Professional Documents
Culture Documents
commerce,
Mobile
commerce,
technologies,
INTRODUCTION
Due to continued technological innovations, the world had seen drastic changes in
almost every sphere of life. The advent of Internet-based electronic commerce over the
past decade or so has given businesses an unprecedented marketing opportunity. Brick
and mortar businesses can find it difficult to compete with web-based businesses
because the latter usually have lower operating costs and greater flexibility
(www.investopedia.com; 2011).As the Internet-using population has grown, so too has
the potential market size for any business that sets up a shop on the Web (Steinfield, C.;
2002).
With the advent of each new day, new technologies were developed in the wake
to make life easier. This development resulted in the transformation of the world from ecommerce to m-commerce. The reasons for these developments can be traced back
mainly to technology innovations, like faster data transmission technologies and better
mobile devices equipped with improved computing capacity, enhanced data storage and
better user-interface. Some other factors, like the increasing penetration of society by
mobile phones and the integration of world economies have also increased the need for
mobility. The high availability of mobile Introduction phones, which is greater than that of
computers in most countries, is leading to concepts of new, innovative mobile services,
collectively described as m-commerce.
TRADITIONAL COMMERCE
Traditional commerce can broadly be defined as the exchange of valuable objects
or services between at least two parties. Such activity includes all of the processes that
each party undertakes to complete the transaction. The earliest form of traditional
commerce is the barter system. A traditional "street-side" business that deals with its
customers face-to-face in an office or store that the business owns or rents. Henceforth,
all the components in traditional commerce are physical.
The activities which most businesses engage in as they conduct commerce are
called business processes. Classic business processes include:
E-COMMERCE
Commerce has a long tradition of profiting from innovative systems and tools. As
technologies emerge, successful businesses are quick to identify developing
opportunities and expand their commercial capabilities. Conducting commerce
electronically is no different. For many businesses, new technologies that digitally
exchange text and monetary information are effective tools to serve traditional business
goals of streamlining services, developing new markets, and creating innovative
business opportunities. In addition, they offer the potential to develop types of services
that are so innovative and distinct from tradition that they define a new type of
commerce. Appropriately named, electronic commerce (E-Commerce) is the synthesis of
traditional
business
practices
with
computer,
information
and
communication
Electronic business, or e-business, is a term often used interchangeably with ecommerce, but is more concerned with the transformation of key business processes
through the use of internet technologies.
using
the
internet,
extranet
and
intranet
networks.
(www.londoninternational.ac.uk, 2011)
From the analysis of the definition, we may put that E-Commerce is a confluence of
business operations with electronic and network technologies. Telephony and nonnetworked technologies such as CD-ROM media may integrate into operations, but the
core of E-Commerce is network technologies and especially open networks such as the
Internet (www.orlandowebdevelopment.com, 2011). E-commerce means processing of
information using one digital application (EDI or Internet) and only a few quick steps.
(www.thalys.gr, 2011)
Ecommerce has allowed firms to establish a market presence, or to enhance an
already larger market position, by allowing for a cheaper and more efficient distribution
chain for their products or services. One example of a firm having successfully used
ecommerce is Borders. This book store not only has physical stores, but also has an
online store
where
the
customer
can
buy
books,
CDs
and
DVDs.
(www.investopedia.com; 2011).
E-commerce is a very valuable weapon. Its most important characteristic is
interactivity which keeps the customer involved in the companys processes. Interactivity
is the mean to individualization. Furthermore, it is cheap as long as you use Internet or
reform already installed EDI (Electronic Data Interchange). Note that installing EDI from
the beginning is much more expensive than using the web. (www.thalys.gr, 2011)
There had always been illusion as to the concepts of e-commerce and ebusiness. While some use e-commerce and e-business interchangeably, they are distinct
concepts. In e-commerce, information and communications technology (ICT) is used in
inter-business or inter-organizational transactions (transactions between and among
firms/organizations) and in business-to-consumer transactions (transactions between
firms/organizations and individuals). (Andam, Z.R.; 2003)
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From this discussion we may conclude that an e-business model must have following
essentials:
1. A shared digital business infrastructure, including digital production and distribution
technologies (broadband/wireless networks, content creation technologies and
information management systems), which will allow business participants to create
and utilize network economies of scale and scope;
2. A sophisticated model for operations, including integrated value chains-both supply
chains and buy chains;
3. An e-business management model, consisting of business teams and/or partnerships;
and
4. Policy, regulatory and social systems-i.e., business policies consistent with ecommerce laws, teleworking/virtual work, distance learning, incentive schemes,
among others. (Andam, Z.R.; 2003)
Types of E-Commerce:
Some of the major types of e-commerce include the following:
business-to-business (B2B);
business-to-consumer (B2C);
business-to-government (B2G);
consumer-to-consumer (C2C);and
B2B E-Commerce:
B2B e-commerce is simply defined as e-commerce between companies and
involves companies conducting e-procurement, supply chain management, network
alliances, and negotiating purchase transactions over the internet. Businesses use ecommerce to lower transaction costs of conducting business and to make savings in
terms of time and effort when conducting business. Being the largest category of ecommerce, it is expected by most of the experts that B2B e-commerce will continue to
grow faster than the B2C segment. (www.londoninternational.ac.uk, 2011)
5
B2C e-commerce:
Business-to-consumer e-commerce, or commerce between companies and
consumers, involves customers gathering information; purchasing physical goods (i.e.,
tangibles such as books or consumer products) or information goods (or goods of
electronic material or digitized content, such as software, or e-books); and, for
information goods, receiving products over an electronic network.
It is the second largest and the earliest form of e-commerce. Its origins can be
traced to online retailing (or e-tailing). Thus, the more common B2C business models are
the online retailing companies such as Amazon.com, Drugstore.com, Beyond.com,
Barnes and Noble and Toys Rus. Other B2C examples involving information goods are
E-Trade and Travelocity. (Andam, Z.R.; 2003)
C2C E-Commerce:
Consumer-to-consumer e-commerce or C2C is simply commerce between private
individuals or consumers. Being characterized by the growth of electronic market-places
and online auctions, particularly in case of vertical industries where firms/businesses can
bid for what
They want from among multiple suppliers, it perhaps has the greatest potential for
developing new markets.
This type of e-commerce comes in at least three forms:
peer-to-peer systems, such as the Napster model (a protocol for sharing files
between users used by chat forums similar to IRC) and other file exchange and
later money exchange models; and later money exchange models; and
classified ads at portal sites such as Excite Classifieds and eWanted (an
interactive, online marketplace where buyers and sellers can negotiate and
which features Buyer Leads & Want Ads). (Andam, Z.R.; 2003)
B2G E-Commerce:
Description
Example
Business-to-business
(B2B)
Business-to-consumer
Tesco.com sells
(B2C)
services to individual
merchandise to consumers
consumers.
Consumer-to-consumer
Participants in an online
e-Bay is an online
(C2C)
system.
government
(B2G)
California.
7
B2C ecommerce.
Source: www.londoninternational.ac.uk, 2011; Introducing electronic commerce.
Accessed on: October 10, 2011. P-9.
http://www.londoninternational.ac.uk/current_students/programme_resources/cis
/pdfs/subject_guides/level_3/cis323/cis323_chpt1.pdf
E-commerce
Web pages
Traditional commerce
Magazines, flyers, online
catalogs
Request item
On-line catalogs
Catalogs
Phone, fax
Generate order
Printed form
E-mail, EDI
Fax, mail
Prioritize order
On-line database
confirm price
phone,fax
pages
Schedule delivery
Printed form
Generate invoice
On-line database
Printed form
Receive product
Shipper (unless it is
Shipper
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electronic)
Confirm receipt
Printed form
Send/Receive Invoice
E-mail, EDI
Schedule payment
Printed form
EDI
Source: www.thalys.gr , 2011; Positioning Towards Customer and Supplier; Accessed on;
October 10, 2011. PP-8-9.
http://www.thalys.gr/pagesuk/technicalissues/internet/ecommerce/e_commerce_e_commerce_p9.htm
The historical development of e-commerce:
The first wave:
The use of networks to exchange money and transfers began in the late 1950s
with the development of electronic fund transfers (EFTs). EFTs, or wire transfers, was the
electronic transmission of account information over private communication networks.
Such activity may be thought of as electronic trading, since businesses and individuals
could update accounts and trade via EFTs.
In the late 1960s, electronic data interchange was used to reduce the amount of
time and effort in putting data such as invoices, purchase orders and bills. EDI allowed
for the exchange of information and the execution of electronic transactions between
businesses, typically in the form of electronic purchase orders and invoices. Businesses
that engage in EDI are referred to as Trading Partners. Due to the high implementation
costs only government agencies and large corporations were able to enjoy this
technological benefit. (www.londoninternational.ac.uk, 2011)
It wasnt until 1994 that e-commerce (as we know it today) really began to
accelerate with the introduction of security protocols and high speed internet connections
such as DSL, allowing for much faster connection speeds and faster online transaction
capability.
businesses.
In response to these expert opinions, between 1998 and 2000, a substantial number of
businesses in Western Europe and the United States built out their first rudimentary ecommerce websites. (sellitontheweb.com, 2011)
However, many of these companies went bust, due to not having sufficiently
robust revenue models to generate enough income to sustain their business. As more
and more businesses competed for a fixed number of good ideas, internet businesses
became over-valued and many bad ideas were also implemented. By 2000, the internet
business had started to see a downturn. Thousands of businesses went bust as lack of
advertising
revenue
meant
they
could
not
sustain
their
early
promise.
(www.londoninternational.ac.uk, 2011)
The dot-com collapse raised the concerns, and seeing its innumerable benefits,
investigations were made for finding the reasons for such an incidence. These
investigations came up with following serious flaws made while adopting the technology:
It was found that e-commerce was limited to a large degree to US businesses and
was not global in nature. (www.londoninternational.ac.uk, 2011)
Many of the original e-commerce businesses were started with outside investor
money-backing good ideas. They focused entirely on how internet could be used
to refine business processes and reduce transaction costs and less care was
taken regarding developing understanding on how these businesses could
produce revenue.
Email has also been associated with the ever increasing amounts of spam and
other unsolicited content. The expected reliance on advertising as a revenue
source was a major mistake by many e-businesses. The lack of alternative
revenue models or an understanding of what online advertising actually yielded in
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terms of returns meant that many e-businesses were left with no revenue
streams. (www.londoninternational.ac.uk, 2011)
The Second Wave:
In an effort to overcome the flaws of the first wave, and to ensure achievements of
new heights, the key characteristics of the second wave of e-commerce can be
understood to be based on internationalization and widening participation.
Accordingly, following initiatives came as a landmark to ensure wide acceptance of ecommerce:
Own funds and capital was mainly used for establishing online businesses.
Great effort and care is taken in devising revenue models and identifying
appropriate revenue streams. There is an emphasis not on who will supply us with
revenue, but how are we going to generate revenue.
There has been an explosion in the number of internet users worldwide, and it is fair
to say that most countries in the world now have internet access, if not always at the
same level of quality. Availability of broadband connections has ensured access to digital
content such as video and music can be sold and exchanged online. Even greater
emphasis has been put on the use of customised email strategies. Businesses now use
email for formulating deep relationships with consumers and ensuring that consumers
are contacted in a timely manner.
Businesses today use a multitude of sophisticated advertising approaches that are
integrated with their e-business activities. They have developed new strategies for the
sale of distributed products with advertising attached. (www.londoninternational.ac.uk,
2011)
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The main differences between the first and second waves of e-commerce are
summarized in the table below.
Table 3: Differences between the First and Second waves of e-commerce:
First Wave
Second Wave
dial-up modems.
investor money.
Innovations affecting consumers: This includes credit and debit cards, automated
teller machines (ATMs), stored value cards, and e-banking.
Innovations enabling online commerce are e-cash, e-checks, smart cards, and
encrypted credit cards. These payment methods are not too popular in developing
countries. They are employed by a few large companies in specific secured channels
on a transaction basis.
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commerce) is the buying and selling of goods and services through wireless technology,
i.e., hand-held devices such as cellular phones and personal digital assistants (PDAs).
Japan is seen as a global leader in m-commerce. (Nagaraju, 2010)
According to Webagency, 2001, M-Commerce has been defined as under:
(www.themanager.org, 2011)
M-commerce is a by-product of the technology convergence of
information technology (IT) with telecommunication technologies
(TCT). Together they are referred to as information and Mcommerce may be thus regarded as an extension of electronic
commerce (ecommerce) to wireless media. This convergence,
however, enables some unique, location-based services, hitherto not
possible in e-commerce. These innovative services are made
possible by the convergence of these two technologies. Today, the
scope of m-commerce encompasses almost every walk of life.
15
of services like GPRS which keeps users always in touch and connected.
5) Simple authentication- Mobile telecommunication device function with an electronic
chip called SIM, which is easily identifiable. This in combination with an individual
Personal Identification Number (PIN) makes the authentication process simple.
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Simple
Authentication
Devices like SIM,
PIN are effective
Instant Connectivity
Ubiquity
Always-on features,
hence convenient
Services available
anywhere
M-Commerce
Localisation
Immediacy
Localised Content
and Services
Services available
anytime
History of M-Commerce:
Mobile commerce was born in 1997 when the first two mobile-phones enabled Coca
Cola vending machines were installed in the Helsinki area in Finland. The machines
accepted payment via SMS text messages. The first mobile phone-based banking
service was launched in 1997 by Merita Bank of Finland, also using SMS. A major leap
took place when two major national commercial platforms for mobile commerce were
launched in 1999. These included Smart Money in the Philippines, and NTT DoCoMo's iMode Internet service in Japan.
Mobile-commerce-related services spread rapidly in early 2000. Norway launched mobile
parking payments. Austria offered train ticketing via mobile device. Japan offered mobile
purchases of airline tickets.
17
Mobile ticketing
Location-based services
Information services
Mobile banking
Mobile brokerage
Auctions
Mobile Browsing
which stock quotes can be displayed and trading conducted from the same handheld
device);
Telecommunications, in which service changes, bill payment and account reviews can
all be conducted from the same handheld device;
Service/retail, as consumers are given the ability to place and pay for orders on-the-fly;
and
Information services, which include the delivery of entertainment, financial news, sports
figures
and
traffic
updates
to
single
mobile
device.
(searchmobilecomputing.techtarget.com, 2011)
Present Scenario:
According to a survey made by Informa (Nov 2007), there are currently over 3 billion
mobile phones worldwide, that is, approximately 40% of the worlds population currently
carries a mobile phone. The chart below puts this figure in the context of other major
technologies. Mobile phone adoption continues to grow. In many developed countries
mobile phone penetration is well above 90%, so saying everyone has a mobile phone
has become a reality.
Source: Mobile Commerce: Opportunities and challenges, A GS1 Mobile Com White
Paper.February 2008 Edition. PAGE-10.
Mobile Commerce: Beyond E-Commerce:
Throughout the 1990s the introduction of the internet and e-commerce reshaped
the way that businesses do business and the way that consumers interact with
businesses. Businesses took the opportunity to automate many processes that before
would have been handled manually, from ordering to customer service. One clear
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example is the way that spending on advertising has begun to shift from traditional offline media to online and digital media as advertisers have seen an opportunity to better
connect with their target audience. IBM forecasts 22% growth in mobile, digital and
interactive advertising formats between 2006 and 2010 against 4% growth in traditional
advertising formats.
Mobile commerce, often referred to as m-commerce, builds on the advances
made by ecommerce (such as automated, electronic processes) but makes interaction
available to a wider audience in a more personalized way.
Like any emerging market, there are many propositions about how to use this
technology. Some organizations adopt an aggressive policy and want to get something
moving as fast as possible whilst others adopt a wait-and-see approach. As a result,
proprietary solutions are developed that make integration with existing systems or by
multiple partners complex and costly. At the same time, multiple solutions create a
complex landscape for businesses and consumers alike - making it difficult to choose
which solution to use.
The other difference between ecommerce and m-commerce is the opportunity to
connect information with objects in a more direct way than has been possible until now.
This is the world predicted by the Internet of Things, a report published by the
International Telecommunications Union (ITU) in 2005, where objects have a life and
history of their own that we can use to our advantage. The mobile phone can be the tool
that connects the physical and virtual world. At the base of this vision is the ability to
identify objects uniquely. What is special about mobile phones is the fact that they have
massive adoption globally.
Many more people have access to a mobile phone that to a computers and this
means that m-commerce has the opportunity to connect not just big businesses but also
small business and consumers on a massive scale. In this sense, mobile phones have
the potential to bridge the digital divide and allow organizations and individuals to reach
out to one another more easily than ever before. Were moving into a world where digital
goods are becoming as important as physical goods. Due to the internet, value is
created not just by goods themselves but by the exchanges of those goods.
Organisations that can facilitate that exchange (for example by creating
communities of users with similar interests) have a significant competitive advantage in
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CONCLUSION:
From the above discussion we can easily put-forth that commerce has gone
through revolutionary changes to keep pace with changing world. In this wake, it has
traveled phase of traditional commerce to e-commerce. E-commerce had played game
changing role for businesses around the world. Albeit, having some drawbacks, it had
generated enormous opportunities for businesses to accelerate upon others. Even, it
opened the path for future technological development possibilities for the businesses for
ensuring easy access to customers. This possibility and innovations in technology led to
the emergence of a recent phenomenon - m-commerce. Innovation in mobile market
had made it all possible. However, with it had aroused certain concerns regarding its use
and security. Seeing the enormous opportunities in this field, it is required that the
initiatives should be carefully framed out keeping in mind all possible loopholes that may
arise in future, to escape it from any failures.
REFERENCES:
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Andam, Z.R. (2003, May); E-Commerce and E-Business; ASEAN Task FORCE. Undpapdip. P-7
Ibid. P10-12.
Ibid. PP-12-13.
Ibid. P-13.
Ibid. PP-13-15.
Ibid. P-20.
Ibid. P-21.
Ibid. P-31.
Ibid. P-32.
en.wikipedia.org (2011); Mobile commerce. October 10, 2011.
Mobile commerce; http://en.wikipedia.org/wiki/Mobile_commerce
GS1 Mobile Com, 2008; Mobile Commerce: opportunities and challenges; A GS1 Mobile
Com White Paper. February 2008 Edition. PP-12-13.
Hunter, J.L., (2002, April 9); m-Commerce: Reality Behind the Hype.
jcizzo.com, (2011); Traditional Commerce. Accessed on: October 10, 2011.
http://jcizzo.com/the-traditional-commerce.html
Nagaraju, August 19, 2010. October 10, 2011.
What is M-Commerce?; http://www.smarte-commerce.com/what-is-m-commerce/
searchmobilecomputing.techtarget.com, (2011); m-commerce (mobile commerce);
http://searchmobilecomputing.techtarget.com/definition/m-commerce
sellitontheweb.com ; History of E-Commerce. Retrieved on: October 10, 2011.
http://sellitontheweb.com/blog/history-of-e-commerce/
22
Tiwari, R., Buse, S. Herstatt (2008); From Electronic to Mobile Commerce: Opportunities
through technology convergence for business services; CACCI Journal, Vol. 1, 2008. PP
1-2.
www.investopedia.com (2011); Brick And Mortar. Accessed on; October 10, 2011.
http://www.investopedia.com/terms/b/brickandmortar.asp#axzz1aLz3MXjf
www.londoninternational.ac.uk, (2011); Introducing electronic commerce. Accessed on:
October 10, 2011. P-8.
http://www.londoninternational.ac.uk/current_students/programme_resources/cis/pdfs/su
bject_guides/level_3/cis323/cis323_chpt1.pdf
Ibid. P-9.
Ibid. P-11.
Ibid. P-13.
www.orlandowebdevelopment.com; Understanding E-Commerce. Accessed on;
October 10, 2011.
http://www.orlandowebdevelopment.com/e-commerce-definition.htm
www.thalys.gr, (2011); Introduction; Accessed on; October 10, 2011.
http://www.thalys.gr/pagesuk/technicalissues/internet/ecommerce/e_commerce_e_commerce_p5.htm
Ibid. P-8.
http://www.thalys.gr/pagesuk/technicalissues/internet/ecommerce/e_commerce_e_commerce_p8.htm
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