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E- Commerce

Par Davide PARLAPIANO Publié le 07/01/2017 à 11:47:14 Noter cet article:
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E- Commerce or Electronics Commerce is a methodology of modern business , which addresses the need of business organizations, vendors an d customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. E - commerce refers to the paperless exchange of business information using the following ways :

- Electronic Data Exchange (EDI)

- Electronic Mail ( e - mail)

- Electronic Bulletin Boards

- Electronic Fund Transfer (EFT)

- Other Network - based ologies

Features

E - Commerce provides the following features :

- Non - Cash Paym ent : E - Commerce enables the use of credit cards, debit cards, smart cards, electronic fund transfer via bank's website , and other modes of electronics payment.

- 24x7 Service availability : E - commerce automates the business of enterprises and the way they p rovide services to their customers . It is available anytime, anywhere.

- Advertising / Marketing : E - commerce increases the reach of advertising of products and services of busin esses. It helps in better marketing management of products / services.

- Improved Sales : Using e - c ommerce, orders for the products can be generated any time, any where without any human intervention. It gives a big boost to existing sales volumes.

- Support : E - c ommerce provides various ways to provide pre - sales and post - sales assistance to provide better services to customers.

- Inventory Management : E - c ommerce autom ates inventory management . Reports get generated instantly when required. Product inventory management becomes very efficient and easy to maintain.

- Communication improvement : E - c ommerce provides ways for faster, efficient, reliable communication with customers and partners.

3 Traditional Commerce v/s E-Commerce

ADVANTAGES

The advantages of e-commerce can be broadly classified into three major categories:

- Advantages to Organizations

- Advantages to Consumers

- Advantages to Society

Advantages to Organizations

Using e-commerce, organizations can expand their market to national and international markets with minimum capital investment. An organization can easily locate more customers, best suppliers, and suitable business partners across the globe.

E-commerce helps organizations to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.

- E-commerce improves the brand image of the company.

- E-commerce helps organizations to provide better customer service.

- E-commerce helps to simplify the business processes and makes them faster and efficient.

- E-commerce reduces the paper work.

- E-commerce increases the productivity of organizations. It supports "pull" type supply management. In "pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.

Advantages to Customers

It provides 24x7 support. Customers can enquire about a product or service and place orders anytime, anywhere from any location.

- E-commerce application provides users with more options and quicker delivery of products.

- E-commerce application provides users with more options to compare and select the cheaper and better options.

- A customer can put review comments about a product and can see what others are buying, or see the review comments of other customers before making a final purchase.

- E-commerce provides options of virtual auctions.

- It provides readily available information. A customer can see the relevant detailed information within seconds, rather than waiting for days or weeks.

- E-Commerce increases the competition among organizations and as a result, organizations provides substantial discounts to customers

Advantages to Society

Customers need not travel to shop a product , thus less traffic on road and low air pollution.

- E - c ommerce hel ps in reducing the cost of products , so less affluent people can also afford the products.

- E - c ommerce has enabled rural areas to access services and products , which are otherwise not available to them.

- E - c ommerce helps the gov ernment to deliver public services such as health care, education, social services at a reduced cost and in an improved manner.

DISADVANTAGES

E - Commerce 7 The disadvantages of e - commerce can be broadly classified in to two major categories:

-Tec hnical disadvantages

-Non - t echnical disadvantages

Technical Disadvantages:

There can be lack of system security, reliability or standards owing to poor implementation of e - c ommerce.

-The s oftware development industry is still evolving and keeps changing rapidly.

-In many countries, network bandwidth might cause an issue .

-Special types of w eb server s or other software might be required by the vendor , setting the e - commerce environment apart from network servers.

-Sometimes, it becomes difficult to integrate an e - c ommerce software or website with existing application s or databases.

-There could be software/hardware compatibility issue s , as some e - c ommerce software may be incompatible with some operating system or any other component.

Non - Technical Disadvantages

-Special types of w eb server s or other software might be required by the vendor , setting the e - commerce environment apart from network servers.

-Sometimes, it becomes difficult to integrate an e - c ommerce software or website with existing application s or databases.

-There could be software/hardware compatibility issue s , as some e - c ommerce software may be incompatible with some operating system or any other component. Non - Technical Disadvantages

-Initial cost: The cost of creating / building an e - c ommerce application in - house may be very high. There could be delay s in launching an e - Commerce application due to mistakes, and lack of experience.

-User resistance: User s may not trust the site being an unknown faceless seller. Such mistrust makes it difficult to conv ince traditional user s to switch from physical stores to online/virtual stores.

-Security/ Privacy: It is d ifficult to ensure the security or privacy on online transactions.

-Lack of touch or feel of products during online shopping is a drawback .

-E - c ommerc e applications are still evolving and changing rapidly.

-Internet access is still not cheaper and is inconvenient to use for many potential customers , for example, those living in remote villages.

BUSINESS MODELS

E - commerce business models can generally be categorized in to the following categories.

-Business - to - Business (B2B)

-Business - to - Consumer (B2C)

-Consumer - to - Consumer (C2C)

-Consumer - to - Business (C2B)

-Business - to - Government (B2G)

-Government - to - Business (G2B)

-Government - to - Citizen (G2C

Business - to - Business

A w ebsite following the B2B business model sells its product s to an intermediate buyer who then sells the product to the final customer. As an example, a wholesaler places an o rder from a company's website and after receiving the consignment, sells the end - product to the final customer who comes to buy the product at one of its retail outlets.

Business - to - Consumer

A website following the B2C business model sells its product s directly to a customer. A customer can view the products shown on the website . The customer can choose a product and order the same. The w ebsite will then send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.

Consumer - to - Consumer

A website following the C2C business model helps consumer s to sell their assets like residential property, cars, motorcycles , etc. , or rent a room by publishing their information on the website. Website may or may not charge the cons umer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.

Consumer - to - Business

In this model, a consumer approaches a website showing multiple business organizations for a particular service. The c onsumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of pers onal loan/ car loan provided by various banks via website s . A b usiness organization who fulfills the consumer's requirement within the specified budget , approaches the customer and provides its services.

Business - to - Government

B2G model is a variant of B2B model. Such websites are used by government s to trade and exchange information with various business organizations. Such websites are accredited by the governm ent and provide a medium to businesses to submit application forms to the government.

Government - to - Business

E - Commerce 11 Consumer - to - Business I n this model, a consumer approaches a website showing multiple business organizations for a particular service. The c onsumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of pers onal loan/ car loan provided by various banks via website s . A b usiness organization who fulfills the consumer's requirement within the specified budget , approaches the customer and provides its services. Business - to - Government B2G model is a variant of B2B model. Such websites are used by government s to trade and exchange information with various business organizations. Such websites are accredited by the governm ent and provide a medium to businesses to submit application forms to the government. Government - to - Business Government s use B2G model website s to approach busi ness organizations. Such websites support auctions, tenders , and application submission functionalities

Government - to - Citizen

Government s use G2C model website s to approach citizen in general. Such websites support auctions of vehicles, machinery , or any other material. Such website also provides services like registration for birth, marriage or death certificates. The m ain objective of G2C website s is to reduce the average time for fulfilling citizen’s requests for various government services

PAYMENT SYSTEMS

E - c ommerce sites use electron ic payment , where electronic payment refers to paperless monetary transactions. Electronic payment has revolutionized the business processing by reducing the paper work, transaction costs, and labor cost. Being user friendly and less time - consuming than manual processing, it helps business organization to expand its market reach / expansion. Listed below are s ome of the modes of electronic payments :

-Credit Card

-Debit Card

-Smart Card

-E - Money

-Electronic Fund Transfer (EFT)

Credit Card

Payment using credit card is one of most common mode of electronic payment. Credit card is a small plastic card with a unique number attached with an account. It has a magnetic strip embedded in it that is used to read the credit card via car d readers. When a customer purchases a product via credit card, the credit card issuer bank pays on behalf of the customer and the customer has a certain time period after which he/she can pay the credit card bill. It is usually in the credit card monthly payment cycle. Following are the actors in the credit card system.

-The card holder - Customer ,

-The merchant - seller of product who can accept credit card payments ,

-The card issuer bank - card holder's bank ,

-The acquirer bank - the merchant's bank ,

-The ca rd brand - for example , V isa or Master Card.

Credit Card Payment Process

Step 1

Bank issues and activates a credit card to the customer on his/her request

Step 2

The c ustomer presents the credit card information to the merchant s ite or to the merchant from whom he/she want s to purchase a product/service.

Step 3

Merchant validates the customer's identity by asking for approval from the card brand company

Step 4

Card brand company authenticates the credit card and pa ys the tran saction by credit. Merchant keeps the sales slip

Step 5

Merchant submits the sales slip to acquirer banks and gets the service charge s paid to him/her.

Step 6

Acquirer bank requests the card brand company to clear the credit amount and gets the payment .

Step 7

Now the card brand company asks to clear the amount from the issuer bank and the amount gets transferred to the card brand company

Debit Card

Debit card, like credit card , is a small plastic card with a unique number mapped with the bank accoun t number. It is required to have a bank account before getting a debit card from the bank. The major difference between a debit card and a credit card is that in case of payment through debit card, the amount gets deducted from the card's bank account imm e diately and there should be sufficient balance in the bank account for the transaction to get completed ; w hereas in case of a credit card transaction, there is no such compulsion. Debit cards free the customer to carry cash and cheques . E ven merch ants accept a debit card readily. Having a restriction on the amount that can be withdrawn in a day using a debit card helps the customer to keep a check on his/her spending .

Smart Card

Smart card is again similar to a credit card or a debit card in appearance , but it has a small microprocessor chip embedded in it. It has the capacity to store a customer ’s work - related and/or personal information. Smart card s are also used to store money and the amount gets deducted after every transaction.

Smart card s can only be accessed using a PIN that every customer is assigned with . Smart cards are secure , as they store information in encrypted format and are less expensive/p rovides faster processing. Mondex and Visa Cash cards are examples of smart cards.

E - Money

E - Money transactions refer to situation where payment is done over the network and the amount gets transferred from one financial body to another financial body wit hout any involvement of a middleman. E - money transactions are faster, convenient , and saves a lot of time. Online payments done via credit card s , debit card s , or smart card s are examples of e - money transactions. Another popular example is e - cash. In case o f e - cash, both customer and merchant have to sign up with the bank or company issuing e - cash.

Electronic Fund Transfer

It is a very popular electronic payment method to transfer money from one bank account to another bank account. Accounts can be in t he same bank or different bank s . Fund transfer can be done using ATM (Automated Teller Machine) or using a computer. Now a day s , internet - based EFT is getting popular . In this case, a customer uses the website provided by the bank , log s in to the bank's website and registers another bank account. He/she then places a request to transfer certain amount to that account. Customer's bank transfers the amount to other account if it is in the same bank , otherwise the transfer request is forwarded to an ACH (Automated Clearing House) to transfer the amount to other account and the amount is deducted from the customer's account. Once the amount is transferred to other account, the customer is notified of the fund transfer by the bank

Security is an essential part of any transaction that takes place over the internet. Customer s will lo se his/her faith in e - business if its security is compromised. Following are the essential requir e ments for safe e - payments/transactions: i

Confidenti al ity - Information should not be accessible to an unauthorized person. It should not be intercepted during the transmission.

-Integrity - Information should not be altered during its transmission over the network.

- Availability - Information should be avail able wherever and whenever require d within a time limit specified.

- Authenticity - There should be a mechanism to authenticate a user before giving him/her an access to the required information.

-Non - Repudiabi l ity - It is the protection against the denia l of order or denial of payment. Once a sender sends a message, the sender should not be able to deny sending the message. Similar l y , the rec ipient of message should not be able to deny the receipt. - Encryption - Information should be encrypted and decrypt ed only by an authorized user.

-Auditability - Data should be recorded in such a way that it can be audited for integrity requirements

Measures to ensure Security

Major security measures are the following:

- Encryption - It is a very effective and practical way to safeguard the data being transmitted over the network. Sender of the information encrypt s the data using a secret code and only the specified receiver can decrypt the data using the same or a different secret code.

- Digital Signature - Digital si gnature ensures the authenticity of the information. A digital signature is a n e - signature authenticated through encryption and password.

- Security Certificates - Security certificate is a unique digital id used to verify the identity of an indivi dual website or user.

Article Source: tutorials point

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