E-commerce an Introduction

E-commerce an Introduction

In the broadest sense, electronic commerce (e-commerce), is the buying and selling of products and services over the Internet. It has included the handling of purchase transactions and funds transfers over computer networks. According to the Forrester Research Study Sizing Intercompany Commerce, total U.S business-to-business Internet trade in 1998 is $7.7 billion, compared to a total global e-commerce of $21.8 billion, dramatically increasing from $2.5 billion in 1997. By the year 2002, according to the report, there will be $328 billion worth of e-commerce.

Electronic Commerce (e-commerce)

Electronic commerce is the ability to perform transactions involving the exchange or use of goods or services between two or more parties using electronic tools and techniques Some main technologies have made e-commerce viable - WWW, Electronic Data Interchange (EDI), Electronic Funds Transfer (EFT) and E-mail.

EDI is the inter-organisational, computer-to-computer exchange of business documentation in a standard, machine-processable format. EFT was designed to optimise electronic payments with electronically provided remittance information.

Electronic commerce provides the capability of buying and selling products and information via telephone lines, computer networks, and other electronic means. The Internet, the largest network of computer networks, is the medium usually favoured for electronic commerce because it allows an organisation to cut service costs while increasing the speed of service delivery.

Electronic commerce is considered a primary means by which organisations may expand rapidly into high growth emerging markets of the world. This is possible because, firstly as trans-national companies become skilled in their use of the Internet, they will be able to pursue global electronic commerce more efficiently, saving important advertising, communication, and administrative costs. Secondly, the Internet can increase responsiveness by notifying individual customers when new products in their areas of interest become available and by creating customised products and services. Thirdly and finally, trans-national companies using the Internet can increase their knowledge about consumer habits, be able to define trends, and turn consumer statistics into long-term customer relationships.

Electronic Commerce Activities

Electronic commerce endeavours to improve the execution of business transactions over various networks. Transactions are exchanges that occur when one economic entity sells a product or service to another entity. A transaction takes place when a product or service is transferred across a technologically separable interface that links a consumer (buyer) with a producer (seller). When the buyer/seller transactions occur in the electronic marketplace, information is accessed, absorbed, arranged, and sold in different ways. There are four main categories where business transactions take place Business to Business (B2B), Business to Customer (B2C), Business to Administration and Consumer to Administration.

An example in the B2B category would be a company that uses a network for ordering from its suppliers, receiving invoices and making payments. This category of electronic commerce has been well established for several years.

The B2C category largely equates to electronic retailing. This category has expanded greatly with the advent of the World Wide Web. There are now shopping malls all over the Internet offering all manners of consumer goods, from cakes and wine to computers and motor cars.

The business administration category covers all transactions between companies and government organisations. For example, in the USA the details of forthcoming government procurements are publicised over the Internet and companies can respond electronically. Currently this category is in its infancy, but it could expand quite rapidly as governments use their own operations to promote awareness and growth of electronic commerce. In addition to public procurement, administrations may also offer the option of electronic interchange for such transactions as VAT returns and the payment of corporate taxes.

The consumer administration category is just emerging, in the wake of a growth of both the business consumer and business administration categories; governments may extend electronic interaction to such areas as welfare payments and self-assessed tax returns.

B2B e-commerce was born out of an attempt to solve an administrative problem. It developed a new computer standard to handle these needs, which became known as EDI, Electronic Data Interchange. Today its descendant, XML, a lighter, simpler data interchange standard is used by B2B sites. Simple e-commerce sites first appeared in 1992. The early e-commerce sites were virtual catalogues, simply listing products for sale. Ordering was off-line, through e-mail, phone or fax. By 1996