Electric Commerce:
Electronic commerce, commonly known as (electronic marketing) e-commerce or E-Commerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic commerce is generally considered to be the sales aspect of e-business. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. Modern electronic commerce typically uses the world wide web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
History:
Early Development:
The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically. Later, the growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by sabre in the USA and travicom in the UK.
Online shopping, an important component of electronic commerce was invented by Michael Aldrich in the UK in 1979. The world's first recorded B2B (business-to-business) was Thomson Holiday’s in 1981. The first recorded B2C (business-to-consumer) was Gateshead Tesco in 1984. The world's first recorded online shopper was Mrs Jane Snowball of Gateshead, England.
In 1990, Tim Berners-Lee invented the World Wide Web and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. The Internet became popular worldwide around 1994; it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the world wide web. Since then people began to associate a word "e-commerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.
Timeline:
1979: Online shopping was invented in the UK by Michael Aldrich.
1982: Minitel was introduced nationwide in France by France Telecom and used for online ordering.
1987: swreg begins to provide software and shareware authors means to sell their products online through an electronic merchant account.
1990: Tim Berners-Lee writes the first web browser, World Wide Web, using a next computer.
1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies Will Change the Way We Shop and What We Buy. St. Martin's Press. isbn 0312063598.
1994: Netscape releases the Navigator browser in October under the code name Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also became commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL encryption that made transactions secure.
1995: Jeff Bezos launches Amazom and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio started broadcasting. Dell and Cisco begin to aggressively use Internet for commercial transactions. eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
1998: Electronic Postal Stamps can be purchased and downloaded for printing from the Web.
1999: Business sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer file sharing software Napster launches. ATG Storeslaunches to sell decorative items for the home online.
2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion. Niche retail companies CSN Stores and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
2003: Amazon posts first yearly profit.
2007: Business acquired by R.H.Donnelley for $345 million.
2008: US E-Commerce and Online Retail sales projected to reach $204 billion, an increase of 17 percent over 2007.
Business applications:
Some common applications related to electronic commerce are the following:
E-mail
Enterprise Content Management
Instant messaging
Newsgroups
Online Shopping and order tracking
Online Banking
Online office suites
Domestic and international payment systems
Shopping Cart Software
Teleconferencing
Electronic Tickets
The forms of usage of e-commerce:
Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.
On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books or groceries, to expensive items like real estate. Another example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All of these activities can be done with a few strokes of the keyboard.
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce today.
Electronic commerce that is conducted between businesses is referred to as business to business or B2B. Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as Business to consumer orB2C. This is the type of electronic commerce conducted by companies such as Amazon.
E-commerce provides many new ways for businesses and consumers to communicate and conduct business. There are a number of advantages and disadvantages of conducting business in this manner.
E-commerce advantages and disadvantages:
E-commerce provides many new ways for businesses and consumers to communicate and conduct business. There are a number of advantages and disadvantages of conducting business in this manner.
E-commerce advantages:
Some advantages that can be achieved from e-commerce include:
Being able to conduct business 24 x 7 x 365: E-commerce systems can operate all day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically.
Access 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.
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.
Opportunity to reduce costs: The Internet makes it very easy to 'shop around' for products and services that may be cheaper or more effective than we might otherwise settle for.
Allowing customer self service and 'customer outsourcing': People can interact with businesses at any hour of the day that it is convenient to them, and because these interactions are initiated by customers, the customers also provide a lot of the data for the transaction that may otherwise need to be entered by business staff. This means that some of the work and costs are effectively shifted to customers; this is referred to as 'customer outsourcing.'
E-commerce disadvantages and constraints:
Some disadvantages and constraints of e-commerce include the following.
Time for delivery of physical products: 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.
Physical product, supplier & delivery uncertainty: 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.
Perishable goods: Forget about ordering a single gelato ice cream from a shop in Rome! Though specialized or refrigerated transport can be used, 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.
Returning goods: 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.
Privacy, security, payment, identity, contract: Many issues arise - privacy of information, security of that information and payment details, whether or not payment details (e.g. credit card details) will be misused, identity theft, contract, and, whether we have one or not, what laws and legal jurisdiction apply.
Prospect of E-Commerce in Pakistan:
E-commerce is a very hot issue these days. After the revolution of Internet, more and more countries are getting involved in it.
The over-all volume of e-commerce is more than $4 billion annually. Doing business on internet is not a very costly investment. It is estimated that in near future, almost 25 per cent of the traditional business will be converted into internet business.
Trends: E-commerce is an information technology trend developing fast in the business world. The corporate and the business world, aptly supported by the IT industry, already stands transferred, which by recent estimate will exceed $400 billion this year.
As we start warming up to global e-commerce in Pakistan, we must understand that almost 78 per cent of the e-commerce activity takes place in the USA, obviously driven by the use of internet in that country. As the January 2000, over 110 million people have internet access there compared to 279 million the world over.
Nevertheless, Pakistan can make good use of this opportunity with proper planning and execution. To begin with, let us focus on the domestic front before going all out for the global market.
Domestic activity: Offer for improving and productivity to bring it to the excellent level. It also allows our entrepreneur to test their web business and marketing skills before taking on the international markets. E-commerce is not for all but for those who understand it. Yet, e-commerce is not a technology.
The issue at the individual level, it is purely a business matter. At the govt. level, it is a matter of providing infrastructure for transactions on internet. E-commerce or business through internet is becoming very popular mode of trading around the world particularly in the developed world. E- Commerce is a broad term used to quantify the trading taking place on the internet.
Most studies, however, suggest that e-commerce runs through four steps. The very first step is, to build a website to let the world know about your existence. The website contains information about the company, product/services and other related information, which can help visitors to learn more about the hosts. The second step involves asking customers to lose their pockets and buy on line.
This step requires adopting advance level of software capable of handling orders. In the third stage inventory, management adds to the system and lastly, providing provisions of payments through online banking partnership between buyers and sellers, the most difficult and complex part of e-commerce.
However, Pakistan is still far behind in chasing the west in this regard. Entrepreneurs in Pakistan are of the opinion that e- commerce means being able to make and receive payments through internet and any other activity through internet is not considered as e-commerce. This low level of understanding has led many Pakistani firms to give low priority to e-commerce due to unavailability of proper framework for the internet in the country.
In Pakistan, e-commerce is still in its infancy and faces many barriers to grow. The notable barriers are: unavailability of proper infrastructure [telephone line of stem lines of steam age, frequent failures of power] limited user of internet hardly one per cent of the entire population have access to the internet], the issue of security of transactions on the internet and high bandwidth rates.
The Basic E-Commerce Model:
In a Nut Shell:
It can be concluded that there is a lot of scope of e- commerce in Pakistan, and most companies are eager to going to the digital world, but at present due to absence of any policy framework and limited internet market, companies are holding their plans to start e-business until clouds of barriers as discussed are disappeared.
E-Commerce has a long way to go — as have the all-important supporting services: credit card processing, fulfillment and shipping — but opportunities for market position exist for companies with patience, contacts and resources. The July 2002 Economist Information Unit ranked preparedness for ecommerce as follows (USA scoring 8.41).
Country Index:
Israel 6.79
South Africa 5.45
Turkey 4.37
Bulgaria 4.25
Sri Lanka 4.05
India 4.02
Romania 4.00
Russia 3.93
Saudi Arabia 3.77
Egypt 3.76
Iran 3.20
Ukraine 3.05
Nigeria 2.97
Pakistan 2.78
Algeria 2.70
Kazakhstan 2.55
Azerbaijan 2.38