COMPUTER PROJECT

ON

E-COMMERCE

2009

A PROJECT ON E-COMMERCE SUBMITTED AS A PRACTICAL

FULFILLMENT OF B.COM IIIrd YEAR

Name-Gunjan Shukla
Roll No.19641
Department of Commerce

Department of Commerce
Faculty of Commerce & Management Studies
Mahatma Gandhi Kashi Vidyapith
Varanasi – 221002

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 Acknowledgement

I wish to put on record my heartfelt thanks to my dexterous Head Dr.Ashok

Kumar Mishra and Mr. Amit Singh was always a source of inspiration during the course

of project. I wish to reveal through these lines my deepest sense of gratitude and

admiration for his relentless efforts, constructive counsel, and critical appreciation, where

not a single a word could escape his scrutiny.

I take the opportunity to express my profound gratitude to all my teachers past

and present.

Last I am very thankful to all my friends & all those who have supported me

in preparing this project.

Gunjan Shukla

B.Com IIIrd Year

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 E-Commerce

We are in the midst of electronic revolution, the impact of which on the economy
is much more profound than that caused by the Industrial revolution. This modern day
revolution, at the global level, has manifested itself in the form of many innovations and
breakthroughs and giant leaps in internetworking technology. With these new
opportunities, people can now transcend the barriers of time and distance with the
internet’s speed.
With the inception of the web, organizations and individuals are more and more
making use of it to create new business ventures. The WWW is not only a definitive
source of information, but an astounding business opportunity as well. Millions of us are
venturing out onto the web for buying and selling goods and services. Thus ushered in,
the era of ‘E- commerce’ has established a significant synergy between the use of digital
information and computerized business. The web has indeed proved to be a boon to
business, drawing its power from the flow of easy and instantaneous transactions,
worldwide. Online business is thriving and more and more corporate companies are
joining the fray of electronic transactions. Electronic commerce (e-commerce) has
become a buzzword for businesses over the past few years, with increased awareness
about the use of computer and communications technologies in simplifying business
procedures and increase efficiency. Combining the range of processes, such as electronic
data interchange (EDI), electronic mail (E-mail), World Wide Web (WWW), and Internet
applications. E-commerce provides ways to exchange information between individuals,
companies and countries and, most important of all, between computers. More simply
put, e-commerce is the movement of business onto the world wide web. This movement
has been broken up into two main sectors consisting of business-to-business (B2B) and
business–to consumer (B2C). E-commerce refers to marketing, selling and business
over the internet. The available e-commerce information on the internet is huge and still
growing.

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Electronic commerce is doing business online. It is about using the power of digital
information to understand the needs and preferences of each customer and each partner to
customize products and services for them, and then to deliver the products and services as
quickly as possible. Personalized, automated services offer businesses the potential to
increase revenues, lower costs, and establish and strengthen customer and partner
relationships. To achieve these benefits, many companies today engage in electronic
commerce for direct marketing, selling, and customer service; online banking and billing;
secure distribution of information; value chain trading; and corporate purchasing.
Although the benefits of electronic commerce systems are enticing, developing,
deploying, and managing these systems is not always easy. In addition to adopting new
technology, many companies will need to re-engineer their business processes to
maximize the benefits of electronic commerce. An electronic commerce strategy should
help deliver a technology platform, a portal for online services, and a professional
expertise that companies can leverage to adopt new ways of doing business. Platforms are
the foundation of any computer system. An e-commerce platform should be the
foundation of technologies and products that enable and support electronic commerce.
With it, businesses can develop low-cost, high-value commerce systems that are easy to
grow as business grows. An e-commerce platform’s breadth should also be unmatched,
ranging from operating systems to application servers, to an application infrastructure and
development tools, and to a development system.

Portals are the crossroads of the Internet, where consumers gather and where businesses
can connect with them. Companies normally provide customers with a wide range of
choices for professional implementation services and tightly integrated software for
commerce solutions. Independent software vendors (ISVs) have created specialized
commerce software components that extend the platform.
This guide details introductory strategies and priorities for electronic commerce, which
sets the stage for the rest of the book. It also describes how the platform, portal, and
partners are critical to solving business problems in the four most common areas of
electronic commerce: direct marketing, selling, and service; value chain integration;
corporate purchasing; and financial and information services.

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Introduction

Electronic commerce, commonly known as e-commerce or eCommerce,

consists of the buying and selling of products or services over electronic systems such as
the Internet and other computer networks. The amount of trade conducted electronically
has grown extraordinarily since the spread of the Internet. A wide variety of commerce is
conducted in this way, spurring and drawing on innovations in electronic funds transfer,
supply chain management, Internet marketing, online transaction processing, electronic
data interchange (EDI), inventory management systems, and automated data collection
systems. Modern electronic commerce typically uses the World Wide Web at least at
some point in the transaction's lifecycle, although it can encompass a wider range of
technologies such as e-mail as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual

items such as access to premium content on a website, but most electronic commerce
involves the transportation of physical items in some way. Online retailers are sometimes
known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers
have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-

business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or
limited to specific, pre-qualified participants (private electronic market). Electronic
commerce that is conducted between businesses and consumers, on the other hand, is
referred to as business-to-consumer or B2C. This is the type of electronic commerce
conducted by companies such as Amazon.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also

consists of the exchange of data to facilitate the financing and payment aspects of the
business transactions.

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Historical Background of E-Commerce

Early development

The meaning of electronic commerce has changed over the last 30 years. Originally,
electronic commerce meant the facilitation of commercial transactions electronically,
using technology such as Electronic Data Interchange (EDI) and Electronic Funds
Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to
send commercial documents like purchase orders or invoices electronically. The growth
and acceptance of credit cards, automated teller machines (ATM) and telephone banking
in the 1980s were also forms of electronic commerce. Another form of e-commerce was
the airline reservation system typified by Sabre in the USA and Travicom in the UK.
Online shopping was invented in the UK in 1979 by Michael Aldrich and during the
1980s it was used extensively particularly by auto manufacturers such as Ford,Peugeot-
Talbot, General Motors and Nissan. From the 1990s onwards, electronic commerce
would additionally include enterprise resource planning systems (ERP), data mining and
data warehousing.

Perhaps it is introduced from the Telephone Exchange Office, or maybe not. The earliest
example of many-to-many electronic commerce in physical goods was the Boston
Computer Exchange, a marketplace for used computers launched in 1982. The first online
information marketplace, including online consulting, was likely the American
Information Exchange, another pre-Internet online system introduced in 1991.

Although the Internet became popular worldwide in 1994, it took about five years to
introduce security protocols and DSL allowing continual connection to the Internet. And
by the end of 2000, a lot of European and American business companies offered their
services through the World Wide Web. Since then people began to associate a word
"ecommerce" with the ability of purchasing various goods through the Internet using
secure protocols and electronic payment services.

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Traditional Versus E-Business

Traditional or brick and mortar businesses were product centric, with companies
competing on the basis of product differentiation and innovation. But in the e business
era, companies focus on customers and adopt a customer centric approach. In the
traditional business, companies manufactured products and customers purchased them.
But now customers are a part of product design and they dictate terms to manufacturers
with regard to the features of products. Proctor & Gamble has created the "P&G
Advisors" program to collaborate with customers in developing new products.

Customers try new products and provide feedback, allowing P&G to refine products and
marketing plans. Before using the Internet, P&G spent $25,000 to test each product
concept and took two months to complete a test. Now, P&G can do the same test at a cost
of $2,500 and obtain results in two weeks. P&G is also using the Internet to take these
new products to market. For example, when launching its Physique range of hair care
products, P&G invited consumers to register on its Physique.com website to sample the
new products. Within 12 weeks, more than five million consumers visited the site.

Information is essential for conducting e business. Thus information capture, storage and
dissemination are important activities in organizations that have adopted e-business. The
volume of data that is collected and analyzed is substantial in ebusiness. Although data
was available, even before the Internet age, organizations could not analyze and cleanse
the data to get meaningful information. But now modern technology has made real time
information processing possible. This has improved the productivity and efficiency of
organizations and enabled them to offer high quality customer service.

Traditional business operations are confined to limited geographic locations, but in the
case of e business, operations can take place across the globe due to the ubiquitous nature
of the Internet. In addition, automation has made e business processes and operations
more efficient than those of traditional businesses. Transactions that were earlier time
consuming are now performed within minutes because customers can interact with the
organization through the fax, telephone, e mail or web.

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Business applications

Some common applications related to electronic commerce are the following:

• Email
• Enterprise content management
• Instant messaging
• Newsgroups
• Online shopping and order tracking
• Online banking
• Online office suites
• Domestic and international payment systems
• Shopping cart software
• Teleconferencing
• Electronic tickets

Issues in Implementing Electronic Commerce

Although it is simple to describe their benefits, it is not nearly as easy to develop and
deploy commerce systems. Companies can face significant implementation issues:

• Cost
• Value
• Security
• Leveraging existing systems
• Interoperability

Cost
Electronic commerce requires significant investments in new technologies that can touch
many of a company’s core business processes. As with all major business systems,

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electronic commerce systems require significant investments in hardware, software,
staffing, and training. Businesses need comprehensive solutions with greater ease-of-use
to help foster cost-effective deployment.

Value
Businesses want to know that their investments in electronic commerce systems will
produce a return. Business objectives such as lead generation, business-process
automation, and cost reduction must be met. Systems used to reach these goals need to be
flexible enough to change when the business changes.

Security
The Internet provides universal access, but companies must protect their assets against
accidental or malicious misuse. System security, however, must not create prohibitive
complexity or reduce flexibility. Customer information also needs to be protected from
internal and external misuse. Privacy systems should safeguard the personal information
critical to building sites that satisfy customer and business needs.

Leveraging Existing Systems

Most companies already use information technology (IT) to conduct business in non-
Internet environments, such as marketing, order management, billing, inventory,
distribution, and customer service. The Internet represents an alternative and
complementary way to do business, but it is imperative that electronic commerce systems
integrate existing systems in a manner that avoids duplicating functionality and maintains
usability, performance, and reliability.

Interoperability
When systems from two or more businesses are able to exchange documents without
manual intervention, businesses achieve cost reduction, improved performance, and more
dynamic value chains. Failing to address any of these issues can spell failure for a
system’s implementation effort. Therefore, the company’s commerce strategy should be
designed to address all of these issues to help customers achieve the benefits of electronic

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commerce.
The company’s vision for electronic commerce should also be to help businesses
establish stronger relationships with customers and industry partners. For example, a
successful strategy for delivering this vision is described by three workflow elements
(platform, portal, and industry partners), each backed by comprehensive technology,
product, and service offerings. From self-service portals to transaction processing, a
successful workflow strategy can be the underlying engine delivering state-based,
processed-focused control services for e-business applications. Human labor is
expensive, and workflow technology allows e-businesses to supplement, and in some
cases eliminate, reliance on human supervision and intervention.

The Shift to E-Business

There is no free lunch, though, and along with the benefits of doing business in the
new economy comes a new kind of customer, one with different expectations and
standards by which companies are judged. Web sites must offer a consistently positive
customer experience to win over consumers. Inspiring loyalty is the biggest challenge to
e-businesses, and e-consumers are a tough group to win. Thus, the attraction of moving
an established, traditional business to the Internet (or of starting a new, pure-play Internet
business) involves a variety of factors:
1. 24 / 7 operation. Round- the- clock operation is an expensive proposition in the
‘brick and mortar’ world, while it is natural in the ‘click –and-conquer’ world.

2. Global reach. The net being inherently global, reaching global customers is
relatively easy on the net compared to the world of bricks.

3. Cost of acquiring, serving and retaining customers. It is relatively cheaper to

acquire new customers over the net; thanks to 24/7 operation and its global reach.
Through innovative tools of ‘push’ technology, it is also possible to retain
customers loyalty with minimum investments.

4. An extended enterprise is easy to build. In today’s world every enterprise is the

part of the ‘connected economy’; as such, you need to extend your enterprise all
the way to your suppliers and business partners like distributors, retailers and

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 ultimately your end customers. Internet provides an effective (often less
expensive) way to extend your enterprise beyond the narrow confines of your own
organization. Tools like enterprise resource planning (ERP), supply chain
management (SCM) and customer relationship management (CRM), can easily be
deployed over the net, permitting amazing efficiency in time needed to market,
customer loyalty, on-time delivery and eventually profitability.

5. Disintermediation. Using the net, one can directly approach the customers and
suppliers, cutting down the number of levels and in the process, cutting down the
costs.

6. Improve customer service to your clients. It results in higher satisfaction and

more sales.

7. Power to provide the ‘best of both the worlds’. It enhances traditional business
along with Internet tools.

Disadvantages

Some business processes may never lend themselves to electronic commerce. For
example, perishable foods and high-cost items (such as jwellery, antiques, and the like)
may be impossible to inspect adequately from the remote locations, regardless of any
technologies that might be devised in the future. Most of the disadvantages of electronic
commerce today, however, stem from the newness and rapidly developing pace of the
underlying technologies. These disadvantages will disappear as e-commerce matures and
becomes more available to and accepted by the general population. Many products and
services require a critical mass of potential buyers who are well equipped and willing to
buy through the internet.
Businesses often calculate the return- on-investment before committing to any
new technology. This has been difficult to do with e-commerce, since the costs and
benefits have been hard to quantify. Costs, which are the functions of technology, can
change dramatically even during short lived e-commerce implementation projects,
because the underlying technologies are changing rapidly. Many firms have had trouble

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in recruiting and retaining employees with technological, design, and business process
skills needed to create an effective e-commerce atmosphere. Another problem facing
firms that want to do business on the Internet is the difficulty of integrating existing
databases and transaction-processing software designed for transforming traditional
commerce into a software that enables e-commerce.
In addition to technology and software issues, many businesses face cultural and
legal obstacles in conducting e-commerce. Some consumers are still some what fearful of
sending their credit card numbers over the internet. Other consumers are simply resistant
to change and are uncomfortable viewing merchandise on the computer screen rather than
an in person. The legal environment in which e-commerce is conducted is full of unclear
and conflicting laws. In many cases, government regulators have not kept up with the
trends in technologies.

• Security - there are still some people who don’t think it is save to buy on-line
therefore as their isn’t a high-street shop will loss their custom.
• you may not receive what you believe you have purchased.
• Things such as viruses could mean losing the site or affecting your customers
computers while on your website.

E-commerce Opportunities for Industries

Following are the some of the areas where e-commerce is witnessing rapid growth
in the global markets. Indian software and services companies need to tap into some of
these vertical segments to gain the maximum advantage in the e-commerce solution
sectors.
1. Financial Services. Forrester Research, a leading US based market research
agency has predicted that, by 2002, a large number of users will use the internet
for financial guidance.

2. Stock trading. Online stock trading is nowadays one of the most demanding e-
commerce utilities. The ability to offer market access at a competitive price is a

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 key advantage of online stock broking companies and this is slowly happening in
India too.

3. Banking. Internet banking is not growing as fast as online stock trading. However
some banks like ICICI and HDFC are making inroads into these areas.

4. Legal and Professional Services. Opportunities also exist for Indian companies
in legal and other professional services. There is significant legal and regulatory
implementing as Internet business or of migrating from a traditional off-line
business. In terms of opportunities for Indian legal service providers, the
requirement for professional, legal and regulatory advice is expected to increase
as the number of e-commerce users increases.

5. Tours and Travels. The travel industry has readily adapted to e-commerce.
There has been a growing emphasis on the search for alternative distribution
channels within the sector, particularly with the railways and the airlines, as they
seek to reduce costs. These sectors have adapted well because of their online
reservation systems.

6. Health Care. Health care represents one of the biggest expenditures of

governments worldwide. Internet has the potential to enhance communications,
streamline processes and create new business opportunities, by providing high
quality administrative services and integrating information systems.

Rise of E-Commerce
E business has evolved rapidly within a short span of time. It was virtually nonexistent
until 1995, but by the beginning of the new millennium, $1 trillion worth of ebusiness
transactions (including 13213 and 132C) took place.

The success of this electronic form of business is dependent on customer trust and the
availability of suitable technology. Organizations use e business for a number of reasons.
Some of these reasons are discussed below:

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 Transaction management: It is possible to completely integrate customers and
suppliers using e business, thus bringing down the transaction costs of purchasing. E
business also does away with the problems associated with time and distance.

Business efficiency: E Business appeals to companies because of its ability to achieve

efficiencies in production and distribution. Efficiency can be increased in the entire value
chain, right from the procurement of goods to customer service.

Reshaping customer relationship: The collection of data through the Internet helps
organizations provide better customer service. It also helps in targeting right customers
for their products and services.

Reaching new markets and segments: The Internet makes it possible for companies to
explore new markets by providing global reach. Foreign markets can be explored without
a physical presence in the market. Moreover, time differences do not pose a hinderance to
the study of those markets.

According to studies, e business can benefit organizations in several ways: increase

revenues by about 10 20%, reduce costs by 20 45% and reduce working capital
requirements upto 60%. For example, Dell Computers has been able to increase its
revenues by 20% and profits by 85% by doing business online.

PricewaterhouseCoopers has identified four distinct phases of e business. The first phase
is marked by the implementation of a website that will enable the concerned organization
to buy and sell online. The second phase involves putting supply chain management
processes online by linking suppliers with the enterprise, using extranets and intranets. In
the third phase, the organization forms alliances (content, marketing and commerce) with
other online players indicating the adoption of e business as a commercial too. This alters
the way in which the organization operates. In the fourth and final stage, there is a
convergence that will lead to innovative products and services. Some of the key
characteristics of e business are:

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Customer is king: Customers have more choices since they can collect information on a
range of competing products.

Entry barriers are low: Entry barriers are low since the online model can be easily
replicated by competitors at a lower cost. Although, conducting business online is
relatively easy, digitizing the entire value chain and reaping the benefits of doing so is a
difficult task.

E business leads to disinterinediation: In e business, middlemen are replaced by

infornediaries. Infornediaries offer information on products and services on behalf of the
manufacturers. They link manufacturers and customers.

Economies of scale: Since the fixed cost incurred on servicing customers comes down
with the increase in the number of customers, organizations have to look for ways to
attract more customers to their website. When the number of transactions increases,
organizations can obtain economies of scale.

In the early stages of e business, an organization must have to gain first mover advantage
and adopt a sustainable and flexible e business strategy.

Classifications of Indian Web Sites

Indian web sites can be divided into four categories: Consumer-to-consumer (C2C),
consumer-to-business (C2B), business-to-business (B2B), and business-to-consumer
(B2C) as shown in table below:

CLASSIFICATION OF INDIAN WEB SITES

Category Functional area Examples Prospects
C2C Portals enabling Baazee.com, A small segment;
consumers to buy Bidorbuy.com right now, these
and sell from each portals will face
other through, say, logistical hurdles

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 an auction. and people’s
resistance to online
shopping to the
initial years .
C2B Sites where Razorfinish.com The smallest
consumers set section of the net
prices and business all over
companies bid to the world. It is just
offer products and to emerge in India.
services.
B2B Portals linking Commodityindia.com, This segment has
different businesses Indiaconstruction.com the largest volume
or different parts of Clickforsteel.com of business- both in
a business. India and abroad. It
will be the mainstay
of the internet
business in the
future.
B2C Portal selling Rediff.com The segment with
products or services Jaldi.com maximum number
directly to Indiatimes.com of website, it is the
consumers Zipahead.com worst affected by
Indiabulls.com, the financial
Fabmart.com crunch.

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 Business
Business

Government

Consumer
Consumer

E-business Model Based on the Relationship of Transaction parties

E-business Model Based on the Relationship of Transaction Types

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Info – Mediary Model:
An organizer of virtual community is called an information intermediary or info-mediary,
who helps customers to collect, manage, and maximize the value of information about
consumers. Date about consumers and their buying habits are extremely valuable
especially when that information is carefully analyzed and used to target marketing
campaigns. Some firms are able to function as info-mediaries by collecting and selling
information to other businesses.

Community Model:
E-communities (or electronic communities) are formed when groups of people meet
online to fulfill certain needs, which include personal interests, relationship,
entertainment and transactions. Of course, e-communities are not confined to just
individuals but businesses as well. E-communities cater to groups of people who come
on-line to serve their common interest and needs, exchange information, share interest,
trade goods and services, entertain and seek help.

Value Chain Model:

Value chain moves businesses away from discrete streams of data about the product
being made to one unified pool of information – one that even extends outside the
company to suppliers and customers. The goal is to develop full and seamless interaction
among all members of the chain., resulting in lower inventories, higher customer
satisfaction and shorter time to market.

Brokerage Model – Its Characteristics

The characteristics of brokerage model are as follow:
• The price- discovery mechanism is its key-principle.
• It is a meeting point for sellers and buyers.
• Auctions and exchange are the modes of transactions.
• It is a Free Market”.
• It consists of Global Network of Buyers &Sellers.
• It is Virtual Marketspace enabled by the Internet.

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 • It encompasses all types of organization now.

Aggregator Model
Classic wholesales and retailers of goods and services are increasingly referred to as “e-
tailers.” Sales can be made on list prices or through auction. In some cases, the goods and
services are unique to the web and not have a traditional “brick- and mortar” storefront.
Following are some of the aggregator models:
1. Virtual merchant.
2. Catalog merchant
3. Surf-and turf.
4. Bit vendor
5. Subscription model.

The Aggregator Model

S
E B
L U
L Aggregator
Y
E E
R R
S S

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Government regulations

In the United States, some electronic commerce activities are regulated by the Federal
Trade Commission (FTC). These activities include the use of commercial e-mails, online
advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national
standards for direct marketing over e-mail. The Federal Trade Commission Act regulates
all forms of advertising, including online advertising, and states that advertising must be
truthful and non-deceptive.[4] Using its authority under Section 5 of the FTC Act, which
prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce
the promises in corporate privacy statements, including promises about the security of
consumers’ personal information.[5] As result, any corporate privacy policy related to e-
commerce activity may be subject to enforcement by the FTC.

Forms

Contemporary electronic commerce involves everything from ordering "digital" content

for immediate online consumption, to ordering conventional goods and services, to
"meta" services to facilitate other types of electronic commerce.

On the consumer level, electronic commerce is mostly conducted on the World Wide
Web. An individual can go online to purchase anything from books or groceries, to
expensive items like real estate. Another example would be online banking, i.e. online
bill payments, buying stocks, transferring funds from one account to another, and
initiating wire payment to another country. All of these activities can be done with a few
strokes of the keyboard.

On the institutional level, big corporations and financial institutions use the internet to
exchange financial data to facilitate domestic and international business. Data integrity
and security are very hot and pressing issues for electronic commerce today.

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Five Business Models of E-Commerce

Five different ways websites can generate revenue.

"There's no such thing as a free lunch!" While this simple economic aphorism seems to
have been forgotten in the world of cyberspace, it holds true as much today as it ever has.
First lets establish the fact that no site is free - every web site costs money. The web site
is stored on a computer, uses web server software, accesses telecommunication resources,
and must be maintained. Someone must pay for the computers, software,
telecommunication charges, and time. The omnipresent cost either comes from your
pocket or some benevolent benefactor.

The cost and potential revenue constitutes a business model. Therefore, even the "free"
sites have a business model. Every site in the entire world wide web has a business
model. There are different business models underlying each website.

In actuality, five distinct eCommerce business models form the basic structure for the
wide variety of websites today. The five categories are called vanity, billboard,
advertising, subscriptions, and storefront sites. While not all drive revenue directly, they
all incur costs.

Vanity: Many web sites are started as vanity sites. These sites are often created by
individuals as an outlet of self expression, to share a hobby, promote a cause, or find
others with similar interests. These sites are created with no intentions of deriving
revenue and no illusions of grandeur. It could be as simple as a one page family site or a
complex forum on a specific topic. The costs are borne either by the individual or by
some altruistic enterprise such as universities, libraries, communities, associations, and
even businesses. Nevertheless, the costs are real of these "free" sites.

Billboard: Billboard sites (also called brochure or information sites) are designed to
derive economic benefit through indirect means from either referred sales, reduced cost,
or both. Revenue comes from creating awareness of its products or services via the web,
with the actual purchase transaction occurring off-line. Just like a billboard on a highway,

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success is measured on viewership as net citizens "surf" by and are influenced to
purchase product. Most corporate sites today put up these electronic brochures to provide
information about their products, employment information, or public information.
Economic benefit is created through the indirect purchase of goods or services from
existing physical outlets and cost savings through the elimination of infrastructure or
inefficiency. Finally, some businesses feel this is the best way to avoid channel conflict'a
potential pricing disparity between different supply chains.

Advertising: Network television, radio, and many periodicals follow the advertising
model. All programming and content is funded by advertising dollars, with consumer
viewership measuring value. Agencies conduct sophisticated surveys to measure the
value and establish the pricing. For eCommerce, advertising can be in the form of
banners, sponsorships, ezine ads, and other promotion methods.

Subscriptions: In other media, the subscription models are well established'accepted by

subscribers and nurtured by publishers. On the web, subscriptions are not yet widely
accepted by consumers. Of those that are accepted, the subscription model caters to sites
targeted to particular niches of individuals who have specific needs. These sites are often
specialized with expert content and timely information. The subscriptions fund the
development and maintenance of the site.

Subscriptions can be paid on a weekly, monthly, or annual basis. Payment through a

credit card account is a common payment scheme for subscription sites because of the
ability to periodically process the purchase transaction electronically.

Storefront: To some people, a products-offered site is narrowly defined as a "true"

eCommerce site. A website that offers products for sale is the electronic version of a
catalog. These virtual storefronts are built to describe the offering with pictures and
words, offer promotions, provide a "shopping cart," and complete the purchase
transaction. Once the product is purchased, the cyber enterprise arranges for product
fulfillment including shipping and handling. The fulfillment is sometimes completed by
the website enterprise or directly from the manufacturer in a drop shipping arrangement.

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Some manufacturers are now passing up the intermediary wholesalers and retailers by
offering their products directly to consumers. This collapsing of the supply chain is called
disintermediation.

Although the vast majority of these sites offer tangible products, they can work for
service products too. The primary characteristic of these types of sites is the ability to
make a one time purchase with no future obligations.

While it is impossible to predict the future in this fast moving media, it is obvious that all
five business models will remain viable for the near term. Each model will continue to
mature both in its acceptance and sophistication. Consumers will increasingly look to the
web for physical commerce alternatives because of the limitlessness of the media both in
terms of geography and shopping hours. For net entrepreneurs, each model should be
examined carefully to understand which model provides the maximum benefit. With the
understanding of the business models, financial projections can be easily created and
business plans finalized. With the business plan in hand, you will realize even in
cyberspace, there is no such thing as a free lunch.

Ecommerce Beats Retailers In Customer Satisfaction

E-consultancy reports that a recent study conducted by the UK National Customer

Satisfaction Index scored retailers, e-commerce reported a stunning score of 82 points for
Q4 2008 (out of 100). Why is this news so interesting? Because the average retailer
customer satisfaction score is 74.8.

Amazon and Play.com helped e-commerce separate itself from the rest by posting 85 and
87 satisfaction scores. Amazon would be ranked high on this list, but really surprised to
see Play.com achieve such a high customer satisfaction level. I haven’t personally played
around with their site too much, but hopefully this will give them some much deserved
attention in the conversion-world for their great work.

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Here’s the breakdown of the top customer satisfaction retailers by category:

Global Ecommerce: New Trends Involved in Ecommerce Business

Internet use has grown and spread during the last decade. With the fame and widespread
usage of Internet this new trend in e-commerce business is spreading like wild fire and
has a pivotal role in global economy. Businesses these days are rising in all realms.
Ecommerce has changed the way people do business. These days, ecommerce business is
at its boom. From big corporations to cottage industries, businesses are online, opening
up their products and services to new groups of people worldwide.
These days, the use of other media trade, such as the telephone, television, fax, and
electronic payment, has been also grown. These play also an important role in the boom
in ecommerce business because ecommerce has been 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.
With the emergence of ecommerce business during the last decades, a number of
ecommerce business solution providers have been also grown. No one can imagine a
successful ecommerce business without the assistance of a reliable ecommerce business
solution provider. Ecommerce service provider performs many useful jobs for your

25
business, such as doing market research, getting traffic for your ecommerce storefront
and online ordering system.
Today, ecommerce is the latest mantra in increasing your sales. This is because
instead of selling your goods and services through a local store, you can sell online and
gain a greater customer base. Apart from providing shipping services, you will need an
online ecommerce merchant account to accept credit card payments to make your venture
a success.
These days, even a restaurant is running under ecommerce system. Ecommerce
solution provider performs many jobs for the Restaurant, such as, they put online
restaurant menu, online restaurant ordering systems, and bed and breakfast booking
system. There are many ways to get your products and services online, from a simple
brochure site to a high-end database driven site.
In this way, we see that ecommerce has changed the people to do the business in a
different way. Every thing in this world has been being globalize and of course business
is no exception. Global ecommerce business has been new trends in ecommerce business
and plays a pivotal role in global economy. Also the role of ecommerce business solution
providers cannot be ignored because you cannot imagine successful and fruitful
ecommerce business without their assistance.

Types of E-commerce Technologies:

The global economy may have faltered in 2002, but advances in e-commerce
technology continue to transform personal communication and global business at an
astounding pace. Although these advances promise to bring a substantial percentage of
the world’s population online in the next five years, they also present significant
challenges to industry and policymakers alike. According to NUA Internet Surveys
(http://www.nua.ie/surveys/), over 620 million people worldwide are linked to the
Internet. Experts predict that global Internet usage will nearly triple between 2003 and
2006, making e-commerce an ever more significant factor in the global economy.
Estimates suggest that by 2009, some 47 percent of all business-to-business (B2B)
commerce will be conducted online.

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E-Commerce Technology
With the preceding in mind, the dynamic nature of the new economy, and
particularly the Internet, calls for decision makers to develop policies that stimulate
growth and advance consumer interests. But, in order to create the foundation for the
rapid growth of e-commerce, enterprises must adopt the effective e-commerce
technology policies that embrace the following four crucial principles:

Strong intellectual property protection: Innovation drives e-commerce technology, and

rewarding creativity fosters innovation. Thus, strong copyright, patent, and other forms of
intellectual property protection are key to invigorating the information economy.

Online trust: security and privacy: Without consumer confidence in the safety,
security, and privacy of information in cyberspace, there will be no e-commerce and no
growth. Protecting information and communications on the Internet is an absolute
prerequisite to the continued success of the Internet and the information economy.

Free and open international trade: Closed markets and discriminatory treatment will
stifle e-business. The Internet is a global medium, and the rules of the information
economy must reflect that fact. Only in an open, free market will the Internet’s potential
be realized. Investing in an e-commerce technology infrastructure: Supporting the
physical infrastructure necessary to deliver digital content (primarily through
telecommunications deregulation and government efforts to reduce the digital divide) is
vital to spurring technological growth.

Protecting the Security of Information

The first and best line of defense against unwarranted intrusions into personal privacy
is for individuals to employ e-commerce technology to protect themselves. Industry-
developed and supplied encryption technologies and firewalls, for example, provide
individuals with substantial tools to guard against unwarranted intrusions.

27
Encryption is technology, in either hardware or software form, which scrambles e-mail,
database information, and other computer data to keep them private. Using a
sophisticated mathematical formula, modern encryption technology makes it possible to
protect sensitive information with an electronic lock that bars thieves, hackers, and
industrial spies.

A firewall is essentially a filter that controls access from the Internet into a
computer network, blocking the entry of communications or files that are unauthorized or
potentially harmful. By controlling Internet “traffic” in a network, firewalls protect
individuals and organizations against unwanted intrusions, without slowing down the
efficiency of the computer or network’s operations. They also limit intrusions to one part
of a network from causing damage to other parts, thereby helping to prevent large-scale
system shutdowns brought on by cyber attacks. Not surprisingly, then, firewalls have
become a key component of computer systems today, and their architecture comprises
some of the most state-of-the-art e-commerce technology available in today’s
marketplace.

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But, computer security, or cyber security, is more than encryption, and it requires more
than a onetime fix. It is an ongoing process requiring the adoption of strong security
policies, the deployment of proven cyber security software and appliances-such as
antivirus, firewalls, intrusion detection, public key infrastructure (PKI), and vulnerability
management, as well as encryption-and, in the case of larger organizations, the existence
of trained security professionals. These professionals, in turn, must be continually
retrained in order to ensure that they are able to address and combat the evolving nature
of cyber threats.
Strong security tools alone, however, cannot protect users against threats in each and
every instance. Dedicated hackers and criminals will always seek new ways of
circumventing even the most effective security technologies. That is why it is critical that
strong laws be put in place to deter such activities. In particular, where needed, laws
should make it illegal to defeat, hack, or interfere with computer security measures, and
penalties for these crimes should be substantial.
As is the case with copyright laws, however, strong words in a statute are not enough.
Effective ant hacking and computer security laws must:

• Provide deterrent civil and criminal penalties

• Be backed by vigorous enforcement by governments (including through adequate
funding of such enforcement).
• Allow private parties to pursue fast and inexpensive remedies when their cyber
security has been illegally breached

Although the government should create a strong legal framework against cyber crime, it
should not intervene in the marketplace and pick e-commerce technology “winners” by
prescribing arbitrary standards in the security field. Such intervention would do little
more than freeze technological development and limit consumer choice. Instead, the
development and deployment of security tools should be determined by technological
advances, marketplace forces, and individual needs, and should be free of regulation.

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Pursuing New Trade Agreements that Respect E-Commerce
As trade moves increasingly from the import and export of tangible goods to Internet-
based commerce, it is vital to ensure that traditional free-trade principles apply equally in
the realm of electronic commerce. Nations that have sought to rid themselves of
burdensome trade barriers must ensure they do not stifle e-commerce with those same
barriers. Because trade liberalization is crucial to the worldwide growth of the software
industry, the following agreements and negotiations are very important:

1. The pursuit of a new round of multilateral trade negotiations under the auspices of the
WTO
2. The conclusion of regional free trade agreements, such as the Free Trade Area of the
Americas(FTAA)
3. New, bilateral trade agreements, including the U.S.-Singapore Free Trade Area (FTA)

Thus, the preceding bilateral and multilateral talks provide opportunities to further
strengthen international trade law, provide a predictable business environment for e-
commerce, and develop a progrowth e-commerce agenda.

Keeping E-Commerce Barrier-Free

Any new trade negotiations should focus on barring new measures whose effect
would be to restrict or inhibit the growth of global e-commerce. Countries should also
ensure that they apply current WTO standards to online transactions. Specifically,
countries should:

• Sign the Information Technology Agreement (ITA) and eliminate e-commerce

technology tariffs.
• Make the 1998 Moratorium on Customs Duties on Electronic Commerce
permanent and binding.

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 • Refrain from trade classifications that penalize software and other products
acquired through downloading from a computer network, compared to those
purchased in tangible form.
• Affirm that current WTO obligations and commitments, namely the General
Agreement on Tariffs and Trade (GATT; trade in goods), General Agreement on
Trade in Services (GATS; trade in services), and TRIPs (intellectual property)
rules are technology-neutral and apply to e-commerce. Countries should refrain
from enacting trade-related measures that could impede, actually or potentially,
international e-commerce. Such rules should be enacted only where a legitimate
policy objective necessitates doing so and where the least trade-restrictive
measure is chosen.
• Support a NAFTA-type approach to e-commerce services issues in future trade
negotiations. NAFTA’s services obligations apply to all services, including new
services that have developed since the conclusion of NAFTA (this approach is
sometimes referred to as “top-down”). Because it is impossible to anticipate what
specific e-commerce services will develop over time, any “bottom-up” approach,
as embodied in the current GATS, almost certainly will be out-of-date from its
inception. There is a need to set the stage for an agreement that is more flexible
with respect to future e-commerce and computer industry developments.
• Adopt a horizontal work program in the WTO for all e-commerce issues. This is
necessary in order to ensure that WTO rules and disciplines reflect the horizontal
(cross-disciplinary) nature of e-commerce

B2B - Business to Business

B2B is the selling between companies, wholesale rather than retail. But it means more
than that. Efficient use of capital demands small inventories, which entails anticipating
demand, and so maintaining detailed information flows between all parties involved in
today's complex manufacturing processes. B2B involves widening the circle of suppliers
(for safety and competition), and of centralizing control (for records and discounts).

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B2B ecommerce is an important part of any online business. Leaving aside the simple
transfer of funds — covered here — many businesses need some combination of:

• Creditworthiness assessment.
• Guarantee of quality and delivery of goods (escrow services).
• Safeguards against fraud.
• Fast collection of funds, with ability to vary the collection period.
• Reporting: approval of sale, invoicing, delivery, payment.
• Procedures to handle disputes.
• Information of all types — corporate, technical, identity-building — has to be
interchanged across the scattered divisions of large companies, and new ideas
fostered, assessed and disseminated. Speed is vital, as are improved
communication, collaboration, and customer understanding. All these
requirements can be handled by IT, and software has been developed to meet the
challenge — customer relationship management, enterprise resource planning,
online auction, supply chain management, etc. Little of it is off-the-shelf, but is
devised as systems to be extended and built round individual company
requirements.

Principles of E-Commerce

E business can significantly benefit the functional processes of an organization and

enhance their profits; therefore more and more businesses are adopting online sales and
marketing. For example, Encyclopedia Britannica has sold more encyclopedias online
than through its door to door method of marketing. There are several principles of e
business which an organization must follow to reap the full benefits of its online
initiatives.

Know Your Customer

At the core of e business is the ability to capture and use information to
understand customer needs and preferences. It is impossible to build a good relationship
with customers in the absence of customer information. Information on customers helps

32
organizations determine the products and services they should produce and the
distribution channels they should use. Knowledge of customers is not confined to the
sales process alone. It includes information regarding customers after sales preferences as
well. Thus information on customers includes the following:
Customer profiles and preferences. The combination of products and services to
be offered to customers The best method for providing customer support
The marketing efforts suitable for different customer segments
The new products and services that should be developed.

Organizations must systematically capture and use customer information. The

first step in this process involves collecting information on them. This information can be
obtained directly from the customer, or by using the transaction data that has been
captured and stored, or by collecting information from third parties like data syndicates,
credit bureaus, etc. The type of data that needs to be collected varies from industry to
industry, depending on the products or services that they offer. Generally, data on
customers includes demographic information, purchasing history, and the industry in
which the customer is operating (if the customer is a business customer). The data
collected must be analyzed to derive meaningful results.

Earlier, the collection and storage of customer information was not possible for
most organizations. Now, emerging e business technologies have made it possible for
them to effectively collect and manage customer data. E business technologies not only
help in the collection and management of data, they also enable the updating of customer
information. Changes in customer preference or buying behavior can be assessed using
these e business technologies. Without thorough customer knowledge, it would be
impossible to offer personalized services to customers, providing value addition in
products and services and ensuring 100% customer satisfaction.

Develop a Customer Profile

Developing a customer profile is another important step. A customer profile

should include the basic factors that were mentioned earlier and also an analysis of the

33
customer life cycle. This profile should give the organization insights into: The
product/service feature that is most valued by the customer Customer spending in the past
and the likely future spending. Effective segmentation and predictive modeling

Segment Customers on the basis of Effective Criteria

An analysis of the customer life cycle will reveal the similarities and differences
in different customer segments. The important aspect here is focusing on the most
significant similarities or differences and the relevant customer segment. E business
technologies enable timely and effective customer segmentation. They also help
organizations correlate information on different customers. Prior to the use of these
technologies, companies were unable to capture and use huge volumes of data. Hence,
they used to segment customers on the basis of geography, income group, etc. But now
companies are able to segment customers on the basis of on complex factors like channel
preference, profitability, buying patterns, etc. For example, IBM has identified twelve
different customer segments. Initially, it segmented customers in the following
categories: government, education, mid size and large companies. Now, the large
companies segment is divided into global and large companies. The government segment
is divided into three segments; federal, state and local. The education segment is split into
K 12 and higher education. This type of segmentation helps the company effectively
handle the demands of different customer groups.

Customer segmentation helps companies target their advertising and sales

promotion at specific customers. The Internet has also made collaborative segmentation
possible. This type of segmentation allows customers to choose from a flexible menu of
offerings, configure them to suit their preferences and select the segment that they fit in.
This is in contrast to the traditional segmentation process in which firms determine what
offerings should be made to which segment. Collaborative segmentation is more accurate
and efficient because it enables customers who know their actual needs to participate
actively in the segmentation process. The customers of GM and Dell can configure

34
products according to their convenience and place an order for them. Customers do not
have to wait for the company to prepare a model, show it to them, seek suggestions,
incorporate the suggested changes, seek their approval again, and then make the final
delivery. Therefore, collaborative segmentation saves time for customers as well as
companies.

Avoid the 'Silo' Effect

Although a huge amount of information is available in organizations, it is difficult to use

the information since it is scattered across different files, in different formats and at
different locations. This is referred to as 'Silo Effect.' E business technologies help
organizations integrate these islands of information and overcome silo effect. The silo
effect occurs when an organization's customer and prospect information is spread across
different business units, divisions, departments, and product lines. A few years back,
CompUSA suffered from the 'Silo Effect.' The customer service agents were not able to
access full information about the customers as it was scattered across the departments.
When a customer called, they had to spend considerable time locating the required
information. After deploying Siebel call center software, it was able to help customer
service agents resolve problems quickly. This software ensures that service persons have
access to all information about customers, thus helping them provide quality service. Use
of this software has reduced costs and improved customer service.

Predictive Modeling and Customer Profitability

Few organizations undertake in depth customer analysis to estimate the purchasing power
and spending patterns of their existing customers. Strategies for retaining customers and
attracting new ones are based on customer analysis. On the basis of existing information
on customer behavior, organizations correlate customer attributes and build models for
the future. Predictive modeling can be used by companies to identify customers who are
likely to discontinue business with the company. It can also be used to identify the cause
for customer dissatisfaction and take appropriate steps to retain the customer.

35
Use Multiple Channels to Interact with Customers

The emergence of new communication channels (such as the Internet and mobile
devices) is having a significant impact on the way in which organizations interact with
their customers. The number of organizations, that use the Internet to do business or
communicate with customers, has increased significantly in the last few years. The
increase in communication channels has given rise to some problems. One of these
problems is the synchronization of the customer interaction that takes place at different
times and through different channels. Customers do not always confine themselves to a
particular channel; they use the channel that is most convenient for a given situation. The
implementation of effective e business architecture will help organizations overcome
channel conflict. It will also help organizations track orders in real time.

An effective multi channel strategy can help organizations improve the sales efficiency
and help reach out to more customers. Studies have revealed that no single channel can
service more than 50% of the total market volume. This suggests that the use of more
than one channel is essential for reaching customers. Secondly, the use of multi channel
can bring about channel synergies. The benefits of using a combination of channels are
more than those that can be gained from using a single channel.

The multi channel strategy has been especially effective in Internet brokerage. A study
conducted by McKinsey revealed that Charles Schwab is one of the most successful
online brokerage firms. According to the study, the success of Charles Schwab can be
attributed to its multi channel strategy. Charles Schwab services customers through the
Internet, telephone and call centers. McKinsey also found that there was a high
correlation between high value customers and the multi channel strategy. This suggested
that some high value customers gave importance to the availability of multiple channels.

All organizations, irrespective of type, size or scale of operations, require a multichannel

strategy. Such a strategy can be effective only if the different channels are synchronized
to allow customers seamless interaction with the organization, irrespective of the channel
they use. Identify Customer Channel Preference

36
Customers use only a few channels consistently when they are given a choice. So
organizations should analyze the channel usage of their high value customers. To make
the use of multiple channels economically viable, incentives should be given to
customers for the use of the most cost effective channel. Organizations can also provide
customers self service channels through the web or through telephones, using IVR
technology.

Offering self service capabilities will enhance customer satisfaction and productivity.
Honeywell has implemented a web based self service system that contains answers to
about 50,000 queries. These are stored in a common database so that they are available to
customers. The system not only offers self services, it also improves productivity of field
personnel. If customers are unable to find a solution using the company's knowledge
base, they can forward their queries through the company's website to the concerned
person.

Organizations must ensure that they are communicating with customers using the
customers' most preferred channel. For example, some customers may respond well to e
mails but not to telemarketing. By using appropriate e marketing software, the
effectiveness of each marketing channel for each customer segment can be determined.

Synchronize Channels so that Customers have Continuous Seamless Integration

Regardless of the channel used by a customer for interaction, every interaction should be
tracked and recorded. An e business system will maintain a universal queue that will
support queries from various channels. All queries pass through a single channel and the
queries are prioritized based on standard rules that govern the routing of queries.
Organizations should be equipped with powerful online tools for coordinating multi
channel interactions.

Understand the Cost Structure of Each Channel

Channel optimization is important irrespective of the function for which the channel is
used. Channel optimization involves balancing the cost of the channel against factors like

37
value to the customers, customer preferences and profit potential. Though transaction
costs are low on the web, it may not be the right medium for all transactions.

Optimize the Channel Strategy

A cost benefit analysis can be conducted to find out returns that the multi channel
strategy is yielding. The web, e mail and call centers are some of the cost effective
channels available. But cost is not the sole criterion driving the multi channel strategy.
Migrating to a web based channel does not mean that other channels should be
abandoned. For example, at IBM, mundane queries are answered through call centers
while complicated queries are handled by the sales force.

Personalize the Customer Experience

Prior to mass communication and mass marketing, business was restricted to local
markets. The degree of personalization was also high, with one to one interaction
between merchants and customers. But with the growth in business, one to one
interactions disappeared. The e business technologies now available help revive oneto
one relationships between the enterprise and customers. Such interactions help
organizations build personal relationships with customers. These relationships enable
organizations to offer a high level of customer service. E business technologies allow
organizations to continuously update information on customers and prospects and
customize their offering for each customer segment. For example, Yahoo! and Excite
enable users to customize their web page. By customizing the web page, users can have
all their preferred features on the web page.

Individualize Content

Customizing content to suit specific customer preferences is a basic principle of

personalization. The information made available to the customer through the Internet
should be driven by the company's knowledge of the customer's needs and preferences.
This is why it is so important to gather information on the customer. Amazon.com
recommends books to customers using the registration information provided by them.

38
The site uses collaborative filtering to make a list of recommendations. This technique
uses the purchase data of a customer to determine the customer's preference for a specific
category of books. Using this technique, Amazon.com is able to offer books that might
interest a particular customer.

Enable Customers to Customize the Environment

The medium and channel of customer interaction determines the extent to which the
customer environment can be customized. The dynamic nature of the Internet makes the
environment highly custornizable. For example, users can create personalized web pages
in a web site. In the 13213 business environment, the exchange environment can be
customized to suit the requirements of specific trading partners, For example,
bliquid.com, an auction site for construction equipment, uses Siebel's eAction software to
cater to the needs of a particular market. It uses specialized software that allows
customers to carry out one to one negotiations. The software also provides real time
information on finance and shipping costs.

Personalize Interaction through all Channels

Regardless of the channel of interaction, organizations should use e business technology

to personalize customer contact. Marriott (A US based Hospitality Company) uses e
business software to maintain detailed customer profiles. When it comes across a repeat
customer, it makes an individualized itinerary for that person. Personalized service is also
offered when the guest arrives at the hotel. Such personalized service is offered to
business customers. This ability to extend personalized service not only saves the
customer9s time but also enhances customer loyalty and satisfaction.

Optimize the Value of Every Customer

Optimizing value for a customer operates at two levels macro and micro level, At the
macro level, it involves the strategic use of resources to extend maximum value to
customers. And at the micro level, it involves the maximization of the value of individual
customer interactions.

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Micro Level Optimize every Level of Customer Interaction

Every interaction with customers or prospective customers creates an opportunity to add

value. Value can be generated for the customer by offering the most suitable product or
service; and value can be generated for the organization in terms of increase in revenue
and enhanced customer loyalty. Customer interaction with the organization should be
designed to achieve the following: Basics of E Business

To make customers happy by providing excellent customer service

To create opportunities to generate revenues cross selling, up selling and reselling
To capture useful customer information

Murphy Brewery, an Irish beer manufacturer, implemented an e business solution to

optimize customer interaction. An internal survey carried out by the company revealed
that customer service should be improved. The company had multiple channels of
interaction and no single person was responsible for handling specific orders, queries, etc.
As a result, most of the customer queries remained unanswered. To address this,problem,
the company implemented an e business solution through a dedicated call center. This
call center streamlined the process of handling customer requests and queries.

Organizations seldom optimize customer value. This means that organizations are not
able to make customers spend to their maximum potential on any product/service. This
happens because organizations do not have complete information on the customer.
Therefore, businesses are not able to fully exploit cross selling, up selling and re selling
opportunities. Obtaining comprehensive customer information is essential for even non
profit organizations. For example, American Heart Association (AHA) is facing problems
matching heart donors with volunteers. AHA is making an effort to solve the issue by
building a consolidated information system of donors and volunteers.

To gain a greater share of the customers' wallet, organizations can offer them a wider
choice of products. Sharp Image's online auction initiative uses Siebel's e auction
software to use customer bidding information for cross selling. Use of this technology
brought about an increase in revenue and the sale of excess goods.

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E-Commerce Infrastructure

The principles discussed will be of little use if there is a lack of adequate E-Commerce
infrastructure to capture, organize, analyze and manipulate data. In the absence of
adequate meaningful data, organization will not be able to identify their customers' needs
and use multiple channels optimally. The guidelines for building a well designed
architecture are discussed below.

Centralized Data Storage

Centralized storage of customer and product information is required to develop sound

strategies. Though it seems simple, not many organizations have managed to build such a
data repository. Consolidated customer information can be of great use to organizations.
It will give them a comprehensive view of customers that will enable them to create
customer experience. E-Commerce systems allow organizations to create a centralized
repository that can be accessed by employees of different functional departments,
working at different locations.

Update Information Dynamically

A key feature of systems architecture is the capability to dynamically update customer

information. Customer information should be updated real time, irrespective of the
channel used by customers. Such updating is essential for channel synchronization. If a
customer lodges a compliant through a company's web site and then makes a call to find
out the status of the complaint, the customer service executive should be able to instantly
answer the customer's queries on the basis of customer information stored in the system.
E-Commerce systems also enable the tracking of a channel partner's interaction with
customers. Apart from dynamic updating capabilities, there should also be a provision for
modifying the system architecture whenever there is a necessity.

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Focus on Back Office Systems

The processes that directly interact with customers and back end processes must be
efficient to enable an organization to achieve a high level of customer satisfaction. The
processes that directly interact with customers are sales, marketing, customer service, etc.
Back end processes are order fulfillment, billing etc. The online ordering system must be
linked with the fulfillment, accounting and distribution system. For example, FedEx has a
well integrated information system that enables customers to check the real time status of
their orders on the FedEx website.

Scalable Systems

As a business grows' its E-Commerce systems should also adopt and grow along with the
organization. To be able to adapt, E-Commerce systems should use scalable technology.
Scalability refers to the ability of the system to handle numerous users concurrently and
allow them to complete transactions in the minimum possible time.

Support all Applicable Platforms and Devices

A wide range of communication and information devices are in use today. Regardless of
the hardware and operating system used, E-Commerce systems should be able to
integrate with all devices. For example, mobile devices should be able to link up with a
company's centralized database. Without these capabilities, there will be customer
dissatisfaction. The use of handheld devices can be highly effective in the pharmaceutical
industry. Medical representatives can gain access to information on drug and physician
profile while traveling.

Support Global Implementation

A global E-Commerce system must support the currency and language of all the
countries in which it operates. It should also accommodate any changes in the currencies
of the country e.g. the switch from national currencies to the Euro in Europe. As

42
businesses expand globally, the ability of E-Commerce systems to support multiple
currencies and languages should also increase.

Single View of the Organization to Customers

Customers should get a unified picture of the organization. Even if the organization is
using multiple channels there should be no conflict in communication. Companies in the
automobile industry often run into communication problems. Automobile manufacturers
spend a huge amount of money on building brand identity. But the brand identity is not
optimally leveraged by their distributors and dealers. If a particular model requested by a
customer is not available with the dealer, the dealer contacts another dealer via telephone.
In the meantime, the customer loses patience and leaves the showroom. To overcome this
problem, Saturn Corporation has implemented an E-Commerce system that links all its
retail outlets across the nation with each other and with customers and partners. It is
estimated that 15,000 retail team members will use the system in real time to fill
customer orders, handle customer queries, and so on. Through the Internet, customers can
communicate with dealers and the dealers can have access to updated customer profiles.

E-Banking

The Internet has initiated an electronic revolution in the global banking sector. Its
dynamic and flexible nature as well as its ubiquitous reach has helped in leveraging a
variety of banking activities. The Internet has emerged as one of the major distribution
channels of banking products and services for banks in the US and in European countries.

The use of the Internet in banking started way back in 1995. The Internet served as an
ideal platform for commercial exchange, helping banks achieve higher efficiency in
financial transactions, strengthen customer relationships, promote price discovery and
ensure wider reach. It offered banks better opportunities to expand their client base and
rationalize their business, while customers received value in the form of savings in time
and money.

43
Initially, banks offered information regarding their products, services and advice through
the Internet. More recently, advances in Internet security have made it possible for banks
to play their primary role as financial intermediators and facilitators of commercial
transactions, via electronic networks especially through the Internet. However, while the
Internet has brought more convenience for customers, it has also affected the profitability
of banks because of the increase in online competition. Not many banks have been
successful in exploiting the opportunities offered by e-banking. Banks need to define
niche markets and develop an effective Internet strategy to utilize these opportunities
fully.

E-Governance

The governance enabled by information technology is called e governance. It involves

using Internet technology to deliver public services and information in a conve nient,
citizen centric and cost effective manner. The automation of services and their integration
improves cooperation and coordination among various government agencies and results
in Optimum utilization of government resources. This boosts the efficiency and
effectiveness Of public agencies thus enhancing citizen satisfaction. The government can
improve the quality of education, housing, municipal and health related services offered
to the public through e governance. Further, e governance also helps in developing an
online community, which increases public awareness and enables sharing of knowledge.
By providing online access to information and se rvices,governments can improve
transparency in the administrative system The transactions can be monitored closely and
reports can be generated from the database at any time.

E governance encourages the active participation of people in governance and seeks their
suggestions in improving administrative processes. People can help authorities to
improve development plans for various sectors like agriculture, power, Communications,
environment and services. Thus, e governance decentralizes the decision making process
and empowers people. Therefore. e governance realizes the true spirit of democracy.

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However, e governance initiatives can lead to the digital divide between people who can
access and people who cannot access online services. Governments should improve the
information infrastructure in the Country so that citizens in every nook and corner of the
country can access information relating to government services on the Internet.
Community kiosks may be set up at various locations for people who do not have access
to the Internet. People (especially in villages and suburbs) also need to be educated in the
use of the Internet to improve the quality of their lives.

Electronic Payment System

Electronic payment systems are extensions of the already existing payment systems for
settling accounts, which include credit cards, debit cards, automated teller machines,
prepaid cards, etc. In an electronic payment system, accounts are credited or debited
between banks and concerned individuals or institutions depending on the information
transmitted following a transaction.

For corporate and individuals, cheques are still the most preferred route for payment, but
in the developed countries, the monetary value of transactions made through cheques in
comparison to that of made through the electronic payment systems is very low. For
example in the US, even though less than 5% of all transactions ware done through
electronic payment systems, these transactions accounted for more than '88% of the total
value. The various payment clearance mechanisms used in the US are the Fedwire of
Federal Reserve, Clearing House Interbank Payments System (CHIPS) of New York
Clearing House and Automated Clearing House (ACH). Fedwire and CHIPS are used for
large value transactions by banks and businesses. Banks settle their end of the day
transactions through Fedwire and businesses us CHIPS for foreign exchange transactions.
ACH uses private networks for transferring funds between businesses and their suppliers.
Therefore, transactions through ACH are of high volume and low value in nature.

There are a large variety of methods, standards and protocols for payment over the
Internet. Electronic payment systems need to support web purchasing, be secured from
attacks or break ins, be cost effective for low value transactions, etc. The standards used

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are Anonymous Internet Mercantile Protocols by AT&T Bell Labs, and Secure Electronic
Transaction promoted by Master Card and Visa. The software and hardware products
used for e payment systems include Cybercash, Digicash, Mondex, NetBill, Netcheque,
etc. The electronic payment systems can be broadly categorized into three types: payment
using electronic currency, payment using electronic funds, and payment through an
intermediary. Intermediaries like credit card services and cheque clearing firms help in
adjusting accounts of both the parties involved. To settle non cash payments, information
is needed at various levels like

Payment Clearing Services: The identities of buyers, sellers and the instruction to settle
payments.
Notational Fund Transfer: The credit card numbers and bank account numbers.
Digital Currency Payment Systems: The actual value of digital currency.

The conventional payment methods include locating a seller, choosing a product, giving a
quote, striking a deal and agreeing on payment terms, validating the identity and payment
mechanisms and shipment of goods. But these functions don't exist in electronic payment
systems. Therefore, there have to be methods that ensure a secure fund transfer in e
commerce. The various intermediaries should provide security, identification
authentication and payment support for electronic transactions.

Need for electronic payment systems Though credit cards, debit cards, etc. are now
widely used and accepted by the sellers, the number of transactions by cash outnumbers
the number of transactions made through these instruments. Therefore, there is a need for
an equivalent of cash in the digital world.

Anonymity in transactions

Digital currencies can preserve the privacy of the user in a better way than the trusted
third party method because payment information is separated from the buyer
identification in digital transactions. This is possible because the bank, which issues the
digital currency, keeps track only of the serial numbers of the currency to authenticate it.

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Digital coins carry encrypted messages about the user, which will be revealed only if the
coin is double spent and through legal means.

Micro payments and the Internet

The need for reducing transaction costs especially in small value transactions is driving
the use of digital currency. As explained earlier, non cash devices requi re the verification
of buyer's identity to authenticate them. This process is an inefficient method for small
value transactions. As the cost of authorization and handling the transactions is high,
there is a need to reduce the transaction costs to increase the usage of electronic based
payment systems. Therefore, increase in the usage of noncash payment systems totally
depends on the reduction in the transaction costs. As PCS and NFT are not suitable for
small value transactions, digital currency needs to be fully developed for information
trading.

The transferability of value

Another factor that may help increase the usage of digital cash is the removal of third
party intervention. A user should be able to complete a transaction without the
intervention of the third party. Non cash payment systems usually involve one or more
than one party for transaction settlement. It is equivalent to the client server system in
which the third party functions as a server and has the authority to validate and
authenticate the transaction. On the contrary, a transferable system supports peerto peer
transactions and the role of the third party is merged with the digital currency. It is not
necessary to have transferable system for the settlement of transactions between two
parties, because the involvement of the third party delays the settlement process and
increases the cost of transactions. A transferable currency can be used for both online and
offline transaction.

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Diagrammatic description of E-Commerce and working of e-payment-
system

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Supply Chain Management

Supply chain management (SCM) is changing as companies continue to look for

ways to respond faster, improve service for customers, and maximize sales while
decreasing costs. SCM solutions must support highly configurable products, such as
computers and automobiles, global markets with local specifications, and widely
dispersed suppliers and partners. Yet most companies’ SCM solutions are linear,
sequential, and designed for controlled conditions. They rely on accurate forecasting of
demand, but are disconnected from the actual demand. Decisions are made centrally, and
changes typically take days, weeks, or even months. However, companies increasingly
need to respond to changes in hours and minutes. Supply chains in this century must be
adaptive and provide greater visibility, velocity, flexibility, and responsiveness to enable
enterprise value networks to adapt to changes in supply and demand in real time.

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Management Shift
As supply chain networks extend across organizational and geographic boundaries,
companies must find ways to manage the unmanageable. The future of supply chain
management lies in the ability of the enterprise to respond instantaneously to shifts in
global supply and demand, and to major events that occur across extended supply chain
processes. The faster a supply network can adapt to these events, the more value that will
be created. For example, with Walldorf, Germany-based SAP® mySAP™ Supply Chain
Management (mySAP(tm) SCM), enterprise systems supplier SAP is delivering what it
believes is the most adaptive supply chain management solution available on the market.
In addition, SAP is developing adaptive-agent technology and repair-based optimization
that is expected to enable the next generation of adaptive solutions and services.

Supply chain management is now the key to increasing and sustaining profitability. In
fact, Stamford, Connecticut-based Gartner Group recently predicted that 91 percent of
leading companies that fail to leverage supply chain management would forfeit their
status as preferred vendors.

Customer relationship management (CRM) is about capturing customer requirements,

building life-long customer relationships and brand value, and
influencing demand through promotions. This information must be fed back into the
supply chain network to improve planning. Although this flow of information generally
does not occur now, it represents the key to customer-segmentation strategies and
effective demand management, which will lead to increasing overall profitability.
Customer feedback and trends must also drive product development to ensure that
products are designed according to customer requirements.

In addition, integration between a product life-cycle management (PLM) system and an

SCM solution reduces time-to-market for new products and ensures that engineering
changes are seamlessly integrated back into manufacturing. Last but not least, aligning a
company’s business model with operational capability requires engineering and sourcing
products differently. To support mass customization and postponement strategies,

50
products tend to be designed in a modular fashion and sourced from fewer strategic
suppliers. Close collaboration with these suppliers on product design is essential to
reduce time-to-market, increase product quality, and ensure that products are designed for
supply.

With that kind of integration, a superior understanding of the customer drives everything
—CRM, product design, supply chain operations, and even the value proposition of the
entire network. In an adaptive supply chain network, SCM, CRM, and PLM must all
work together. That is the hallmark of a truly customer-centric organization—and the key
to profitability.

Competitive Advantage Making adaptive supply chains a reality means fundamental

changes in a company’s internal operations, starting with the integration of processes and
systems across organizational boundaries. Then, companies can leverage the increased
visibility within and across organizations to achieve change in their supply chain
processes, including functionality for the following.

Adaptive Planning

Today, most supply chain planning and scheduling systems rely primarily upon historical
data collected from enterprise resource planning (ERP) and legacy systems. However, as
companies aim to create virtually “inventory-less” supply chains, they require the ability
to realign demand and supply almost continuously to consider the latest demand situation
and supply status. Adaptive planning replaces batch-oriented, period planning with an
event-driven, real-time response to demand signals and changing supply situations.

Dynamic Collaboration

Traditional supply chains rely mostly upon inventory and assets, but the adaptive supply
chain network is information-based—it uses shared data for planning and execution
processes. By incorporating data garnered from collaborative processes (such as vendor-
managed inventory [VMI]; collaborative planning, forecasting, and replenishment

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[CPFR]; collaborative supply management; and collaborative transportation
management), these networks replace inventory and capacity buffers (long used to make
up for a lack of supply chain visibility) with information.

Distributed Execution

Most execution systems are ill-prepared to support the emerging virtual supply network.
Distributed execution considers the distributed nature of processes in a world of
outsourcing, in which multiple partners in the extended network might manage a single
process. Distributed execution allows the management of processes across different ERP
systems by supporting cross-system integration and collaboration.

Event-Driven Coordination

Today, even small disruptions in supply chains initiate a wave of e-mails, faxes, and
phone calls just to keep pace with the problem. Adaptive supply chain networks address
the challenge of managing the virtual enterprise through up-to-the minute monitoring and
control of business processes and the rapid, intelligent resolution of exceptions. Event-
driven coordination complements adaptive planning by trying to solve supply chain
exceptions locally to support existing, optimized plans. The result? Faster response to
market changes and instantaneous adaptation to customer needs across the enterprise and
the network.

Continuous Performance Management

Most executives would agree that consistent performance metrics are the key to steering
the behavior of individuals and reconciling conflicting goals across functional areas.
However, key performance indicators (KPIs) also play a major role in managing
collaborative processes and in providing decision makers with actionable information to
increase the quality and speed of decisions. Continuous performance management
enables closed-loop learning processes by allowing the company to measure the quality
of processes constantly, and by feeding this information back into supply chain planning.
Besides addressing the need for consistent performance metrics, companies are
increasingly complementing supply chain KPIs with balanced scorecards to get a level

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view of the state of the organization, and to align operational targets with strategic
objectives across functional silos.

Combined, these elements enable companies to implement closed-loop learning processes

across the supply network. In business, the ability to adapt to change is increasingly
important. For those who do it right, the adaptive supply chain network will be an
important competitive weapon. Those who don’t may well become the dinosaurs of their
industries

The Scope of the Internet and the Web

The renaissance of the Internet age launched an entirely new set of communication
technologies and methods. As multiple technologies evolve and interoperate, so do
complementary standards, such as those for multimedia applications. The advancement of
multimedia applications for the Web has resulted in a wave of new technologies to
enhance the Internet experience. From voice to video, the latest developments have
resulted in the requisite standards to allow for the full maturation of the technology.

Voice over IP (VoIP) has gained acceptance within the last few years, with older
standards enabling the technology. As more advanced standards mature and enhanced
capabilities and features become available, the adoption of VoIP has begun to take off.
For example, H.323 is currently the dominant standard for initiating a voice session. But,
as more multimedia services, such as unified messaging, video conferencing, instant chat,
and presence, gain acceptance in an Internet Protocol (IP) environment, more robust
standards are needed. Hence, the creation of an HTTP-based protocol—Session Initiation
Protocol (SIP).
SIP’s main functions are signaling and call control for IP-based communications. It
defines the desired service for the user, such as point-to-point calls, multipoint
conferencing, text, voice, or video. Using the protocol, SIP servers perform a routing
service that puts the caller in contact with the called party, taking into account the desired
service and user preferences. Because SIP has its foundation in HTTP, it eases the
integration of voice with other Web services.

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Enabling Multimedia E-Commerce with SIP
The emergence of SIP has opened up new doors of innovation, enabling the next
generation of e-commerce through the use of VoIP and multimedia applications. The
simplicity of SIP technology is facilitating the spread of VoIP around the world. SIP’s
straightforward approach has encouraged developers of e-commerce applications and
telecommunications providers to implement it into their customer relationship
management (CRM) systems.
Traditional voice call centers for customer support are migrating to Web support
centers where the focus is shifting from pure voice (800 numbers) to e-mail support, text
chat, voice, and video with click-to-connect service. The integration of these applications
brings a fresh dimension of communication to customer-facing Web sites. As customers
experience the benefit of multiple touch points, enterprises are compelled to integrate
these new communication methods into their CRM systems. As the enabling protocol,
SIP is well-suited to bring these capabilities to the user.
Because support for instant messaging and presence is built into the SIP, a whole new
level of customer communications can take place. Presence lets users know the
availability of other parties, and when coupled with instant messaging and conferencing,
allows for communications to happen in a spontaneous fashion. With these added
functionalities, the online consumer can experience a rich customer support environment.

Because SIP enables real-time voice and video to become viable applications on many e-
commerce Web sites, it enhances Internet call center productivity. With the click of a
mouse, a customer can talk to or be in face-to-face contact with a service representative.
This level of customer service allows an immediate personal connection with customers
—one of the most critical aspects in CRM. The adoption of e-commerce will be bolstered
further as consumers begin to rely upon this type of online customer service.

SIP-based communications can be achieved with any device, fixed or mobile, such as
laptops and Internet-ready phones In addition, because SIP supports name mapping and
redirection services, it is possible for users to initiate and receive communications and

54
services from any location, and for networks to identify users regardless of location. This
adds an additional level of usability from a CRM perspective. As e-commerce spreads to
cell phones and other handheld devices, this functionality will increase in importance.
Now, let’s look at how to use the Web to reach customers. Although customer experience
includes intangible, no quantifiable aspects, it also includes a wide range of entirely
measurable Web site elements.

Using the Web to Reach Customers

The rules are the same. To succeed in e-business, just as in brick-and-mortar, you need
customers. And, keeping customers is vastly cheaper than getting new ones. High rates of
customer retention (and the referrals that accompany happy consumers) can mean the
difference between success and going back to the drawing board.
The challenges that e-businesses face, however, in earning and retaining customers are
different from those confronted by traditional business. A shopper who drives to the
bookstore is not likely to put down the book he wants and drive to another location
because of a line at the checkout stand. Someone looking for the biggest selection of CDs
cannot go to 20 stores in 6 states in half an hour to check their selection. And, once you
have received personal attention from someone at a store, helping you find exactly what
it need, it isn’t hard to decide where to go next time. The options and flexibility of doing
business online put much more control in the hands of the consumer, placing a premium
on the performance, effectiveness, and reliability of an organization’s Web site. There is
no one to apologize to Internet customers when the service goes down, or when an image
is missing, or to explain what an error message means. And, alternatives are just a click
away.
For online consumers, the user experience is the most significant factor in
customer retention. Customer experience comprises a range of issues, including ease-of-
use, dependability, speed, as well as less quantifiable aspects of a Web site. As the
Internet matures and evolves into a ubiquitous, if not preeminent, medium for business,
those companies best able to monitor their Web sites and ensure a positive, rewarding

55
customer experience will have an unparalleled advantage in the race to create and retain
loyal customers.

The Often Missing Piece

A less tangible but equally vital aspect to customer loyalty in e-business is trust. For
consumers, participation in a typical Internet business model requires divulging personal
information for registration purposes, often including sending credit card numbers to the
site. Increasingly, customers are cautious when sending such information and wary about
sites that they suspect may not adequately guard the privacy of their demographic and
financial information. Web sites that have prolonged outages or frequent transaction
failures break the chain of trust with their consumers, pushing them to other providers
that instill stronger confidence and, therefore, loyalty, in their customers.
To be successful, an e-business has to be:

1. Sophisticated and fast

2. Easy and consistent
3. Extremely reliable

Without these, customers will click away, going to the sites that give consumers the
interaction with e-business that they expect and require.
Acquisition, Retention, and Referrals
Customer acquisition costs range wildly from one company to the next, but everyone
understands that once a company has acquired customers, the key to maximizing revenue
is keeping them.

• It is 7 to 11 times cheaper to keep a current customer than to add a new one.

• A Xerox study showed that their totally satisfied customers were 7 times more
likely to make additional Xerox purchases in the subsequent 29 months than the
merely satisfied.
• Companies can increase profits by almost 100% if 6% more of their customers
were retained.
• Estimates show up to 91–96% of a brand’s profits come from loyal customers.

56
 • A study by McKinsey & Co. calculates that an 11% increase in repeat customers
translates to a 10.6% increase in company value.
• Bain & Co./Mainspring research shows that online grocers must keep customers
for 29 months just to break even.

The preceding are potentially frightening data to e-business, which lives, or dies, in a
medium where jumping from one Web site to another, changing brands and loyalties, is

Benefits of the E-Commerce Market

The letter “e” lost much of its language-domineering swagger with the fall of the dot-com
economy. Technology marketers, journalists, and analysts now cringe at “e”-inspired
products and concepts. Venture capitalists hide their money-stuffed mattresses when
Silicon Valley experts drop by with business plans. Yet, electronic commerce veterans in
some of the largest companies in the United States, companies such as Ford, Cisco, Wal-
Mart, Procter and Gamble, McKesson, and Compaq, see opportunity in the midst of e-
commerce turmoil.

Increasing Interest in Interfacing Technologies

Transaction management market (TMM) technologies automate machine-to-machine
information exchange between organizations. The share of IT budget dedicated to
solutions that interface with customers, suppliers, and service providers is increasing.
This trend is evidenced by continued demand for CRM, order management, demand
forecasting, sourcing, and procurement solutions despite difficult economic conditions.
And, Web services market hype provides an almost deafening statement about the value
of interfacing technologies. Therefore, as economic conditions improve and as eXtensible
Markup Language (XML) standards begin to reduce intersystems integration costs, there
will be an increased demand for transaction management technologies.

Nevertheless, although interfacing technology demand is consistent across most industry

segments, the business conditions generating interest vary considerably. Ever-tightening
electronic relationships between consumer packaged goods (CPG) manufacturers and

57
larger retailers are driven by the need to accurately track and forecast demand for billions
of fast-moving products through a low-margin, geographically dispersed network. High-
tech manufacturers continue to invest in interfacing technologies to regain some of the
control relinquished with business process outsourcing contracts. Cash-strapped
wholesalers invest in any technology, including TMM solutions, that can reduce the order
to cash cycle. Despite differing business concerns, interest in technologies that improve
interbusiness process efficiency is high.

Drivers of Change
Several important technology developments are driving change in the TMM market. First
and foremost is the emergence of the Internet as an effective, low-cost means of
transporting mission-critical business information between systems. Although the
Internet alone does not provide the network quality of service (QoS) demanded for
mission-critical data communications, software and service providers have built solutions
on top of this nearly free transport network. Data transport cost declines have
fundamentally altered the way companies interact.
The second major force of change in the TMM market is the emergence of new
technology standards, such as Java™, XML, and Web services. Overcoming
communication barriers, which come in many forms, is often expensive. Java, XML, and
other technology standards remove a number of machine-to-machine communication
barriers and reduce partner integration costs.
Falling integration costs will affect the TMM market in two ways: first, the addressable
market for TMM solutions will continue to expand as solution price points fall into
ranges acceptable to small and midsized businesses. Second, reducing the cost and
complexity involved in deploying and maintaining a TMM system will release corporate
resources to other higher-value automation efforts. Many experienced users that bought
TMM solutions to control order processing costs have since evolved their systems to
manage a demand forecasting process, complex pricing data, and Just-in-Time (JIT)
inventory strategies.

Processing Heavy Order Volumes

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 TMM solutions can quickly and accurately process thousands, even millions, of
orders a week. Consumer packaged goods manufacturers, apparel manufacturers,
retailers, wholesalers, and companies in similar industries manage high order volumes for
fast-moving, made-to-stock products. In industries such as pharmaceuticals, health
products, and electronic components, where both order volumes and per-SKU prices are
high, fast and accurate order processing is essential to staying in business. Companies
facing these conditions leverage TMM technology to scale business without scaling
operational costs.
Combining on-site translation software with electronic trading network service
has proven a very effective means of managing order volume growth without scaling
order processing head count. By working with a network service provider, transaction
volume growth (and related corporate expansion) is not encumbered by technology skill
and staff development needs.
It is difficult to compare manual and automated order processing costs. The
comparison would be interesting, but is not necessary. In a high-growth, heavy order
volume industry, TMM technology is not a cost-savings option, but a business
requirement. Therefore, despite TMM’s mission-critical nature in heavy order volume
industries, many companies use innovative forecasting, direct shipment, and customer
service capabilities, as the most significant advantage to their organization’s gains from
TMM service usage today.

Managing Codependent Relationships and Complex Products

In industries with less demanding order volumes, but more complicated products
and relationships, transaction management systems are used for equally valuable but very
different business reasons. In the high-tech, automotive, and chemicals manufacturing
industries, products are complex, highly engineered, and often expensive. Companies in
these industries are highly dependent on partners to produce high-value, high-complex
products. In these industries and others, dependencies are becoming stronger and
products are becoming more complex. TMM systems support codependent relationships,
allowing companies to play an effective role in complex production processes.

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Best Practices
Today, companies are extending, or planning to extend, their TMM systems into
interesting new business automation scenarios. Several of these best-practice examples
are described next.
Speed and Competitive Advantage
Speeding business process and improving customer service to gain competitive advantage
is not cheap. A company could spend nearly $5 million annually to support its machine-
to-machine order processing system. But, business benefits and competitive distinction
greatly outweigh the costs of the system.
For example, in the food-and-beverage industry, paper and mail are slow. Money makes
money. Anything that slows down money or products costs money. Companies usually
tackle banking communications first to speed the processing of thousands of small
monthly order volumes. Most companies usually tackle logistics management challenges
next, which is followed by an incremental deployment with a supplier connectivity
solution. In addition, most companies claim to have achieved a positive ROI in less than
12 months after going live with the banking stage of their implementation.

Managing Outsourced Business Relationships

Most high-tech companies shift their business strategies as the economy begins to
slow. With cost control pressures mounting and shareholders demanding improved
returns, the companies choose to outsource production and certain support services to
contract manufacturers (CMs). To support the outsourcing strategy, the firms identify and
implement TMM technology. The solution manages the mission-critical information
flowing between a company and its new CM partners. A system could cost less than
$400,000 to deploy (including hardware, software, and services). Ongoing costs run
approximately $230,000 annually.
It is difficult to measure the value a solution provides a company, but, an outsourcing
business strategy would not be possible without the TMM solution. Because of difficult

60
economic conditions and financial turmoil in the industry it services, firms have limited
visibility into future demand. Companies expect demand to increase as the economy
recovers. Their new CM relationships should allow them to react rapidly to changing
demand and avoid losing sales through lack of production capability.

Expansion Strategy Support

Companies are using TMM technology to support complex operational strategies,
the role of TMM technology will continue to expand as costs fall, as standards develop,
and as innovative best-practice use cases emerge from the fog of the current recession.

The Service Provider Advantage

Value added network (VAN) service charges have gained an onerous reputation since the
emergence of the Internet as a corporate communications tool. The idea of charging per-
transaction fees to move data across a network (which is how VAN service charges
accrue) riles free-spirited Internet enthusiasts. But the Internet’s greatest strength
(ubiquity) is also its fatal flaw.
The last thing a company wants is not ubiquitous access to its data traffic, nor are
companies interested in the lack of control inherent in a ubiquitously managed network.
Absent the addition of robust technology, the Internet is insecure, unreliable, and
unworthy of mission-critical corporate data. VAN service providers offer subscription-
based technology services that meet corporate data communication needs. VANs ensure
that data gets from point A to point B securely, reliably, and with an audit trail.
Companies pay usage-based subscription charges for access to VAN bandwidth.
Accessing network QoS functionality from a third party also helps separate business
objectives from technology plumbing. Companies interested in deepening partner
collaboration or automating more complex business processes are faced with a myriad of
business challenges. One-time partners become next-project competitors. Partners are
contracted to ship to a production plan, regardless of the status provided by a real-time
system. Processes, which vary by both company and division, need to be reviewed and
aligned. Obstacles abound in a value chain integration scenario. VAN and electronic

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trading network service providers remove the interenterprise communication obstacle,
allowing staff to focus on business, not technology problems.

Summary

In a remarkably short time, the Internet has grown from a quirky playground into a vital,
sophisticated medium for business, and as the Web evolves further, the threshold for
conducting successful business online will move increasingly higher. Online consumers
are flooding to the Internet, and they come with very high expectations and a degree of
control that they did not have with traditional brick-and-mortar companies. Businesses,
too, are rushing to join the Internet revolution, and new, viable competitors are emerging
in all industries.The enticement of doing business online must be tempered by the
understanding that when the dust settles, a significant percentage of e-businesses will
have failed. The ones that succeed will be those that are able to deliver a satisfying and
consistent customer experience online, building brand loyalty and guaranteeing high rates
of customer retention.

Although customer experience includes intangible, nonquantifiable aspects, it also

includes a wide range of entirely measurable Web site elements. It is necessary for any
organization wanting to succeed in e-business to define a broad spectrum of performance
parameters, establishing benchmarks for speed, reliability, availability, and accuracy, and
to monitor all of those parameters. Nothing works perfectly all the time, and the spoils
will go to those e-businesses that constantly and efficiently monitor their Web sites,
immediately identifying any glitches that do occur and fixing them promptly.

Moving forward, all businesses will be affected by the global move to electronic
commerce. Business operations will change, and new processes will be created.
Companies that start learning in this new environment today will be leaders in the future.

Furthermore, as future technologies are developed, the SIP will continue to play a pivotal
role in the adoption of multimedia e-commerce. SIP’s simplicity, easy integration, and
extensive interoperability ensure its longevity as the preferred multimedia platform

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Bibliography

• Joseph P.T. “E-Commerce- A Managerial Perspectives” Prentice Hall of India

Pvt. Ltd, New Delhi.2002
• Syed Rahman “Electronic Commerce: Opportunities and Challenges” IGI Global;
illustrated edition (February 2000)
• www.Businessline.com
• Economic Times

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