The exponential growth of Electronic Commerce

The Internet now provides a set of interconnected networks for individuals and businesses to complete transactions electronically. We define very broadly as the online exchange of goods, services, and money’ among firms, between firms and their cus­tomers, and between customers. The Census Bureau of the Department of Commerce reported that annual online retail sales were up by 23 percent and that e-commerce accounted for 2.7 percent of total retail sales in the second quarter of 2006, resulting in revenues of more than .8 billion for that quarter. With this much money at stake, it is little wonder that no other information systems issue has captured as much attention as has EC. Although EC was being used as far back as 1948 during the Berlin Airlift (Zwass, 1996), the emergence of the Internet and Web has fueled a revolution in the manner in which products and services are marketed and sold. Their far-reaching effects have led to the creation of an electronic mar­ketplace where a virtually limitless array of new services, features, and functionality can be offered. As a result, a presence on the Web has become a strategic necessity for companies.

 

Contrary to popular belief, EC goes beyond merely buying and selling products online. EC can involve the events leading up to the purchase of a product as well as customer service after the sale. Furthermore, EC is not limited to transactions between businesses and consumers, which is known as EC. EC is also used to conduct business with business partners such as suppliers and intermediaries. This form of EC is commonly referred to as EC. Some companies use both forms for conducting business, such as the clothing and home furnishing retailer Eddie Bauer, while other firms concentrate solely in B2C or B2B. Some forms of EC happen between businesses and their employees; these are referred to as Some forms of EC do not even involve business firms, as would be the case with an online auction site such as eBay; these forms of EC are referred to as Finally, there are forms of electronic commerce that involve a country’s government and its citizens (government-to-citizen [G2C]), businesses (government-to-business [G2B]), and other governments (government-to-government [G2G]). Furthermore, there is a wide variety of ways to conduct business in each arena. In the following section, we examine the reasons that Web-based EC is revolutionizing the way business is being done. This is followed by an in-depth analysis of how companies are uti­lizing EC in their daily operations.

Technological forces are driving business, and the Internet and Web emerged as a strong new agent of change. The resulting technological revolution has essentially broken down the barriers to entry, leveled the playing field, and propelled commerce into the electronic domain (Looney and Chatterjee, 2002). Companies are exploiting the capabilities of the Web to reach a wider customer base, offer a broader range of products, and develop closer relationships with customers by striving to meet their unique needs. These wide-ranging capabilities include global information dissemination, integration, mass customization, interactive communication, collaboration, and transactional support (Chatterjee and Sambamurthy, 1999; Looney and Chatterjee, 2002).

 

The powerful combination of Internet and Web technologies has given rise to a global platform where firms from across the world can effectively compete for customers and gain access to new markets. EC has wide geographical potential, given that many countries have at least some type of Internet access. The worldwide connectivity of the Internet enables a relatively economical medium for firms to market their products and services over vast distances. This increased geographical reach has been facilitated by virtual storefronts that can be accessed from every Web-enabled computer in the world.

Web technologies also allow for of information via Web sites, which can be linked to corporate databases to provide real-time access to personalized information. No longer must customers rely on old information from printed catalogs or account statements that arrive in the mail once a month. For example, when Alaska Airlines (www.alaskaair.com) updates fare information in their corporate database, customers can access the revisions as they occur simply by browsing the company’s Web site. As with nearly every other major airline, the Web allows Alaska Airlines to disseminate real-time fare pricing. This is particularly important for companies operating in highly competitive environments such as the air transport industry. Furthermore, Alaska Airlines offers their valued customers the ability to check the balances of their frequent flier accounts, linking customers to information stored on the firm’s corporate database. Customers do not have to wait for monthly statements to see if they are eligible for travel benefits and awards.

Web technologies are also helping firms realize their goal of mass customization. helps firms tailor their products and services to meet a customer’s particular needs on a large scale. For instance, bag manufacturer Timbuk2 (www.Timbuk2.com) has developed an application called Custom Messenger Bag Builder, which allows customers to create a virtual bag that is modeled just for them (see Customers can configure the virtual bag based on a number of criteria such as size, fabrics, colors, accessories, and even use (e.g., for carrying a laptop). The virtual model application also assists Timbuk2 in tracking customers’ preferred styles and colors, allowing them to target marketing efforts to individual customers.

via the Web enables firms to build customer loyalty by providing immediate communication and feedback to/from customers, which can dramatically improve the firm’s image through demonstrated responsiveness. Many firms are augmenting telephone-based ordering and customer support with Web-based applications and electronic mail. In some cases, online chat applications are provided to allow customers to communicate with a customer service representative in real time through the corporate Web site.

Best Buy, for example, has entered into the computer repair and support business with their brand Geek Squad Traditionally, customers having computer problems would have to take their computer to a Best Buy store for repair. Geek Squad online (www.geeksquad.com) has implemented a feature whereby customers can contact customer support representatives at any time of the day to receive real-time online support. Support options include operation system diagnostics, software installation issues. and computer opti­mization, and interactive communication agents aid the customers online in real time. This feature allows the customer service agent to walk the customer through the troubleshooting process step-by-step while the customer is at home. This customer-driven approach far outdis­tances traditional, no electronic means in terms of tailoring and timeliness.

Web technologies can also enable The entertainment media company Virgin Entertainment Group, which runs 23 megastores throughout the United States, selling music, DVDs, and books, was looking for a way to maximize the time managers would spend selling products on the floor or training employees. Before they decided to implement a Web-based collaboration system, managers would spend countless

 hours trying to locate inventory information for the head office, while at the same time employees in the head office would respond to literally hundreds of e-mails asking the same questions. After the introduction of Microsoft SharePoint, a Web-based collaboration suite, Virgin’s managers can now spend up to 20 percent more of their times on efforts to sell products, while at the same time employees at the head office have substantially more time to devote to operational oversight or strategic planning (Microsoft, 2004).

By providing ways for clients and firms to conduct business online without human assistance, the Internet and Web have greatly reduced transaction costs while enhancing operational efficiency. Many companies, such as Dell Computer Corporation, are utilizing the Web to provide automated . Dell began selling computers on the Web in mid-1996. By early 1998, Dell was experiencing around million in online sales per day. Dell derives about 90 percent of its overall revenues from sales to medium-size and large businesses, yet more than half of its Web-based sales have been from individuals and small businesses that typically buy one computer at a time. As a result, Dell is experiencing significant cost savings per sale by reducing the demand for phone representatives on the smaller purchases. Individual customers can access product information at any time from anywhere, benefiting not only the end consumer but also Dell. Customer service representatives can focus on lucrative corporate customers, reducing labor costs involved in servicing small-ticket items.

Because technology is different and more powerful than other technology, in addition, it has challenge much traditional business thinking, and has number of unique features that help explain why we have so much interest in e-commerce. E-Commerce is growing so fast because of its quickness-whereas in years gone by pc plc would send a cheque to the company and then the company would cash the cheque hekni dispatching the goods we can now use instant transactions to transfer money from account to account in a number of seconds. Another popular factor of ecommerce is its wide availability – people from everywhere can buy- not just those the company can afford to send a leaflet to, also it means that the internet can be  used an extra income for your spare time.

 E-Commerce is very low maintenance. You just have to wait for people to buy and then send the goods; sample as!!!

E-commerce arguably has a potential to add a higher value to businesses and consumers in developing countries than in developed countries. Yet most developing country-based enterprises have failed to reap the benefits offered by modern information and communications technologies (ICTs). Some business models have emerged that overcome e-commerce barriers in developing countries. Yet in e-commerce journals, the developing world has received surprisingly scant attention. There are a very few analytical e-commerce studies in the developing world settings. Moreover, empirical evidence in the developing world lags behind theoretical development. There have been calls for research on developing country-based enterprises’ e-commerce strategy.

E-business continues to grow vigorously in developed countries, but divergences are surfacing among developing countries, says E-commerce and Development Report 2003, released today. More and more governments and businesses in the developing world are nonetheless beginning to eliminate obstacles to the adoption of information and communications technologies (ICT). While the immediate effects are not necessarily dramatic, the Report predicts that improvements in the e-business environment should eventually result in productivity gains in these economies. At the same time, many other developing countries still face difficulties in identifying and realizing the potential benefits of ICT and the Internet for their economic development.

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In terms of Internet use, developing countries continue to grow faster than developed countries: at the end of 2002, they accounted for 32% of the world´s 591 million Internet users, up from 28% the previous year, and could well represent 50% by 2008. These estimates, although far from ideal, provide a reasonably good indication of whether the foundations of a “digital economy” exist in a given country. Countries where such foundations do exist – whose governments have pushed the development of the information society early on (such as Japan, Malaysia, Singapore and the US) – have benefited from ICT much earlier, the Report finds. But for developing countries to catch up with ICT developments globally, they must be committed at the highest political level, must pay attention to implementation issues and must strike the proper balance between the roles of the public and private sector in ICT development.

As to what the spread of ICT will mean for national economic performance, the Report concludes that it has a positive impact on all factors affecting productivity and underpins growth in several countries where the technology really penetrated. Systematic empirical evidence on developing countries is still not abundant, but many useful lessons can be drawn from available experience. Governments should, for example, encourage greater understanding of best practices in the use of ICT so that the best possible choices can be made. They should implement policies to facilitate greater access to low-cost, high-bandwidth Internet connections and the use of affordable software. And they should play a leading role in addressing skill deficiencies in the workforce through training and education. UNCTAD recommends that the development and adoption of ICT in developing countries should follow a multi-stakeholder approach, including public-private partnerships, alliances and consortia.

Contrary to what might be expected, the Report finds that no direct linkage can be established between a country´s income level and Internet usage rates. Internet penetration rates in developing countries with comparable income levels vary by as much as 25 times. While developing countries share many challenges in their efforts to participate in the information society, such factors as levels of awareness, the vitality of civil society, and the priority that government, business and other social agents give to these challenges (and the policy choices they make) matter as much as the availability of financial resources.

The Report notes that the Web is growing rapidly in terms of active sites, whose numbers rose by 17% last year. The number of Internet protocol (IP) addresses using some kind of scripting language – indicating higher levels of interactivity – also mounted, by 52.1%. Similarly, the 14% increase in the number of sites using the secure sockets layer (SSL) protocol points to the continued expansion of business-oriented sites, which require secure transaction capabilities.

Internet hosts are heavily concentrated in the developed world: North America and Europe account for 89% of all hosts worldwide, and their numbers are growing faster than in the developing countries. But industrial countries account for an even higher concentration of Internet users: last year there were nearly 1,000 times more Internet hosts per 10,000 people in North America than in all of Africa. Thus, little content is hosted in developing countries. Hosting content in a developed country may, however, be the best option for some enterprises in developing countries, UNCTAD says: it may be easier to host information about a tourist destination, for example, on a server located close to where the potential tourists reside.

 

 

Business-to-business (B2B) e-commerce is widely believed to promise a radical change in the way that firms trade with one another. B2B e-commerce applications are being promoted as tools that will enable producer firms in developing countries to reduce their costs substantially, thereby easing their access to global markets. The vision of B2B e-commerce is driven by a simple idea that, the Internet provides an open global network and access to this network is relatively cheap. Internet-based B2B e-commerce should help producers in developing countries obtain better information on global markets and give them direct access to new customers. In developing countries, producer and benefit from low labor cost, enable lower price even on the already averaged low price most of the internet products. Also, Just- in- time (JIT) inventory system can be optimized, and fast payment

The e-commerce will provide producers in developing countries some unique advantages include:

There are three benefits for producer who work in universal standards are:

Reduced search costs for consumers
Becomes simpler, faster, with more accurate price discovery
Lower market entry costs for merchants

Traditional transactions can provide more richness in terms of face-to-face service including visual and aural cues. However, traditional transactions are limited in terms of how many people can be reached at a single time. Online transactions, which can be global in reach, can provide content that is both complex and rich, overcoming the traditional trade-off between reach and richness. Producers in developing countries get access to the global marketplace. The Internet spans the world, and it is possible to do business with any business or person who is connected to the Internet. Simple local businesses such as specialist record stores are able to market and sell their offerings internationally using e-commerce. This global opportunity is assisted by the fact that, unlike traditional communications methods, users are not charged according to the distance over which they are communicating.

E-commerce allows the producers in developing countries to have two-way communication between them, and the consumer as well as their affiliate supplier. Speed electronic communications allow messages to traverse the world almost instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / e-commerce world.

The total amount and quality of information available to all producers in developing countries is vastly increased and is cheaper to deliver.

 E-commerce technologies enable producers in developing countries to target their marketing messages to a person’s name, interests and past purchases. E-commerce allows producers in developing countries to change their products or services to suit the purchasing behaviour and preferences of consumers.

The potential market size is roughly equal to the size of the online population of the world. The products and services producers in developing countries have will be available just about everywhere and at all times. Producers in developing countries will be able to conduct business 24 x 7 x 365. E-commerce systems can operate all day every day. The physical storefront does not need to be open in order for customers and suppliers to be doing business with producers electronically. In brief, it is useful to take a global view with regard the potential and organisation e-commerce activities, especially if producers in developing countries are targeting global customers. The Internet provides an important new channel to sell to consumers. Peterson et al. (1999) suggest that, as a marketing channel, the Internet has the following characteristics:

1)      The ability to inexpensively store vast amounts of information at different virtual locations,

2)      The availability of powerful and inexpensive means of searching, organising, and disseminating such information

3)      Interactivity and the ability to provide information on demand ,

4)      The ability to provide perceptual experiences that are far superior to a printed catalogue, although not as rich as personal inspection.

5)      The capability to serve as a transaction medium,

6)      The ability to serve as a physical distribution medium for certain goods (e.g., software)

7)      Relatively low entry and establishment costs for sellers

8)      No other existing marketing channel possesses all of these characteristics.

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The key question is: does the implementation of Internet-based B2B or e-commerce actually lead to new trading opportunities for producer firms in developing countries? Some of the hype has gone out of the Internet debate, but policy makers and development assistance organisations continue to have a very optimistic view about the potential of the Internet and information and communication technologies (ICTs), more generally. They are concentrating on removing the obstacles that hold back the use of ICTs by developing country firms. Helping these firms to bridge the ‘digital divide’ and take advantage of ‘digital opportunities’ is a very high priority. Some constrains are related to the level of ICT and the advances in telecommunication in those developing countries.

Also the availability of cyber law, availability of fast modern logistic services , availability of e-commerce affiliated partner, availability of e-commerce expertise, and availability of the ecommerce acceptance by consumers in Developing countries.

 

 It is possible to visit a local music store and walk out with a compact disc or a bookstore and leave with a book. E-commerce is often used to buy goods that are not available locally from businesses all over the world, meaning that physical goods need to be delivered, which takes time and costs money. In some cases there are ways around this, for example, with electronic files of the music or books being accessed across the Internet, but then these are not physical goods.

 When you walk out of a shop with an item, it’s yours. You have it; you know what it is, where it is and how it looks. In some respects e-commerce purchases are made on trust. This is because, firstly, not having had physical access to the product, a purchase is made on an expectation of what that product is and its condition. Secondly, because supplying businesses can be conducted across the world, it can be uncertain whether or not they are legitimate businesses and are not just going to take your money. It’s pretty hard to knock on their door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to start wondering whether or not it will ever arrive.

Goods bought and sold via the Internet tend to be durable and non-perishable: they need to survive the trip from the supplier to the purchasing business or consumer. This shifts the bias for perishable and/or non-durable goods back towards traditional supply chain arrangements, or towards relatively more local e-commerce-based purchases, sales and distribution. In contrast, durable goods can be traded from almost anyone to almost anyone else, sparking competition for lower prices. In some cases this leads to disintermediation in which intermediary people and businesses are bypassed by consumers and by other businesses that are seeking to purchase more directly from manufacturers.

 The Internet is an effective conduit for visual and auditory information: seeing pictures, hearing sounds and reading text. However it does not allow full scope for our senses: we can see pictures of the flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel its weight or balance. Further, when we pick up and inspect something, we choose what we look at and how we look at it. This is not the case on the Internet. If we were looking at buying a car on the Internet, we would see the pictures the seller had chosen for us to see but not the things we might look for if we were able to see it in person. And, taking into account our other senses, we can’t test the car to hear the sound of the engine as it changes gears or sense the smell and feel of the leather seats. There are many ways in which the Internet does not convey the richness of experiences of the world. means that people are often much more comfortable buying via the Internet generic goods – things that they have seen or experienced before and about which there is little ambiguity, rather than unique or complex things.

 Returning goods online can be an area of difficulty. The uncertainties surrounding the initial payment and delivery of goods can be exacerbated in this process. Will the goods get back to their source? Who pays for the return postage? Will the refund be paid? Will I be left with nothing? How long will it take? Contrast this with the offline experience of returning goods to a shop.

 Many issues arise – privacy of information, security of that information and payment details, whether or not payment details (eg credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.

 E-commerce is an effective means for managing the transaction of known and established services, that is, things that are everyday. It is not suitable for dealing with the new or unexpected. For example, a transport company used to dealing with simple packages being asked if it can transport a hippopotamus, or a customer asking for a book order to be wrapped in blue and white polka dot paper with a bow. Such requests need human intervention to investigate and resolve.

 

 

Although some human interaction can be facilitated via the web, e-commerce cannot provide the richness of interaction provided by personal service. For most businesses, e-commerce methods provide the equivalent of an information-rich counter attendant rather than a salesperson. This also means that feedback about how people react to product and service offerings also tends to be more granular or perhaps lost using e-commerce approaches. If your only feedback is that people are (or are not) buying your products or services online, this is inadequate for evaluating how to change or improve your e-commerce strategies and/or product and service offerings. Successful business use of e-commerce typically involves strategies for gaining and applying customer feedback. This helps businesses to understand, anticipate and meet changing online customer needs and preferences, which is critical because of the comparatively rapid rate of ongoing Internet-based change.

E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online. The size of transactions is also impacted by the economics of transporting physical goods. For example, any benefits or conveniences of buying a box of pens online from producers in developing countries tend to be eclipsed by the cost of having to pay for them to be delivered to consumer in developed countries. The delivery costs also mean that buying individual items from a range of different overseas businesses is significantly more expensive than buying all of the goods from one overseas business because the goods can be packaged and shipped together.

E-commerce however has some drawbacks. Consumers are hesitant to buy some products online. Online furniture businesses, for example, have failed for the most part because customers want to test the comfort of an expensive item such as a sofa before they purchase it. Many people also consider shopping a social experience. For instance, they may enjoy going to a store or a shopping mall with friends or family, an experience that they cannot duplicate online. Consumers also need to be reassured that credit card transactions are secure and that their privacy is respected.

 

More than 600 Billion books will be sold at the Internet this year, forecasts say. This should not come as a grand surprise when you realize the marketing power of Amazon.com or Barnes and Noble. The average Internet surfer is well educated, self employed or in a responsible management position. He definitely has a need of information, new trends, but also of relaxing and sit-back time. Many consumers use books for this purpose and enjoy reading. The market is well fitted with the major book sellers; however, small and aggressive entrepreneurs will always have a chance to conquer their niche markets. Therefore in order for you to succeed online selling books you will have to choose a specific high demand book category and focus on this niche

Software, game, music, home videos DVD and Out Sell Feature Films and Movies flowers were 1.3 million, or 26 percent of the .8 billion total. The incredible success of DVD video has propelled home video to become America’s most popular entertainment medium, surpassing consumer spending on movie tickets, music and mass-market books. Just announced by the DVD Entertainment Group at the International Consumer Electronics Show (CES) in Las Vegas, U.S. consumers spent more than twice as much buying and renting DVDs as they did going to the movies. Last year, consumers spent .3 billion buying and renting DVDs versus .3 billion moviegoers spent at the theatrical box office.

An airline ticket, car reservations and hotel reservations was 2.8 million, or 21 percent of the total.

 

 

 

 

It is important for any producers in developing countries to follow the policies and legislative accredited by authority and government that producer operate from as selling illegal or prohibited items might lead producer to trail, lose and prison. Here is some items which are prohibited to be sell via Internet 

Bootlegs are generally the rare music CD’s, rare movie footages etc. But bootlegs are also movies shot through a video camera by a person who for all you know is your next-door neighbour. There is a large-scale production going on in Asia and US jurisdiction does not apply there. So ‘No’ bootlegs are allowed on EBay.

Copies of computer software are abundant and you can find them in Asian markets. It is not just the software but the black markets also sell copies of some of the best PC games too. These copied items are not allowed on eBay. Whatever you sell on EBay has to be original.

Copies of computer software are abundant and you can find them in Asian markets. It is not just the software but the black markets also sell copies of some of the best PC games too. These copied items are not allowed on eBay. Whatever you sell on EBay has to be original.

This is quite similar to copy and yet different. Many people would replicate a Gucci handbag or a RayBan’s sunglass. Although they are openly sold in stores all across the US, but they are definitely forbidden for sale at eBay.

Weapons

Selling firearms and mass destruction weapons are regulated by US law and cannot be placed for sell over e-commerce website.

There are organizations fighting to save wild animals and birds from near extinction. It is not allowed to sell any product made from animals or their skin on eBay.

There are state laws on tickets such a Florida law states that cannot be sold for more than the face value plus . Since there are state-to-state restrictions, hence they cannot be sold at eBay.

Selling one item is one thing but selling an entire catalogue is a different ball game. The only catalogues that can be sold at eBay are those dealing with collectible items.

Sale of alcohol and alcoholic beverages are banned at eBay.

EBay does not allow sales of cigarette or any kind of tobacco products.

 

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