fulfillment via download.

MOBILE INTERNET ACCESS

Many people believe that wireless internet access using handheld devices, such as personal digital assistants and mobile phones, will become more popular than using the web through desktop computers.

Because of the limited graphical and processing capabilities of these devices, a special internet protocol called the wireless application protocol has been development to provide versions of web sites that are suitable for these devices. To accommodate the growing number of users who will want to purchase products via their wireless devices, e-commerce businesses need to plan to implement WAP in the near future. Some of the internet businesses that are taking advantage of the wireless trend are providers of services that help web sites make their content viewable on wireless devices. The leading such service is currently Avantgo.

CUSTOM PRICING

Custom pricing is being pioneered by Priceline.com an e-commerce site where a user can specially the price he or she wants to pay for a particular service. Currently the site offers airline tickets, hotel rooms, new cars , home financing , rental cars and long distance service. Service providers review each request and if one of the providers accepts, the user is usually bound to following through with the purchase. This is a novel business concept enabled by e-commerce on the web

INTELLIGENT AGENTS

Intelligent agents are software that acts automatically on behalf of the user. These agents will eventually result in a vast improvement in internet searching. Because of intelligent agent ability to understand concepts and search for related topics, this agent is better able to provide relevant search results for users. A good example of intelligent agent technology in use today is Apple Computers Sherlock functionally.

FORCES DRIVING E-COMMERCE

FORCES DRIVING E-COMMERCE

The speed at which the web has brought e-commerce to the average person is astounding. In August 1995, there were 18 million internet users in the U.S and Canada. By April 1999 that number had skyrocketed to 92 million of these 60 percent were online shoppers.

Consequently new e-commerce sites are being developed and launched very rapidly. Given the downturn in the stock market fortunes of many e-commerce companies in 2000, the casual observer might be prompted to wonder why business continue to feel that a web presence is vital.

Despite the drop in stock prices of “dot.com” companies e-commerce is rapidly becoming a staple of the business world. Indeed this may be why the prices dropped; perhaps the “pie-in-the-sky” valuations of e-commerce ventures were are consequence of the type surrounding the new industry. Now that this industry is more established and traditional companies are also venturing into e-commerce the stock prices are more commensurate with those of promising companies in other industries.

There are several forces that are driving the development of new e-commerce Web sites. As in the physical world of commerce there are three key players.

Ø  BUSINESSES: Businesses want a piece of the pie. The number of people on the web and their demographic are impressive. The pie is still rapidly getting bigger. Also online consumers are not the only market available to web businesses. Increasingly businesses are using the web as a means to reduce the cost of conducting inter and intra company commerce. Inter- company e-commerce also known as B2B e-commerce reduces costs by avoiding middlemen. Intra-company e-commerce reduces costs by eliminating paperwork.

Ø  CUSTOMERS: There are many benefits of e-commerce for customers. At the simplest level e-commerce makes the acquisition of goods and services much less burdensome in terms of time and effort. Customers also want privacy and security while benefiting from the advantages that the web provides.

Ø  GOVERNMENT: Government entities are still trying to figure out how or whether to take an active role in governing the internet at all. One of the major issues with governance of the internet is that it’s a global entity and as such has no clear boundaries of jurisdiction.

KEY CONCEPTS FOR E-COMMERCE

KEY CONCEPTS FOR E-COMMERCE

Before get into the detail of e-commerce business and site development, it’s important that you understand some of the lingo.

COMMERCE

Commerce is the exchange of goods and services for money. This definition of commerce holds true for any type of commerce as well as any type of money. The following three key capabilities need to be provided by a merchant in any type of commerce.

·         COMMUNICATION: This is the method of transferring information from the buyer to the seller. For example when a shopper makes a purchase from a real world bookstore the shopper presents the books he or she wishes to buy and a method of payment such as cash, check or a credit card.

·         DATE MANAGEMENT: This dictates the exchange format of the information. In the case of check your account number is preprinted on the check. When it’s processed by the business bank the business uses the number to request the funds from your bank. With a credit card the transaction is more immediate. Your credit card number is submitted for approval over a private digital network (PDN) and an almost instant response is received.

·         SECURITY: The private digital network provides the necessary security for the transaction. You are also given the customer copy of your receipt and any other duplicates thus providing security for your credit card information. The cashier provides security for check purchase by storing the check in a secure area of the register until it’s taken to the back office to be processed.

THE HISTORY OF E-COMMERCE

THE HISTORY OF E-COMMERCE

Contrary to popular belief, e-commerce has been around a lot longer than the World Wide Web.

The simplest definition of e-commerce is “commerce conducted via any electronic medium” Using this definition even the use of the telephone or fax machine to transact business is considered e-commerce. This means that every time you receive a catalog in the mail and pick up the phone or send in a fax to order an item, you are conducting an e-commerce transaction.

EDI AND E-COMMERCE BEFORE THE WEB

E-commerce through computer networks really started with the standard format for sharing business data that is known as Electronic Data Interchange (EDI) . EDI is a method of transferring data between banks and other firms on a closed system. It’s been used in ordering systems, credit card processing , direct deposit and many other processes for the past three decades. Automatic teller machines (ATMs) and credit cards are excellent examples of the kind of e-commerce that’s been around since before the web.

E-COMMERCE ON THE WEB BREAKS DOWN BARRIERS

E-commerce has taken on new meaning, however with the advent and rapid proliferation of its use the web. E-commerce web sites are free of many of the constraints of previous types of e-commerce. For example, EDI has traditionally been very expensive to implement because of its need for dedicated networks. Phone ordering requires customers to wait for a customer service representative to pick up the phone. Many previous types of e-commerce had restrictions on the hours during which you could shop, and for those overseas (who have no access to toll free numbers) an extremely expensive phone call was necessary to order products and services electronically.

THE EARLY DAYS OF THE WEB

The internet was started as a way to exchange information, and was primarily used by researchers at academic institutions. With the introduction of Mosaic, the first graphical web browser in 1993 the possibilities of online e-commerce began to be seen by some very forward thinking, entrepreneurial people. The Netscape browser was released in 1994 and by 1995, online retail sites, such as Amazone.com were beginning to pop up. The rest as they say is history. Today there are thousands of e-commerce web sites and more are launched each day.

THE REASONS FOR E-COMMERCE

THE REASONS FOR E-COMMERCE

In a very short time, the web has grown from being an academic experiment in hypertext to an important part of thousands of businesses worldwide. Businesses and consumers are attracted to e-commerce for many reasons. Three of the most important reasons are:

·         E-Commerce opens new markets.

·         E-Commerce increase efficiency.

·         E-Commerce expands the capabilities of traditional commerce.

Now will discuss the above three reasons in detail.

E-COMMERCE OPENS MARKETS

On the internet, merchants are able to sell goods without the substantial overhead costs and geographical limitations of a physical store. Even merchants will existing real-world stores are able to sell more goods to more consumers, such as those living in remote areas or simply outside of the merchants geographical coverage, if they have an e-commerce presence. With e-commerce, consumers can buy goods from a merchant without accessing the physical store.

E-COMMERCE INCREASE EFFICIENCY

Any barrier that stands between a business and its customers creates inefficiency. In the world of physical stores, some of the barriers include distance, business hours and the need for distributers and middlemen. E-commerce appeals to businesses because it allows them to have a more direct relationship with customers.

The reasons that e-commerce appeals to shoppers vary. The reasons can range from a physical handicap, to limited free time, to an aversion to real world shopping. E-commerce also gives shoppers the ability to easily compare prices and products. An additional bonus of online shopping is that purchases are often exempt from sales taxes. Any way you look at it, e-commerce is helping people introduce more efficiency into their lives.

E-COMMERCE EXPANDS THE CAPABILITIES OF TRADITIONAL COMMERCE

One of the finest examples of e-commerce today is Amazon.com the first major online bookstore. Amazone.com has been imitated and emulated repeatedly by other retail Web sites. Amazone.com provides something that real world bookstores generally cannot, an extremely deep inventory. This means that Amazone.com stocks not only the most popular books on a given subject, but also pretty much everything else in print on that subject.

Whereas a good real world bookstore has a fairly deep inventory and can order anything in print, access to this inventory and this service require physical proximity to a good bookstore, not something that we are all fortunate enough to have in our hometowns. Amazone.com solves this problem by bringing this capability to the Web. As a result of their success with book selling. Amazone.com has branched out and now sells music, videos, electronics and other products.