Question

Explain the use of e-commerce and global information systems.

Answer 1

E-commerce has become one of the important mantras of branching out and marketing, in the business circle. Technological convergence, deep urban/rural penetration of personal computers, increasing computer literacy and training, liberalization of telecommunication policy and the availability of cheap Internet connectivity are factors that influenced both consumer as well as business behavior in favour of E-Commerce.

For business houses ‘the lure of conducting global operations through a web site has become irresistible because a page on the World Wide Web can reach web surfers in every state in the nation and perhaps every nation on earth.’ Attracted to the possibilities of E-Commerce, for a possible market expansion, and with hope of exploiting more avenues of trade in the international market, Internet has become another market place, though virtual.

E-commerce means using the Internet and the web for business transactions and/or commercial transactions, which typically involve the exchange of value (e.g., money) across organizational or individual boundaries in return for products and services. E-Commerce is viewed to embrace all commercial and economic transactions that take place electronically, including Electronic Data Interchange and Electronic Funds Transfer. E-business applications turn into e-commerce precisely, when an exchange of value occurs. Digitally enabled transactions include all transactions mediated by digital technology and platform; that is, transactions that occur over the Internet and the web.

The application of information and communication technologies to one or more of three basic activities related to commercial transactions: (1) production and support, that is, sustaining production, distribution, and maintenance chains for traded goods and services; (2) transaction preparation, that is, getting product information into the market-place and bringing buyers and sellers into contract with each other; and (3) transaction completion, that is, concluding transactions, transferring payments, and securing financial services.

Over the last decade the advent of e-commerce has actually transformed the manner in which people used internet. People now are not only just using internet for gathering information, leisure or socializing online but also at the same time they are seeking measures to conduct business.

The major different types of E-Commerce are:

I. Business-to-Business (B2B);

II. Business-to-Consumer (B2C);

III. Business-to-Government (B2G);

IV. Consumer-to-Consumer (C2C);

V. Mobile Commerce (M-Commerce).

Following are the major business application areas where E-Commerce is used widely:

1. Sale, Purchase of Goods:

By using E-Commerce, consumers can buy the various products and services from the different manufacturers. Industries can purchase raw materials, components etc. using E- Commerce. Sellers can sell their products by using E-commerce.

2. Real Estate Market:

Online real estate services are provided by websites that show listing of houses, shops and flats put up for sale and rent. Online real estate sites play supporting role for property dealers.

Now builders can use virtual reality technology on their website to demonstrate three dimensional floor plans to buyers. This helps real estate companies to attract buyers. So transactions normally can be initiated online but materialize offline in a face to face contact of parties. Many websites are providing online real estate services.

3. Online Banking:

Online Banking is also known as electronic banking, Net banking, virtual banking and internet banking online banking is defined as automated delivery of new and traditional banking products and services through electronic and interactive communication channels. Customers can access online banking services by using electronic devices like personal computer, laptop, palmtop, ATM, kiosks etc.

4. Delivery of Goods:

E-Commerce allows the delivery of products. For example, the computer software is directly downloaded by the software manufacturer on computer of the customer.

5. Import and Export:

Electronic payments are playing a great role in import and export business. The internet has simplified the import and export business. By using E-commerce importers can make enquiries about the products, their manufacturers, price, quality, other terms and conditions etc.

Exporters can also make enquiries about suitable customers. Payments can be made by electronic modes including digital means like internet payment or internet money transfer.

6. Supply Chain Management:

A supply chain is a set of relationships between a number of companies who have a symbiotic relationship with each other in that one company supplies commodities or services to other companies which, in turn, supply commodities or services to other companies, and so on.

An important point about an application such as this one is that information should be kept confidential as it flows across the internet.

7. E-Tailing:

E-tailing refers to retailing over the internet. Thus an e-tailer is a B2C business that executes a transaction with the final consumer. E-tailers can be pure play businesses like amazon(dot)com or businesses that have evolved from a legacy business, Tesco(dot)com. E-tailing is a subset of e-commerce.

E-commerce operates digitally. It has some unique ways to put a business transaction in place.

Let’s see how this happens:

1. Product/Service:

For E-commerce to happen there should be a prod­uct or service that has value and for which someone is willing to pay a price. If this criterion is met, then you can sell anything on ecommerce websites—gadgets, books, automobiles, grocery, toys, apparel, vegetables and digital goods such as music, e-books, software, air tickets, magazine subscriptions and the like.

2. Processing Mechanism:

The ecommerce website of a company should put an easy process in place so that the customer browsing through the site can place an order. The software that makes this happen is called a shopping cart.

3. Payment Gateway:

Once the customer fills the cart with items that he or she has shopped, the site should take the customer towards the payment gateway, which collects money electronically. If the product is downloadable such as music, e-book etc., the website must also provide for that after accepting payment from customer.

4. Delivery of Product:

Once customers make the payment, the e-com­merce site must ensure the delivery of product in good condition on time. Logistics is a specialized function, so most sellers outsource it to third party logistics providers. Like Amazon using the services of FedEx.

5. After Sale Service:

Customers need to be serviced pre-sales as well as post sales. Before the sale, customers might have queries about product features that are not mentioned on the website. They might have ques­tions about customization and accessories. After the sale, customers might have queries related to the usage, repair or enhancement of the products or services that they have already purchased.

6. Reverse Logistics:

There is no guarantee of supplying an error-free product. If products get damaged or stop functioning after a while, or a wrong product is delivered—the ecommerce seller must ensure the flow of products in the reverse direction—known as reverse logistics—where goods flow from customer to the seller.

In the modern times E-Commerce has increasingly emerged as an important means of business and trade. But at the same time it has posed various challenges to national policy makers and legislators as regards its governance. Furthermore, its born global nature has created various jurisdictional issues, raising controversies over who should have authority to decide in case of a dispute as well as how they should be handled. Because of these reasons E-Commerce and its governance are involved in various policy dilemmas and issues. The following issues need special attention.

1)Issues relating to Access: Access issues include access to infrastructure, access to content, universal access.

2)Issues relating to Trust: The various trust related issues are privacy, security, consumer protection and content regulation.

3)Issues relating to Ground Rules: Issues relating to ground rules are issues of taxation, intellectual property rights, commercial laws including contract law, international trade and standards are categorized as ground rules-related issues.

Any form of E-Commerce will never become successful unless the trading parties trust each other as well as the system through which the transaction is made. An analysis of this area would reveal that the following elements are critical for developing trust in a E-Commerce system:

1)Privacy and data protection

2)Security

3)Consumer Protection, and

4)Content Regulation

The Global Information Infrastructure Commission also points out certain other areas of concern, which are as follows:

1)Online fraud: The instances of online frauds are on the increase. A person who loses money in any of such frauds may face difficulty in enforcing his rights.

2)Privacy protection: It is also important that confidential information such as credit card information, bank account number etc. should be protected. Internet is a medium through which these information are very often misused.

3) Authentication and security of information: Similarly an ordinary consumer would also face difficulty in verifying the authentication and security information in an online atmosphere.

4)Lack of Consumer education: Many persons who use online platforms to engage in commercial activities fail to understand the vulnerability of Internet and taking appropriate safeguards.

New or modified rules and standards of governing E-Commerce are needed with respect to many issues of crucial importance to the development of electronic commerce. The important issues are as follows:

1)Taxation

2)Intellectual Property Rights

3)International trade

4)Commercial law and standards

5)Dispute Resolution.

Information technology enhances business processes in two main ways:

1.Increasing efficiency of existing processes - Automating steps that were manual

2. Enabling entirely new processes that are capable of transforming the businesses :

•Change flow of information

•Replace sequential steps with parallel steps

•Eliminate delays in decision making

One of the greatest recent transformations in the way that businesses operate is how much they now rely on networked technology. It is now commonplace for businesses to have a website. Such a website will be accessed through both wired and wireless networks. Both customers and employees may use networked technologies such as PC, laptops, blackberries and mini notebooks to access information and services of the business. Put simply, if an organisation does not have an online presence, it is very difficult for it to take advantage of the global opportunities available for business. The move to the use of online technologies has meant that businesses can drastically reduce the costs associated with operating on a global scale. Businesses can now operate 24 hours a day, seven days a week and offer services worldwide. The global nature of online business today also causes some challenges. These include the idea that there is now nearly perfect knowledge of the market and often perfect knowledge of what competitors are offering. This means that customers are often smarter and better informed and they can easily choose alternative suppliers. In turn this means that businesses face the challenge of how to be competitive on a worldwide scale. There are even businesses operating online who sell the service of telling customers where they can get the best deal for a particular product or service. These price comparison websites sell pure information rather than a physical product or service.

Digital firms normally participate in time and shape shifting. Time shifting refers to the ability for a business to operate 24 hours a day seven days per week rather than a narrow working day of nine to five. Shape shifting refers to the idea that the business can work anywhere in the world. They use a global workshop that knows no national boundaries.

Information systems can be used to help a business to achieve the following six core strategic objectives. Excellence in the way it operates and conducts business.

1. The development of new products, services and business models.
2. The establishment of intimate customer and supplier relations.
3. Supporting the decision-making process.
4. Establishing a competitive advantage.
5. Surviving in a competitive world