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E-commerce is the use of electronic communications and digital information


processing technology in business transactions to create, transform, and redefine
relationships for value creation between or among organizations, and between
organizations and individuals.
In other words Electronic commerce or e-commerce consists primarily of the
distributing, buying, selling, marketing, and servicing of products or services over
electronic systems such as the Internet and other computer networks. The
information technology industry might see it as an electronic business application
aimed at commercial transactions. It can involve electronic funds transfer, supply
chain management, e-marketing, online marketing, online transaction processing,
electronic data interchange (EDI), automated inventory management systems, and
automated data collection systems. It typically uses electronic communications
technology such as the Internet, extranets, email, e-books, databases, and mobile
phones.

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The four functions of e-commerce are:
èc Mommunication- Aimed at the delivery of information and/or documents to
facilitate business transactions. e.g. E-mail

èc rocess management-Movers the automation & improvements of business


processes e.g. networking two computers together.
èc Ýervice management-Application of technology to improve the quality of
service. e.g. Federal Express website- to track shipments & schedule.
èc Transaction capabilities-rovides the ability to buy/sell on the Internet or some
other online services, e.g. Amazon.com.

‡ Æ  c Æ Æ
c Æusiness-to-Æusiness refers to the full spectrum of
ecommerce that can occur between two organizations. Among other activities, Æ Æ
ecommerce includes purchasing and procurement, supplier management,
inventory management, channel management, sales activities, payment
management, and service and support.
‡ Æ   c Æ 
c Æusiness-to-Monsumer e-commerce refers to
exchanges between businesses and consumers, e.g., Amazon.com, Yahoo.com and
Ýchwab.com. Ýimilar transactions that occur in business-to business e-commerce also
take place in the business-to-consumer context. For instance, as with smaller
business-to-business, transactions that relate to the ´back officeµ of the customer
(i.e., inventory management at the home) are often not tracked electronically.
However, all customer-facing, or ´front officeµ activities are typically tracked. These
include sales activities, consumer search, frequently asked questions and service and
support.
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c Monsumer-to-Monsumer exchanges involve
transactions between and among consumers. These exchanges may or may not
include third-party involvement as in the case of the auction-exchange eÆay.


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Around the globe, despite a less-than-robust economic climate in most parts of the
world, there continues to be ample evidence that e-retailing is alive and well. A
rapidly growing number of consumers is online and while there, many are shopping
and buying. Even so, the sentiment surrounding e-retailing has gone from one of all
blue skies and unlimited possibility to one that may more accurately reflect the
business realities of e-retailing·s future. E-retailing has become an accepted mode of
retailing ² albeit one that will ultimately capture a very small share of total retail sales
² in most of the developed world.

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èc E-commerce, including e-retailing, is growing rapidly worldwide. Worldwide e-
commerce revenues are escalating year by year.
èc Internet-based commerce will not look the same from country to country,
especially in terms of mode of access. For example, in the U.Ý. and Manada, it
seems that M-Internet access is likely to be the preferred mode.
èc As on land, there is only room for a few retailers online to operate profitably in
each merchandise category. Ýhakeout is likely to continue to occur among
players as each market develops. Already, rationalization of e-retailers is
occurring around the globe in the form of a spate of acquisitions and business
failures.
èc Telecommunications costs are likely to continue to fall as competition
increases and government/consumer pressures mount. Lower costs of
telecommunications will likely improve the level of online penetration and/or
the frequency and length of online visits.
èc Ýimilarly, the development of e-commerce will force countries to further
deregulate their retail markets.
èc Æricks-and-clicks players and alliances will play a major role in e-commerce. E-
commerce will remain largely in the hands of established retailers. Multi-
channel players are already well-known entities, creating a higher level of trust
and a lower need for advertising and marketing expenditures, compared to
pure-play retailers.

èc E-retailers will continue to stimulate further development of value-oriented


retailing in many regions of the world. Online retailers are offering bargain-
basement prices to build their customer bases, oft combined with generous
shipping and handling promotions. And, pricing across retailers will become
more transparent as consumers can check prices online quickly and easily.
Ýhopping comparison sites are providing assistance in this area as well.
èc Mhange comes quickly. High-profile players can vanish overnight.
Technologies that seem advanced now will soon be eclipsed by competitors·
new developments. And, there will continue to be tremendous momentum
from consumers, businesses, and governments to boost the economy through
ongoing e-business progress.

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  c c (NAÝDAQ: AMZN) is an American-based multinational electronic


commerce company. Headquartered in Ýeattle, Washington, it is America·s largest
online retailer, with nearly three times the internet sales revenue of runner up Ýtaples,
Inc. Jeff Æezos founded Amazon.com, Inc. in 1994 and launched it online in 1995. It
started as an on-line bookstore but soon diversified to product lines of VHÝ, DVD,
music MDs and Ms, computer software, video games, electronics, apparel,
furniture, food, toys, etc. Amazon has established separate websites in Manada, the
United Kingdom, Germany, France, Mhina, and Japan. It also provides international
shipping to certain countries for some of its products. Amazon.com is the most
successful e-tailer in the world. Innovative technology is the backbone of the
company's success. "Its success has partly been based on superior order fulfillment,
allied to a user-friendly interface built around its patented 1-Mlick technology" and
also came up with kindle concept of having books online in a file form like pdf. a
computed file . Using its unparalleled customer database that provides the most
comprehensive insight into consumer behavior, the company will need to continue
to anticipate and address those needs in a unique way before its competitors.
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We seek to be Earth's most customer-centric company, where customers can find
and discover anything they might want to buy online, and endeavor to offer
customers the lowest possible prices.
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Our vision is to be Earth's most customer centric company; to build a place where
people can come to find and discover anything they might want to buy online.

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The company·s six core values: customer obsession, ownership, bias for action,
frugality, high hiring bar, and innovation. The company motto: ¶Work Hard, Have Fun,
and Make History·.
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èc Instant growth opportunity


èc Instant wide exposure
èc Ýtores never close
èc Unique cash flow characteristics
èc Inventory turns fast
èc Assets turn fast

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èc Instable environment
èc High competition
èc Low margin
èc Distribution problems
èc Monsumer confidence
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èc rice
èc Mustomer base
èc Distribution capabilities
èc Innovative technology
èc 9eliability
èc Alliances
èc Ærand recognisation

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èc Economies of Ýcale
èc Ýtrategic alliances
èc Æroad customer base
èc Internet storefront
èc The variety of products and services offered
èc The first mover advantage
èc Mustomer loyalty
èc Technological advantages
èc Distribution capabilities
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èc Difficulties of handling large number of customers
èc Limited operating history
èc Ýecurity awareness
èc Low margins in the sector
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èc Æuilding Alliances
èc Moncentrating on Emerging Ýegments
èc Moncentrating on Developing Markets
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èc Future of online commerce
èc Offline companies are going online
èc Heavy investments
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èc Increase the expenditure in the research and development area.
èc Increase its word-of-mouth advertisement
èc Montinue expanding its product lines
èc Further expansion of Amazon.com mostly to the developed countries
èc Ýtrive to offer low, competitive prices to its customers
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AMAZON G9OWTH 9ATE IN THE AÝT YEA9 -.7% TO 5.%.
AMAZON TALLY OF AMTIVE ÝELLE9Ý IÝ U ÆY 18% F9OM YEA9 EA9LIE9.

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èc Different clients can do business with each other by paying a commission to


Amazon.com(third party).
èc New opportunities for small and independent publishers
èc Jeff Æezos summarizes Amazon.com in the following way, "Ultimately, we're an
information broker. On the left side we have lots of products, on the right side
we have lots of customers. We're in the middle making the connections. The
consequence is that we have two sets of customers: consumers looking for
books and publishers looking for consumers. 9eaders find books or books find
readers."
èc They also have entered into apparel category.
èc Amazon auctions (known as zÝhops) were launched in March 1999, in large
part as a response to the success of eÆay. They were promoted heavily from
the home page, category pages and individual product pages. Despite this, a
year after its launch it had only achieved a . % share of the online auction
compared to 58% for eÆay and it only declined from this point.

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EÆay was founded in ierre Omidyar's Ýan Jose living room back in Ýeptember 1995.
It was from the start meant to be a marketplace for the sale of goods and services
for individuals.

They have created an experienced management team with an average of  years


of business experience and built a strong vision for the company -- that eÆay is a
company that's in the business of connecting people, not selling them things.

They quickly shed the image of only auctioning collectibles and moved into an array
of upscale markets where the average sale price (AÝ) is higher. AÝ is a key metric
in determining eÆay's transaction fees, so increasing the AÝ became an important
item. Æy forging partnerships with name brands such as GM, Disney and Ýun .

EÆay has built an online person-to-person trading community on the Internet, using
the World Wide Web. Æuyers and sellers are brought together in a manner where
sellers are permitted to list items for sale, buyers to bid on items of interest and all
eÆay users to browse through listed items in a fully automated way. The items are
arranged by topics, where each type of auction has its own category.

EÆay has both streamlined and globalized traditional person-to-person trading, which
has traditionally been conducted through such forms as garage sales, collectibles
shows, flea markets and more, with their web interface. This facilitates easy
exploration for buyers and enables the sellers to immediately list an item for sale
within minutes of registering.

Ærowsing and bidding on auctions is free of charge, but sellers are charged two kinds
of charges:

èc When an item is listed on eÆay a nonrefundable ¯   is charged,


which ranges between  cents and $., depending on the seller's opening
bid on the item.
èc A fee is charged for Œ  Œ 
  to promote the item, such as
highlighted or bold listing.
èc P Œ Œ (final sale price) fee is charged at the end of the seller's auction.
This fee generally ranges from 1. 5% to 5% of the final sale price.

EÆay notifies the buyer and seller via e-mail at the end of the auction if a bid
exceeds the seller's minimum price, and the seller and buyer finish the transaction
independently of eÆay. The binding contract of the auction is between the winning
bidder and the seller only.

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Ýince eÆay does at no point during the auctioning process take possession of either
the item being sold or the buyer's payment for the item, user trust is a key issue for
eÆay. In the traditional model of trading forums the buyer and the seller usually
exchange the item for the payment at the same time and place, meaning that trust
does not play as big a role. For eÆay to be able to convince users to participate they
must deal with the inevitable delay between the buyers buying the item and
receiving it, which is not an issue in the tradition model. Æecause access to the online
trade channel (i.e. Internet) is universal, and the physical assets required to setup an
auctioning site are all commercially available, barriers to entry in the auctioning
industry are minimal. What comes stronger into play is the network externalities
effect, as was mentioned before.

Æeing in a market with huge network externalities makes it extremely difficult for a
competitor to get a large share of the user base, since most users tend to gravitate
towards the service which already offers the most users (since it will presumable have
the greatest number of offerings.) This tremendous switching cost has the effect of
locking in customers to a single auction service provider ³ in this case eÆay.

The key success factor of eÆay is c  which is very distinctive from other e-
trailer. EÆay·s greatest strength is that it was the first to enter the online customer-to-
customer market in 1995. Ever since, EÆay gained great popularity and its brand
name became synonymous with the online auction industry. EÆay·s strong brand
image is considered its greatest strength over its competitors.

EÆay now controls the biggest share in the Mustomer to Mustomer e-market and
millions of transactions are being processed daily through its website. EÆay.com was
rated to be the easiest website to navigate by special rating websites like
Gomez.com. The site is also easily accessible from anywhere in the world. Æecause of
that, Ýellers and customers of EÆay developed a sense of loyalty and more than
twenty billion dollars worth of goods and services are traded annually through EÆay.
It is safe to say that this massive customer base and variety of products sold is
another strength that is unmatched by any other competition in this line of business.

Another point of strength is that EÆay has no issues of managing inventory. Unlike
amazon.com and other competitors, EÆay is in the business of connecting sellers and
buyers through its online website. There are no inventory counts or costs.

Other local competitors:   ,  &  etc. even
   is a major competitor of amazon.com as in organized retailing and
amazon.com is non-traditional form of retail.

EÆAY ÝALEÝ OF LAÝT YEA9 9Ý 87 74 UÆY 1 %

MA9KETÝHA9E HAÝ FALLEN ÆY % F9OM 19% TO 17%.

DEMLINE IN ÝALEÝ VOLUME 18% D9O.

INM9EAÝE IN UÝE9 ÆAÝE 85.7 MILLION IN ·9D QUA9TE9.

LIÝTINGÝ A9E WAY U, INM9EAÝING %F9OM LAÝT YEA9 TO 7 MILLION IN ·9D
QUA9TE9

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These analyses show various parameters of e-trailing and provide assistance to the
above discussed matter about the industry and players.