E-Commerce in Pakistan

Introduction
When the Graham bell invented the telephone, perhaps he himself was unaware of the
potential of the telephonic. A tiny desire of talking to each other through a distance has now
grown up to a whole New World of doing complete business and transacting with each other
all over the globe. The power of these interconnected telephone lines is the major reason for
what we say the world is a global village.
Now the a whole new virtual world is in front of us that is perhaps so much the daily part of
our life that it is becoming really difficult to draw the line between the virtual world and the
real one. Imagine of a shop that welcomes about 625million views every day and the shop is
only one not even having any of its branches. It looks more imaginary that the shop even
does not have any bricks and mortar existence, but it does exist in the real world with the
name of Yahoo. Com which is most visited site every day. Imagine the power of technology
giant on the information super high way, when you just receive a video clip of your beloved
one in the very next movement. Although you are in Pakistan and other is sitting in his or
her room in any part of earth with a laptop not connected to any wire.
Reason to select the topic
E-commerce is the one world that really matters and can really pave the path of a countrys
future. Its a trillion-dollar market today and is mushrooming up every day. No one can
deny the potential that the world of e-commerce has got today whether you are a customer,
business man or just a loyal subject of your nation. Its scope starts from the speedy
communication to cost containment, gaining and maintaining competitive advantage to
earning bucks that can change your life and ultimately the economic outlook of your
country.
E-commerce
Defining e-commerce
Now I like to define e-commerce in its real true sense. There are many definitions that have
been associated with this world before but here are some of them.
Microsoft Encarta Computer Dictionary defines e-commerce as following.
Commercial activity that takes place by means of connected computers. Electronic
commerce can occur between a user and a vendor through an online information service on
the Internet, or a BBS, or between vendor and customer computers through electronic data
interchange (EDI).
The KPMG research group defines and explains e-commerce as following
Electronic Commerce is a generic term for applications of information technology (IT).
These enable new ways of conducting business between and across organizations. Electronic
Commerce includes smart cards, Intranets, GroupWare, workflow and Internet information
access. Smart cards are like credit or payment cards but replace the magnetic strip with a
microchip, which can hold information, for instance about the user, and can also, operate as
electronic purses. Intranets provide a means of establishing Internet-style communication
within a closed user group, such as within an organization. GroupWare enables personnel to
work together in teams through the computerized sharing of information. Workflow is an
electronic means of mapping business processes to track the movement of work between
people.
E -commerce can also be defined in the following manner
E-commerce is the buying and selling of the goods and services on the Internet, especially
World Wide Web.
We can also define it in the following way
E-Commerce is online shopping via the Internet.
Commerce is any commercial activity conducted electronically, particularly
via private or open networks, such as
The Internet.
The simple and widely accepted definition is
E-commerce is doing online transaction on the Internet.
Under the e-commerce we can see that following are the main activities that are being
performed over the Internet. These business operations include all the business to business
and business to consumer activities.
Information exchange
Goods and services trading
Online digital content delivery
Electronic funds transfer and transaction processing
Electronic share trading
Collaborative work orientation
Manufacturing management
Accounts settlement
Online Sourcing

Types of E-Commerce
Here we are going to define the types of e-commerce. These are not exactly the types in their
true sense but are like constituents to the e-commerce. E-commerce includes all the
following things but it does not mean that every one of them is exactly the e-commerce
itself. In order to is an e-commerce activity, one of them or the group of them join together
to form an e-commerce activity.
Basically there are only two major types of e-commerce that includes following.
B2B (Business to Business e-commerce)
B2C (Business to Consumer e-commerce)
Under these two major types there are subtypes that can be included under the both main
types of e-commerce. These subtypes include following.
B2B2C
G2B and G2C
EDI
E- Tailing
E-mail
Fax, Internet telephony
M-Commerce (Mobile commerce)
C-Commerce (Collaborative Commerce)
Now we are going to explain all these main types and the subtypes in detail.
B2B commerce
B2B or businesses to business systems are designed for businesses to collaborate or sell
goods and services to each other. B2B commerce is in fact the major portion of e-commerce
that is going on Internet this time. Almost 60% of the e-commerce activity on the Internet
are between the businesses. The big giants like Intel, Sony, and alibaba. Com is earning their
major share on the Internet through b2b transactions.
Electronic Data Interchange (EDI)
EDI (Electronic Data Interchange) is a standard format for exchanging business data on the
Internet. We can define EDI as follows.
Computer to Computer Exchange of structured Business documents while using industry
defined standards.
It can also be described as
Electronic data interchange (EDI) is a form of electronic communication that allows
businesses to exchange transaction data and documents in structured formats that can be
processed by computer applications software.
Electronic data interchange (EDI) is a form of electronic communication that allows
businesses to exchange transaction data and documents in structured formats that can be
processed by computer applications software. EDI is described by Monczka and Carter as
the direct electronic transmission, computer to computer, of standard business forms
between two organizations. EDI is not a technical solution. It is a complete business process
in its implementation. It provides end to end seamless transfer of data between the trading
partners, regardless of the respective computer environment.

Business to Consumer (E-tailing)
E-tailing (less frequently: e-tailing) is the selling of retail goods on the Internet. Short for
electronic retailing and used in Internet discussions as early as 1995, the term seems an
almost inevitable addition to e-mail, e-business, and e-commerce. E tailing is synonymous
with business-to-consumer (B2C) transaction.
E tailing began to work for some major corporations and smaller entrepreneurs as early as
1997 when Dell Computer reported multimillion-dollar orders taken at its Web site. The
success of Amazon.com hastened the arrival of Barnes and Nobles e-tail site. Concerns
about secure order taking receded. 1997 was also the year in which Auto-by-Tel reported
that they had sold their millionth car over the Web, and Commerce Net/Nielsen Media
reported that 10 million people had made purchases on the Web. Jupiter research predicted
that e tailing would grow to $37 billion by 2002.

B2B2C systems
B2B2C systems are merely combinations of B2B and B2C systems designed to manage the
whole supply chain from the consumer through to raw materials providers. They are design
to process orders from consumers and then use this information to place orders with
wholesalers and ultimately manufacturers.
G2B and G2C
G2B and G2C systems involve the government providing services to business and
consumers. These services may range from the on-line provision of information through to
electronic lodgment of forms or tax returns.
Fax and Internet Telephony
E-commerce is also conducted through the more limited electronic forms of communication
called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet.
Most of this is business-to-business, with some companies attempting to use e-mail and fax
for unsolicited ads (usually viewed as online junk mail or Spam) to consumers and other
business prospects.

E-mail
By definition we can define e mail as following
E-mail (electronic mail) is the exchange of computer-stored messages by
telecommunication.
The use of computer systems to transfer messages between users.
Messages are usually stored centrally until acknowledged by the recipient. Electronic mail
facilities are provided by most large computer systems for their users, and are also available
on a national and international basis.
E-mail messages are usually encoded in ASCII text. However, you can also send non-text
files, such as graphic images and sound files, as attachments sent in binary streams. E-mail
was one of the first uses of the Internet and is still the most popular use. A large percentage
of the total traffic over the Internet is e-mail. E-mail can also be exchanged between online
service users and in networks other than the Internet, both public and private.
Mobile Commerce
It is quite a new concept still now and many companies are currently working on it.
Although it is being used and experimented in the developed countries. Mobile commerce is
the used of cellular technologies such as mobile phones, pagers etc for the purpose of
conducting electronic commerce. If you can buy a pizza by placing order on your mobile
phone than it is going to be a mobile commerce.
In Pakistan it is quite at initial stage as there was no Internet connection was available for
the mobile phones. Recently a week ago (October 1, 2000) Nokia has launched its new
mobile phone with the Internet facilities in the market and it is gonna open the door of
mobile commerce in Pakistan. MCB has also started the Mobile commerce in Pakistan.
Mobile commerce will be a big part of e-commerce in the near future as one can foresee the
amount of mobile phone users and the increased time saving concerns of the human kind.
Collaborative Commerce
Along with the mobile commerce a new concept of collaborative commerce is also
immerging and in fact being implemented on the Internet. Collaborative commerce is the
fulfillment of consumer order not only by one company or one business but a group of
businesses. In this Internet world one may be working with his or her competitor for the
sake of an order fulfillment.
Suppose a customer wants a car that has an engine of Ferrari and has an executive outlook
of Mercedes. He can place this order on the Internet and both companies can join together
to fulfill this order with the help of a third company that is actually present on the net and
taking the order.

Internet to E-Commerce
The basic reason for which the Internet was formed by the ARPAnet was a part of defense
strategy of US defense department. Then it leads to the use for the education and research
purposes and ultimately it evolved into a new way of doing business. So now we see that
how Internet was born and how a new branch of commerce formed called the e-commerce
today.
Defining Internet
The Internet, in its broadest sense, can be defined as a collection or interconnection of any
different networks of computer hosts, clients, and servers that collectively provide and use
information and connection services.
"Network of computer networks"
This "network of computer networks" now includes a community that literally spans the
globe and counts among its members nearly every country in the world.
It developed in the 1970s as an experimental network designed to support military research,
and steadily grew to include federal, regional, campus, and other users. The majority of
computers on the Internet are connected using standard telephone lines, while others use
direct connections by way of a cable. This means that practically everyone can have access to
the whole world with a local telephone call. A call goes from your computer to a computer
nearby, which then handles the information to and from the Internet.
Computers with access to the Internet come in all sorts of makes and models and run a
variety of operating systems and applications. Strictly speaking, computers connected to the
Internet are those that use the Transport Control Protocol/Internet Protocol (TCP/IP) suite,
which is a common, set of rules that, allow a variety of systems to communicate. Computers
on non-TCP/IP networks, however, can access the Internet through gateways that perform
the necessary protocol translations and allow appropriate communications.
The Internet uses client/server computing to control the sending and receiving of
information across the Internet. Client/server computing can be explained like this: one
computer (the server) has a supply of information; another computer (the client), wants to
use that information, usually because a person has asked the computer to use it. The two
computers are connected, in this case, through the Internet networks. The client requests
something from the server, and the server sends back a response.

Scope of e-commerce
Businesses need to place electronic commerce within the context of broader uses of the
Internet than the traditional commercial framework. As a market, electronic commerce
impacts not only marketing but also production and consumption. Information collected
through web stores is used to customize products, to forecast future demand, and to
formulate business strategies. Consumers not only order and pay for products online, but
also search for product information, reveal their preferences, negotiate with sellers,
exchange information about products and firms, and use products online by filtering,
processing, and linking them with other computer programs. Likewise, supply chain
relationships among businesses and competitive strategies need to aim at increasing the
overall market efficiency, not just transactional efficiency.
The size of the market, judged by the number of agents or domain names, is growing rapidly
on the Internet. The growth rate in the number of Internet hosts is exponential; it grew from
about 300,000 in 1990 to over 12 million by the end of 1996 most of these Internet sites are
only potentially commercial. But the awareness of its commercial use among businesses is
growing. According to the O'Reilly & Associates' Internet Survey (http://www.ora.com),
almost half of all large companies with 1000 or more employees surveyed in 1995 have
created an Internet presence through publicly accessible World Wide Web pages

Use as Alternative Market Channel
The Internet can certainly be used as an alternative marketing channel, selling existing
products online, but the future of electronic commerce will be guided by innovative digital
products and services that will emerge in the electronic marketplace. The core of digital
commerce comes from selling digital products, but no one is certain how big the digital
product market will become.
To get an idea, one only needs to list products that can be digitized:
All paper-based information products such as newspapers, magazines, books, journals, and
databases
Computer software
Games
Audio products, including music, and speeches; video and multimedia products, such as
movies and television programs;
Other information products, such as weather reports, stock quotes, government
information, consumer information, and even personal information;
Digital counterparts for existing products, such as room keys, digital currency, digital
checks and other financial instruments, airline and concert tickets, and so on.
Factors Broadening the scope
The Web represents a marketplace embodying a number of unique elements that can help a
business maintain or enhance its competitiveness and position its target markets: Following
are some of the factors that not only broaden the scope of e-commerce for any organization
but can dramatically affect the performance of any organization.
Image enhancement
New channel for delivery of products
Improved customer services
Expansive reach
Qualified sales leads
Communication (internal and external)
Corporate logistics
Leveling the playing field (globalization)
Gaining and maintaining a competitive advantage
Cost containment
Collaboration and development
Information retrieval and utilization
Marketing and sales
Transmission of data
Creating a corporate presence
Image Enhancement
Corporate image is an important element of any business's marketing strategy. Web sites
tailored to project a certain image to a certain clientele are becoming common. These sites
may contain a wide spectrum of information related not only to the products and services
they provide, but also to the unique qualities and capabilities that separates them from the
competition. Some firms post additional information, such as `social causes in which they
are involved, or their corporate mission, goals, and philosophies. Still other firms choose to
cite core capabilities and past performance. A small, high-technology firm may develop a
Web site that describes the variety of highly technical research and development contracts it
has performed successfully, for example, complete with project abstracts that detail
corporate capabilities.
New Channel for Delivery of Products
The Web quickly has moved from simply being a tool for public relations and enhancement
of corporate image to a whole new means of delivering products and services. Many sites
now offer the capability to order products online directly. Some products are available for
immediate delivery online as well. Many software vendors, for example, now enable
customers to purchase and download registered software. Other companies, such as market-
research firms, can provide copies of marketing studies and services online to paying
customers.
Improved Customer Services
What do customers want? In addition to low prices, customers demand quality service. Web
technologies allow businesses to provide improved "human-in-the-loop" and autonomous
services much more effectively. No longer are laborious phone calls required to find
technical product information or the answers to many common technical questions.
Customers now can find much of this information directly on a vendor's Web site--any time
of day, any day of the year.
When a customer needs direct support, Web technologies such as e-mail, the Internet, and
Intranet applications allow employees to handle and track far greater volumes of trouble
and support calls than phone systems alone. Additionally, Web-based systems enable your
company to record specific customer preferences and provide more individualized and
personalized service.
Expansive Reach
The Web holds potential as a leveling technology and offers many advantages over
traditional forms of advertising. Unlike many forms of print, radio, or television advertising,
Web advertisements are not limited geographically. You have almost no boundaries on the
audience you can reach. Even small companies, which historically had no way to attract
business outside their immediate region, now can attract business outside their normal
regions--even globally--in a cost-effective way.
Qualified Sales Leads
The Web offers a number of services, such as search engines, with which users can locate
providers of products and services of interest. Someone interested in specialty products,
such as handcrafted Scandinavian wood furniture, easily can perform a Net search to find
out whether and where any vendors of such products exist. What does this mean to a
business? Visitors to your Web site are coming there for a purpose: They are interested in
what you have to offer. These visitors represent highly qualified sales leads and business
opportunities. If even a small percentage of these leads results in direct sales, the cost of
generating those sales is virtually nonexistent when compared to more traditional (and
expensive) methods of sales, such as sending catalogs and direct mailings.
Internal and External Communication
E-mail is a low-cost method for maintaining local, regional, national, and international
communication. Messages can be exchanged in minutes as opposed to days or even months
using regular mail. E-mail is a utility for sharing information and is said to be one of the
most important productivity packages around. Often, the primary and most frequent
business use of Internet connectivity involves internal and external communications
(Ellsworth and Ellsworth 1994). Use of the Internet lets a business be in touch with
branches and work teams at many locations, and permits high-speed access to vendors and
customers.
Improving communication with colleagues, government agencies, the academic community,
researchers, and even competitors, can help improve the industry in general. The culture of
the Internet is such that genuine exchanges on industry-wide questions and improvement
are increasingly more common (Ellsworth and Ellsworth 1994).
Corporate Logistics
Logistical concerns that can dominate production planning can be eased through better
contact via the Internet. The Internet is the "anytime/anywhere" network, so exchanges
with markets across time zones can be facilitated by the use of e-mail and conferencing.
Actual "real time" communication is also possible, through the use of Talk, MOOs, and
Internet Relay Chat (IRC). Distance and time barriers are lessened by using the Internet for
communication (Krol 1992).
In some cases, businesses have created a virtual company composed of individuals who
work at a distance from one another. They may meet face-to-face only occasionally
(Ellsworth and Ellsworth 1994).
Globalization and Leveling a Playing Field
Using the Internet, many organizations are able to bring a global edge to a homespun
business. With the Internet, you are much less aware of national boundaries and distance.
Individuals from Norway converse with others in Toronto, Taiwan and Austin, Texas, easily.
This opportunity for rapid communications can increase a business's visibility from local to
global overnight.
For many companies, the use of the Internet creates a level playing field. Small businesses
can create an image on the network to compete with large businesses. It makes the pursuit
of customers, vendors, and resources possible worldwide--allowing competition in a world
market.
Competitive advantage can be increased due to access to state-of-the-art information on
products, material, new ideas and even the status quo in a given industry. Many
corporations use the Internet to engage in what some call "techno watch" --keeping a finger
on the pulse of emerging and new technologies, and the market response to those
technologies, both anecdotal and in terms of financial performance and the stock market
(Ellsworth and Ellsworth 1994).
The public information and discussion groups available on the Internet provide insight and
feedback that is hard to get in any other manner. Here, workers at all levels of industry,
researchers, and the public exchange of information on marketing, research, technological
developments, internal processes such as accounting and personnel, and external activities
such as purchasing and public relations. These discussion groups are useful both for the
information presented in them and for the pointers they provide to important sites,
contacts, and databases. Having the most up-to-date information about your markets and
the state-of-the-art in your industry allows you to keep or increase your competitive edge.
In some cases, the Internet is a tool for solving problems by accessing information,
documents, and experts. Many companies cannot afford in-house experts on every process
or activity, and use the Internet to locate and network with experts, through mailing lists or
e-mail (Vine 1995).
Cost Containment
Many businesses are using the Internet to contain long distance telephone and mailing
costs. Recent studies have shown that businesses can save thousands of dollars using e-mail,
in lieu of some long distance phone calls and postal deliveries (Vine 1995).
With first class letters costing $ .32 each, a mailing of 1,000 pieces to customers would cost
$320 for postage alone, whereas the same information sent by e-mail would cost 2 to 3 cents
each--and the messages would arrive in seconds as opposed to days. Overnight mail (which
typically costs $8-$12 for each delivery) cannot compete with e-mail for speed or cost.
Collaboration and Development
It is increasingly common for companies to form partnerships and collaborative
development efforts--even IBM and Apple have done. The development team and project
participants often use the Internet to keep in touch and to exchange data, programs, and
working papers from far-flung locations. The Internet also allows several small businesses
to band together much more easily for product development.
Information Retrieval and Utilization
Rich in resources, the Internet provides software, communications connections worldwide,
and files of text, data, graphs, and images. The Internet provides access to databases, books,
manuals, training information, experts in various fields, even sound and video clips.
And much of that information is free. With roughly 2.5 million machines connected to the
Internet, with databases, Usenet, Gopher servers, FTP archives, and conferences, the
amount of information available is astounding (Fraase 1994).
Scientific and research data is available in large quantities. There are electronic newsletters,
searchable databases, and online experts--in some cases causing information overload.
Some have compared using the Internet to drinking from a fire hose (Ellsworth and
Ellsworth 1994).

Marketing and sales
As businesses use the Internet more, and Internet users become more accustomed to
marketing activities, Internet marketing is becoming much more popular. Marketing on the
Internet involves both research and active outflow of information.
Marketing research is common on the Internet, where attitudes are tested, conversations
actively pursued, and opinions solicited from many groups (Ellsworth and Ellsworth 1994).
Marketing plans are increasingly counting on Internet access for success.
One of the prime business uses of the Internet is in the area of customer support. Customers
can reach a company on their own schedules--day or night--and obtain information from
conferences, FTP, e-mail, and Gopher. The customer support information only has to be
transferred to an archive once, and yet it may be accessed by thousands of customers and
potential customers--a labor-efficient and cost-effective way of distributing information. In
addition, a business with a presence on the Internet is perceived as modern, advanced, and
sophisticated.
In these days of a highly competitive global marketplace, the company that can reach and
satisfy customers will have an advantage--and the Internet can help in maintaining
relationships with customers. The Internet is also a fast and efficient way of networking with
vendors and suppliers. With its global reach, the Internet can assist businesses in locating
new suppliers and keeping in better touch with them to aid, for example, zero inventory
planning. A business might locate and coordinate with suppliers in Taiwan, Norway, and
Austin, Texas; and the Internet system in some countries is often more stable than
telephone service, which is often less reliable and less convenient.
Maintaining up-to-date postings of a company's product information and prices also allows
vendors to have continuous access to the information that is needed in order to promote
and sell your products. Small suppliers find that they can compete with larger industries by
being easily available via the Internet (Ellsworth and Ellsworth 1994).
In a business where the concept of getting closer to the customer is prevalent, the Internet is
becoming increasingly important. Internet-assisted sales, where customers are sought and
served online through Gophers and a variety of virtual storefronts, are also becoming more
popular. Customers are sought before the sale and supported after the sale.
Customer and product support and technical assistance by way of the Internet are time
efficient. Many companies provide e-mail assistance, including both individual and
automated replies to e-mail questions and requests for information (Hahn and Stout 1994).
Technical sheets, specifications, and support are offered through Gophers and FTP.
Relationships with vendors and outlets are maintained via the Internet.
In some cases, companies are doing actual product sales transactions on the Internet. In
addition, if the product is amenable to Internet delivery, as with software and information,
the actual product is delivered via the Internet. Some companies are arranging product
delivery through the Internet, where companies can create and support actual distribution
channels.

Transmission of Data
Many companies have been using the Internet for the transmission of data. The major
financial institutions in the world use the Internet extensively for exchanging information
and files. Publishers are using the Internet to receive manuscripts, and transmit files for
printing over the Internet. Books are written and collaboratively edited using the Internet
(Fraase 1994).
The Internet protocols allow the exchange of both ASCII and binary information. Binary
information includes executable programs (software), program data files (word processing
files, spreadsheets, databases, etc.), graphics (pictures, maps, digitized images, CAD/CAM
files, etc.), and sound files. The network's backbone can send the equivalent of a 20-volume
set of an encyclopedia in just seconds (Ellsworth and Ellsworth 1994).
Research and scientific organizations and educational institutions, the original inhabitants
of the Internet, are using the Internet to transmit large quantities of data as well, but
corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).
Corporate Presence on the Internet [1]
By creating a corporate presence on the Internet, businesses can participate in all the
benefits of online marketing, publicity, and sales. They can use such tools as Gopher, FTP
Telnet, e-mail, and Usenet to build a virtual storefront, create catalogs that can be browsed
online, announce products, take orders, and get customer feedback. Yet the most interesting
and comprehensive of resources available to businesses on the Internet is the World Wide
Web. The Web provides businesses and their consumers with all of these tools, accessible
through a graphics-based Web-browser. The available Web-browsers vary in name, but
their functions are indistinguishable. Web-browsers provide consumers with the
information they want at their fingertips, just a click away from a sale.

Starting Your Own E- Commerce
Now we move to the some detailed and technical discussion that how e-commerce is
actually being done and managed. In the following chapter, we will be concentrating on the
following main points.
The very first decision to enter into the e-commerce field is to
decide about your business. There can be two main options for this.
1- You are starting totally a new business right from the scratch. And everything is to be
decided about your product, customers, target market etc.
2- You are already running a business and e-commerce is used to support the existing
business by offering the same product or another product or service that enhances the sale
of your major product category. It is not necessary to even sell the product. Apart from
increase in the marketing and sales, Internet can be used in various ways to support your
business as it has already been discussed under the scope of e-commerce (chapter #2).
The next step includes deciding about your 4Ps in detail. Here it is continuation of the
first step. In this we define everything operationally that how it will be done. What type of
resources will be required and what technology will be used. Decision about resources may
not be very clear till this step as it varies to a great extent with the technical specification.
Third step is to decide about the type of web site you need. There are different types and
category of Web sites that suit to any particular business. It will be discuss in detail in this
chapter later.
Next step is to make your shop or web site. Here following types of decision come under
discussion.
1- Technological decisions
2- Decisions about software to be used
3- Decisions about hardware
4- Decisions about technical human resource necessary to run the operations for ongoing
basis.
5- The money you will be requiring to make your shop. It includes fixed and variable cost
decisions.
Next steps lead to the management of the web site. What business strategies will be used
and how to get competitive advantage on the Internet. So finally we have to develop
complete e-commerce strategy that will be used to run our business on the Internet.
So over all we can say that a new dot-com business can be divided into following steps.
1) What is your strategic vision for the dot-com operations?
2) How will your govern those dot-com operations.
3) How will you allocate key resources to those dot-com operations?
4) What will be your operating infrastructure for those dot-com operations?
5) Is you and your management teams are aligned with the dot-com agenda and the dot-
com strategy that you have designed for your business.

Your DotCOM Agenda [2]


1- Building your dot-com Vision
When one is going to enter in a dot-com business. There are two major options. The strategy
is to be decided when one of these options are chosen.[3]
Primary Objective of a Web site [4]
1- Are you going to build strategy on your current business models?
2- Are you going to create a new business model?


Current Business Model Strategy
If you are already running a business, then the new strategy is
definitely to be aligned with the old one. The already ready running
business may be possibly running on the following strategy.
1- Cost Leadership
2- Enhancing services
Many companies are pursuing the same business strategies in the dot-com world. Merrill
Lynch, Dell Computers, Sony are the example of it. I n the same way some companies are
going to use Internet for the purpose of enhancing services and hence creating a
differentiation strategy. American Air lines is selling plane tickets on line. Toyota is
planning to sell cars with the help of Internet. Cellular phone companies are getting
feedback about the best tone that there customer like on their mobile phone.
Creating a New Business
The benefits that buyers in electronic markets receive from lower prices and search costs are
in many instances more than enough to offset the potential additional risk, distribution and
market costs. This is apparent from the continued growth of the sports trading card e-
market that was studied. Sellers benefit from potential new sources for revenue in the e-
market. The impact of e-markets on other organizations that support commercial
transactions is more mixed. They reduce the need for certain types of intermediaries, such
as wholesalers and retail stores, while increasing consumer demand for new intermediaries,
ISPs, online better business bureaus, and so forth. They also have potential implications for
state and federal government tax revenue collection.
Overall there are economic incentives, both from reduction of costs and from creation of
new revenue sources, for electronic markets. It is not just a fad that will go away. Electronic
markets are a new institution of capitalism and they are useful because there are instances
when they economize on transaction costs when compared with other available transaction
governance mechanisms such as traditional markets.
Running totally a new Business Model
The second option is that you are going to start a totally new business on the Internet. It is
starting from the scratch. It requires quite more decision making than adding a dot-com
world into your previous business. The great example of this is Internet portals, yahoo.com
etc. Selling music for listening on the Internet is quite a new idea that has gained
momentum these days and its going to be quite a new business market that never existed
before. The financial industry has also found quite new uses of Internet. They are using this
medium for lots of service enhancement.
The caution point is to keep an eye on the cannibalization. Your new business strategy
should not be a threat to your already currently running business.

Governing your dot-com Business
The next step is to decide that how youre new business will be governed. The major
categories of decisions that leads to governing your dot-com business includes following.
Operational decisions that include production, marketing, human resources.
Financial decisions that includes your investment logic, finding and resources.
How you balance the tradeoff between your operational and financial decisions.

Allocating Resources
The next step is to allocate resources to your dot-com world. There are four different types
of approaches that help you to allocate resources for your dot-com world.[5]
1. Placing strategic bets
2. Leveraging your alliances
3. Outsourcing your dot-com operations.
4. Operational maintenance
Distinctions
Approaches to deploy your dot-com resources




Alliance
Resources


Internal
resources


Parity

Placing strategic bet means that company commits internal resources to differentiate its
dot-com operations from those of competitors. These resources may be financial,
technological or the human resources. Many companies have given their brains to the web
startups, for example a former wal mart officer now controls the logistics of the
amazom.com
You can also have differentiation and capabilities by alliances and partnerships in the dot-
com world. Alliances are a rapid growing trend in the dot-com world. Micro soft never puts
its hands on the hardware development. It makes software and then asks IBM and its other
alliances to make hardware that will run the software of Microsoft in a better way.
Outsourcing is also a big tool for managing your resources. One can easily get web-hosting
facility, back end processing and other related operational facilities from any of other e
business that are in this field already. You can have a free domain name with the .com
extension on the Internet by going to namedemo.com and hence you have saved $75 for
your first year. If you are a new comer and is just posting your resume than this may be a
significant amount for you. Some of the companies that are providing outsourcing facilities
includes IBM, HP, oracle, Microsoft, EDS, And AT&T.
Operating Infrastructure
Finally we have to decide about our operational infrastructure. That is the technical
requirements to say that we are wired and we are enabled. In the future your may not be
wired and may be enabled as WAP is making its way to a whole New World of wireless
communication.
Operational Decisions are based on the following building blocks.
Attaining Superior Functionality
Offering personalize Interactions
Streamlining transactions
Ensuring Privacy
Superior functionality results in the easy use of web site for the customer. It is done with
the help of better quality images, sound effects and 3D options.
Personalize transaction results into the site loyalty. MY yahoo is the best example of it. In
Future one will have a totally customized web that will satisfy all the needs that one has
without spamming and undesired data.
The back end operations decisions also require simplicity and efficiency. Handling a
terabyte or a penta-byte data is not an easy task but this data is the only asset of an e
organization.
Finally keeping privacy is one the most important and most difficult operational decision.
Spamming, data theft, viruses, firewall, hacking, all aspects are to be properly handled and
are needed to be operationalized.

Management and Team Aligning
A dot-com requires totally a new style of management and a new style of teamwork. Its
management should result in a relaxed and care free environment that leads to creativity.
Management should not only encourage creativity but the experimentation is the only
survival of a dot-com.
Now we have see that how a dot-com looks like and after these few steps that we have
discussed above, we are ready to work on our e business a out of just our thinking process.

Deciding 4Ps for e commerce
When you are going to start your e commerce business. Than the primary decision making
also includes the decision about the product, price, placing and promotion.
Product Decisions
To have a clearer understanding of the issues surrounding the impact of product
characteristics on the successful use of the Internet, a discussion on product classifications
is warranted. When looking at product classifications, marketers divide products and
services based on the types of consumers that use them consumer products and business
to business products. The products are classified into convenience, shopping, specialty and
unsought products. Convenience goods are those that are purchased frequently with little
planning or shopping effort. They are usually at low prices and widely available. Shopping
goods are those, which are, purchased less frequently, such as furniture and major
appliances, and which are compared on the bases of suitability, quality, price and style.
Specialty goods enjoy strong brand preference and loyalty. Consumers of these goods are
willing to make a special purchase effort, do little brand comparisons and have low price
sensitivity. Both producers and sellers of these products use carefully targeted promotion.
Unsought products are consumer goods that the consumer either does not know about or
knows about but does not normally think of buying; for example, Red Cross blood donations
(Kotler, 1998).
Based on the above information, it is logical to infer that Internet commerce would be
especially suited to the promotion of specialty goods, as they require a more targeted
promotional effort. This notion is supported by Peterson et al. (1997), who state that the
Internet seems to be especially suited to reach niche markets and sell products which are
specialized or unique.
It is also possible to classify products and services as being either experience or search
goods. Experience goods are those whose features can only be evaluated by trying or
inspecting the product, while the features of search goods can be evaluated based on
externally available information. Based on this classification, search goods can be
objectively assessed based on the information available on the Internet and a transaction is
more likely to take place (e.g. a music CD). However, in the case of an experience good, the
information available might not be good enough for the customer to evaluate the product
(e.g. a pair of shoes). In this sort of situation, Internet commerce is a poor substitute for
more traditional retail channels. However, a customer might use a traditional channel to
experience the product and revert back to an Internet-based transaction. It is also possible
that a customer might use the Internet to acquire a frequently purchased experience.

E- Product Development
Now first of all we are going to see that how we can decided that what will be our product
that we are going to offer on the Internet. The product decisions for e commerce are similar
to the product decisions taken for ordinary commerce. Still some major differences can also
be seen.
The major product decisions include following.
1. What we can sell on the Internet and what cannot be sold on the Internet.
2. Decision about major product or service category that you are entering to.
3. The product development phase with the decisions about the target market.
4. Informational product decisions are different than the tangible product development
decisions. They are to be taken separately.
What we can sell on Internet [6]
We can sell everything that we want on the Internet. There are some products that are
suitable t be sold on the Internet and some are not. These decisions are based on the
following three factors.
(1) Cost and frequency of purchase;
(2) Value proposition; and
(3) Degree of differentiation.
Goods vary along the first dimension from low-cost, frequently purchased goods (e.g.
consumable products such as milk) to high-cost, infrequently purchased goods (e.g. durable
products such as stereo systems). In general, when purchase fulfillment requires physical
delivery, the more frequent the purchase and the smaller the cost (e.g. milk), the less likely
there is to be a good fit between a product or service and the Internet-based marketing.
Goods vary along the second dimension according to their value proposition, that is, if they
are tangible and physical or intangible and service related. Internet-related marketing is
particularly well suited to certain types of intangible or service-related goods (i.e. those
based on digital assets). To the extent that the value proposition is intangible, the greater
the frequency of purchase or use of a good, the greater the advantage of the Internet as a
transaction and distribution medium.
The third dimension reflects the degree to which a product or service is differentiable. In
particular, it reflects the extent to which a seller is able to create a sustainable competitive
advantage through product and service differentiation. Internet-related marketing can
result in extreme price competition when products or services are incapable of significant
differentiation. However, when products or services are capable of significant
differentiation, the Internet can serve as an effective segmentation mechanism for guiding
buyers to their ideal product or service.

E-product development Process
One of the most successful product categories that are being sold over the Internet is the
intangible services and the informational products. It includes e mails, news, financial
services, order bookings, etc.
For e commerce we have to modify our traditional product development process. There are
two major product development approaches.[7]
Traditional approach
Flexible approach for product development
Well the Internet uses the flexible approach for the product development that is quite
different than the traditional approach. Here we can see the difference between the both
approaches.
The Traditional Approach

Market introduction
Concept Freeze
Project Start
The Flexible Approach


In the traditional product development process, initially the product is developed in the in
the laboratory when the concept of the product is has been decided finally. Once the product
concept is finalized than it is given to the R&D to shape that concept in the form of product
and finally it is introduced in the market. But in the case of Internet world, we start product
development along with its concept development. Our concept development phase overlaps
the implementation phase here.
The flexible process is not essential for each of the company that is going on the Internet.
But if the concept is quite new and innovative than it needs to be refined with the help of
flexible product development process.
Development of Netscape browser is the best example of the flexible product development
process. Netscape introduced its browser in the market by January 1996. Then it saw the
response of the people and researched on the further technical possibilities. So it kept on
developing its navigator. In the next nine months there were 7 updates in the market and
that last update was very different than the first one while the new concepts were added in
the browser.
The flexible product development requires a deep sensing of the market. It leads to know
that what market needs and want. When u sense the market than you can finally go for the
technical solutions of that product. Then these technical solutions are again tested in the
market and hence the product development keeps on going. There is very less chance that a
product exists in the field of Internet and it is not being developed at that time. Throughout
the product life cycle and product is being developed in the Internet world.

Successful Products
According to a survey held in Singapore, Following products are suited best for the sale on
the Internet and there sales are comparatively much higher than the sales of other products
on the Internet.[8]
These products include following main categories.
1- Flowers and Gifts
2- Paid Subscriptions
3- Financial Information
4- Online Video/ Music
5- Software
6- Consultancy Services
7- Loans and Insurance
Small firms should realize Internet commerce demands a holistic approach. Product
characteristics alone cannot determine Internet commerce benefit. Small firms may need to
seek advice from experienced marketers specializing in online marketing to determine a
marketing strategy based on other factors in addition to product characteristics.[9]
It has been a tenet of the online believers faith that the Internet allows small businesses
the same access to markets as the giant multinational. Indeed, we have seen how larger
businesses have focused more on internal communications and their existing supply chain
than on promotion and selling.
E-commerce has succeeded best where the products and services are technical and/or
technological. More techies use the Internet so, it seems to us, they are more likely to use
the medium to buy.
The Internet is primarily an information source rather than a virtual marketplace.
Despite the hype, most people use the Internet to find things out rather than to engage in
transactions.
In general, consumers will have access to a wide array of new services via the Internet,
some, of which we can't even conceive of now. On a less lofty level, almost everyone has
something to sell, a service, a product or a skill, and through the Internet they now have a
worldwide market free from the convention economics of mass
distribution. Recreation: Customized entertainment taking advantage of the multi-media
capabilities. Products and Services that will do extremely well In the Next Phase of the
Development of the Internet as a Marketplace includes following.[10]
Shopping/mail order:
Consumers will be able to find the best prices, quality and products with advanced search
tools. If you do not have a presence on the worldwide Web you will not be able to participate
in this marketplace.

Business to Business Commerce:
The Internet greatly facilitates the process of looking for products and services; receiving
information and evaluating the product; contracting; delivering; and post-delivery support
of the product/service.
Education/Corporate Training:
Virtual seminars will become commonplace. Content providers will no longer be able to
command thousands of dollars for training videotape, but can greatly increase profits with
significantly increased volume and reduced marketing and distribution costs.
Travel:
You can visually experience many portions of the trip before committing to the purchase,
expanding the travel market and reducing transaction costs.
Health Care
An area where people will pay for information.
Financial Services
Investing and managing your money will never be the same again.

Pricing Decisions
Price setting of the product or service totally depends on the product or service that you are
going to perform on the Internet. People may think that you are giving your product for free
but in fact you may be earning with advertising on Internet.
There is not much data available for the price decisions on the Internet. There are very
different pricing strategies that are practiced on the Internet. But none of them can be taken
for granted. Your price decisions also depend on the business strategy. If Company is doing
business on the bases of cost leadership than Internet can help the company make its cost
further decrease due to cheap communication facilities. Pricing decisions also depends upon
the target market for which you are selling your product.
What is ever is the pricing strategy but he basic pricing decisions is your desired profit
above the cost that you are going pay for your facility. People are buying sometimes those
products from the Internet that may be available cheaper without the use of Internet but
this ratio is very low.
You can charge premium by providing time Vs cost trade off to your
Customer and hence the customer is ready to pay you premium for this time saving. Pricing
also depends upon your total input cost for starting your business that includes your fixed
cost that is also to be retrieved back. Pricing also depends upon the amount of creativity you
are presenting with your product. If product is individualized and customized than
traditional practice of charging more stays the same. But one thing is to be kept in mind that
product life cycle is the e commerce world is very less than the product life cycle of
traditional business world. So you have to recover all of the cost as early as possible. The
moment you present your product on the net; that moment automatically gives birth to your
competitors and different alternatives that will be on the net much earlier than you are
expecting. So pricing decisions are to be taken very carefully but it does not mean that you
start a skimming strategy and keep very high strategy in the beginning. It is to be kept in
mind that you have to promote and tell the people that you have got a product on the net
and you are to attract them and low pricing or free product is also the part of it.
Payment Systems on the Internet
The payment mechanisms make the pricing P totally different than the traditional pricing
decisions we take for our normal commerce. Here now I am going to discuss some of the
payment procedures that are being used on the Internet.
It is to be kept in mind that security and safety are one of the most important aspects in e
commerce. They are directly with the payment procedures and will be discussed after
discussing these 4 Ps in e commerce.
There are different payment systems on the Internet. Some of them are following.[11]
1- Use of credit cards
2- Paying net cash
3- Point earning method
4- Digital coins method
5- Payment through e cash
6- Use of Millicent
Use of credit cards [12]
The credit card is one of the most widely payment procedure that is being used for Internet
transactions. The credit card requires further third party verification apart from the bank
and the payee. It has also the disadvantage of credit card theft.
In Pakistan credit cards are in the primary phase. Although State Bank of Pakistan has
allowed banks to open merchant account for this purpose but still no progress has been
made so far. City bank and ANZ Grindlays are providing limited services in this field.

Digital Coins Payments
Due to the increasing importance of electronic commerce via the Internet the importance of
digital money increases. Representing "real" money in an electronic world means that
properties and functionalities like anonymity, authenticity, as well as availability of Pico-
payments are considered. Like "real" money, digital coins have an inherent value.
Depending on the way digital money is implemented there exist different cryptographic
methods and organizational precautions to avoid the usage of forged money. Basically, there
are two different types of digital coin-based money:
Using specific cryptographic method the anonymity of digital money may be achieved.
Then, neither the financial institution nor the dealer may build up a connection between the
customer and coins used by him. The financial institution only knows to which customer the
coins are transferred initially
Coins with customer identifying characteristics allow the financial institution to identify
the customer and to follow up on payments where the coin has been used in.
Also, the payment process may be classified into online and offline transactions.
If an online payment takes place the coins will be checked immediately for authenticity.
This implies that a digital coin is used only once. The financial institution needs to check the
authenticity by using a list of all coins that have been issued or a list of all coins that have
been sent in for credit.
In case of offline payments the coins may be used more than once. To avoid double
spending it is necessary to store information about the user or the users on the coin in order
to be able to perform checks later. Anonymity may be guaranteed by so-called secret
sharing. Then, the financial institution only gets information in case of double spending.

Payment through E-Cash [13]
E-Cash is anonymous digital money whose validity is checked online by the corresponding
financial institution. E-Cash is developed by Digi Cash and is offered by Mark Twain Bank,
St. Louis since 1995. Deutsche Bank AG, Frankfurt (Main) offers e-cash as a pilot project to
its customers since October 1997.
The customer withdraws digital money from his equate-account using the so-called blinding
method and stores it on its hard disk. The blinding method works as follows. The client
encodes a serial number and sends it to the financial institution. The financial institution
certifies the coin and transfers it back to the customer. The customer then decodes the serial
number. Hence, the serial number is not known to the financial institution, which
guarantees anonymity. In order to avoid double spending the financial institution has to
record the serial numbers of all incoming coins. At each purchase via the Internet the
customer gives digital coins to the dealer. The dealer immediately transfers the coins to his
bank in order to check for validity. The dealer's bank registers the numbers of the coins
issued without tracing them back to the customer. Finally, the dealer is credited and delivers
products and services ordered
Figure: Payment process with e cash [14]


Digital coins may be used only once. E-Cash may be considered to be a currency of its own.
Financial institutions have to use special accounts. They also guarantee conversion into
"real" money. As a consequence central banks like the Bundes bank or the Federal Reserve
Bank have difficulties in controlling money supply (financial institutions may create
additional money and thereby increase the amount of money supplied; this is well-known in
the case of so-called check book or deposit money
E-Cash security is achieved by using an asymmetric cryptographic algorithm. Account
access may be protected additionally by using personal passwords. The storage of a coin's
serial numbers does prevent double spending. There may be a problem with scalability,
however. The costs of checking for authenticity of coins are relatively high because the check
has to be done online. This means that the suitability for micro- and Pico-payments has to
be evaluated carefully. Each person who has an E-Cash-account may accept E-Cash coins.
The blinding method, as was already indicated, guarantees anonymity.
Payment through Netcash
The nutcase method is developed at the University of Southern California. One important
goal of this project is the use of already existing accounting systems and procedures in
financial institutions. This reduces initial investment costs. In contrast to E-Cash, this
method is based on a decentralized approach. Consequently, problems associated with a
large number of coins and participants may be solved more easily. Therefore, reduced
anonymity is accepted and the cooperation of all participating financial institutions is
required.
The system is based on independently distributed currency servers. Currency servers are
locations to exchange anonymous into non-anonymous money. Each currency server
possesses an account on an accounting server. The currency server does clearing. It is
necessary that the integrity of the servers is certified and that currency servers accept coins
from other currency servers. Netcash-coins have a face value and a serial number. Also, the
address of the issuing server and an expiry date is stored.
Figure: Payment process using Netcash [15]

Figure shows the payment process using Netcash. The customer gets Netcash-coins from a
currency server. These coins are encoded with a publicly and send to the dealer. Anonymity
of the customer may be guaranteed by using a new session key for each message. The dealer
transfers the coins received immediately to his currency server. From the currency server he
either receives new coins or the corresponding value will be credited to his account. The
currency server does final clearing.
The serial numbers of all coins that are not send back and are not yet expired are stored on
the currency server in order to avoid double spending. This means reduced anonymity.
Exchanging the coins at another server may increase anonymity. Security is reached by
means of a hybrid cryptographic algorithm. Like E-Cash we have a method that requires a
lot of communication. The usage for micro-payments, however, should be more efficient.
Each person may accept Netcash-coins because the system allows free exchange of coins.
Payment through Millicent
The Millicent method is developed by Digital Equipment Corporation (DEC) to manage
small and smallest payments (e.g. payment for getting information from the Internet about
news and stock quotations or payment for small programs like Java-applets)

The customer buys broker scrip with a defined value by using his credit card or by debiting a
suitable bank or broker account. Such scrip is like a telephone card. At the time of purchase
the customer exchanges parts of the scrip into a dealer's scrip. This scrip is then sent to the
dealer. The dealer collects all Scripps and exchanges them into "real" money. Figure shows
the payment prosecuting Millicent.
Figure: Payment process using Millicent [16]
To guarantee the security of this method one-way-hash-functions that may be evaluated
quickly are used. Furthermore, the costs of illegally decoding scrip (this means finding the
inverse of the hash-function used) are much higher than the scrip's value. A large number of
transactions are possible at low costs compared to the other two methods discussed. In
principle, each person may be registered at a broker and may then accept digital payments.
There is no anonymity but there is the possibility to buy Scripps from different brokers.
Then, no comprehensive user profile may be built.

Logistics Decisions For E commerce
The logistic section is given a bit less importance in the field of Internet, but it is one of the
most important aspects that one company should look into. With Internet it does not mean
that we do not need a proper full-equipped logistics department.
The increasing popularity of the Internet has generated significant interest in the
development of electronic retail commerce. The Internet has the potential to evolve into an
interconnected marketplace, facilitating the exchange of a wide variety of products and
services. The development of this electronic marketplace implies that there will be
significant changes in the economics of marketing channels and the organizational structure
of distribution, which will lead to a redefinition of industry value systems. When a company
starts an e- commerce business than it is involved in two types of main logistics:
1- Distribution of Intangible Products
2- Distribution of Tangible Products
Distribution of Intangible products
The Intangible section on the Internet includes following.
When the company is in the business of informational products.
When the company has some business that does not includes any physical asset.
Many companies have been using the Internet for the transmission of data. The major
financial institutions in the world use the Internet extensively for exchanging information
and files. Publishers are using the Internet to receive manuscripts, and transmit files for
printing over the Internet. Books are written and collaboratively edited using the Internet
(Fraase 1994).
Research and scientific organizations and educational institutions, the original inhabitants
of the Internet, are using the Internet to transmit large quantities of data as well, but
corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).
Logistics of Tangible Products
When you are selling some tangible product on the Internet then
the task of managing logistics becomes much more difficult then it
is taken. Selling a physical product on the Internet requires a
complete logistics department at the back end .It requires
organized form of order processing. It requires much more mount
of inventory management and warehousing.
The importance of logistics can be valued from the fact that today
amazon.com has so big warehouse at its back end that are equal to
a big wal mart. It requires same amount of management and
expertise as it is required to run a sears store or ant big retail store
in the your country. It requires same amount of warehousing and
logistics as we have amount of inventory processing for PACE in
Lahore.
Cybermediaries in E-commerce
"Cybermediaries, " are organizations that perform the mediating tasks in
the world of electronic commerce.
The intermediaries in an e-commerce world that bridge the gap between the both ends are
called cybermerdiaries. It is generally a notion that as the Internet grows and e-commerce
takes on its momentum, it will result into the elimination of the middleman from the
distributions system. Well this is not the case. Still there is much more types of
intermediaries (called Cybermediaries[17] in this case) are emerging.
The advent of nearly ubiquitous information infrastructures has led many to predict that
one effect of electronic markets will be the bypassing of intermediaries in electronic
markets. The ability of electronic networks to reduce transaction costs is the theoretical
cause of this supposed trend.
Functions of Electronic Middleman
There are new functions that are performed by an electronic intermediary. They are not just
sorting and assorting goods and services as in the case of traditional marketing. They are
performing Following Functions.

Search and Evaluation
A consumer choosing a specialty store over a department store implicitly chooses between
two alternative search and evaluation criteria. In either case the consumer is delegating
some of the product search process to the retail intermediary. Intermediaries also provide
quality control and product evaluation. Importantly, this may not mean providing a high
level of quality, but rather providing an appropriate level and definition of quality. Thus, the
quality of the goods expected at a flea market, a discount store, and a specialty-clothing
boutique is significantly different. Specialized intermediaries, such as Consumer Reports
and Better Business Bureau can also provide product evaluations. However, retail
intermediaries design the type of the search and evaluation services that will be offered to
consumers by choosing the product mix and focus.
Needs Assessment and Product Matching.
In many cases it is not reasonable to assume that individual consumers possess the
knowledge needed to assess their needs reliably and identify the products which will
efficiently meet those needs. Therefore, intermediaries can provide a valuable service by
helping customers determine their needs. For example, many hardware stores explicitly
present themselves as providers of "helpful hardware people" who help customers
determine which products they need. By providing information, not just about the product,
but also about the usefulness of the product, and even explicit expert assistance for
identifying consumers' needs, intermediaries provide consumers with needs assessment and
product matching services.

Customer Risk Management [18]
Consumers do not always have perfect information, and hence they may purchase products
that do not meet their needs. Consequently, in any retail transaction the consumer faces a
certain amount of risk. This risk may be the result of either consumer need uncertainty,
communication failure regarding the characteristics of the product, or the intentional or
accidental failure of the producer to provide an adequate product. Another service that
many intermediaries provide is related to the management of this risk. By providing
consumers with the option to return faulty products or providing additional warranties,
intermediaries reduce the consumers' exposure to the risk associated with producer error. If
the consumer has the option to return products for any reason, the intermediary further
reduces the customer's exposure to the risk associated with customer failure to assess needs
accurately and match them to the characteristics of the product. Thus, by choosing an
intermediary that provides these services, customers are implicitly purchasing insurance
from the intermediary.
Product Distribution
Many intermediaries play an important role in the production, packaging, and distribution
of goods. Distribution is a critical factor in determining the value of many consumer goods.
For example, the value of a gallon of gasoline one hundred miles from a consumer's home
and the value of a gallon of gasoline one mile from the consumer's home are significantly
different, primarily because of the distribution services provided. Distribution service firms,
such as Federal Express, are a prime example of how information technology has begun to
make it economical to provide services independently that historically have been provided
by integrated retail intermediaries.
Product Information Dissemination [19]
One class of producer services provided by intermediaries relates to informing consumers
about the existence and characteristics of products. Producers rely on a variety of
intermediaries, including traditional retail stores, catalog and mail-order houses,
advertising agencies, and media outlets to inform consumers. In some cases, such as
traditional retail intermediaries, these information services are tightly tied to other services,
such as distribution, and in other cases independent intermediaries may provide the
information services and distribution.
Purchase Influence
Ultimately producers are not interested only in providing information for consumers; they
are interested in selling products. Thus, in addition to information services, producers also
value services related to influencing consumer purchase choices. There are many ways that
intermediaries can influence consumers' purchasing behavior. Product placement by
intermediaries can influence product choice, as can explicit advice from sales agents.
Commission compensation schemes, shelf space payments, and special discounts are all
ways that producers purchase influence services from intermediaries.
Provision of Customer Information
In addition to information and influence services, intermediaries also provide valuable
information about customers. Increased use of IT in the retail industry has contributed to
an increase in the importance of retailers and credit companies as sources of consumer
information. Producers to evaluate new products and plan production of existing products
use this information, which is also collected by specialized intermediaries, such as market
research firms. Even in cases where producers do not receive explicit consumer information,
retail intermediaries implicitly provide information-processing services by aggregating
demand information from a variety of local markets.
Producer Risk Management
Like consumers, producers face risks when engaging in commercial transactions.
Intermediaries provide services that enable producers to manage their exposure to such
risks as consumer fraud and theft. This risk, which has received a great deal of attention in
recent discussions of Internet commerce, is a problem that traditionally has been managed
by retail and credit intermediaries. In the past, these intermediaries have provided systems
and policies for limiting this risk. When it could not be eliminated, it was the intermediaries
that managed direct exposure to that risk.

Integration of Consumer and Producer Needs
Intermediaries must deal with problems that arise when consumer needs conflict with the
needs of producers. In a competitive environment a successful integrated intermediary must
provide a bundle of services that balances the needs of consumers and producers and is
acceptable to both. For example, a producer may wish to inform consumers about the
existence of a good while consumers would rather it were filtered out as part of the product
search and evaluation process.

Types of Cybermediaries [20]
Directories
Directory service intermediaries help consumers find producers by categorizing Web sites
and providing structured menus to facilitate navigation. At present these are usually free
services to consumers, but in the future may extract fees. There are three types of directory
services.
1-General directories (e.g. Yahoo and EINet Galaxy) provide a general index of a large
variety of different sites. There is typically some scheme for organizing (and choosing) the
sites that will be included. These site often support browsing as well as keyword searches of
the index.
2-Commercial directories (e.g., The All-Internet Shopping Directory) focus on
providing indices of commercial sites on the Web. These sites do not provide infrastructure
or development services for producers, but simply acts as a directory of externally existing
commercial sites. Commercial directories may also provide information about a specific
commercial area; often listing firms that do not even have Web sites (e.g. The Embroidery
Directory). These intermediaries are equivalent to publishers of paper-based industry
guides.
3-specialized directories
For Example Jeff Frohwein's ISDN Technical Page) are topic oriented, often even as simple
as a single page created by an individual interested in a topic. These pages may play a role in
supporting commercial exchanges by providing a consumer with technical and evaluative
information about a good or a particular producer, in additional to simple search support.
Search Services
In contrast to the directories, search sites (e.g. Lycos and Infoseek) provide users with the
capabilities for conducting keyword searches of extensive databases of Web sites/pages.
Typically, search sites do not allow browsing of the database directly, and they are rarely
topic specific. Because there is an attempt at completeness they may allow individuals to
explicitly add entries to the database.
Malls.
The term virtual mall or Internet mall is often used to refer to any site that have more than
two commercial sites linked to it. Hence, many of the commercial directories described
above are actually called "malls". However, Here it is to be distinguished between a
directory service, which indexes external commercial sites, from an intermediary, that, like
traditional physical malls, provides infrastructure for the producer/retailer in return for a
fee (perhaps rent or percentage of sales). Often these malls have a geographic focus (e.g.,
The Aloha Mall or The Alaskan Mall). They may target a particular type of producer/retailer
(e.g., The Asian American Mall). Or they may be composed of variety of "stores", selling a
variety of products (e.g., The Pinnacle Mall or Cyber superstores). Malls often will provide
links to stores other than the stores that are explicitly part of the mall. However, a key
difference between a mall and a directory is the source of their income. A mall derives its
income from its "renters;" a directory does not have renters and so will typically have some
type of advertising for sale.
Publishers
Publisher Web sites is "traffic generators" that offers content of interest to consumers
(e.g.Information Week or Wired Magazine). They may appear more or less to be online
newspapers or magazines. Currently the largest traffic generators are the directories and
search sites described above. The high traffic generators that are content providers are often
pre existing publishers. Publishers become intermediaries when they offer links to
producers through advertising or product listings related to their content. An example of a
primarily electronic content provider with very strategically placed ads is GNN. They may
only charge flat fees for advertising, or may extract a transaction fee for sales.
Virtual Resellers
The malls described above provide cyber-infrastructure, but they do not own inventory or
sell products directly. In contrast, virtual resellers do. These are intermediaries that exist to
sell to consumers. Often these resellers are product-focused (e.g., The Christmas
Shop, International Shopping Club, and America's Shirt and Tie). They are able to obtain
products directly from manufacturers, who may hesitate to go directly to consumers for fear
of alienating retailers upon which they depend. It thus represents a good of example of
where the NII permits lower priced goods to be offered to consumers, but through efficient
intermediaries rather than producer-to-consumer direct links.

Web Site Evaluators
Consumers may be directed to a producer's site via a new type of site that offers some form
of evaluation, which may help to reduce some of the risk to consumers (e.g., Point
Communications (Top 5% of the Web) and GNN). Sometimes the evaluations are based on
frequency of access, while other times they are an explicit review of the sites. They may
extract value by charging a fee to producers to be evaluated, or may charge consumers for
their service. Also some of the directories and search sites described above are beginning to
provide evaluations of sites.
Auditors
Auditors are not direct intermediaries, but serve the same functions as audience
measurement services in traditional media. We mention them only to point out that
Internet commerce requires many of the same supplementary services that facilitate
traditional commercial activity. Advertisers require information on the usage rates
associated with Web advertising vehicles, as well as credible information on audience
characteristics. Nielsen, a firm that dominates audience measurement services in other
media, is quickly moving to capture a preeminent position in Web measurement as well
through their Nielsen Interactive Services subsidiary. Another player is The Internet Audit
Bureau.
Forums, Fan Clubs, and User Groups
Sites such as these are also not necessarily direct intermediaries, but can play a large role in
facilitating customer-producer feedback and supporting market research. The best examples
of these groups are product-related discussion groups and lists. They may be created
specifically to connect the producer with consumers (as is the case for many of the user
forums on the commercial on-line services) or they may be created by users to communicate
with each other (as is the case for most of the discussion lists and newsgroups on the
Internet).
Financial Intermediaries
Any form of electronic commerce will require some means of making or authorizing
payments from buyer to seller. Payment systems will take many forms including credit
authorization by major credit card companies such as Visa or MasterCard, electronic
equivalents to writing checks (Checkfree), paying in cash (Digicash), and sending secure
electronic mail authorizing a payment (First Virtual). In an electronic commerce
environment, these financial intermediaries may extract per transaction fees in order to
absorb some of the risk associated with money flows.
Spot Market Makers and Barter Networks
Given the speed, with which electronic networks can inform buyers about products for sale,
as well as those with goods to sell about buyers looking for particular products, it is likely
that spot markets will emerge. When people exchange one good or service for another,
instead of paying with money, it is a barter network. A new set of intermediaries, similar to
auction houses, flea market owners, and commodities exchanges may arise to capitalize on
this network opportunity. Some thriving examples of where the network helps create a spot
market are the news groups that act as markets for various products. Often, on college
campuses or local Freenets there are local market groups. There are also specialized groups
(computer equipment, trading cards, etc.), and those that deal with used goods. In addition
to the newsgroup-based facilities there are also many Web based services, including Barter
Net and netTrader .

Intelligent Agents
Intelligent agents are often discussed as the answer to user problems with navigation in the
chaos of the Internet. Agents are software programs that begin with some preliminary
search criteria from users, but that also learn from past user behavior to help optimize
searches. They may appear as a new intermediary service that buyers "hire" when in need of
a particular good or service. One intelligent agent site known as BargainFinder has been
created by Andersen Consulting for research purposes, although it is not yet particularly
powerful, and is actually more of a focused search tool.
In addition to providing services for consumers, intermediaries also provide a variety of
services for producers. In choosing marketing channels, producers choose the bundle of
services provided by the intermediaries involved. Several functions of intermediaries
purchased by producers are briefly highlighted below.

Promotion Decisions for E-commerce
Perhaps promotion is the most beneficial part of marketing with the introduction of e-
commerce. A Company that uses Internet can have much wider, cheaper and effective
promotion than a company that is not in the e-commerce field. There are many new ways of
promoting your business and promoting your product with the advent of Internet. Here are
some of the promotional tools and strategies that are being used in the world of e-
commerce.
Promotional Tools
There are many tools that are being used on the Internet for promotional purposes. Here is
the list of some of them. Every day there is a new way coming that becomes a new
promotional tool in the world of e-commerce. So it is very difficult to find all of them and
list them all. Here are few of them that are being used excessively and effectively.
An online classified ad is a very effective tool for your e-business promotion. You can run
an ad on those sites that have much high customer terrific than yours and hence they can
come to your site as they see your add.
Affiliate/reseller/associate programs are also very effective in your web site promotion.
You can become an affiliate to some well run business on the Internet and then have an easy
takeoff. It is an easy startup for the new web based businesses.
Newsgroup promotions are one of direct way of reaching to the customers. Your news
groups continuously deliver information about your web site and about your business that
results into attracting customers to your web site.
Promotions through discussion lists and newsletters are one of the most widely used
methods of your business promotion. Newsletters sent to e-mail of the individualize can be
customized for each individual and is an easy way of reading as customer can know about
you any time he likes.
Autoresponders are also being used to respond to the needs of customers. When some one
clicks any of your web site add or banner. Auto responder can keep that person on track by
responding automatically on that adds by opening a new add of your web site for him.
Bulletin boards are used where a group of people having common ideas and common
problems can exchange views and post them for further discussion and further reading.
Here you can cater to those bulletin boards that come to your target market.
Ranking at the top of search engines is a very effective way to promote yourself in the
wired world of business and you can increase your web terrific many times in just weeks by
listing your web site for some mostly used search engines.
Sales strategies as they are being used in traditional and non-electronic businesses are
also very effective in the electronic world. Sales strategy is your basic strategy that is going
to be used in every aspect of web promotion.
Banner ads (tips and tricks) that includes banner exchange programs is like barter trade
that helps both the web sites to promote them selves quickly.

Use of Search Engines for Promotion
Search Engines are index web pages based on content. Each engine works differently.
They base the search results on Meta Tags, page content, title, or a combination of
these.
A lot of a web site's traffic is generated by search engines and
directories,
so it's obvious that web masters will do anything to ensure their
site is listed at the top. There are different search engines, and here
are brief details of their types.
1- Directories categorize the WWW based on input submitted by a human being, an example
is Yahoo. When someone searches for a keyword, this is referenced against a database of
sites that contain a title and description for a particular site.
2- A search engine to index the web uses spiders. They all capture specific information about
a page. Some capture the title and the first 1,000 characters of content. Some capture the
title and "description" Meta Tag. Some look only for the "keyword" Meta tags. Some use a
combination of all of these.
Promoting Your E-Business Presence
In The Internet Business Book, Ellsworth and Ellsworth (1994) present the four models for
creating a business presence on the Internet that are most common. As companies become
familiar with the Internet, they may expand beyond these four basic models, and allocate
more resources to market on the Internet.
Billboard Model [21]
The Billboard model is concerned with the posting of information for others to read and
take action on. These are visible, without being too obtrusive. The object is to place a small
bit of your information in view without coming on too strong. Usually these notices are for
telling others where more complete information is available. The Billboard approach works
best for those just starting to use the Internet for business. It is a relatively low-cost strategy
that can place your business information in the hands of Internet users. This approach is
suitable for those with businesses that are traditionally outside of the Internet, and does not
involve offering actual products or services over the network. People usually put notices in
the following places:
plan.txt, .plan, or .profile files
Signature blocks
E-mail headers or footers
Yellow Pages Approach [22]
The Yellow Pages approach is concerned with providing directory information similar to the
telephone yellow pages. Essentially, you create a menu, with each item on the menu
pointing toward other sources and providing small bits of information. By providing
directory information and a useful service, businesses are "giving back to the Net." This is a
middle ground approach. The Yellow Pages approach requires heavier investments of time
and money, but it creates a higher profile for the business. This requires some Internet
experience, and is for products and services that are ready for Internet promotion, and
those with steady Internet access. Common Yellow Pages models are:
Gopher servers
BBSs
Usenet News
World Wide Web Pages
WAIS
Brochure Approach [23]
The Brochure approach features the provision of information sheets, brochures, and other
informational items. The emphasis here is on the information itself, with only a small
amount of promotional material. This is similar to the Yellow Pages approach, but with the
added requirement that you maintain a good-sized inventory of useful information pieces.
Some of the vehicles for brochures include:
FTP archives
Gopher servers
BBSs
Usenet News
WAIS
World Wide Web Pages
E-mail, particularly automated reply
Virtual storefront Approach
The Virtual Storefront is a full information service designed to include the marketing of your
services and products, and in some cases, to allow online purchasing, customer support, and
more. The Virtual Storefront should be approached cautiously. It requires a fairly heavy
investment of time and effort. A Storefront can be extremely costly if a business maintains
its own dedicated line and site, but it can also be maintained on a rental basis with a full-
service Internet provider. The Storefront is particularly suited to businesses that are
information-based. It combines some of the activities from all of the other models, but in a
more coordinated approach.
Created on Gopher or the World Wide Web, using your own or rented "space" from an
Internet provider
Supported by e-mail, FTP, Usenet News, and other tools already mentioned.

Developing an e-commerce website
Till now we have discussed many aspects that are not very technical in the nature, but this
part of my thesis deals with a brief over look on how practically we can make an e commerce
web site. Here is a checklist of some steps while we develop our own web site.
First of all we make an over all plan that what our web site should consist of. It includes
following things.
1. What are your web site contents and what is the volume of those contents
2. What is over all theme in which you are going to run your aver all Web site
3. What is your target market and who will be visiting your web site.
What will be the major functions that will be performed by your web site. By major
functions of a web site, I mean following
1. Is your web site is static information dissemination based that is updated periodically. For
example you can have different carpet designs on your web site. And customer can mail you
about his order. All the rest transaction is done manually with out Internet.
2. Is your web site is interactive in nature that allows customer to find his customized
information by interacting with him. These sites are based on active server pages and are
continuously updated with each person who is accessing it. These web sites are also taking
your customer data in different form, processing them at the back and then contact the
customer again.
3. Finally a full fledge e-commerce site includes all transaction based mechanism in it. A
person can place order, can pay on the net and receive its good and service on the net.
Delivery is physical only if the product is tangible.
The next step is to find that what amount of expertise you need to develop your web site.
How much time is required. How many different technical personals are required for
building the web site. From where you are going to hire them.
Next step is decided about the softwares that will be used to develop front end and the
back end of your web site.
Then we move on to development of web pages and your database. Development of Your
Home page is altogether a different task as it is face of your web site.
Next step is to use ODBC (Object Database Connectivity) for interconnecting your
database and your web pages.
Then we move on to selecting your domain name also called your web site name and
getting your domain name registered.
Setting your hardware and assigning duties to your staff is the next step as your web site
is uploaded.
Testing your web site for debugging and load balancing is a move ahead.
At the same time, getting your merchant account and making it operational is one of the
most difficult and important tasks for an e -commerce web site.
Then we move on to developing different safety measure that results into your merchant
account safety, customer's credit card safety, hacking etc.
Finally we re check all the system and remove all the weaknesses from our web site.
The above mentioned checklist is not exhaustive, there are many steps that are in between
and are left behind. There a number of things those are to be done and are not listed and are
a very important part of your web site development.
Software Decisions
Deciding about software that will be used to make your web site is Primary importance.
Following type of software is to be used.
1. Simple web page Development requires Microsoft Front page, Macro Media Dream
Weaver etc.
2. Use of Macromedia products that include Flash for including animations in your web site.
3. Use of Different Image editors like Ulead image editor, Corel Draw, etc for enhancing
your web site out look by adding different kinds of images
4. Use of different sound processing and sound editing softwares for adding different kinds
of sounds in your web site.
5. Use of Oracle and MS Access for developing your database at the back end of your web
site.
For all of these purposes different program languages are to be used in order to make a
difference in your web site that includes JAVA, C++, Oracle and Visual Basic etc.



Major databases Used
Major Softwares Used
MS FrontPage
Macromedia Dreamweaver
Macromedia Fireworks
Macromedia Flash
Macromedia Director
Ulead Image Editor
Corel Draw
Macromedia Shockwave

Strategies for an E-commerce Site
Building Competitive Advantage
Now we have made a web site and we are doing business on the Internet. It is just beginning
of the problems. Because you will find a competitor emerging every day in your e world. So
the main task is to say that how our web site will survive in this electronic world. Our web
site has to do something different that is not provided by the other web sites. It is the same
traditional concept of building competitive advantage for your web site. There are many
ways and many strategies that help you to differentiate your web site from others. Here are
some strategies and some small tricks by which one build competitive advantage for his web
site to be competitive in the wired world.
Competing on Reach, Richness & Affiliation
On the Internet the old ideas of competitive advantages of cost of quality are changing. Now
if a company have to compete on the Internet. It can build its competitive advantage on
following three bases.[24]
1-Competing on Reach.
Its all about access and connection. Reach means that to how many customers a business
can contact and how many products it can offer. The more customers a business can grab on
the Internet. More competitive the business is.
For example the largest bookstore in US offers about 200000 books. But amazon.com alone
offers more than 4.5 million books. So there is a big difference between the reach of
traditional and electronic business.
Previously a business reach was limited to some location but now the reach has no
boundaries. Previously the large business had more reach than the small ones. But now on
the Internet
2-Competing on Richness [25]
The second competitive advantage a business on Internet can have is on the basis of
richness. Richness is the depth and detail of the information that a business can give to
customers on the Internet. The more information you provide on the Internet. The better
you are on the wires.
A business can be providing richness in the following fields.
Rich Customer Information
Previously retailers were the big source of collecting information about the customer. Now a
company can directly now about its customers and can collect information about them. The
better a company uses this information. The more competitive it becomes.
CDNOW.Com is best example of it. Here the Detailed information about the music liking
and disliking of the customer is collected and then the same type of CDs are offered to him
for sale.
Rich Product Information
The manufacturer has the best competitive advantage on the Internet on this base. They
know maximum about their products. For example SONY knows best about its products. So
this can be a competitive base for it while doing business on the Internet. It is more effective
when the products are more complex and more technical.
Competing on the basis of Brands [26]
There are two types of brands.
1. Brands on the basis of beliefs e.g. SONY
2. Brands on the basis of experience e.g. Barbie
The products that have brands on the basis on experience will have more competitive
advantage on Internet than the products that have brands on the basis of beliefs.
3- Competing on the Basis of Affiliation
The third base of competitive advantage on the Internet is affiliation. Affiliation means that
whose interest a business represents on the Internet. A business can affiliate it self to
consumer or to supplier. There will be a trade of between the both that whether a business
should earn from the supplier side or the business should earn from the buyer side.
For example the amazon.com have to decide that if it does not show the ad of a new book.
Will it hurt its own sales or the sales of the company that published the book.
Shaping your Strategy
At end the type of business will determine that what competitive base it should adopt. For
example the product manufacturer should compete on the basis of richness. The retailers
should build their strategy on the basis of consumer affiliation while the navigators should
build their competitive edge on the basis of fast richness and close affiliation to the
customer.[27]
Strategy for a Pure Navigator [28]
Never take your Business Definition for granted. You must compete with other navigators
on richness and reach domain whose boundaries are constantly moving.
Recognize that close affiliation with consumer is a major competitive advantage. It is part
of web directory. Do not compromise on consumer interests over your short-term gain.
Build richness very fast. It the most probable area where the new comer will attack.

Strategy for electronic Retailer
Define your business in tern of consumer search domain, not in a physical category.
Be very exclusive with the product suppliers. The sacrifice of reach and consumer
affiliation is likely to cost you more in competitive advantage than the gain in margin is
worth.
Beware of category killer physical retailers, they often have better consumer information
and better logistics. Theyre only handicap on inability to think differently that they could
change.
Strategy for Product Manufacturer [29]
Adding richness especially product specific richness is the most powerful way to compete.
Concentrate on enhancing brand as experience.
Mentally deconstruct your own business. Look at its informational components. Develop
independent strategies for them. Take an organization that takes those strategies seriously.
Reach is a two edged sword for manufacturer. It might enable you to escape stranglehold
of your retailer . But it exposes you to new navigators whose potential reach ma is far more
than you reach.
Look seriously towards the alliances in order to have more reach and affiliation. Alliances
are the most effective in the e world to run your business.
Types of web Sites
Now we are going to discuss the major types of web sites that a company should make in
order to have a competitive advantage. There are two major paths in order to build a web
site.
1. The first path is to move from information to transaction. In beginning your web site just
provides information then you start doing transactions at the later stage. This type is
adopted by the MNCs or companies who are already doing business and are very my much
in known. They get promoted with information very easily. 3M is the best suited example
who started giving information about all of its products over the Internet and keeps on
telling of its new innovative products on the Internet. Now it has also selling its products on
the Internet.

Evolutionary Path of a Web site [30]
INFORMATION TO TRANSACTION MODEL
MNCs


The second type of web site moves from transaction to information phase. It is inverse of the
first web site type. This type of web site is suited for Internet start-ups. Firm that are
starting their business on the Internet should first start transacting and then should
promote their name and information about their site at the late stage when their product is
already in the market. CD Now is the best example of this. Nullsoft is also a good example of
people who started giving music to people over the Internet and now they are promoting
that who was the company that made this business software.
Evolutionary Path of a Web site [31]
TRANSACTION TO INFORMATION MODEL
Internet Start-ups

Drivers of Internet Business Model
Many companies are doing business on the Internet with different types of sites and with
different types of business models. Here is a model that describes why a firm goes for e-
commerce.[32]

Primary
Business
Impact


Cost
Reductio
n

Revenue
Generatio
n






Custom
er Focus





TRANSACTIONS
Use of Internet for conducting transactions for better customer service

Product
Information
Use of
Internet for
Promotions

, database
manageme
nt, market
research
and
transaction
s

External

The first quadrant includes companies using web primary as a communicational tool to
engage in one way or two-way communication. The communication is between outside
audiences e.g. intermediaries, suppliers etc. Software developers are the best example of it.
Apple Web site provides technical and legal support to their customers and releases to
Macintosh users.
The companies in the second quadrant are also internally focused but also offer
transactions over the Internet. e.g. CD Now is offering music to worldwide consumers that is
less then the other companies prices.
The third quadrants have those companies that use web for its international customers.
Service is more valuable to all the customers here. An e.g. Sun Micro system provides global
support, product information and software updates worldwide.
Fourth Quadrant includes those sites that offer transactions to their customers
worldwide. These transactions involve matching of the buyers and sellers. These companies
make profit by making commission from the both buyers and the sellers. Ali Baba dot COM
is the best example of it.

Categories of Web Site
There are different categories of web sites and they can be categories on different bases.
Here is their Categorization on the bases of focus and content.[33]




2
Software.Ne

t
Worldworth
Books
Mr.
Upgrade
CD Now
Lightning
Instruments





GLO
BAL

Business Models for E-commerce [34]
In actuality, five distinct e-commerce business models form the basic structure for the wide
variety of web sites today. The five categories are called vanity, information, advertising,
subscriptions, and storefront sites.
While not all of the models derive revenue directly, they all incur costs. In addition, many
sites combine several of the five identified business models. Each of the five models has
unique characteristics that differentiate them from the other types. So it's important to
understand their differences.
Vanity Sites
Many web sites started as vanity sites. Individuals as an outlet of self-expression, to share a
hobby, promote a cause, or find others with similar interests often create these sites.
The sites are created with no intention 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
on these "free" sites.
Information Sites
Information sites (also called brochure or billboard sites) are designed to derive economic
benefit through indirect means from 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 offline.
Just like a billboard on a highway, 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
opportunities, investor relations, or customer service. Economic benefit is created through
the indirect purchase of the goods or services from existing physical outlets and cost savings
through the elimination of infrastructure or inefficiency.
Some businesses feel this is the best way to avoid channel conflict -- a potential pricing
disparity between different supply chains.
Advertising Sites [35]
Network television, radio, and many periodicals follow the advertising model. All
programming and content is funded by advertising dollars with consumer viewership being
the measurement of value. Agencies conduct sophisticated surveys to measure the value and
establish the pricing. For e-commerce, advertising can be in the form of banners,
sponsorships, ezine ads, and other promotion methods.
This is much ballyhooed but still largely unproven model on the web. While there are a few
sites that are entirely supported by advertising dollars, the lack of web-savvy viewership
statistics hinders mass adoption by advertisers. As the knowledge of consumer behavior is
further understood, experts will prepare purchase pattern analyses providing advertisers
with empirical data to support their promotion campaigns.

Subscription Sites [36]
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 subscription revenues 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 Sites
To some people, a products-offered site is narrowly defined as a "true" e-commerce site. A
web site 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 web site
enterprise or directly from the manufacturer in a drop shipping arrangement. 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.

The Stages of Maturity Model [37]
In the following model we distinguish between three stages in the



implementation of Electronic Commerce. Stage 1 represents experimentation. Stage 2
represents ad hoc implementation. Stage 3 represents integration: an organization-wide,
Board-led initiative to integrate Electronic Commerce with existing business processes and
re-engineer them where necessary. The majority of companies participating in this survey
are at Stages 1 or 2 Neither Stage requires Board-level approval or sponsorship. But moving
from Stage 2 to Stage 3 does, both in terms of budget availability and encouragement to re-
engineer. Companies at Stages 1 or 2 do not need to have assembled a business case for
Electronic Commerce. But in order to justify process change and move into Stage 3, a
business case is essential.

Qualities of A Successful Web site
Here are some of the factors that are important contributors to the success of your web site.
Without giving proper attention to these factors, it is not easy to promote and excel your e
business. Following figure lists these factors very clearly.
Here we can see that design of the web site is most important factor that contributes to the
success of your web site. While pricing lies at the end although price leadership is very
successful factor in traditional businesses. [38]


Reasons for Best Site

According to research conducted by KPMG Group in England. The design of the site was
considered the best factor for successful web site. Information and web site contents were
next that were given importance. Here is the detail list of different factors that are rated by
users in order to select a best site.[39]

The Five Laws of Web Marketing
Five Laws of web marketing is the advice by Dr. Ralf,[40] here is the detail of those laws.
1-The Law of the Dead End Street
Setting up a web site is like building a storefront on a dead-end street. If you
want any shoppers, you must give them a reason to come.
The most wonderful site in the world is wasted unless people stop by to admire and
purchase. It's the same reason that most great craftsmen aren't millionaires; they've learned
to make a great product, but don't have a clue about marketing.
So the first question you need to ask yourself, even before you build your company's site, is:
How will we get people to visit? Perhaps your marketing plan will look like this:
Banner ads for two months to boost name recognition.
Search engine positioning on HotBot and Excite in the first quarter, to include Infoseek,
Lycos, and AltaVista in the second quarter.
Reciprocal links with our industry organization and a paid listing in their directory.
A newsworthy contest in the third quarter, for which we'll try to get full media coverage
through press releases and calls from a PR agency.
A company newsletter that carries industry news rather than just company drivel, to
begin in the fourth quarter (though you should start collecting e-mail addresses now).
Then decide which of these activities to carry out in-house and which to outsource, attach a
dollar value to each, and provide for them in your marketing budget. Your marketing plan
may look much different than this, but you must give visitors a reason to come.
Many sites I visit are pretty slim. Yes, they give information about the company and its
services, but nothing you'd want to bookmark. What compelling content can you put on
your site that will make someone want to return? Content is primary.
With excellent content, when you ask for a reciprocal link, you don't have to plead, "Link to
us because we're the greatest." You can say, "Link to us because we offer everything a buyer
needs to know to select the right lighting fixture." When you offer a public service, you
suddenly become newsworthy. Trade journals and magazines begin to mention you, and
traffic follows. Give visitors a reason to come, and they will.
2. The Law of Giving and Selling
An important element of Web culture is "free stuff." The Law of Giving and Selling says:
Attract visitors to your site by giving away something free, and then try to sell
something additional to those who visit.
Here's how we used this strategy. In mid-1995 Wilson Internet Services launched our web
site design business with a goal of attracting business nationally via the Web. At that time
evenlocal web site designers were considered oddities.
Here's the simple strategy:
Attract people to your site by giving away lots of free information. Then
let people know about your products and services. Learn this rhythm of giving something
away, and selling something. The strategy works. But to sell, you need to master a third law.
3. The Law of Trust [41]
Assuming your products or services are priced competitively and are of good quality, your
most significant sales barrier is trust.
Trust is the essential lubricant of Web business; without trust,
business grinds to a halt.
An established store brand name comes from hundreds of positive impressions built by
expensive advertising campaigns. These ads purchase brand trust. But if you're a small
business you can't afford such advertising. Nevertheless, you can build trust by means of
your web site in multiple ways. First, anchor your business in time and spaces by giving a
full address and phone number. If you have an office or brick-and-mortar store, show a
photograph. Better yet, show photos of yourself or your staff. Now your customers view you
as real people rather than some faceless entity who-knows-where.
You build trust by selling well-known brand name products, by displaying clear shipping
and return policies, by joining nationally respected organizations, and by offering
guarantees. You build trust with a customer-friendly navigation system and intuitive
interface, and an SSL secure server for credit card transactions. You gain credibility by
having a professionally designed site, rather than something your teenage son cooked up on
the weekends.
Once you've established trust, sales result. You also build trust by repeated contact with
your visitors. We describe this in a fourth law.
4. The Law of Pull and Push
The Fourth Mutable Law of Web marketing is: [42]
Pull people to your site by your attractive content, then push quality
information to them regularly via e-mail.
Web sites, by their very nature are passive creatures, like fireside dogs. They just lie there
wagging their tail listlessly and smiling wanly until someone enters the door. (Then the best
web site dogs come alive and propels you to the desired destination and action.)
E-mail messages, on the other hand, are active animals like St. Bernard Rescue Dogs, always
ready to go where you send them and deliver a refreshing cask of information, and an
invitation to return to your web site to see the newest thing you have to offer.
A web site tries to attract you by pulling you in with the promise of content, while e-
mailpushes its message into your previous visitors' mailboxes. Most businesses can't survive
on one-time sales only. The cost of customer acquisition is too high for just a single sale.
They need to draw satisfied customers back again and again for repeat sales. The Law of Pull
and Push accomplishes this vital task.
Getting an invitation to send e-mail to your visitors is key to this strategy. Include a form
that will collect their e-mail address. To convince your visitor to give you his e-mail address,
however, you need to promise two things:
2. You'll e-mail him something of value
3. You won't sell or rent his address to another company, hence the need for a clear privacy
policy. But once the visitor has given you permission to e-mail additional information, you
have wonderful marketing leverage.
This law, too, has its own rhythm. Pull the customer to your web site by attractive power,
then push good content and offers to the customer via e-mail to draw them back to your site.
5. The Law of the Niche [43]
The Law of the Niche is last but not least. Let me state it this way: Big businesses like
Amazon.com and Wal-Mart have the money and clout to "own" whole segments of the
marketplace
Small businesses succeed by finding niches that are either unfilled or only
partially filled, and filling them with excellence.
For example, JustBalls.com (http://www.justballs.com) saw an unfilled niche in selling
sports equipment. Instead of trying to bite off more than they could chew selling the whole
range of sports equipment, they looked for a single slice -- balls -- and set up "The Biggest
Ball Store on the Net." They sell sports balls, fitness balls, toy balls, and ball stuff. You'll find
baseballs, softballs, footballs, and volleyballs. If it's a ball they have it. When you think
"balls," they want you to remember them, "JustBalls.com" and come to their site. They also
own the URLs for Justbaseball, Justfootball, Justbasketball, Justlacrosse -- 27 different
sports in all -- in case they want to expand their marketing by sport by sport.
Unique Selling Proposition
The key to this kind of savvy niche marketing is to carefully write a business plan that
defines your Unique Selling Proposition (USP). It defines what makes your business unique
from every other competitor in your field. It spells out the precise niche you seek to fill, and
how you aim to fill it.
Ways to promote your Site
Here are different ways and different strategies that can help us to promote our web
site. [44]
Write a Page Title.
Write a descriptive title for each page of 5 to 8 words. Remove as many "filler" words from
the title, such as "the," "and," etc. This page title appears on the Web search engines when
your page is found.
List Keywords.
To get your juices flowing, sit down with some associates and brainstorm a list of 50 to 100
keywords or keyphrases -- the kind of words or phrases someone might search on to find a
business or site like yours. Then refine the list to the most important. Make sure that you
don't repeat any word more than three times so you're not penalized for "keyword
spamming.".
Write a Page Description.
Select the most important 20 keywords, and write a careful 200 to 250 character (including
spaces) sentence or two. You don't need to repeat any words used in the page title. Keep this
readable but tight. Eliminate as many "filler" or "throwaway" words as you can (such as:
and, the, a, an, company, etc.) to make room for the important words, the keywords which
do the actual work for you. Place those words at the top of the Web page, between the
<HEADER></HEADER> tags, in a META tag.
Submit Page to Search Engines.
Next, submit your page to the important Web search engines and directories. To do this,
consider using a submission service such as Submit-
It http://submitit.linkexchange.com/ or All4one Submission
Machine http://www.all4one.com/all4submit/ The most important search engines that
robotically "spider" or index your site are: AltaVista, Excite, HotBot, Lycos, Infoseek,
WebCrawler, and Northern Light.
Submit Page to Yahoo.[45]
Yahoo is the most important listing of all -- though it's technically a directory, rather than a
search engine. It uses real humans to read (and too often, pare down) your 200 character
sentences, so be very careful, and follow their instructions.
Submit Page to Other Directories.
You've probably seen offers to submit your pages to 300 different search engines. These
don't help much, except to increase the perceived "popularity" of your site by some of the
major search engines. The most important 25 directories are probably enough, unless you
find some specific to your industry. Most of the rest aren't really search engines at all, just
an excuse to solicit you for "upgraded listings." These marginal directories come and go very
quickly, making it hard to keep up.
Request Links on Industry Sites.
You probably belong to various trade associations that feature member sites. Ask for a link.
Even if you have to pay something for a link, it may bring you the kind of targeted traffic you
crave.
Include URL on Stationery, Cards, and Literature.
Make sure that all reprints of cards, stationery, brochures, and literature contain your
company's URL. And see that your printer gets the URL syntax correct. In print, I
recommend leaving off the http:// part and including only the www.domain.com portion.
Promote using traditional media.
Don't discontinue print advertising you've found effective. But be sure to include your URL
in any display or classified ads you purchase in trade journals, newspapers, etc. View your
web site as an information adjunct to the ad. Catch readers' attention with the ad, and then
refer them to a Web page where they can obtain more information or perhaps place an
order. Sometimes these ads are more targeted, more effective, and less expensive than
online advertising. Consider other traditional media to drive people to your site, such as
direct mail, classifieds, post cards, etc. Since SuperBowl 1999 we've seen TV used
extensively to promote sites, since the Web is now considered a mass medium, though it is
probably too broad for all but the most general portal sites.
Develop a Free Service.[46]
It's one thing to say, "Come to our site and learn about our business." It's quite another to
say "Use the free kitchen remodeling calculator available exclusively on our site."
Request Reciprocal Links.
Find complementary web sites and request a reciprocal link to your site (especially to your
free service, if you offer one). Develop an out-of-the way page where you put links to other
sites -- so you don't send people out the back door as fast as you bring them in the front
door.
Issue News Releases.
Find newsworthy events (such as launching your free service), and send news releases to
print and Web periodicals in your industry.
Request Links from Business Link Sites.
Especially if you offer a free service, you can request links from many of the small business
linking pages on the Web. When you have something free to offer, many doors open to you.
Surf the net looking for places that might link to your site. Then e-mail the site owner or
webmaster with your site name, URL, and a brief 200-word description of what you offer
there.
Capture Visitor E-mail Addresses [47]
On your web site's response form, include a checkbox where the visitor can give you
permission to e-mail updates about products or services. Now your e-mails to visitors are
not "spam." You're responding to their request for more information.
Publish an e-mail Newsletter.
While it's a big commitment in time, publishing a weekly, monthly, or quarterly newsletter
is one of the very best ways to keep in touch with your prospects, generate trust, develop
brand awareness, and build future business. You can distribute your newsletter using your
e-mail program, or have people subscribe on your web site directly to a list server program
(such as Majordomo) offered by your Internet Service Provider.
Install a "Signature" in your e-mail Program.
Most e-mail programs such as Eudora, Netscape, or Outlook allow you to designate a
"signature" to appear at the end of each message you send. Limit it to 6 to 8 lines: Company
name, address, phone number, URL, e-mail address, and a one-phrase description of your
unique business offerings. Look for examples on e-mail messages sent to you.
Promote Your Site in Mailing Lists and News Groups.
The Internet offers thousands of very targeted mailing lists and news groups made up of
people with very specialized interests. Use DejaNews http://www.dejanews.com to find
appropriate sources. Don't bother with news groups constituted of pure "spam." Instead,
find groups where a dialog is taking place. Don't use aggressive marketing and overtly plug
your product or service, even if you see some jerks doing so. Rather, add to the discussion in
a helpful way and let the "signature" at the end of your e-mail message do your marketing
for you. People will gradually get to know and trust you, visit your site, and do business with
you.
Announce a Contest [48]
People like getting something free. If you publicize a contest or drawing available on your
site, you'll generate more traffic than normal.
Join a Banner Exchange Program.
Of the many banner exchange programs, LinkExchange is the
biggest.http://www.linkexchange.com Essentially, you agree to show a rotating banner on
your site for other LinkExchange members, and they do the same for you, and there's a
possibility you'll earn something through paid banner ads, too.
Purchase Banner Ads on Appropriate Sites
You may need to spend money to boost traffic by purchasing banner advertising. Choose
sites that seem to attract the kinds of people who would be good prospects for your business
or product. Expect to pay $10 to $40 per thousand people who see your ad, and achieve a
click-through rate of 0.5% to 1%. You can find media brokers who can help you find
appropriate and cost-effective places to advertise, especially if you have a significant
advertising budget for branding purposes.
Buy a Text Ad in an e-mail Newsletter [49]
Businesses are finding that some of the best advertising buys are for small 4 to 12 line ads in
established e-mail newsletters. Ads can both inform and motivate readers to click on the
URL, and tend to bring much more targeted visitors.
Employ search engine positioning.
Registering your site with the search engines is the first step. But with tens of millions of
WebPages, your site may hardly be visible. These days you may need to construct a series of
gateway pages, each tuned for a particular search phrase and search engine. Then fine-tune
these gateway pages to rank high using a program such as Web Position
Gold(http://www.webposition.com). Many small businesses outsource search engine
positioning because of the considerable time investment it requires.
Begin an Affiliate Program. [50]
Essentially, a retailer's affiliate program pays a commission to other sites whose links to the
retailer result in an actual sale. The goal is to build a network of affiliates who have a
financial stake in promoting your site. If you're a merchant you need to (1) determine the
commission you are willing to pay (consider it your advertising cost), (2) select a company
to set up the technical details of your program, and (3) promote your program to get the
right kind of affiliates who will link to your site.
Devise Viral Marketing Promotion Techniques.
Viral marketing uses the communication networks (and preferably the resources) of your
site visitors or customers to spread the word about your site exponentially. Word-of-mouth,
PR, and network marketing are offline models. The classic example is the free e-mail service
hotmail.com that includes a tagline about their service at the end of every message sent out.
Attracting New Customers [51]
One of the difficult thing in e-commerce is reaching to new customers as they are not in
front of you. Attracting someone who is not in front of you is quite difficult than someone
who is physically present for you. Here are some ways to attract new customers for your e-
business.
Give Away An Electronic Information Product
The product could be a simple report posted on your Web site or autoresponder to a
downloadable e-book. The information product should relate to your target audience. Just
place your advertisement somewhere on the product. Allow other people to give away the
information product to attract even more customers.
Offer Free Consulting Via E-mail
Allow potential customers to ask you specific questions relating to the subject of your
business. Giving away free advice can show your prospects your expertise and give you
instant credibility. Another benefit is when you e-mail them back the free advice or
information include your signature file to get free advertising.

Hold A Free Chat Room Seminar
People go to seminars to learn about a particular subject. With chat rooms you don't need to
fear public speaking or spend money to rent out a seminar room. You can use your own chat
room or hold the seminar in someone else. Holding a chat room seminar is an incredible
way to get free publicity. Just send a press release to the media announcing your free
seminar.
Start A Free-To-Join Club [52]
Having people join your club is a creative way to attract new customers. People want to
belong to something, why not your online club. The club should be related to your product
or service. You could give away a free e-mail newsletter for club members only . Have a
members only
message board, e-mail discussion group or chat room. Post your advertisements on all the
club information.
Provide Your Product Or Service For Almost Free
Tell potential customers you'll accept barter deals for your products or services. You may
not be getting money but they will become your customers. If they are satisfied they might
pay money the next time they make a purchase. Barter for things to improve your business
or your own personal life.

E-commerce in Pakistan
Now we come to our core topic with detail discussion on Internet and se-commerce in
Pakistan. In Pakistan e-commerce is quite at initial stage. In fact e-commerce is not yet
started in Pakistan. But Internet is growing like mushroom in Pakistan. The primary
requisite for e-commerce requires following things in Pakistan that are yet to be done.
It requires increased awareness level of the people towards accepting the fact that e-
commerce can earn you more than traditional commerce.
It requires a proper infrastructure for doing e-commerce in the country.
It required developing e-commerce minds that know how to do business on the Internet
and how to teach it to others.
It requires transaction facility over the Internet world wide that is still not available in
Pakistan.
E-Commerce Objectives for Pakistan
Diversification of exports: New markets, new products, and new businesses.
Greater role of SMEs in exports as e-commerce provides low cost accessibility to markets
and services which was not available before.
Survival in the emerging global electronic economy, greater transparency, better
monitoring and supervision
Facilitate international trade through an e-commerce infrastructure whose presence is
becoming a prerequisite for participation in global trade and economy
Increased efficiency of business transactions, logistics and increased competitiveness
Electronic documentation of economy.
Use of E-Commerce in government for procurement, promotion of trade, provision of
information and trade related services
To revitalize the economy by exploring the new potential of Electronic Commerce in B2B
and B2C trade and services, worldwide.
Simplifying citizens access to government while providing choices and options for
interaction with government financial Impact of Full Scale Implementation
The present initiative of launching IT Policy and Action Plan by the Ministry of Science and
Technology (MoST) has revived serious interest in developing the IT industry and e-
commerce in Pakistan. Impressed by the commitment, sincerity and responsiveness of the
present Government towards the sector, stakeholders in Pakistan and abroad have
responded enthusiastically to helping the Government implement a proper and adequate
package of reforms and incentives geared toward achieving accelerated growth in the IT
industry.
To promote Electronic Commerce in Pakistan, the State Bank of Pakistan (SBP) has agreed
to allow the opening of Internet Merchant Accounts within Pakistan, and notification in this
regard would be issued shortly. This was a major hindrance in start of E-commerce
activities in the country. To facilitate the software export industry, SBP has agreed to allow
banks to accept the Contracts as collateral for the software exporters to qualify them for
export refinance scheme. Previously this was only permitted against letter of credits, which
do not exist in the software export business. SBP has also agreed to allow software-
exporting companies to retain 25% of their export earnings in foreign exchange accounts.
Hitherto, the software exporters did not have any such facility. The State Bank of Pakistan
would issue notifications to these effects shortly.

Internet Growth in Pakistan
Internet entered in Pakistan in 1997 actually when people started knowing about the
Internet. it got real boom in year 2000 when govt. started giving a proper and intensive
attention to e economy.
Here is the trend of Internet subscribers in Pakistan.[53]


Growth Rate in Pakistan 30%
Some initiatives have already been undertaken in the key areas to stimulate the growth. The
cost of Internet bandwidth of PTCL was reduced up to 53% which has led to reduction in
Internet end user prices and improvement in quality of service for the Internet users. Free
Internet connections are being extended to public sector Universities under an agreement
with the private sector ISPs and PTCL.
To facilitate the private sector, IT and telecom industry and to enhance the investors
confidence in the Government, processing period for license applications in the deregulated
sector by the PTA has been reduced to 7 days from several months. In order to deliver
efficient IT infrastructure, PTCL would now provide international bandwidth and Internet
connectivity to the ISPs and other corporate customers within 4 to 8 weeks. Previously this
connectivity used to take 4 to 12 months. Training of thousands of blue collar IT workers for
data entry and transcription services is being initiated and would be completed within 6
months.

PAK E-commerce Sites
Although Pakistan is far behind in the filed of e commerce than the rest of the world. There
are many reasons for this slow progress. The main problem
JaalBazaar.com - Create your own gift and send it to your loved ones in Pakistan. All
Specials are under $20. FREE SHIPPING to Pakistan in 48 Hrs for methais, flowers and
cakes. Gifts for all occasions. New (URL: http://www.jaalbazaar.com )
5 Star` Movies - Online movie store in Pakistan with online movies catalog, movie
previews, new releases and secure ordering online (URL: http://www.5starmovies.com.pk )
A Gift Shop - Send Flowers, Cakes, Mithai and more to PAKISTAN, UAE, USA, INDIA
AND UK (URL: http://www.giftshop.com.pk )
Darbaar.com - Largest Collection of Arts & Crafts, Books, Music, Video, Groceries and
Travel from Pakistan (URL: http://www.darbaar.com )
Desi Albums Shop - The largest variety of both Indian and Pakistani music on the Net.
The on-line store sells CDs, Cassettes, DVDs, Video CDs and Video Cassettes with over
5,000 items to choose from! (URL: http://www.desialbums.com/)
Desimall Online Store :- Online sale of sweaters, clothings, food items, spices, henna,
tea and other Desi stuff. (URL: http://www.desimall.com.pk )
eBizGoods.com - Best prices of Pashmina on & off the web. Also buy Rugs & Carpet,
Leather Products, Cushion Covers, & Antiques (URL: http://ebizgoods.com )
ePakistan.Com - ePakistan is a cyber-enterprise with one mission --- To provide quality
services to the Expatriate Pakistani Community Worldwide. (URL:
http://www.ePakistan.com/ )
eTaza.com-Buy Mithai, Choorian, Gifts, Flowers, Cards... (www.etaza.com )
Gandhara Sculptures (URL: http:// www. pakmart. com/gandhara /index.html)
Gift Dukan - Send gifts, flowers, cakes, mithai with your custom message to your dear
ones in Pakistan. Gift dukan - the most popular E-commerce Site for Pakistani's on the
Internet. (URL: http://giftdukan.com/ )
Gift Express - Send gifts to your loved ones to more than 93 cities and towns in Pakistan
from within the country as well as from U.A.E, Saudi Arabia, Kuwait, U.K. and U.S.A. (URL:
http://www.giftexpress.net.pk/ Hits:)
HamaraPakistan Selling Pakistani paintings worldwide. (www.hamarapakistan.com/ )
Indus Valley Arts & Crafts - The Indus Valley On-line Store Front (URL:
http://www.it-warehouse.com/indus/)
International Foods (URL: http://www.intlfoods.com/ Hits:)
Libas for Us - We have large veriety of Ladies Pakistani Suits, for all occasions, at great
prices. (URL: http://www.libas4us.com )
Lucky Deals - An online resource for sellers and buyers of bulk merchandise where you
can find lucky deals on every item. (URL: http://luckydeals.com.pk/)
Net2Profit - Net2profit deals in gift items, online shopping mall, dinnerset, lamps, glass
house, handicraft, hangons, wallplates, photo frames, plaster of Paris, cielings (URL:
http://www.net2profit.com.pk )
Online CD Store (URL: http://www.cdstore.com.pk/ )
Paigham.Com - You can send Cards, flowers, cakes, Mithai and fruit baskets to your
loved ones in Pakistan. (URL: http://www.paigham.com/)
Pak Gift Mall - Free delivery, best prices on-line and delivery system of over 50 cities
through out Pakistan (URL: http://www.pakgiftmall.com )
Pak store - Books, Cakes & Sweets, Candies/Stuff Toys, Clothing, Computer, Electronics,
Flowers/Bouquets, Handicrafts, Leather Goods, Music, Perfumes, Shoes, .. (URL:
http://www.pakstore.com/ )
Pakistan Duty Free Shops - first online duty free shops outlet at Karachi airport,
replacing former site of Karachi duty free (URL: http://www.pakistandutyfree.com )
Pakistan Gift House - Send great gifts, flowers, cakes, mithai, and more to your loved
ones in Pakistan. Gift delivery to over 150 cities. Secure Server. Free delivery. Also has good
information about Pakistan history, Jinnah, landmarks, monuments, National Anthem etc.
(URL: http://www.pakistangifthouse.com )
Pakistan Handiworks - First Online Store of Pakistani Handmade Products. (URL:
http://www.handiworks.com.pk)

E-commerce Implications for Pakistan [54]

Impact of e-commerce on Pak markets [55]

Reasons to Use Internet in Pakistan [56]

Prospects for Pakistan [57]


Current IT Policy [58]
The Vision
To harness the potential of Information Technology as a key
contributor to development of Pakistan.
The Mission
Rapidly develop the infrastructure in synchrony with the creation of excellently trained
individuals and teams. Direct these at transforming our society into a prosperous and
dynamic oneone that values and benefits from the creation and free flow of information
and knowledge. Encourage and assist the entrepreneurial spirit, and make the fruits of this
technology available to every citizen.
To realize the vision behind the IT policy, the following goals have been set:
Make the Government a facilitator and an enabler to provide maximum opportunities to
the private sector to lead the thrust in development of IT in Pakistan.
Develop an extensive pool of trained IT manpower at all levels to meet local and export
requirements.
Provide business incentives for both local and foreign investors to ensure the
development of Pakistans IT sector (including the software, hardware, and service
industries) and the use of its products

Goal [59]
Develop an enabling legislative and regulatory framework for IT related issues.
Revitalize, emphasis, and support the countrys dormant manufacturing and research and
development (R&D) potential.
Establish an efficient and cost-effective infrastructure that provides equitable access to
national and international networks and markets.
Set up national databases that are reliable, secure, upto-date and easily accessible. These
would be open databases.
Promote widespread use of IT applications in government organizations and departments
for efficiency improvement and transparency in functioning and service provision, and to
organize and facilitate access to public information.
Promote extensive use of IT applications in trade, industry, homes, agriculture, education,
health, and other sectors with widespread use of Internet.
Encourage and promote the development of quality software that can capture export
markets.
Develop a tradition of electronic commerce for both national and international
transactions.
Encourage expatriate IT professionals to return to Pakistan and establish software houses
or extend assistance to the local industry in the form of assignments from abroad.

IT Policy Strategies [60]
Human Resource Development [61]
A major human resource issue in Pakistan is quality education and training, nurturing, and
retention of technically skilled manpower. This problem is more severe in IT where
technology changes are rapid and there is a large loss of critical trained manpower due to
emigration.
Manpower development is imperative for the local IT industry to take root on a large scale
in Pakistan, and for the country to achieve and maintain the position of an important player
in the international IT market. A large pool of skilled manpower is required for all
components of the IT industry, and it has to be geared to meet both local and export needs.
Whereas, a brief working document has been prepared by the IT Steering committee on
Education, HRD and Training, a more comprehensive plan for education and human
resource development in IT shall be drawn up to meet the present and future needs of
manpower. Also, a working group on the same lines shall be established to advise on current
and emerging education and training needs.
This following section briefly covers IT education and IT training. IT awareness, a related
issue, is addressed separately.
IT education includes degree programs, while IT training comprises short courses that
provide focused hands-on skills in specific IT areas where manpower is needed urgently.
Such training could be provided to fresh graduates as well as underemployed youth.
The object of this Policy is to attract the most able students and develop faculty for IT, in
order to ensure quality, quantity, affordability, and market relevance of all IT education and
training.
A comprehensive plan for education and human resource development in IT shall be
drawn up to meet the present and future needs of manpower.
Facilitate and encourage the training and hiring of women in the IT sector to help reduce
unemployment and to utilize this largely untapped human resource. Women can be hired
and can become effective players in large numbers in all sectors of the software and
telecommunications industry.
Facilitate and encourage the use of IT by people of special needs to be able to make them
more effective in society.
Education
Education determines, more than anything else, a country's prospects for human
development and competitiveness. Fortunately, the information revolution offers some
extraordinary opportunities in education. The following measures shall be adopted to avail
these opportunities:
The education sector is responsible for delivering a work force skilled in the use of
information systems and a technical corps able to produce and maintain information
products and services -create appropriate policies and incentives for this to occur.
Make participation by rural and poor segments of society in IT education a strategic
priority for both social and economic development.
Launch a scheme for providing low-priced computers and Internet connectivity to
universities, colleges and schools through a public-private sector initiative.
Network all universities, engineering and medical colleges, and institutions of higher
learning in the country for improved quality of education.
Set up electronic libraries to ensure economical and equitable access to world
information.
Encourage educational facilities to computerize their registration, examinations,
accounting, and other activities.
Encourage educational facilities to adopt computer assisted learning and other IT tools to
aid in the teaching process.
Establish virtual classroom education programs, using online, and Internet and/or video
facilities, to provide distance learning to a large number of individuals.
The Private sector and the Government shall jointly make efforts to meet the growing IT
education needs. Specific policy recommendations are:
Include a compulsory, modern and upto date Computer Literacy module in the
matriculation curriculum for high schools. Revise the computer science curriculum at
Intermediate level to make it modern and up-to-date and to offer it at all science colleges.
Make training in the use of IT applications compulsory for all degree courses within the next
3 years.
Develop world-class bachelors, masters, and Ph.D. programs in computer science (CS)
and related areas of IT. Develop standardized curricula and teaching materials in co-
operation with public and private educational institutions, using international benchmarks
for reference.
To address the critical shortage of qualified IT faculty, establish Faculty Chairs by
attracting foreign and expatriate faculty and arrange faculty development programs.
Establish a national educational Intranet (linked to the Internet) to enable sharing,
among educational institutions, of electronic libraries of teaching and research materials
and faculty (through distance learning and video conferencing).
Attract the best students by establishing a scholarship fund for IT education and training.
Establish Accreditation Council to ensure quality IT education and training. The Council
will be responsible for collecting data on educational institutions, rating the institutions,
and disseminating information about the institutions. The Council will also establish
curricula, testing guidelines and services for IT education and training. The council will
consist of leading academics and IT experts and will be linked to provincial IT Boards
through representation on the
Establish an HRD fund (HRDF) to be by the IT Division. This fund will be utilized to
expand and improve the quality of IT education, strengthen existing IT educational
institutions, upgrade IT infrastructure (including laboratories, connectivity, and teaching
resources), develop faculty, attract visiting faculty of international repute, provide student
scholarships, share pooled resources through distance learning programs, and develop
linkages with foreign universities and global IT firms. Apart from the government, the Cell
will mobilize financing through expatriate Pakistani community, international agencies and
global IT firms.
Assign provincial IT Boards the task of working closely with IT Division to ensure quality
IT education, strengthen IT educational institutions, develop databases, and establish
linkages with industry for jobs and internships.
Allow administrative and financial autonomy to IT departments in public universities and
colleges to enable them to attract and retain qualified faculty and respond quickly to
changing requirements of the IT industry.
Promote the setting up of IT universities and institutes of international standards.
Encourage and catalyze collaboration between the government and the private sector, and
elicit the assistance of various foundations, multinational companies, foreign universities,
and other social and welfare organizations. Strengthen existing institutions to establish a
number of centers of excellence.
Provide foreign and local universities incentives to set up distance learning or resident
programs in Pakistan.
Ensure that existing UGC and University rules and procedures regarding affiliation of
private IT institution are clearly defined and transparent in order to expedite the affiliation
process and setting up of quality institutes.
Work Visas for foreign I.T faculty shall be simplified and expedited.
Training
Investments in IT training are expected to yield quick results. Policy recommendations
include:
Ensure high-quality training by assigning the Accreditation Council for IT Education the
task of collecting data on training institutions, rating the institutions, and disseminating
information on the institutions.
Through the Institutional Development Cell, take steps to strengthen existing IT training
institutions and encourage the setting up of new IT training institutes, update curricula,
introduce new technologies through linkages with global IT firms, develop strong local
faculties, and provide student scholarships. Organize teacher training on a top-priority basis
to meet the growing demand for qualified teachers in IT and for upgrading their skills
regularly. To rapidly increase the annual production of IT manpower, launch crash-training
programs. Use the HRDF to support IT training activities.
The IT industry would be bound to offer a certain number of internships to fresh IT
graduates each year. This activity to be monitored by ITC and Institutional development cell
for compliance.
To ensure maximum utilization of existing facilities, encourage public universities and
colleges to collaborate with the private sector in conducting training programs during
vacations and at other times when the facilities are not in use.
Introduce mandatory IT Literacy courses for all levels of civil and military personnel.
Make IT literacy a prerequisite for induction into gazetted positions.
Make a special effort to train and induct women in the IT sector.
Make extra efforts to educate and train people with special needs in order to give them
equal opportunity in the society.

Infrastructure Development
In order to grow, the local IT industry will need a suitable support infrastructure, i.e.,
telecommunications and information data banks. Development of the telecommunications
sector will entail deregulation, liberalization, privatization, and the creation of a competitive
market.
Establish IT parks and incubators, equipped with the most modern facilities and
matchless incentives, to provide a one-stop shop for prospective investors in the IT industry.
The recommendations presented below will facilitate establishment of such an
infrastructure.
Telecommunications
A Telecom Policy is under preparation and shall be a detailed blueprint based on the basic
precepts of this IT policy.
A close relationship between the government and the private sector is critical for the
development of the telecommunications sector. The following telecom policy strategies are
based on government-private sector synergy: the two sectors will need to work together to
create a modern, sophisticated, efficient, and productive telecommunications sector that
provides services to every segment of society at a reasonable cost. Though a large part of the
sector is already deregulated, in case the PTCL cannot be privatized in a short time frame,
an earlier total deregulation may be considered.
It is however felt that The Telecom industry shall be deregulated at the earliest point to be
able to at least provide affordable, competitively priced Internet connectivity low and high
bandwidth -- for a larger community of users. Special measures are being taken to separate
the provisioning of Bandwidth and Access for Education, Software needs, Data and Internet
from restrictions, which are being caused by the current regime.
Increase telephone line penetration rate by expanding the existing telecommunications
network and providing new ones employing modern technologiesthis will minimize the
capital cost of expansion. The government will permit private telecom operators for supply
of basic infrastructure and services, either as independent licenses or under the umbrella of
the PTCL exclusivity if needed.
Barriers to the induction of new technologies (e.g. Wireless Local Loop [WLL]) by the
Private Sector will be removed to ensure the spread of communications to under-served and
UN-served areas of Pakistan. Using International technologies, standards and agreements
as a basis, open up the 3, 4, 5 and 20-40 GHz bands for growth if the WLL for Internet,
Cable and voice communications.
Develop an integrated, flexible, robust, and reliable transmission network that covers the
entire nation and is capable of voice, video, and data transmittal.
Revise PTCL rates and tariffs for all telecommunications services down from time to time,
so that the cost is reasonable and consistent with the economic realities of the country.
Establish the tariff at par with or below the charges prevalent in the regional and
international markets to remain competitive. In the competitive environment, the market
forces would determine the pricing of these services. Regulation and intervention in this
case will take place only if absolutely necessary.
The bandwidth rates both domestic and International will be brought down dramatically
to encourage the rapid launch of new Internet and software related services as well as new
and needed services like distance learning, Telemedicine, video conferencing, etc. This will
also provide a competitive edge to local companies trying to break into established
International markets.
To ensure the Pakistan Telecommunication Authority (PTA) between operators and the
customers make Service Level Agreements Quality of Service, mandatory.
Encourage telecommunication companies and carrier network service providers to
upgrade rural telecommunications facilities. In this equitable Interconnect agreements,
which protect the investments of all operators (private-public) will be put in place to restore
confidence of the industry in due process.
Encourage competitiveness in the telecommunications sector. Ensure that full
competitiveness is achieved in all telecommunications services and infrastructure provision
and companies to ensure full competitiveness like data, voice, and international connectivity
are operational by 31 December 2002. (or earlier in case of earlier deregulation). The
necessary regulatory mechanism needed for such a purpose should fall in place very soon.
Invite private sector participation on very attractive terms in joint telecommunications
development work of the PTCL. This will ensure that the PTCL is adequately equipped for
the post deregulation competition phase.
Encourage local companies to enter the telecommunication fields that are closely
associated with the infrastructure needed for an information rich society.
Create an environment in which the government, telecom operators, and regulators work
together to ensure that access to advanced IT enabling telecommunications services is
available to all citizens including commercial consumers, educational institutions, hospitals,
libraries, and government functionaries - regardless of their location and at a reasonable
cost.
For all projects of the Government, the private sector will be encouraged to participate
and will compete on equal terms with the government organizations (e.g. NTC or the PTCL).
Expand connectivity with other countries, using existing and new regional and global
satellite and Optical Fibre links.
Take appropriate actions to launch Pakistans own satellite at the earliest. The neglect and
mistakes of yesteryears have been very expensive in terms of loosing slots and strategic and
financial opportunities.
Databases and Platforms
Databases provide quick and easy access to information, which greatly facilitates the work
and increases the productivity of businesses and institutions. Access to national databases is
essential for coordinated and informed decision-making and for efficient planning. National
databases are thus an important part of the IT infrastructure.
Both the government and the private sector should be encouraged to participate in the
development of national databases. Two pilot sector projects have been identified and will
be initiated shortly. The main recommendations for policy for this area are:
Encourage and accelerate government-private partnership in establishing comprehensive
databases.
Through the IT Division and Computer Society of Pakistan, set standards to ensure that
national databases are developed based on open standards especially in the government
sector.
Ensure open and equitable access to databases. The databases to be used in the
Government will be open and shall provide the utmost flexibility to integrate into the
existing environment and should ensure that the systems and software caters for future
needs. This is also necessary in order to ensure that the country is not exposed to the threat
of a restriction of export from a single vendor.
Access to databases shall be based on open Internet standards
Technology Parks
Technology Parks are needed to develop both the hardware as well as the software industry.
These Technology parks (TPs) would be set up to provide one-window services to domestic
and foreign companies that seek to engage in IT business in Pakistan. The TPs should
provide workspace, utilities, telecom, and other infrastructure facilities of international
standard at low costs. Efficiently functioning TPs will attract local as well as foreign and
multinational entrepreneurs.
Encourage the private sector to set up such parks on BOT/BOO basis and do the same for
IT Incubation centers.
In order to expedite the setting up of TPs, the facilities/incentives being offered by Export
Processing Zone Authority (EPZA) & other Industrial zones in the country be fully utilized.
IT Division will co-ordinate with EPZA in further facilitating interested IT companies for
setting up TPs and IT projects.
Charge the lower utility and infrastructure rates for bulk consumers to TP users.
Expedite TP projects in Karachi and Lahore and Islamabad.
Software exporting companies having a minimum export obligation verifiable through the
State Bank of Pakistan in locations other than TPs should be declared as EPUs (Export
Processing Units) to avail the incentives equivalent to that of TPs. IT hardware
manufacturing units having a minimum import substitution capability, should be treated
similarly.
The existing software companies shall be provided land on lease at commercial rates to
build their campuses.
Software Industry Development
Software development is a high growth industry and forms a major segment of the vast
information technology market and will continue to do so in the future. A developed
software industry with a focus on exports (in addition to the local market) would mean
better employment opportunities, reduced brain drain, foreign exchange earnings,
improvement in per capita income, and higher standards of living leading to a better quality
of life.
Development of Local Software Industry
A developed local software industry will not only meet Pakistans own needs, but will also
serve as a training ground for capturing export markets. Key policy recommendations for
developing the local industry are:
Initiate Private- Public sector partnership programs with a view to access to the export
market. Address the software with high value and maximum demand e.g. ERP, ERM, and
CRM, e-business and e-commerce.
Outsource Government software projects including mass Data entry, Digitization and GIS
projects to the Private sector. Preference will be given to local software companies in
awarding such projects.
Devise a phased plan for the private sector to take over a major part of the governments
software development needs.
Give preference to the private sector to develop software for government and non-
classified Defense projects.
In order to make this a reality, entry barriers and hurdles for local Software houses to bid
for sizeable government IT projects shall be reduced or removed. These shall be in the form
of earnest money, bid bonds, holdbacks, etc. These shall be reviewed and all Government
departments to be advised of the new Policy. Secondly, a fair rate (software development
rate) and equitable progressive payment methodology has to be ensured for sustainable
software development and investment in R&D.
For software work requiring expertise that is not locally available, engage foreign
companies only if a local partner is involved to the extent where 15% added value is
provided by the local company to ensure the transfer of technology.
Urdu and Regional Software Development
In order to bring IT to a large number of people as possible and to reduce the deep and
emerging divide of the IT haves and have-nots it is important that the issue of
standardization of the Urdu Code Plate and key board is immediately resolved. A focused
effort to standardize the Urdu code plate will be done in the next few weeks and a concerted
plan to encourage the development of open source and licensable Urdu software is being
launched. This will enable plug-ins for popular office and e-mail packages to be made
available. This initiative is expected to drive the development of other Urdu and Regional
software packages for word processing and data base applications.
Recognize that Pakistan has to leverage its knowledge base of an English literate
population and the goal will be to keep on driving towards exploiting this asset. The
development of the Urdu word processor, spreadsheet, database and presentation interface
will in no way detract from encouraging the people to learn the English elements of the
Office environment and Software use. In fact the government will actively encourage the use
of Linux as a free operating system and a very low cost or free English language Office
software for normal operations.
The intent of this initiative is to encourage people to develop skills in working and writing
core software for applications and developing tools, which will go beyond the development
of the local languages. The application programs for translation, speech to text conversion,
databases, Asps for popular packages will need to be written in currently and newly
evolving software.

Promotion of Software Export
Rising costs in developed countries have significantly increased software development
outsourcing. This has enabled other countries, especially those in Asia, to tap offshore
software development business. So far, Pakistan has not been able to secure any significant
share of the global software market.
The following policy actions are recommended to promote software exports, private sector
investments, and attract foreign direct investment (FDI):
A Software Development Fund should be established by the Government to support the
promotion, expansion, and improvement of the software industry.
In all countries where Pakistan can address this software development potential,
following actions will be taken:
Incubator centers run by professionals will be set up, based on the established systems
and principles available in the USA. These will provide a point of presence for software
companies in Pakistan. This is imperative, since no company in the US (or other projected
export market) will give contracts to overseas software houses unless a local contact and
follow-up point is available.
Pakistan must make it easy for foreign-based incubators to sponsor and fund Pakistani
portfolio companies. The legal, accounting and regulatory structure must support this effort.
This will make it easier for high net-worth Pakistani expatriates to invest in Pakistani start-
ups. This will also be easier in the short-term to find US limited partners that would invest
in an incubator with a US-based general partner and management team
Appoint IT specialists at Pakistani embassies, commercial consulates, and Export
Promotion Bureau (EPB) offices. The IT specialists should be responsible for promoting
Pakistani IT products. For some large markets, e.g., the USA and EU markets, hire
consultants to manage the effort, with the IT specialist doing the co-ordination work. These
IT specialists will help find niche markets, provide market intelligence, and develop
guidelines regarding target markets.
The IT Division shall promote and facilitate the local industry rather than get involved in
competitive activities itself.
Encourage software export projects in IT service areas that require minimum time and
can be started with currently available skills. These include operational activities for banks
and airlines, medical and legal transcription, data entry, data conversion, , and call centers.
Each of the above has potential to show short-term results.
Facilitate and encourage the training and hiring of women in the IT sector to help reduce
unemployment and to utilize this largely untapped human resource. Women can be hired
and can become effective players in large numbers in all sectors of the software and
telecommunications industry.
IT Division to hire competent local and foreign consultants in key markets to conduct two
types of studies: (a) marketing assets highlighting the competitive advantage of offshore
software development in Pakistan. (b) How To guides for business development for
Pakistani exporters in those markets. These consultants will work with the IT Support
Councils being set up by expatriate Pakistani IT experts and professionals in Europe, UK,
USA and the Far East. In the same token, hire consultants of international repute shall be
hired to develop a plan for Pakistan's software industry and make recommendations on how
to access the world markets.
Simplify all governmental procedures related to software exports and recording of
revenue for exports with the State Bank of Pakistan (SBP). Review rules, regulations, SRO
and modify those that create obstacles for software exporters. Remove restrictions on
foreign remittances and flow of funds.
Encourage expatriate IT professionals to return to Pakistan and establish software houses
or extend assistance to the local industry in the form of assignments from abroad.
Encourage equity participation of banks in software projects by setting up venture capital
funds. Set up venture capital funds at the federal and provincial levels to encourage private
local and foreign funds to establish privately managed venture capital funds. The necessary
changes in legislation are being carried out by the SECP (Securities and Exchange
Commission of Pakistan).
Encourage the setting up of a content industry, comprising intellectual property such as
encyclopedias, compositions, photographs, and other information of international interest.
Fix yearly targets for software export and equip PASHA to perform its role effectively in
export marketing. PASHA shall be the focal point for all software related export activities
and it will work closely with IT Division and other departments to ensure that export-
marketing activities have a synergetic effect. Earmark adequate funds and provide
infrastructure to promote software exports.
Encourage local business to invest in software industry. Conduct awareness campaigns to
highlight the immense potential and high returns from this industry.
Encourage major multinationals operating in Pakistan to set up software facilities and
bring international business through their established channels.
Establish an Export Market Development Fund to create a favorable market image of
Pakistans software industry. These funds should be used for participation in software and
other IT related fairs, single country exhibitions, and investment seminars. IT
Division/Export Promotion Bureau and PASHA will jointly manage this.
IT Division in consultation with PASHA to prepare effective marketing materials using
multimedia to highlight Pakistani software expertise, government initiatives, incentives, and
necessary statistics. This will enable direct contact with target markets and will create a
good image of Pakistans software industry. Extensive use of the Internet and Web will be
made.
Assist entrepreneurs locally and abroad in obtaining visas and work permits. Major
diplomatic efforts should be made where required.
All Software companies (local or for export) will need to be registered with the IT division
in order for them to be able to obtain the benefits give under this Policy.

Hardware Industry Development
In the context of Information Technology, the hardware industry can be defined as design,
development, manufacturing and maintenance of all products, modules and components
that form the building blocks of an IT infrastructure.
The policy recommendations for this area do not seek to initiate aggressive competition
with developed countries. Rather, they focus on developing the areas that are within
Pakistans reach, in terms of technology and resources, and in which the country could have
a comparative advantage. It is recommended that the concessions incorporated in policy for
the software industry be extended to the hardware industry, General recommendations for
this industry are provided below, divided into two important categories: manufacturing and
R&D.
Most of the value of the hardware development revolves around software development.
However, the hardware needs to be in place for this to happen.
The focus will be on niche markets with a large value added content. Products that are of a
high volume, rapidly changing variety (for example PCs) will not be encouraged.
A thriving hardware industry is pivotal to the growth of IT infrastructure and services.
Development of this industry will make Pakistan self-reliant, competitive and a net exporter
of technology.
The concessions incorporated in policy for the software industry shall be extended to the
hardware industry. General recommendations for this industry are provided below, divided
into two main categories: manufacturing and R&D.
The EPB initiatives for ISO 9000/1 implementation will be effectively deployed in these
industries.
Manufacturing
Establish a Hardware Development Fund (HDF) to finance IT hardware related R&D and
manufacturing activities. IT Division would supervise the HDF's operation.
As far as possible, duties and taxes for hardware products shall be brought in line with
WTOs Information Technology Agreement (ITA).
For procurement of IT hardware (of a contract value above a certain limit) from
international sources, the customer in the public/private sector shall ensure local value
addition.
Encourage and reward enhancements in the depth of production achieved by local
manufacturers, which result in increased local value addition and competitiveness.
Transfer management control of existing manufacturing concerns in the public sector to
the private sector through equity participation or long-term lease.
In order to accelerate the pace of business, IT manufacturers shall be offered the facility of
having their premises declared as document-based bonded units enabling them to have UN-
hindered and tax-free access to materials/services and global infrastructure for the industry.
A consistent duty/tax/regulatory structure shall be ensured to enable local and foreign
investors to make long-term investments in this industry.
Provide special incentives that are directed towards reducing the cost of inputs.
Technology Transfer and R&D
Identify key technology areas and provide fiscal support and incentives to encourage local
technology development.
Encourage and fund R&D in universities and engineering colleges. Make it attractive for
industries to set up R&D centers at university level, through faculty chairs, matching grants
and focused joint projects.
Encourage expatriate IT experts and educationalists to spend their annual vacations in
Pakistan to transfer their knowledge and share their experiences with local universities.
Fund such visits using the HDF.
Setup an Information Resource Center with on-line linkages to reputed scientific
information repositories, accessible from all major cities of Pakistan
Initiate Innovative Ideas competitions, on countrywide basis, covering all levels (from
schools to premier R&D Centers), to instill the spirit to innovate in our young professional.
Establish a premier think-tank institute based on public and private sector partnership. It
is suggested that this institute work in close collaboration with a similar set-up outside
Pakistan and is close to a nucleus of R&D activity in this field.
Internet
The Internet is likely to continue to revolutionize the way people communicate and access
information. Because it represents such a powerful communication tool, the environment in
which the Internet operates must be understood and regulated differently from traditional
communication media. Three general principles should be adopted if the Internet is to grow
in Pakistan: existing regulatory structures should not be forced on it, competition in
Internet growth should be encouraged and unnecessary regulations should be avoided.
To expand provision and use of the Internet in Pakistan, it is necessary to provide low-
cost and reliable access to the international bandwidth, reliable local bandwidth
connectivity, low-cost access to network equipment, widespread public access to networked
computers, a base of educated and trained users and providers, and support for the
development of national Internet content.
The Pakistan Internet Society is being formed to ensure the optimal inductions of Intent
and Intranet based services into Pakistan. It will comprise of a Chairperson, an Engineering
chair and a Social Internet chair.
The aspects that need to be considered in this regard are discussed below.
Internet Market Development
Although the Internet industry is not easily classified into tidy segments, three main
categories of Internet service providers can be distinguished in Pakistan:
Backbone Service providers
Internet access and service providers,
Content providers and other value-added service providers.
To ensure that the Internet market develops:
Create a regulatory environment that allows for as much competition as possible. Ideally,
this should extend as far as the provision of physical network infrastructure.
Encourage PTCL and new carriers in the private sector to develop into backbone
providers. If such telecommunications operators function as Internet access providers
and/or content providers, they should do so through a subsidiary company. Moreover,
income derived from other services of the carriers should not be used to cross-subsidize
their Internet services. The Internet services thus provided by such subsidiary companies
should be cost based to enable fair competition. This will ensure transparency and fair
competition.
Permit and encourage existing and future ISPs to provide Backbone and Peering services.
Encourage them to set up different nation-wide physical delivery and access mechanisms
via IP Radio, Fibre, Laser and Microwave.
Make the licensing procedure as simple as possible, low-priced, and free of high royalty
structures, as these costs are ultimately passed on to consumers and restrict growth
Establish robust and reliable Network Access and Peering Points both by the PTCL as well
as the Private sector in order to locally route in-country traffic on the Internet as well as
provide multiple, reliable and zero failure Pakistan Internet homing to NAPs in Europe,
USA and the Far East.
IP Delivery Mechanisms
The rapid roll-out of new telecommunications infrastructure is critical to the rapid growth
of the Internet in Pakistan. It is, therefore, important that any telecommunications
framework encourages the development of alternative physical delivery mechanisms. This
strategy is expected to effect a major improvement in the penetration of the basic
infrastructure and Internet accessibility. Some of the alternative delivery mechanisms that
must be explored are:

Wireless/Laser Technologies
Wireless/Laser technologies are a particularly important way of addressing local loop
capability because of their rapid roll-out, greater reliability, and lower maintenance cost. To
this end, specific frequency bands will be released for Packet Radio for the higher Spread
Spectrum bands (since the 2.4 GHz is already choked) as well as the 20-40 GHz LMDS
operations. Wherever Fiber can be deployed, it will be encouraged.
Electricity Supply Grid
The use of an electricity grid should be investigated since the penetration of electricity in
Pakistan is much greater than telecommunications, especially for rural areas.
Satellite Operations
A number of international satellite operators have already begun to provide high-speed
Internet access. These services should be encouraged to overcome bandwidth limitations,
not only in urban areas but also in the rural and suburban areas, for basic Internet
connectivity.
Cable TV
Convergence of voice, data, and video transmittal has opened up new opportunities for
quick access of users and operators. Cable TV is expanding very fast and infrastructure for it
is being laid. Regulations are to be put in place to allow cable operators to offer Internet
services in collaboration with licensed ISPs. The LMDS and MMDS operations would be
permitted after clearance from the FAB.
Incentives
The government will need to invest in various fiscal and non-fiscal incentives to nurture,
develop, and promote the use of information technology in organizations, to increase their
efficiency and productivity. Most of the non-fiscal incentives have been discussed earlier.
This section discusses the broad fiscal and some additional non-fiscal incentives required
for IT awareness and promotion. A detailed list of these incentives is also annexed. These
recommendations will become operative after the necessary consents have been obtained
from the relevant authorities e.g. State Bank of Pakistan, CBR, Banks, NIT, SECP, Export
Promotion Bureau, Ministry of Finance, Customs Department, etc.
Fiscal Incentives
Declare information technology as Infrastructure Facility. IT industry to be redefined as a
core business function to the level of production and to include provision of hardware,
software, training / Consultancy / education, telecommunications equipment, and allied
products.
Extend existing incentives given to specific sectors of the IT Industry to the entire IT
Industry; selective application will only encourage corruption, and time consuming
procedures will discourage the intended beneficiaries.
At the center of development of the IT sector is the venture capital industry. The willingness
of venture capital funds to incubate IT companies has been crucial for the IT industry.
Frame proper regulations and incentives for encouraging venture capital investments and
setting up private funds. This could be monitored and regulated through the establishment
of an institutionalized venture capital industry association. A vibrant venture capital sector
can leverage innovation, promote technology, and harness the ongoing knowledge
explosion.
Encourage equity participation of banks in software projects by setting up venture capital
funds at the federal and provincial levels. Necessary changes in legislation are being carried
out by the SECP (Securities and Exchange Commission of Pakistan).
Encourage banks, DFIs, and SMEDA to recognize software development as a priority
industry. Major banks should have IT financing cells for smooth and transparent processing
of loans and funding based on cash flows, future earnings, working capital financing, etc.
Set up Venture Capital Funds[62] for low-interest loans and investment in equity for
companies set up by enterprising and qualified people in software, hardware design, and
human resource development. Additionally, give the Venture Capital companies income tax
concessions by allowing them to set off losses in one invested company against profits in
another company during a particular year, tax breaks, and allowance to redeem all their
paid-up capital.
To attract US accounting and legal firms to provide familiar transparency to US investors
and lower the perceived risk for these investors. Also, create the kind of enterprise-friendly
regulatory environment that would attract leading US investment banks to set up local
offices with the specific aim of taking successful Pakistani start-ups public in the US and
other stock markets. This will provide the liquidity potential without which venture capital
firms will not invest.
Encourage investments in all phases of IT businesses, like idea generation, start-up,
growth ramp-up, and exit process.
Create a foreign investment friendly environment, especially to fund large infrastructure
investments, which, will most likely not return the investors' capital in the short-term. A
clear example of such an investment area might be carrier infrastructure. The only realistic
way to fund this infrastructure is through existing large global carriers. These carriers will
invest only if (a) they anticipate stability in the regulatory and economic environment, (b)
they can license key assets through long-term contracts (e.g., rights-of-way, spectrum, etc.)
and (c) they expect strong growth in bandwidth demand in the future. A properly
prioritized, funded and implemented national IT plan would attract such investors,
especially if the government can institute a convincing regulatory environment and ensure
continuity.
Allow the nationalized banks, other banks, and investment funds to create an
underwriting fund so that the public offer of IT companies can arrange for a portion of their
capital to be underwritten.
Encourage public sector non-banking and investment financial institutions, such as NIT,
to put up at least 20 percent of the public offers of telecommunications, software, and other
IT related companies.
Frame special listing procedures through the Securities and Exchange Commission of
Pakistan (SECP) to attract IT companies to be listed on stock exchanges of Pakistan. The
procedures may include removing minimum public offer percentage, profit track record,
and age of company. Frame special guidelines for the establishment of Over the Counter
(OTC) exchanges at the stock exchange to help list small capital companies with high
volatility.
Assist and give incentives to private companies for acquiring ISO/SEI and other
certification for quality standards for the IT industry (for e.g. subsidize 50% cost of such
activities).
Give commercial and investment banks special tax concessions on earnings from
investments in IT ventures. Establish a special pool of debt for IT companies.
Give special incentives to foreign universities and companies for setting up development
and educational centers in Pakistan by venture capital funding.
Establish an Export Market Development Fund, managed by IT Division/EPB, to provide
marketing support to IT exporting companies, with matching grants from the government.
Enhance the limits for export refinance facility for software exports based on previous
years performance, to help finance established software companies.
Redefine IT industry to include provision of hardware, software,
training/Consultancy/education, telecommunications equipment, and allied products.
To facilitate the capital accumulation required for international marketing, give IT
exporters a seven-year tax holiday.
For duty and tariff purposes of the IT industry, treat IT hardware, software, and related
equipment (e.g., radio modems, routers, auto-teller machines [ATM], electronic
components and consumables, power generators, air-conditioners, test equipment) as one
category and exempt them from all duties, taxes, surcharges, octroi, etc.
Make the re-import and re-export of IT equipment requiring repairs, or re-import of
recorded or packaged software easy and transparent, simplifying documentation
procedures.
Ensure that all equipment/software tools being imported for IT exports are swiftly
cleared.
To retain qualified faculty within the country, IT faculty at universities and institutions
shall be exempted from Income Tax.
Allow local businesses to treat expenditure on software & hardware as tax deductible, e.g.
leasing is treated currently as a tax-deductible expense for purposes of corporate income tax
calculation.
Allow 100% depreciation for hardware, software, and other equipment in the first year of
its use in the IT industry.
IT companies must register with the IT Division to qualify for the above-mentioned
exemption/concessions..
IT Promotion & Awareness [63]
A massive IT promotion and awareness campaign should be undertaken. A national strategy
should be worked out and the structure for its implementation put in place. This will
include:
Provision of continued support and funds by EPB for the participation in world
IT/computer trade fairs, which is vital for the IT industry.
Presence of IT specialists in embassies, commercial consulates, and EPB offices in
countries with software export potential. Consultants may be hired for larger markets, like
the United States.
Review of government policy to ensure that service providers can compete in the
provision of telecommunications services to rural areas, where appropriate.
Extensive usage of the electronic media to aid in the awareness drive. The drive would be
aimed at enabling the citizens to utilize available data on official networks.
Promotion of IT use by the Head of the Government, ministers, and all other key figures
who can influence public opinion at all public and private forums. Ministers of concerned
ministries can be made to ensure that the departments under their control automate their
work on a priority basis.
Declaration of the next fiscal year as 'IT Year'.
Organization of special events during this year, such as a National IT Conference cum
computer exhibition in major cities, mobile computer exhibitions, international conferences
and exhibitions, IT competitions at various levels, and special programs on electronic
media.
IT in Government [64]
To embark on an aggressive program to improve efficiency and provide quality services to
the citizens of Pakistan, information technology must be inducted at all levels of
government. This induction and its effective utilization will also help in motivating others to
follow suit, since the government has a large bearing on all segments of the society.
One or two projects are being identified to provide for a practical model for other
departments. For example, the operations of the S&T ministry (and departments associated
with it) will be hosted on the Web so as to provide transparency of transactions for all to see.
The main features of such a program could include the following:
On the pattern of the IT Division, each provincial government shall create an IT
Department/Board to plan, co-ordinate, and implement government IT projects. The
Departments shall be staffed with IT professionals. Special pay scales/contracts shall be
introduced for IT professionals.
A minimum of 2% of the budget shall be allocated for IT Services and provincial as well as
federal IT departments will be allocated a substantial sum annually for developing IT
infrastructure and conducting training at all levels in the government.
Working Groups shall be formed to create awareness in all Government organizations
about the utility of computers and IT. For recommendation of these items, consent of the
Establishment Division at the Federal level and S&GAD departments of the Provincial
Governments will be obtained.
IT literacy shall be made mandatory for all future government employment, and a column
shall be introduced in the ACR form for assessment of IT knowledge and utilization by
government employees.
The Internet and Intranet e-mail shall be utilized for inter-office communication
(necessary security, digital authentication and legal cover shall be provided to secure the
validity of such communications) and the establishment should replace physical file system
to computer base file system.
The IT departments shall pre-qualify private firms to provide IT Consultancy services,
software development and products to the government. Computer and office automation
training for all management and secretarial staff shall be taken up on a priority basis and
should be outsource to the private sector. Selection of networking operators for government
projects will be done on a competitive basis and will not be restricted to PTCL/NTC only.
National databases of economic activities shall be prepared to provide facts for different
policies framed by the government. These databases shall be made accessible to the public
through the Internet, in accordance with the Laws of Pakistan. This will lead to
transparency in Government transactions and various bidding processes.
Representation from the private sector and the provincial governments shall continue in
the IT Commission for generating new concepts, solving IT related problems, and ensuring
due participation of all stakeholders in ongoing as well as future efforts towards IT
implementation. The IT Commission will provide inputs on a continuous basis. The existing
composition of the IT Commission shall be expanded and the groups formed for
formulation of the IT Policy shall continue to work as associate members of the IT
Commission.

IT in PAK Economy: E-Commerce [65]
In the new economy, information is a critical resource and the basis for competition. Old
ways of doing business are being attacked and sometimes defeated. At the social level, a
corresponding change has set in. Society's information capabilities are pervasive, making it
substantially different from an industrial society. It is much more competitive, more
democratic, less centralized, less stable, more capable of addressing individual needs, and
friendlier to the environment.
These changes dictate a major agenda of structural adjustment. Advanced countries are
aggressively pursuing their version of the agenda, and developing countries like Pakistan
must follow suit or risk falling further behind. The information adjustment required must
achieve macroeconomic and political balance while the economy struggles with
uncontrolled information flows and global competition, trade, and investment.
Broad policy recommendations for the sector
Effect systemic improvements in the functioning and competitiveness of key sectors of the
economy through strategic information policies and systems. Typical among the strategic
systems are sector-wide information systems for education, health, public sector
management and transportation, electronic payments, university and science networks,
trade facilitation, property and business registries, disaster prevention and management,
and national statistics.
Develop new ways to use information technology to help solve the most pressing
problems of human and economic developmenteducation, health, poverty alleviation,
rural development, and care for the environment.
Where the private sector can provide investment and services, the government acts as a
catalyst for the formation of markets. In information projects, where market failures are
more frequent, provide government financing and incentives. When the private sector
requires initial assistance to adjust to a highly competitive information economy, provide
assistance and incentives to empower private firms, which comprise the main engine for
growth.
The private sector is pre-eminent in deployment of the information infrastructure
through the provision of goods and services on a competitive basis. Allow the private sector
to satisfy market demands and, occasionally, give it an initial boost.
Communities and non-governmental organizations often have the best local connections
for efficient and appropriate development efforts. Encourage alliances that work through
these agents.
To provide safeguards for the privacy of individuals and the confidentiality of transactions
against all possible misuse, including that by the State, within the legal framework.
Greater role of SMEs in exports through e-commerce by providing low cost accessibility to
markets and services, which were not available before.
Simplify citizens access to government while providing choices and options for
interaction with government. IT is now being used effectively in Land Management, Water
Management, Yield Assessment, Livestock management etc. Pakistan being a
predominantly agricultural country, shall explore avenues for using IT for increasing
efficiencies in agricultural sector. A high-powered Working Group shall be formed to
recommend use of IT in Agriculture. The working group shall also explore the possibility of
inducting "Basic IT Officers" (BIT) to help the farmers in the use of IT.
Establish high profile Electronic Commerce Council of Pakistan (ECCP), to govern all the
electronic commerce (e-commerce) affairs in Pakistan.
Establish specialized work groups for planning and implementing different aspects of
electronic commerce, such as awareness, promotion, education and training; EC
infrastructure implementation; EDI; the Internet and other emerging technologies for EC
services; and laws, regulations, and standards for EC. The groups should work in
consultation with the government, businesses and EC organizations.
To encourage computerization all registered organizations shall be given tax incentives
for computerization.
All trade transaction like L/C, bills of lading, etc. shall be encouraged to be made through
electronic means.
As a tool to enforce transparency and ensure documentation in the economy all business
transactions such as import / export activities shall be given a timetable to use electronic
means.
Manufacturers and suppliers shall be encouraged to show bar codes on every item sold in
the country.
Facilitate international trade through an e-commerce infrastructure
To encourage use of E-Commerce in government for procurement, promotion of trade,
provision of information and trade related services.

Legislation and Regulations [66]
To provide protection and enhance confidence of users, providers, and facilitators of
information services, the Ministry of Law should frame legislation based on the
recommendations of the steering group comprising IT and legal experts. The UNCITRAL
model laws should be kept in mind while drafting laws.
Actions in the following areas should be considered on a priority basis:
Digital Signature Act - Laws should be enacted and/or amended to recognize digital IDs,
signature certificates, and electronic authentication and verification.
Computer Crimes Act
Tele-Medicine Development Act - This should cover the legal issues involved in
professional services provided electronically by practitioners in another country. Adequate
provision should be made for covering liabilities associated with directly accessed
information and services such as medical information or advice.
Tele-Education Act
Intellectual Property/Copyright Act and the Consumer Protection Act - The copy right
laws should be strictly enforced to protect intellectual property rights of software developers
and IT service providers while at the same time protecting the rights of the consumers
Multimedia Convergence Act
Electronic Government Act
Electronic Commerce Act
Protection of privacy, security, and confidentiality.
Admissibility of copies of electronic records in an administrative or court proceeding.
Review of existing laws to remove any contradictions that may hinder the implementation
of IT Policy.
The government should seek legislative approval of changes to statutes that will
encourage electronic commerce, and revise statutes that mandate a paper-based or manual
process.
Regulations
A regulatory framework is essential to avoid violating policy goals and direction,
incorporate social and consumer concerns in the deployment of new products and services,
and safeguard precious national resources. It shall be ensured that excessive regulations do
not stifle industry investment and growth.
In devising a useful regulatory framework, the following measures shall be taken:
Focus on creating a fair and competitive environment, based on the principles of free
market and open access.
Make optimum use of existing investments in networks. Remove restrictions on voice
transmittal, video telephony through Internet, intranet, or other data communication links.
Give network operators the freedom to build their own backbone and local access.
Encourage combined and collaborative efforts in this regard.
Facilitate rapid deployment of infrastructure for promotion of IT services.
Review government management and procurement policies to encourage competition
among telecommunication services providers in technical service standards, prices, and
development of broadband services.
Through the PTA, ensure that the Authorized Service Providers meet network standards.
To enable a free society to function, minimum amount of intrusion will be permitted in
terms of Monitoring and filtering on all kinds of communication.
Standards [67]
The government should consider standards on an ongoing basis as part of a continuing IT
planning process. To determine where to standardize, the process should consider costs and
benefits. Benefits may include:
Easier sharing of data,
Easier sharing of skills,
Economic usage of resources, and
Improved product quality.
The relevant steering group will study, review, and recommend standards to be adopted in
the use of It by the government and the private sector.
The government shall carefully consider the costs and benefits of standardization in
technologies where there are many reasonable standardization alternatives and/or no
clearly dominant standard exists. These considerations shall be settled through an open,
visible process with broad participation from relevant government representatives and
public and private sector organizations.
Standards should be published on a regular basis. The publications can be used as
guidelines by government, and public and private sector organizations throughout the
country. Where specific standards are identified as critical to the development and
deployment of a countrywide infrastructure, compliance with these should be made
mandatory.
Apart from participation in international standardization activities, the government shall
recommend standards and guidelines for the following:
Two-way electronic business transactions,
Countrywide electronic mail exchange,
Non-refutable electronic signatures,
Classification of information,
Videoconferencing systems, and
Minimum encryption standards for data requiring various levels of security.
Major E-commerce Problems
Despite the very best and most careful planning and all the help you can get, there are
certain common things that people seem to trip up on. Here are several items about taking
your story on line and electronic commerce that are often forgotten until they sneak up
behind you and bite you.
Still Got to Ship It [68]
This one gets retail stores more than it does catalogers. That's because most retail stores
aren't set up to actually ship things except as an occasional convenience for a customer.
If you move your store onto the web or do any e-commerce at all, you're going to be doing
fulfillment and shipping. The time to make arrangements for that is before you start doing
electronic commerce, not after.
If you're using a web-site to support a physical retail store, then the amount of shipping
you're likely to do will be relatively small. You can probably handle it by making sure there's
a shipping area in the back and that one of your staff is assigned to handle shipments.
In many types of specialty retail environments, we've found that a significant number of
customers (by gut-level guess is about 1/3) like to actually pick up their order at the store.
That will mean that in addition to shipping, you have to arrange for some form of will-call or
pick-up system.
If you're looking at setting up an actual web store as part of strategy, then your shipping
challenges are likely to be quite a bit larger. In this case you should be looking for a
fulfillment house, special shipping department, and special rates with carriers.
UPS, Federal Express, RPS and other package and courier companies are generally willing
to negotiate with you for special rates depending on your volume.
If a significant number of your deliveries are going to be local, then consider special
arrangements with local-based carriers whose rates are usually much better within the local
trading area.
Internet Credit Card Accounts [69]
For a while merchant credit card accounts were very easy to get. Then banks and credit card
companies made it a lot tougher because they had been burned. They were especially wary
of any kinds of transactions that do not carry a physical signature and a paper record.
Years ago that meant that they were wariest of mail order and catalog sales. Mail order and
catalog companies had a much harder time getting merchant accounts and wound up with
special provisions. Now, that same unease (magnified) applies to internet accounts.
Even if you have a merchant account now, you will probably need a special account or
special provisions for dealing with your internet sales. It's getting easier and easier to do this
but it's still a bit of a nightmare.
Pricing Issues [70]
In most retail sales, there are two general tiers of pricing. National catalog prices are
generally the lowest around because of the volume that the catalog folks do. Local retail
prices are generally quite a bit higher. If your strategy calls for internet sales outside your
geographical territory, then you have some hard decisions to make about pricing.
The three options are to go with the internet pricing, with local pricing, or with separate
pricing for different types of sales.
Internet pricing makes you competitive with other internet sites and can often be justified
on the basis of lower overhead and transaction costs. The problem is that if you go with
internet pricing across the board, you're cutting the margin on your local store sales. The
numbers here can be astounding, so be sure to do the kind of homework and analysis that
lets you know what the impact is likely to be.
If you go with local retail store pricing, you maintain good margins. The problem here is
that you may not be competitive with other internet sites. That can make you vulnerable to
erosion of overall sales and to the "handle here/order there" phenomenon that some retail
stores are already seeing.
What about split pricing? We don't have enough experience with this yet to offer a definitive
answer but most of my experience with customers over the years is that split pricing can
have two strongly negative effects. First, it can simply be confusing. And confusion leads to
lost sales.
Second, split pricing can give some customers the feeling that they are not being treated
fairly. That's even worse than a few lost sales. That can cost you major business and your
reputation.
So what's the answer? There really isn't one across the board. Instead, break out those
spreadsheets and start doing some analysis. Then make your best guess about how things
will work out for your particular situation. Once you've made that decision, commit to living
with it for at least a year.
Underestimating the Task of Data Conversion [71]
This is a slightly different problem for retailers and catalogers. In both cases, though, it's
almost certain that the form your data will need to be in for effective web commerce is not
the form it's in when you start your project.
Catalogers, who are often good at putting together paper catalogs, generally have pictures in
one place, descriptions in another, and pricing information somewhere else. Those have to
be brought together in a single, structured database in order to be effective for web
commerce.
For retailers, the problem often has to do both with not having a comprehensive database
and with having multiple schemes for organization.
Inventory organization [72]
Most retail stores operate with multiple levels of organization and sometimes even multiple
systems of organizations of the things that they sell. When you plug into an e-commerce
system, even the most sophisticated only go to about two levels. Overall, that's not a
problem. Your development team should be able to design and prepare special web pages
that make the users experience what you want.
There's still a problem, though. The problem is that you'll need to put your parts into the e-
commerce database and so you have to make a judgment about how easy it will be to move
your system into their system.

Kitting/Sets/Assemblies
Many retail stores bundle different part numbers as a set or a kit. This kind of thing often
presents problems for an e-commerce package.
In general, your e-commerce system will work best if there is a separate line item. That
means that a kit would have a particular order. It means that a red guitar would have a
different part number from a green guitar. Some systems can handle this on a limited basis,
but no major system out there can handle all of the varieties of kitting, colors, sets, and
combinations in even the simplest retail store. Take a look at what this means for you in
terms of set-up and especially in terms of your own staff work.
Discounted Orders
Many e-commerce systems have problems with automatic discounting schemes. For
example, if you have a scheme where you discount for customers who purchase above a
particular dollar amount, or on a particular day of the week, then you need to make sure
your system can handle that or that your developers can devise a way to get the same effects.
Matrix Displays [73]
If you sell a number of consumable type items, such as reeds for clarinets, you'll probably be
displaying matrices of the products. Very often your system and the e-commerce system do
not have an easy way to do this. Take a look at what you've got, what the alternatives are,
and difficulties of creating the matrices you need.
Backorders
Many e-commerce packages give you two choices -- ship complete or backorder complete.
Make sure you've thought through how you will handle backorders (and attendant shipping
cost) with any e-commerce package you are considering.
Shipping Charges
If you've got a very simple system for shipping charges, you probably won't have any issues
here. But, if you've got multiple systems based on order size, or weight, or other things, then
make sure that your e-commerce system can handle it or that your developers can devise a
way to deal with it at a price that works for you.
Tax
Tax is always an issue. It will always be an issue. Make sure your system can handle the type
of tax you need to collect and provide information to you that allows timely and accurate
filing of returns.
Drop Shipping [74]
Many retailers have certain items drop-shipped from other locations or from suppliers or
distributors. If that's you, make sure that your system can handle this or that bridging
programs can be written at a reasonable cost.
Affiliates, Commissions, Rebate Programs.
If you're considering a system of affiliates, similar to the Amazon affiliates program, make
sure that you pick an e-commerce system that can handle affiliates.
The same is true for any scheme where a person or group gets credit for a sale, whether it's
commissioned sales people, a rebate program that goes to community groups, or any similar
program.
List of Problems &Constraints [75]
Now we have discussed different problems and constraints in detail. Here is the list of all
the problems and constraints that may be a hurdle in growth of e-commerce in Pakistan.
Here is their list. (their details are already mentioned in previous chapters.)
1
st
Level Problems
Awareness & Initiative
Lack Of Knowledge
Think Its Ahead Of Time
Limited Knowledge Among Respondents Of Internet
Don't Have Previous Experience To Use Net
Hesitate Because Of Security Problems
Internal Level Of Organizational Expertise Is Limited
Infrastructure Issues
Poor Telecommunication Infrastructure
Cost Of Logging On
Costly Hardware
Slowness/ Speed Of Down Loading
Finding Your Way Around
High Cost Of Internet Subscription
Internet Access/ Concentration In Urban Area
Weak Political And Democratic Institutions
Lack Of Law Protection To Online Commerce
Lack Of An Appropriate Policy
Govt. Role
Education & Technical Know How
Technical Know How
Institutes
Availability Of Technical Staff
Testing Technical Solutions
Cost Considerations For Getting Know How
2
nd
Level Problems
Investment Level And Problems For Startups
Opportunity Recognition
Financing
Human Resource
Govt. Help
Software Related Issues
Hardware Related Issues
Web Site Related Issues
Problems In Web Site Making
Identifying Suitable Products
Strong Branding
Regular Changes
Competitive Pricing
Deciding About Web Site Quality
Easy To Use Good Layout
Graphics
Good To Look At
Interactive
Fun
Links To Other Sites
#3
rd
Level Problems
Marketing Problems
Direct Consumer Marketing
Customer Related Issues
Confidence Level Of Customer
Understand Customer Needs
Sensing The Market
Integrating Customer Needs With Technical Solutions
Post Sales Service
Product Selection
Pricing Policy
Defining Payment System
Inventory Management
Deciding Customers
Setting Rules
Promotional Method Being Used
Handling Databases
Database Management Problems
Database Updating Problems
Handling Electronic Funds Transfers
Online Transaction Handling
Credit Cards Handling
Decisions About Payment Procedures
Keeping Accounts Updates

Competition Handling
New Entrants
Complexity Of Doing Business
Company Shake Outs
Increased Competition
Decline In Profits Due To High Competition
Accounts Settlement
Online Sourcing
Electronic Ordering/ Payment
Security & Safety Issues
Spamming
Misuse Of Info
Loss Of Money
Unauthorized Access
Watching The Transaction
Forgery
Blocking Your Services
Ransom Payments
Revenue Loss
Privacy Issues
Authenticate
Prevent Forgery
Prevent Ease Dropping
Integration In Previous Business
Study How It Can Integrate Into Operations
Develop Strategy Into Business And Marketing Plans
Monitor Competitors And Suppliers
Next Chapter will move to research Methodology and questionnaire design. The above
mentioned factors will used to design the questionnaire and hence it will lead to further
research.

[1] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com
[2] N Venkatraaman five steps to dot-com strategy Slown Management Review, Spring
2000
[3] N Venkatraaman five steps to dot-com strategy Slown Management Review, Spring
2000
[4] The NEWS, May 21, 20000
[5] N Venkatraaman five steps to dot-com strategy Slown Management Review, Spring
2000
[6] Factors Influencing the types of Products. by Ian Phau, www. E-library.com
[7] Marco & Alan Developing Product on Internet Time Harvard Business Review Sep -
Oct 1999, p 108-p117
[8] Factors Influencing the types of Products. by Ian Phau, www. E-library.com
[9] Simpson poon Product characteristics and Internet commerce benefit among small
businesses www. E library .com
[10] Marketing your Products and Services on Internet http://
www.anacom.com/articles /market.htm
[11]Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[12] Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[13] Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[14] Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[15] Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[16] Juergen Seitz and Eberhard Stickel Internet Banking - An Overview www.jbc.com
[17] Sarkar & Butler, Intermediaries and Cybermediaries ; A Continuing Role for
Mediating Players in the Electronic Marketplace http://
jcmc.huji.ac.ii/vol1/issue3/sarkar.html
[18] Sarkar & Butler, Intermediaries and Cybermediaries ; A Continuing Role for
Mediating Players in the Electronic Marketplace http://
jcmc.huji.ac.ii/vol1/issue3/sarkar.html
[19] Sarkar & Butler, Intermediaries and Cybermediaries ; A Continuing Role for
Mediating Players in the Electronic Marketplace http://
jcmc.huji.ac.ii/vol1/issue3/sarkar.html
[20] Sarkar & Butler, Intermediaries and Cybermediaries ; A Continuing Role for
Mediating Players in the Electronic Marketplace http://
jcmc.huji.ac.ii/vol1/issue3/sarkar.html
[21] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com
[22] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com
[23] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com
[24] Philip Evans & Thomas S. Wurster, Getting Real About Virtual
Commerce Harvard Business Review Nov- Dec 199 p85-p94
[25] Philip Evans & Thomas S. Wurster, Getting Real About Virtual
Commerce Harvard Business Review Nov- Dec 199 p85-p94
[26] Philip Evans & Thomas S. Wurster, Getting Real About Virtual
Commerce Harvard Business Review Nov- Dec 199 p85-p94
[27] Philip Evans & Thomas S. Wurster, Getting Real About Virtual Commerce Harvard
Business Review Nov- Dec 199 p85-p94
[28] Philip Evans & Thomas S. Wurster, Getting Real About
Virtual Commerce Harvard Business Review Nov- Dec 199 p85-
p94
[29] Philip Evans & Thomas S. Wurster, Getting Real About
Virtual Commerce Harvard Business Review Nov- Dec 199 p85-
p94
[30] Quelch & Klein, The internet & International Marketing Sloan Management
Review / Spring 1996
[31] Quelch & Klein, The internet & International Marketing Sloan Management
Review / Spring 1996
[32] Quelch & Klein, The internet & International Marketing Sloan Management Review /
Spring 1996
[33] Quelch & Klein, The internet & International Marketing Sloan Management
Review / Spring 1996
[34] www.clikz.com The Five Business Models of E-Commerce.htm
[35] www.clikz.com The Five Business Models of E-Commerce.htm
[36] www.clikz.com The Five Business Models of E-Commerce.htm
[37] Marketing Research Report 1997, KPMG Group, WWW.KPMG.co.uk
[38] Marketing Research Report , KPMG Group, WWW.KPMG.co.uk
[39] Marketing Research Report , KPMG Group, WWW.KPMG.co.uk
[40] Dr. Ralph F. Wilson, The Five Mutable Laws of Web Marketing Web Marketing
Today , Issue 55, April 1, 1999
[41] Dr. Ralph F. Wilson, The Five Mutable Laws of Web Marketing Web Marketing
Today , Issue 55, April 1, 1999
[42] Dr. Ralph F. Wilson, The Five Mutable Laws of Web Marketing Web Marketing
Today , Issue 55, April 1, 1999
[43] Dr. Ralph F. Wilson, The Five Mutable Laws of Web Marketing Web Marketing
Today , Issue 55, April 1, 1999
[44] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[45] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[46] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[47] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[48] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[49] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[50] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57,
June 1, 1999
[51] Internet Marketing Power Tips Copyright 1999 by Larry Dotson Published and
Designed by: BookLocker.com
[52] Internet Marketing Power Tips Copyright 1999 by Larry Dotson Published and
Designed by: BookLocker.com
[53] DAWN Tuesday, January 23,2001
[54] Research findings of IBA report Pakistan May Do well to join the E- commerce Dawn,
may 09,2000
[55] Massachusetts Institute on Technology 1990, On Line
Shopping Marketing Review Jan- March 1999 p08 p21
[56] Massachusetts Institute on Technology 1990, On Line
Shopping Marketing Review Jan- March 1999 p08 p21
[57] Prospects for Pak IT Industry NEWS, May 06,2000
[58] Ministry Of Science & technology, IT Policy and Action Plan Govt. of Pakistan,
August 2000. www. Pakpowerpage.com
[59] Ministry Of Science & technology, IT Policy and Action Plan Govt. of Pakistan, August
2000. www. Pakpowerpage.com
[60] The Term IT Division in this document denotes the IT and Telecommunications
Division and its associated departments and organizations.
Pakpowerpage.com
[62] A proposed draft notification for Venture Capital companies has been prepared and
sent to the SECP
[63] Ministry Of Science & technology, IT Policy and Action Plan Govt. of Pakistan,
August 2000. www. Pakpowerpage.com
[64] Ministry Of Science & technology, IT Policy and Action Plan Govt. of Pakistan,
August 2000. www. Pakpowerpage.com
[65] Ministry Of Science & technology, IT Policy and Action Plan The NEWS, May 6, 2000
[66] [66] Ministry Of Science & technology, IT Policy and Action Plan The NEWS, May 6,
2000
[67] [67] Ministry Of Science & technology, IT Policy and Action Plan The NEWS, May 6,
2000
[68] Common Hidden Problems in Planning Retail E-Commerce Projects
http://www.bockinfo.com/rethid.htm
[69] Common Hidden Problems in Planning Retail E-Commerce Projects
http://www.bockinfo.com/rethid.htm
[70] Critical Considerations in Retail E-Commerce
Projectshttp://www.ambergriscaye.com/BzLibrary/trust126.html REPORT #126 Nov 1999
[71] Common Hidden Problems in Planning Retail E-Commerce Projects
http://www.bockinfo.com/rethid.htm
[72] Common Problem Areas for Retail E-Commerce Systems
http://www.bockinfo.com/retskills.htm
[73] Common Problem Areas for Retail E-Commerce Systems
http://www.bockinfo.com/retskills.htm
[74] Common Problem Areas for Retail E-Commerce Systems
http://www.bockinfo.com/retskills.htm
[75] Common Problem Areas for Retail E-Commerce Systems
http://www.bockinfo.com/retskills.htm