I’m going to talk about one of the most important technology that has grown suddenly in recent years and it’s incredible for scientists and researchers still.
I’m going to talk about Electronic Commerce, its description, and various currently types of EC which are developed recently; Then I’m going to describe the benefit of EC to organizations, consumers, and societies, next I will explain the limitations of EC and at the end I’m going to discuss the changes that will be caused by EC.
EC first began in early 1970s; in that time trade and electronic combined together, large companies created computer networks for sharing information between each other. It was called Electronic Data Interchange or EDI. Then commercialization of the Internet expended it rapidly in the 1990s.
Most companies started EC and government attended to it. On October 26 in 1993; Bill Clinton the president of the United States in that time order federal government implement EC in the U.S immediately.
But what is EC exactly? In fact we don’t have any clearly description that explains EC exactly. It is big areas which sometimes some people use wrong description of EC. We can description EC like this: EC involves making business transaction via telecommunication networks;primarily internet.It shows any business that uses the Internet are EC, in other words EC is buying, selling, or exchanging products, services and information via computer networks.
All the business processes via computer networks are EC, maybe it was just sending or receiving information without any physical product, here information is the product. In all description for EC any kind of transaction must be via computer networks without any intermediary, it’s the most important difference between EC and traditional trade.
All the processes of selecting or choosing product, ordering,buying or selling, exchanging and services doing through the computer in the electronic market place.
What is electronic market place?
An electronic market place is an environment where business can trade through communication technology. Unlike a physical market place, trading is done in cyberspace, with no need for a physical location or travel; thousands of organizations can sell and buy within seconds, with full disclosure of transactions. This brings us significantly closer to what EC calls prefect market. In this business nor seller or buyer can affect market prices. Prices are truly determined by the combined forces of all participants.
To use EC in a country at first we have to create infrastructure for it. If one organization or office uses EC but other companies that sell to or buy from them don’t use EC, it will be a disaster for this company and surly there will be expenses without any revenue. The infrastructure of EC must be created in all business, companies and governments with training and introducing through public media like TV. People must feel the need for EC and see its benefits. They must know how to use web to do more selective and comparative shopping.
First one or two models of EC were used but Many models of EC were created and some other models are being created.
One model of EC is business to business or B2B. In this model one company sells products, information and services to other organization and companies.
In the next model, Business to Consumer, a firm and a company sells its own product to people through web. It involves more electronic retail business.
In Consumer to Consumer or C2C model, people can auction their products and other things to each other. Now numerous web sites serve as virtual meeting places from auction like eBuy.com.
In G2C or Government to Citizen, government agencies for example let citizen; find zoning information online and pay fees and fines via the web. The state of Alaska by using this model not only made the lives of its citizens easier but also saved millions of dollars. Several privet companies serves as intermediaries between government and citizen on the web.
And Mobile Commerce,Mcommerce is one of the newest models of EC which developed rapidly, especially in Europe. Researchers predict it will be the most important technology in the new years. In this model consumers use Mobile instead of computer and it’s easier to use and carry and more comfortable than computer. That’s why it is more popular.
Now I’m going to mention two important models of EC that are used more than other models: Business to Business and Business to consumer.
According to study by Boston Consulting group B2B EC will explode in the next several years, expected growth rate of 33 percent per year a total value of 2.8$ trillion. But online B2B grows more than analysts predicted.
Regardless of the business model B2B commerce has generate the great portion of online commerce: In dollar terms about 80 percent of what we call EC is trade between companies and organization, about 20 percent is between business and consumers. In B2B model industry has one of two goals: saving money and time on purchasing and or saving money and time on sales.
In B2C model corporate sellers can reach many more buyer than they could in physical space and corporate buyers have access to many more they do through traditional trade. Buyers have many more choises in this auction process.they do not have to obligate themselves to long term contracts. Several sites specialized in selling what outside of the web environment has been extremely difficult to sell.
While venture capitalists and corporate world may have most of the attention directed to business to business ventures and models, million of people are exposed to online business, mainly through business to consumer activities. The reason is simple: there are more consumers in the world than there are businesses. Since the mid 1990s when very few people purchased any thing through the internet means to do so, B2C has developed into a multibillion dollar activity.
Consumers prefer to shop and buy on the internet for three major reasons: Convenience, Saving time and comparative shopping. Shoppers can shop from anywhere around the world, at any time. They can shop in the midde of the night; sit at home in the pajamas and with a single click of the mouse execute a purchase order. Shoppers can visit numerous vendors site within short time, while it could take several hours to drive to shopping malls, they can accomplish much more shopping from the comfort of home in a few minutes.
Numerous sites let shoppers compare items they want thus It is easy to find the site that sells it for the lowest price. If they are looking for a price range of an item they can easily find the brand that provides the best overall quality of that item. B2C EC can be done in two major ways: 1) Companies sell directly to consumers 2) Companies use an intermediary
In the first case one company established a website and directly sells its products to consumers, like Ford Company and Nike Company.
In other cases a website sells different or same product of different companies to consumers. Numerous websites like this are on the internet, like Amazon where you can buy any kind of product specially books. In fact Amazon brings together many different companies in one place. It makes consumers more comfortable to find what they like.
EC has to many benefits to sellers, buyers and governments. The benefits of EC are arranged in three categories for three groups: organization, consumer and society.
First let’s see what is the benefit of EC to organizations: EC allows vendors to reach a large number of customers anywhere around the world at very low operating cost.
In traditional trade for large number of customers there was a need for a big company with several branch in different places, to introduce and publicize products but now companies establish a web site on the internet and introduce their own products and services to all consumers any where around the world through the website. It makes the cost of the product cheaper and services faster. Companies can procure materials and services from other companies rapidly. In fact companies search on the web and compare several materials together then choose the best.
The closet environment of the internet helps you find any type of every thing you want comfortably with less cost. Marketing distribution channels can be drastically cut or eliminated. In other words there isn’t distance between sellers and buyers. Buyers directly order to the sellers via the internet on the web and control all the transaction process, without any intermediary.
It results in a decrease in the cost of the products and services. Consumer services and relationships are facilities by interactive one-to-one communication at a low cost.
And some of the benefits of EC to consumer are as follows:
It provides customers with less expensive products and services by allowing them to shop in many places and comparing. In fact on the internet the distance between one virtual environment to the other virtual environment is just one click and there are too many choices between many kinds of prices, qualities, products and etc. EC enables customers to shop 24 hours a day from almost any location as I explained before. Customers can receive relevant and detailed information and other services in just a few seconds. EC enables customers to get customized products and services.
And some of the benefits of EC to the society:
EC is a major facilitator of a digital economy. In fact it’s a key to a perfect economy. EC enables more individuals to work at home, resulting in less traffic and lower pollution. Imagine when parents do their work at home and have more time to be with their children. EC allows some goods to be sold at lower price like auction websites. EC enables people in developing countries and rural areas to enjoy products and services previously unavailable. You can be in a faraway town, that’s not important; you need just a computer and internet connection to connect to the online world. Then you can buy from anywhere around the world, that you didn’t see ever before. EC facilitates superior delivery of public services like transportation and post.
But there are some limitations to developing the ways of EC. The limitations of EC are arranged in two categories: Technical limitations and NON-technical limitations.
One of the technical limitations is lack of universally accepted standards. Internet is in childhood circulation still and is changing rapidly. Bandwidth is insufficient and it must expand for high speed and difficulties in integrating the internet and EC softwares. It needs the agreement between governments and companies. You have to bear in mind that no business model, whatever the technology behind it, can be successful, if it doesn’t in the end generate income. Thus the owners of ventures on the web must clearly plan how their sites can bringin money. If they provide an auction site they must plan how they will execute transaction and charge fees. Taking an approach of “if we build it, they will come.” is not good, because they may not come. It must be clearly who eventually pays the site owners: consumers, businesses doing business through that site, advertisers or another group.
Some of the NON- Technical limitations are legal issue and national and international government regulation. Many countries don’t approve of any law about EC; it would make great problems in the future.
Customer’s resistance:
When people face new technology at first they are suspicious about it. It’s the responsibility of the government to remove it with public training.
We have to bear in mind that every thing is changing rapidly. Products promotion, new sales channels are going to be creat.
Removing intermediary and selling or buying directly result in direct saving time and money and cycle time to market. We will see new customer and services that will change corporate image and make new bands.
But there are important questions that management has to answer ; before beginning with EC.
Is it a real entity? I’m afraid some managers don’t believe they have to change their mind and strategy yet.
How to evaluate the magnitude of business pressure?What should be companys’ strategies toward EC?What is the best way to learn about EC?These were the questions to be answered before taking any step toward EC. At the end I thank you all for your time and patience.
( BY SAEED SAFARAEI)
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