Ebook Building blocks of e-commerce
A major revolution has taken place during the last five years in the way business is done. This revolution is primarily due to the convergence of computers and telecommunication technologies and the emergence of a number of Internet Service Providers (ISPs) who facilitate the connection of computers to the internet–the world wide network of computers. Internet has spawned a number of innovations in business between commercial organizations, between individuals and commercial organizations, and between individuals and individuals.
These transactions are commonly known as business-to-business (B2B), business-to-customer (B2C) and customer-to-customer (C2C) electronic commerce and is abbreviated as e-commerce. These transactions include orders sent to vendors to supply items, invoices sent by vendors, payment usually made by debiting an organization’s account and crediting the vendor’s accounts with banks, and payments made using cre1dit cards. The important point is that all transactions are carried out electronically using a network of computers.
One may define e-commerce as “the sharing of business information, maintaining business relationships and conducting business transactions using computers inter connected by a telecommunication system”. The telecommunication system may be a public network (as used in internet) or a secure private network. There are a variety of e-commerce applications. Some of these are as listed below.
- Retail stores such as those selling books, music, toys etc.
- Auction sites using which an individual buyer/seller can buy/sell goods.
- Cooperating businesses connected using their own private telecommunication network carrying out transactions in a semi-automated way.
- Banks connected to their customers providing services such as deposits, payments, and providing information on status of an account.
- Railways/airlines/cinema theatres permitting booking of tickets on-line and paying for them on-line using credit cards or electronic cash.
- Filing tax returns with government agencies on-line and obtaining immediate acknowledgements.
- Electronic publishing to promote marketing, advertising, sales and customer support.
- Web-based educational material which allow students to learn anytime and anywhere.
One of the earliest B2C e-commerce application was a book shop. Selling books using the internet is an excellent choice for promoting e-commerce as it is difficult and expensive for a physical book shop to stock a large number of books and allow customers to browse before they buy. The catalogue of an e-bookshop can be of very large size and store a huge quantity of information on books, such as excerpts, reviews, summaries, other books by the same author etc., which can be provided to a prospective buyer. A major problem is prompt delivery of books and ensuring the security of a customer’s credit card details. This business model can be copied very quickly by others leading to fierce competition.
A major success story in India of B2C is the reservation of railway tickets. Using a site maintained by the Indian Railways (irctc.co.in) one can book train tickets from anywhere, anytime (it is a 24×7 service). Payment is by credit card and the ticket is delivered by courier at a customer’s doorstep. It is estimated that currently the monthly volume of ticket sales is Rs. 8 Crores and 4000 tickets are booked on-line everyday.
C2C e-commerce is the one used by two individuals who want to sell/buy items. Such items are usually second-hand things, antiques etc. The seller posts the description of the item and the expected price on a web site maintained by a facilitating company. A website called e-Bay pioneered this idea in USA, and usually acts as an intermediary. In India, a site called bazee.com (since acquired by e-Bay) is a popular C2C auction site. A prospective buyer looks at the postings in bazee.com and enters his offer for the item. When several buyers are interested, the highest bidder (within a specified deadline) wins the auction. The items are collected by the intermediary, delivered to the customer and the payment is then sent to the seller. The intermediary gets a commission from both parties.
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