Major Categories of E-Commerce - Essay Example

E- Commerce Introduction Electronic Commerce or e-commerce is the deal of products and services by using Internet or other computer networks. E-commerce follows the similar fundamental principles as traditional commerce that is, buyers and sellers come collectively to exchange merchandise for money. But to a certain extent than conducting business in the traditional way in shopping stores or through mail order catalogs and telephone operators — in e-commerce buyers and sellers carry out business over a network. With growth in the Internet and Web-based technologies, differences between traditional markets and the international electronic marketplace-such as business capital size, among others-are slowly being narrowed down. The name of the game is strategic arrangement, the capability of an organization to establish emerging opportunities and make use of the required human capital skills (such as intellectual resources) to make the most of these opportunities through an e-business strategy that is straightforward, practical and realistic within the context of an international information environment and new economic situation. With its consequence of leveling the playing field, e-commerce joined with the suitable strategy and policy approach allows small and medium scale organizations to compete with large and capital-rich businesses (Turban, 1994). Major Categories of E-Commerce Electronic commerce has been alienated into five different categories: Business-to-Consumer(B2C) Business-to-Business (B2B) Consumer-to-Consumer or Peer-to-Peer (C2C/P2P) Consumer-to-Business (C2B) Business-to-Government (B2G) Business-to-Consumer (B2C) Business to Consumer commerce applies to any business or organization that sells its products or services to consumers over the Internet for their use. In other words, it presents a direct sale between the supplier and in the individual consumer. B2C commerce produced much publicity when it first took off. The first conspicuous achievement arrived around 1995, where organizations like “e-Bay.com” and “amazon.com” were launched. When the victory of these companies took off, many other replications were born. On the other hand, the market turned sour and many of the B2C organizations crashed, including Australian company “destore.com.au”. Business-to-Business (B2B) Business-to-Business engages online transactions between businesses. Examples of B2B comprise online organizations that concentrate in marketing strategies, advertising, email companies, internet consultants, website development etc. Also, as a subsidiary of these organizations, there are a variety of internet resources such as online magazines, as well as the “E-Commerce Times”and “BtoBOnline.com”. Consumer-to-Consumer or Peer-to-Peer (C2C/P2P) Consumer-to-Consumer or Peer-to-Peer is exchanges between/among consumers. These exchanges can engage a third-party participation, which can assist and offer the communications, place and governance for the transactions/exchanges. Perhaps the most well known example of this is the online market place, eBay.com. Here consumers can bid for and sell items of any description, for any price. An example of P2P exchanges are file swapping sites/programs, such as “Kazaa”and “eDonkey”. Consumer-to-Business (C2B) Consumer-to-Business is when consumers present themselves as a buyer group. Examples of this comprise “CTB”and “SpeakOut.com”. These sites offer consumers with market strategies and businesses also use them to increase insight into consumer wants. These groups may be economically aggravated, as with demand aggregators, or communally orientated. Business-to-Government (B2G) Business-to-government e-commerce or B2G is usually defined as commerce between companies and the community sector. It refers to the use of the Internet for community procurement, licensing actions, and other government-related operations. This sort of e-commerce has two characteristics: first, the community sector supposed a pilot/leading position in establishing e-commerce; and second, it is supposed that the public sector has the maximum need for making its procurement system more effective. Web-based purchasing policies raise the simplicity of the procurement procedure (and decrease the risk of irregularities). To date, though, the size of the B2G ecommerce market as a module of total e-commerce is unimportant, as government e-procurement systems remain undeveloped. Why Use E-Commerce? HMV would want to use E-commerce because creating E-commerce operation will offer convenience to its coustomer which is a key to make them loyal and that is a solution to a succesful business, if HMV use E-commerce operations it will offer its customer with (Turban, 2006): Faster Service Customer doesnt need to wait in line to be capable to buy goods or services from the state. In fact, he or she can make most purchases in less than 5 minutes. Convenience With the E-government e-commerce system, we are not restricted to doing business during "government hours”. We can do business when it is most suitable for you. We can also do business with the state from the privacy of your own home. Privacy E-commerce transactions are protected. We use state of the art encryption technology to protect your payment information. And we use industry-standard Visa/MC payment systems to perform online transactions. Advantages of E-Commerce The advantages of E-commerce are fundamentally increased sales and decreased costs through the use of electronical media, particularly the Web. The advantages of E-commerce will be divided into the benefits it provides to organizations, consumers, and society. Advantages to Organizations Through the Internet, business now offers a broad range of alternatives and higher levels of customer information and details for individuals to look for and contrast. Some build-to-order organizations such as “Dell computer Crop”can even provide a competitive advantage by less costly customization of products and services. In terms of cost reduction, E-commerce assists organizations reduce costs in creating, processing, distributing, storing and retrieving information. For instance the communication and advertising costs could be lower by sending e-mails and using online advertising channels, than by using television commercials or the print media. In terms of online ordering and online sale organizations, the costs could be lower than running a tangible shop with the related manpower (Methvin, 1999). Comprehensive trading hours is another benefit, the 24 hours a day. 7 days a week in 365 days permits business always free to open on the Internet devoid of eventually and extra cost. Other benefits comprise the up-to-date company material, recent inventories, improved customers service, better customer’s communication, increased operating and trading flexibility Advantages to Consumers For customers, the advantages arise in the buying process, product research, evaluation and execution. E-commerce offers customers with a stand to investigate product information through international markets with a wider range of choices, which makes contrast and assessment easier and well-organized. With the ubiquity in accessing the Internet, consumers are competent to search for shops or carry out other transactions anytime in almost location. Cheaper goods and services is one of the benefits for consumers who purchase online. Moreover, delivery time and costs can be saved by buyers when they purchase digital goods and services. Examples are e-books, music and audio clips, software, games, and distance education delivered by means of the Internet. Advantages to Society By telecommuting, individuals can nowadays work and do their purchasing at home rather than by traveling around. This will result in less traffic and air pollution. For people in Third World countries, many service and products are now available which were unavailable in the past; opportunities and higher education services are more achievable for students. Non-profit organizations, including government services, also benefit from E-commerce by the online payment system which supports the payment of tax refunds and pensions quickly and securely. Public services such as health care, education, and public social service also benefit from E-commerce. For example, rural doctors and nurses can access professional information and the latest health care technologies. Overall, e-commerce makes products and services more easily available without geographic limitations. Most Important Advantage I think that the greatest advantage of E-commerce is that E-commerce offers buyers maximum convenience. They can visit the web sites of multiple vendors round the clock a day to compare prices and make purchases, without having to leave their homes or offices from around the globe. In some cases, consumers can immediately obtain a product or service, such as an electronic book, a music file, or computer software, by downloading it over the Internet. If we manage to make our customer loyal it will be the great advantage for our organization. So if our customer is happy with us then defiantely we can have a very successful business. Some of the managers in the organization still believe that e-commerce is a fad or is not worth pursuing, but my opinion is oppsite to them because according to me advanatages of E-commerce are more worthy than its disadvantages. Setting up an E-commerce operation is much better for our business beacause it will many valuable and profit giving things for our business such as: 1. Reduce Production Cost Replacing paper-based business operations 2. Better Information System Faster data retrieval rate 3. Better Management System within organization Central database for different departments of the company 4. Better Management System across different organizations Data exchanges and transactions between different organizations from suppliers to customers 5. Better Business Strategy Extending the business to cover more customers 6. Globalization E-Commerce is the essential pathway to implement globalization Disadvantages of E-Commerce The limitations of e-commerce can be classified as technological and nontechnological. Overall According to the research done by CommerceNet in 2000 of the top 10 obstacles to E-commerce, the major drawback of E-commerce is deficiency in of a business model, deficiency of trust and key public infrastructure, slow navigation on the Internet, the high risk of buying unsatisfactory products, and most of all lack of security. Technological For the E-commerce system itself, there is no across the world accepted standard for quality, security and consistency. The software of e-commerce development tools are always developing, and have complexities in incorporate the Internet and E-commerce software with parts of the existing applications and databases. For common users of e-commerce, the ease of access to Internet, such as Digital Divide, is unbalanced, costly and insufficient in porticular areas. This will create limitations for business in accessing wider markets. One more problem is that if a business systems scalability is not sufficient and upgradeable, it will result in squalor, reduce speed, and finally loss of customers. Nontechnological The lack of trust is one major cause why customers are reluctant to acknowledge E-commerce due to privacy and security concerns. Some C2C action organizations are below an unencrypted payment situation, in which a customers number number might be stolen in the payment procedure. Another problem is that there are some products that people will not buy online. For some high-cost and only one of its kind item businesses such as those concerned with jewelry or antiques which have complicatedness in contributing the items in the e-commerce form in the similar way as online books and CD sales. One more example is furniture companies: many of them have websites that permits customers to look through, but most customers still want to feel and touch the item before they make a choice. Unlike prospects of goods and services from customers are distinctive of the online purchasing environment. An example is in the view: Most significant drawback I think that the most significant drawback of E-commerce is lack of security beacause this reason keeps customer away from purchasing through E-commerce. Consumers also need to be reassured that credit card transactions are secure and that their privacy is respected, and that is the main reasons because of which most of the people are afraid of purchasing through e-commerce . Future Trends in E-Commerce In the upcoming year, five years, and ten years the only thing that we can be sure of in relation to ecommerce is that nothing will stay the similar (Methvin, 1999). The improvement of more intelligent based systems will formulate browsing easier content will be pushed rather than pulled. Seller will benefit in more sales of products that customers will not or else thought of buying. The marketplace for SEO will get smaller and the smart money will be used up on, how to pressure the search agents. Potentially a competitor for the ubiquitous Google will come into view based around this idea. Organizations will require thinking bigger if they are to carry on and accept what at the moment would be anxious relationships. The technology will be less significant than the strategy the only limit will be the bravery of the management teams involved, technically anything is possible. Governments will need to bring more content in a citizen focused way, and we will see an explosion in the use of the internet for agitation both positive and negative. “Illegal” blogs will be used to spread candidates and nourish the rumor mill to such an amount that there will certainly be limitations on the organizations that host blog sites. Developments in the B2B division are possible to be focused at a strategic level not technical. With the growth of XML technologies the glue exists at the present to link mutually disparate systems.  What is essential is the will of organizations to entrust to using these technologies. Business Analysis Website Evaluation of “hmv.com” http://www.hmv.co.uk serves as a mail-order product retailer; its product line involves the books, CDs or DVDs of music, games and many other CDs and DVDs of consumer’s interest. Below is the home page of www.hmv.co.uk : Figure 1 HMV Homepage E-bussines Strategy of “Hmv.com” It uses a database on merchant’s computer system that allows a customer to search a product in a variety of ways. It is also an example of client server application. The database consists of product specifications, shipping information, stock levels and other data, other information about data such as CD or DVD titles, album name etc. Such storage of information makes cross referencing the product, possible. For example a CD on “hmv.co.uk” is listed under various categories including Album name, best sellers, or hot titles. Buying a product on “hmv.co.uk”is very simple. After opening the home page if we are looking for a CD or DVD of a specific album, we can search the CD or DVD by using the search box, located on almost on the top of the home page. Desired Item can be purchased by clicking on “cart” button on the top right of the homepage and we also have the options to change, remove or change the quantity of the product in a shopping cart. The shopping cart technology processes the information and shows the products that we have selected to purchase. So it is obvious from the working of “hmv.co.uk” that it uses shopping cart technology and more generally, the storefront e-business model. To conduct storefront e-commerce merchants need to organize online catalogs of product, take orders through their websites, accept payment securely, send merchandise to customer and manage customer’s data. Some of the most successful e-businesses use storefront model, many of the leading companies using store front model are B2C (business- to- consumer) companies (Reynolds, 2004). Since store front model is mostly used by B2C (business- to- consumer) companies, it has direct relationship with customers so customer convience and loyalty is key to success for “hmv.co.uk” to become a successful cyber merchant. The working of a B2C organization, “Hmv.com”, is explained by the diagram: Figure 2 B2C Flow Quality Evaluation of “Hmv.com” When making e-business strategy putting aside the working strategy, there are also three more things (from E-business’s website’s perspective) that are most important to consider. These factors play an equally important role in the success of e-business. So when examining strategy of “Hmv.com”, these factors are also important to be examined as well. These factors are: Design Features Maintenance Design When www.hmv.co.uk was visited on internet then, from the customer’s point of view, putting aside the procedure of shopping and keeping in mind, the design of website, it was found that the design of the website is very good-looking. Colors and graphics (including pictures, buttons, links etc.) are also very eye-catching. Look and feel of website is very good. So a customer feels contentment and ease in surfing these websites. So in the field of designing, when visited, website was found very attractive and fine-looking. Features If we concentrate on “features” aspect of the website then it will be found that this site has very simple and fine features that are easily understandable by the customer. The products are properly categorized and the categories are very clear, so it is very easy to find the product of our interest. This site provides a very easy way to search for a customer’s wish list. The site also provides customer with the ability to bookmark his favorite product so the customers may find there saved products quickly and easily. So in the sense of “features”, “Hmv.com” has very user friendly features and in the point of view of a customer these features are more than satisfactory. Maintenance If we consider the issue of maintenance of the website then it should be clear that when we open the homepage of “Hmv.com” then the page appeared is not the first ever homepage of this site and it is altered a lot of times in sense of designing and features. So it is evident from the above fact that company having this website is doing its best to take care of customer ease and satisfaction. As the company feels that customer can have difficulty in using a certain feature, it tries to maintain the website, remove that feature, and add another feature that is more users friendly. If we consider the evaluation criteria of a website that is presented by http://www.quick.org.uk/menu.htm then according to that criteria the site is qualitative if its aims are clear, and the site is capable of achieving that aims and it is understandable from the surfing of “hmv.com” that the aims of this site are very clear that is customer satisfaction, loyalty and doing a good business with them. And it is very obvious from the reputation of this site that the company has achieved much more than their aims. So This site satisfy the criteria presented by http://www.quick.org.uk/menu.htm. Customer trends Consumer behavior should be the most important key of company e-commerce strategy. While technology will turn out to be better, consumer faithfulness, for instance, is likely to be different significantly between, say, online booksellers and providers of financial services. Two factors seem critical in forecasting behavior and determining an suitable e-commerce strategy. First, what is the duration of the relationship between buyer and seller? That is, does the buyer have a relationship with a favorite seller, in which they come to learn about each other, or does the buyer search for a different electronic vendor for each interaction? Second, what is the scope of goods and services linking buyer and seller? Does the consumer purchase a single good or service, or a bundle of related goods and services? The former suggests the consumer searches for the provider of the best individual goods and services, while the latter suggests a search for the best provider of a collection of goods and services (Steffano, 2001). Consumers buying products that can be described as opportunistic spot purchases show no loyalty; each purchase may be from a different vendor, and there is no one-stop shopping. They may buy a ticket from British Airways one day and United the next, and book their hotels separately. It is essential to be familiar with consumers exhibiting opportunistic spot market behavior and to build up a suitable marketing and pricing strategy. For instance, in markets that demonstrate this activity, buying market share is not good since it can be acquired only for the time being; when prices are raised to cover losses, customers will run away (Kenneth, 2003). Only time will decide whether the market for books, CDs, or DVDs exhibit this behavior. Market Trends The market for free time services and goods is extremely concentrating towards maximizing their income from these more interested, working consumers. An obvious example is “hmv.co.uk”. Many young people have high income, and declining birth rates also mean that the middle-aged have more money to spend for theirt free time interests. These two factors have had an impact on sales of toys and gadgets, in fastidious. As well as the games market, this Market accesses the division for audio-visual, photographic and information-processing goods, which have increased on account of strong consumer interest in the rising technology. The organization profile sections offer a close of growth in these sectors through analysis of the performance by such operators’ deidcated to do that analysis (Kosiur, 1997). A drift across the evaluation period for superior percentage in general household expenses to be dedicated towards free time is notable and ongoing. This has been strengthening by factors such as high employment levels, while the power of the UK economy in excess of the review period has supported consumer self-assurance to a very large degree. In 2005, the explosion period in terms of consumer spending came to a stop, and an ambiance of danger has now set in. This has affected some segments of the leisure industry for instance, the audio-visual division, in which consumers have made less purchase of bigger items such as wide-screen television sets (Kosiur, 1997). Competitor Trends Now companies are at present feeling the pressure of increased rivalry. The supermarkets violent performance in terms of marketing leisure goods has freshly had an impact on the sales of both HMV and WH Smith, among the leading high-street retailers for music and amusement goods. An additional major retail player, DSG International PLC, has also taken action to competition by converting its Dixons high-street action into an online business. Management of customer relationships To get the complete profit of B2B e-commerce, HMV will require making some strategy to place more significance on customer relationship management. As an alternative of automating the physical procurement procedure HMV should place stress in finding the method to track customer, client and supplier behaviour and offer a variety of data analysis services (Kenneth, 2003). There will also require having an intelligent thinking around business representation that definitely reflects customer requirements. Before getting on board on any e-commerce project, HMV will need to understand that the solution is not just about technology but about business models. HMV need to: To define user needs and requirements. Re-design business processes before moving to automation. To combine new technology with legacy information systems to ensure effectiveness. Better management of customer database. Key to Success for a business The Internet is developing at a great speed; most businesses identify that establishing a Web presence is very important; fewer understand that the window of possibility is shutting rapidly (Methvin, 1999). Those businesses that were making enormous profit, a few years ago, are commencement to see the market squash out with increased rivalry. It is still the potential to make a lot of money and profit for the business through e-commerce. So in the sense of business, they key, to success and having an outstanding profit, is hidden in becoming “Online”. Having an E- commerce website is also beneficial for the business in other ways such as a website: Expands your business Enhance current marketing Security of keeping ahead of the competition, since being in the competition a company website is almost compulsory now days. Enhance company image. Web sites are easy to modify according to company’s needs such as when company introduce a new product or product family, the best way for its advertisement is to upload it on company’s website. And uploading is so easy. Web sites are considered a standard for business today. References 1. Andrew, S. Tenenbom. (1999). Computer networks. London. Prentice Hall. 2. Hossein, B. (2000). The Handbook of Information Security. New York. John Wiley & Sons, Inc. 3. Kosiur.D. (1997). understanding electronic commerce. 4. Kenneth C. Laudon. (2003). E-Commerce: Business, Technology, Society, Second Edition. New York. Addison Wesley Publishing Company. 5. Larry L. Peterson. (1999). Computer Networks: A Systems Approach. Morgan Kaufmann Publishers. 6. Methvin, D.W. (1999). How to succeed in E-Business. 7. Reynolds, J. (2004). The Complete E-Commerce Book: Design, Build and Maintain a Successful Web-Based Business. CMP Books. 8. Steffano Korper, Juanita Ellis. (2001). The E-Commerce Book: Building the E-Empire. 9. Turban, king, Viehland. (2006). Electronic Commerce: A managerial perspective. Pearson. Read More