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Aspects of E-commerce

The new trend of commerce

E-commerce (e-commerce) or electronic commerce is the purchasing, selling, and exchanging of goods and services over computer networks (such as the Internet) through which transactions or terms of sale are performed electronically. Contrary to popular belief, ecommerce is not just on the Web. In fact, ecommerce was alive and well in business to business transactions before the Web back in the 70s via EDI (Electronic Data Interchange) through VANs (Value-Added Networks). In this new industrial environment E-commerce became an important factor of modern business development.

In this dynamic era e-commerce can be broken into four main categories: B2B, B2C, C2B, and C2C. A brief look into each;

B2B (Business-to-Business)

Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

B2C (Business-to-Consumer)

Businesses selling to the general public typically through catalogs utilizing shopping cart software.

C2B (Consumer-to-Business)

A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project.

C2C (Consumer-to-Consumer)

There are many sites offering free classifieds, auctions, and forums here individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. EBay’s auction service is a great example of where person-to-person transactions take place everyday since 1995.

There are some more forms emerging out of the above mentioned categories;

Companies using internal networks to offer their employees products and services online--not necessarily online on the Web--are engaging in B2E (Business-to-Employee) ecommerce.

G2G (Government-to-Government), G2E (Government-to-Employee), G2B (Government-to-Business), B2G (Business-to-Government), G2C (Government-to-Citizen), C2G (Citizen-to-Government) are other forms of ecommerce that involve transactions with the government--from procurement to filing taxes to business registrations to renewing licenses.

Perhaps the clearest indication of the growing importance of e-commerce in the global economy is the rapidity with which Internet use has grown and spread during the last decade. The boom in e-commerce also includes increased use of other media for trade, such as the telephone, television, fax, and electronic payment. Because e-commerce became such an integral part of the global economy, the WTO has begun to consider how it fits into the multilateral trade framework, and what rules or regulations should apply. At the Second Ministerial Conference in Geneva in 1998, WTO members wrote the Declaration on Global Electronic Commerce, which calls for the establishment of a work program "to examine all trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries. Because e-commerce cuts across many other key WTO issues such as services, and intellectual property rights, the WTO has appointed councils from each 'cross-cutting' issue to investigate the effect of e-commerce on global trade. These councils include the Council on Trade in Goods, the Council on Trade in Services, the Council on Trade-Related Intellectual Property, and the Committee on Trade and Development.

Role of Internet

Seven years into the new century, it is clear that the internet has become a mainstream activity. Today few big businesses can afford not to have an internet site to advertise and sell their wares. And it has become second nature for many people to check out products, prices and availability online before buying. From the point of view of the economy as a whole, the internet was dramatically lowering the cost of transactions, especially in the services sector.

With this ever rising usage pattern of internet around the world, it has become a driving force behind the increasing preference of e-commerce globally. With a very low investment; anyone can have a web page in Internet. This way, almost any business can reach a very large market, directly, fast and economically, no matter the size or its location of your business. With a very low investment almost anybody that can read and write can have access to the World Wide Web.

Also the history of ecommerce is unthinkable without Amazon and Ebay which were among the first Internet companies to allow electronic transactions. Thanks to their founders we now have a handsome ecommerce sector and enjoy the buying and selling advantages of the Worldwide Web.

Ecommerce also has a great deal of advantages over “brick and mortar” stores and mail order catalogs. Consumers can easily search through a large database of products and services. They can see actual prices, build an order over several days and email it as a “wish list” hoping that someone will pay for their selected goods. Customers can compare prices with a click of the mouse and buy the selected product at best prices.

Online vendors, in their turn, also get distinct advantages. The web and its search engines provide a way to be found by customers without expensive advertising campaign. Even small online shops can reach global markets. Web technology also allows to track customer preferences and to deliver individually-tailored marketing.
Cisco, a company that supplies the routers over which most Internet traffic flows, handles 72 percent of its orders and nearly three quarters of its customer support over the Internet. Cisco estimates that taking Internet orders and offering customer support over the Net saves the company $500 million per year. That's a half billion dollars that drops right to the bottom line.

Intel was crowing about filling nearly half its orders online. That's billions of dollars worth of business being done over the Internet by just one company. The amount of business Intel booked over the Net two years ago was almost nil.

In the US, retail sales on the internet are expected to reach $170bn in 2006, while forecasters suggest that Europe's online market will overtake the US by 2010.

China is growing even faster, and may have more internet users than the US by the end of the decade.

The UK's largest supermarket, Tesco, is also the country's largest online retailer, and the largest store in the US, Wal-Mart, now has one of the largest websites.

While the internet may still seem revolutionary in increasing the range of available services, such as digital music downloads and voice over internet phone calls, it is also part of our daily routine.

Traditional ways of doing business

Traditionally, inter-business transactions begin with a buyer looking for inputs or a supplier seeking buyers for its goods and services. Buyers and suppliers search for each other through advertising, trade shows, brokers, and dealers. Supplier send out sales agents.Buyers then negotiate with potential sellers concerning product specifications and prices, and per haps conclude a spot transaction or form a long-term contract. After the agreement has been reached, the transaction still involves ordering, billing, arrangements for transportation, confirmation of payments, and acceptance of delivery.

In a nutshell, e-commerce has really changed the way people and various organizations go about doing business. It has also paved way for the use of innovation and creativity in the once tedious business process. And with this trend, software development companies around the world are lining up for providing businesses with the most successful and resourceful e-commerce business models.