ELECTRONIC COMMERCE

The term electronic commerce or E-commerce is used to describe doing business over the Internet.
According to World Trade Organization (WTO) definition of Electronic Commerce the term electronic commerce is understood to mean the production, distribution, marketing, sales, or delivery of goods and services by electronic means. The Alliance for Global Business (AGB) defines electronic commerce more broadly incorporates all value transactions involving the information, products, services or payment via electronic networks. This communications as the medium through which goods and services of electronic value are designed, placed, advertised, catalogued, inventoried, purchased or delivered.

Usage of E-Commerce
E-commerce means advertising, selling and supporting products and services using a Web Store around the clock for customers worldwide. The Web Store, or store that works while you sleep, is not geographically or politically restricted. It has global reach. E-commerce has been described as the new economic paradigm. 2002 project total e-commerce transactions projected to exceed over $1 trillion dollars annually. A direct, real-time, producer to consumer virtual marketplace will dominate the national and global economies. Hundreds of thousands of new and agile companies will emerge from around the globe. Opportunity for prosperity will abound for those prepared to take advantage of it. The implications for businesses, both large and small, are clear.

Brief History of Electronic Commerce

The need for electronic commerce stems from the demand within business and government to make better use of computing and to better apply computer technology to improve customer interaction, business processes, and information exchange both within an enterprise and across enterprises. During the 1970s, the introduction of electronic funds transfer (EFT) between banks over secure private networks changed financial markets. Electronic funds transfer optimizes electronic payments with electronically provided remittance information. During the late 1970s and early 1980s, electronic commerce became wide spread within companies in the form of electronic messaging technologies, electronic data interchange and electronic mail.

 In the late 1980s and early 1990s electronic messaging technologies became an integral part of workflow or collaborative computing systems (also called GroupWare). A prominent example of such systems is Lotus Notes. In the mid 1980s, a completely different type of electronic commerce technology spread among consumers in the form of online services that provided a new form of social interaction (such as chat rooms and inter-relay chat IRC) and knowledge sharing (such as news groups and file transfer programs). Social interaction created a sense of virtual community among the cyber space inhabitants and helped give rise to the concept of a global village. By using the global Internet, people can communicate with others around the world. In the 1990s, the advent of the World Wide Web on the Internet represents a turning point in electronic commerce by providing an easy to use technology solution to the problem of information publishing and dissemination.

FEATURES OF E-COMMERCE
Electronic commerce refers generally to all forms of transactions relating to commercial activities, including both organization and individual that are based upon the processing and transmission of digitised data, including text, sound and visual images. It may be interpreted differently by different people but the distinctive features of ecommerce are that it extends beyond the boundaries of a single enterprise, and it can be applied to almost any type of business relationship. E-commerce is the paperless exchange of routine business information using electronic data interchange (EDI) and other technologies, including e-mail, e-bulletin boards, fax machine and electronics transfer of cash. It involves individuals as well as organisations engaging in a variety of E-business transactions using computer and telecom networks. Traditionally, e-commerce focussed on EDI as the primary means of conducting business electronically between and entities having pre-established business conducted over the Internet, particularly the Web. This is because of the Webs popularity and the acceptance of the Internet as a viable mechanism

for the transfer of business information. Over interest here is in e-commerce that takes place via the deployment of Internet and Web based technologies. One thing thats become increasingly clear over the last three years is that e-business is more than a technology discussion. The move to e-business requires a clear vision of what needs to be done.

Forces Fueling Electronic Commerce

Interest in E-Commerce is being fueled by

1. Economics forces 2. Marketing and Customer interaction forces 3. Technology driven digital convergence

1. Economic Forces
Under relentless pressure to reduce costs and stay competitive, firms are attracted to the economic efficiencies offered by electronic commerce. These economic efficiencies include low-cost technological infrastructures that reduce the cost burden of technology upgrades and obsolescence, low-cost and accurate electronic transactions with suppliers, the low cost of global information sharing and advertising, and the ability for firms to provide low-cost customer service alternatives to expensive retail bank branches and telephone call centers. The economic forces motivating the shift to electronic commerce are internal as well as external. The immediate application of electronic commerce is on the internal integration of firms operations. External integration models the vast network of suppliers, government agencies, large corporations, and independent contractors into a single community with the ability to communicate across any computer platform. Internal integration is perhaps even more vital than linking with the outside. In an internally integrated organization, incoming orders are received electronically and the information is automatically sent not only to production, but to shipping, billing, and inventory systems as well. Internal integration also ensures that critical data is stored digitally in formats and on media that permit instantaneous retrieval and electronic transmission.

The ability to coordinate the movement of information is key to both external and internal integration, and firms need to find ways to design business processes that change the way data is created, manipulated, and distributed. While technology is important to information integration, coordination of that information is indispensable. Coordination requires that employees, customers, and suppliers work together to solve problems, improve services, and create new products.

2. Marketing and Customer Interaction Forces

Companies also employ electronic commerce to marketing channels, to target microsegments or small audiences, and to improve post sales customer satisfaction by creating new channels of customer service and support. Companies want to supply target consumers with product and service information in greater detail than that provided in a television or full-page advertisement. As more companies flood the marketplace with new products, target marketing is becoming an increasing important tool of differentiation. Not only are new types of products emerging, but so are new players in old product categories, new spins on traditional plans, new pricing strategies, new target markets, new market research methods and more. The message for marketers is clear: the purchasing climate and the products change quickly. In order to be competitive, marketing executives must employ technology to develop low cost customer prospecting methods, establish close relationships with customers, and develop customer loyalty. Marketers must adapt to a business world in which traditional concepts of differentiation no longer hold; in this world quality has a new meaning, content may not be equated with product, and distribution may not automatically mean physical location. In this new environment, brand equity can rapidly evaporate, and marketers need to understand how customers allocate their loyalty. In light of this, marketers in all industries are seeking new ways of interacting with customers and delivering services.

3. Technology and Digital Convergence

Digital technology has made it possible to convert characters, sounds, and pictures and motion video into a bit streams that can be combined without loss of quality. As a result, electronic commerce and the multimedia revolutions are driving the previously disparate industries such as communications , entertainment, publishing, and computing worlds into evercloser contact, forcing industries with traditionally different histories and cultures to compete and cooperate.

The relentless advance of technology, the emergence of multimedia standards, and the shift to distributed computing and internetworking are providing the raw power for the digital convergence. Convergence has two dimensions:
(i) Convergence of content (ii) Convergence of transmission technology

(i) Convergence of content: Convergence of content ensures that digitized information can be processed, searched, sorted, enhanced, converted, compressed, encrypted, replicated, and transmitted at low cost. Convergence of content enables sophisticated information publishing and browsing tools. Content convergence also enables companies to use networked databases and electronic publishing to improve corporate and individual decision making and information processing. Content convergence enables the coordination and integration of business processes or workflow.

(ii) Convergence of Transmission: Convergence of transmission compress and stores digitized information so that it can travel through existing phone, wireless and cable wiring systems. Convergence of transmission is a convergence of communication equipment that provides the pipelines to transmit voice, data, image, and video over the same line. Transmission convergence over a single line makes it easier to connect computers and consumer electronic devices and to enhance a wide range of image intensive or applications.

Implications of Various Forces

Economic and marketing forces and digital convergence have influenced how industries are repositioning themselves to take advantage of new opportunities, including the creation of entirely new service delivery channels, the development of new markets for existing products, and the development of new information based products for the online environment. Digital convergence is reshaping the competitive environment for telecommunications services around the globe. In response to the intensified competition and reduced margins on basic telephone services in telecom markets, network operators are building new computer driven intelligent network s in orders to offer a wide range of value added services. These

services fore shadow a looming battle between rival cable TV & telephone net work operators, over which systems will deliver video on demand, video games, home shopping & banking, and other interactive consumer services to the home. But before companies can exploit the capabilities of electronic commerce and make it an industrial strength for business, they need to understand the technological framework better.

Classification of Electronic Commerce

There are three distinct general classes of electronic commerce applications:

1. Inter-organizational (business to business) 2. Intra-organizational (within business) 3. Consumer to business

1. Inter Organizational Electronic Commerce

From the inter organizational perspective, E-commerce facilitates the following business application:

(i) Supplier management: Electronic application help companies reduce the number of suppliers and facilitate business partnerships by reducing purchase order processing costs and cycle times, and by increasing the number of POs processed with fewer people.

(ii) Inventory management: Electronic applications shorten the order shipbill cycle. If the majority of a businesss partners are electronically linked information once sent by fax or mail can now be instantly transmitted. This also helps to reduce inventory levels, improve inventory turns, eliminate out of stock occurrences.

(iii) Distribution management: Electronic applications facilitate the transmission of shipping documents such as bills of lading, purchase orders, advanced ship notices, and manifest claims, and enable

better resource management by ensuring that the documents themselves contains more accurate data

(iv) Channel management: Electronic applications quickly disseminate information about changing operational conditions to trading partners. Technical, product, and pricing information that once required repeated telephone calls and countless labor hours can now be posted to electronic bulletin boards. By electronically linking production-related information with international distributor and reseller networks, companies can eliminate thousands of labor hours and ensure accurate information sharing.

(v) Payment management: Electronic applications link companies with suppliers and distribution so that payments can be sent and received electronically. Electronic payment reduces clerical error, increases the speed at which companies compute invoices, and lowers transaction fees and costs.

2. Intra-Organizational Electronic Commerce

The purpose of Intra organizational applications is to help a company maintain the relationships that are critical to delivering superior customer value. How is this accomplished? By paying close attention to integrating various functions in the organization. From this perspective Intra-organizational, E-commerce facilitates the following business application:

(i) Work group communications: These applications enable managers to communicate with employees using E-mail, videoconferencing, and bulletin boards. The goal is to use technology to increase the dissemination of information, resulting in better-informed employees.

(ii) Electronic publishing: These applications enable companies to organize, publish, and disseminate human resource manuals, product specifications, and meeting minutes using such as the

World Wide Web.The goal is to provide the information to enable better strategic and tactical decision making throughout the firm. Also, online publishing shows immediate and clear benefits: reduced costs for printing and distributing documentation, faster delivery of information, and reduction of outdated information.

(iii) Sales force productivity: These applications improve the flow of information between the production and sales forces, and between the firms and customers. By better integrating the sales forces with other parts of the organization, companies can have greater access to market intelligence and competitor information, which can be funneled into better strategy. The goal is to allow firms to collect market intelligence quickly and to analyze it more thoroughly.

3. Consumer to Business E-Commerce

In electronically facilitate consumer to business transactions, customers learn about products through electronic publishing, buy products with electronic cash and other secure payment systems, and even have information goods delivered over the network. From the consumers perspective, E-commerce facilitates the following economic transactions:

(i) Social interaction: Electronic applications enable consumers to communicate with each other through electronic mail, videoconferencing, and newsgroups.

(ii) Personal finance management: Electronic applications like Quicken enable consumers to manage investments and personal finance using online banking tools.

(iii) Purchasing products and information: -

Electronic applications enable consumers to find online information about existing and new products/services.

Intermadairies and Electronic Commerce

Intermediaries (or electronic brokers) are economic agents that stand between the parties of a contract (or transaction), namely buyers and sellers, and perform functions necessary to the fulfillment of a contract. Most firms in the financial service sector, including banks, insurance companies, mutual funds, and venture capital firms, are intermediaries. Other well-known forms of intermediaries are brokers, agents, traders, and mediators. A given intermediary implementation can serve concurrently more than one of these forms, or roles. Consider online retailing. Online intermediaries change the traditional retail distribution pipeline. Traditionally, the same firm would handle nearly every stage of a products life cycle, including design, manufacturing, warehousing, marketing, packing, and shipping. Online products are handled differently. A company sends out a description of a product via public information, a consumer responds with an order, the vendor modifies the product to suit individual tastes, and the product is shipped directly to the buyers home or business. The result is more efficient production and distribution and; at least in theory, lower prices.

SUPPORTING PILLARS
There are two supporting pillars for all-electronic commerce application and infrastructure, which are given below

Public policy

Technical standards
Public policy

Public policy related to e-commerce encompasses such issues as universal access, privacy, and information pricing. Unlike business activities, which the commercial code and detailed case histories, electronic commerce govern currently poses basic policy and legal questions. Information traffic policy issues deal with the cost of accessing information, regulation to protect consumers from fraud and to protect their right to privacy, and the policing of global information traffic to detect information piracy or pornography. Again, the issues themselves, let alone solutions, are just now evolving and will become increasingly improvement as more people enter the electronic marketplace.
Technical Standards

Technical standards dictate the specifies of information publishing tools, user interfaces, and transport. Standards are essential to ensure compatibility across the entire network. Just as traditional transportation networks such as railroads face difficulties with different track standards in different countries, differing standards in electricity distribution and video distribution limit worldwide use of many products.

Principles of starting E-Business

It is pretty overwhelming to start any new business, let alone an on line business, as one should know starting a business is just like getting married, you have to be patient, a true devotee, faithful, spend enough time, enthusiasm, genuine efforts and the last but not the least spend money.

Hope following will help you get going.

PLAN, PLAN, PLAN
Most businesses fail because of two major reasons.

1. Not well thought out plan. 2. Inadequate funds.

TIP:

A sound business plan can help you gather the support you need to get your idea off the ground. A comprehensive documents not only lets interested parties see that you've thoroughly researched your idea, but also that you've critically examined ways to implement it. . You should register or incorporate a company name for your business, even if you're a sole proprietor.

TIP: Get your business Incorporated

Check with your town, city, state to see if you are required to purchase a permit or license for operating a business.
What you need to get started

1. A good powerful and fast computer.

2. A reasonably fast Internet access 56 kbps or better, ISDN, DSL or Cable 3. You'll need to find an Internet Service Provider (ISP) so that you can connect to the
Internet.

TIP: Get the access for as low as $10 a month

Since you will be spending considerable time surfing the net sign up and get paid to surf programs.
Application of E-commerce

Successful E-business applications are based on standards that span multiple platforms. They are server-centric because you cant control all the types of clients youll want to access them over time. They extend existing application.

E-business application model

E-business application model for the heterogeneous world of e-business application. The model was created to extend your existing investment in applications, systems, data and skills.

Application framework
Developers have told us that they need a model to help them develop and their ebusiness applications. Thats why we built the application framework for ebusiness.

The framework consists of:

A set of industry standards and technologies Proven methodology Leadership products

Industry standard:
The framework is based on multiplateform, multivendor standards like Java technologies, CORBA and XML.It includes the client application server, network, data and infrastructure standards that make it possible for a client to access services and data anywhere in the network.

Proven methodology:
Industry standards are just the beginning. Customers are building and buying missioncritical applications and they need to know what works. This ongoing process is focused in four-area methodology for business analysis, application a design, application development and application deployment.

IMPLEMENTATION INPAKISTAN

OF

E-COMMERC

About 137 different sets of laws, ordinances, acts, rules and procedures requiring consideration are to be studied exhaustively with reference to electronics commerce, by working groups of the ministry of science and technology after the framing of information technology legislation. Yet, even as this is continuing, working groups are trying to close the e-commerce gap, across wide front. The E-Commerce national plan is a work in progress All major stack holders have already give their commitment to implement E-Commerce imperatives. So what has been made some of the progress so far on implementing the E-Commerce action plan. E-Commerce working groups, was given a government mandate by the Ministry of Science and Technology, to promote and implement Electronic Commerce as per the action plan. The working group function in lieu of an Electronic Commerce Board, which will consist of representatives of all stockholders. The EC Board is a focal point for implementation if e-commerce in the country It function can be better aided with the help of legislation which will provide guidelines to operate.

Reasons for adopting E-Commerce

Reduced cost of handing business transactions. Reduced cost for material and services to support paper transactions. Increased speed of business. Shrinking of the order receipt pay business cycle. Improved trading partner relations Improved intra-company flow of data Situations ideally suitable for EDI/XML

DEVELOPMENT OF E-COMMERCE
E-commerce is a powerful force unleashed by information technology that is growing faster than any other technology in history. Information revolution of the last decade of the twentieth century is expected to have even more far-reaching effects than the industrial revolution of the 17Th century.

By adoption of E-commerce
Among some of the national objectives given in the report is no less than the countrys survival in the emerging E-commerce economy; Increase the share of e-services in the Gross Domestic Product Greater transparency Revenue collection efficiency Better monitoring and supervision in the economy Facilitate international trade Diversify exports
Importance of E-Commerce

If we can implement the systematic national plan, the country; will not have to beg the International Monetary Fund for money as it is presently doing every year.

IMPACT OF E-COMMERCE IN DIFFERENT FIELD

E-commerce issues that the legal value of electronic records; The economic implications; Impact on online banking; On capital markets; In the insurance industry; Custom duty implication; Sales tax implication; Tax policy implication and the impact on tax administration; On financial services;

 Jurisdiction of the courts over Internet; The impact on exports and trade; Implications for the suitability of all aspects of the present telecommunications network to support an electronic commerce infrastructure as well as its deregulation; Impact on ports and shipping;

How E-Commerce will affect the manufacturing sector

The admissibility of electronic document for evidential purpose and whether an electronic document may have the same evidential weight as a paper-based document; cryptography legislation so necessary in the digital age; the multidimensional problem of electronic payments systems and the need for certification authorities.

Difference of GDP betweenPakistan and U.S.A.

&

ICTs

At present, a little over 5 percent of Pakistans gross domestic product (GDP) consists of the services sector out of which 2.5 percent is the financial services sector, while 3 percent is the information and communication technologies (ICTs) sector. To measure how far Pakistanhas to travel as a comparison benchmark, it must be understood thatUSAs ICT Sector alone is over 50 percent of that countrys GDP.

Introduction:Welcome to the E-Commerce Tutorial. Would you like to be able to accept secure, real time credit card transactions on your web site? Well, here's how! This tutorial will show you how to get started in the complex and exciting world of Electronic Commerce.
This is how E-Commerce works:-

The consumer moves through the internet to the merchant's web site. From there, he decides that he wants to purchase something, so he is moved to the online transaction server, where all of the information he gives is encrypted. Once he has placed his order, the information moves through a private gateway to a Processing Network, where the issuing and acquiring banks complete or deny the transaction. This generally takes place in no more than 5-7 seconds. There are many different payment systems available to accommodate the varied processing needs of merchants, from those who have a few orders a day to those who

process thousands of transactions daily. With the addition of Secure Socket Layer technology, E-Commerce is also a very safe way to complete transaction.

There are several basic steps involved in becoming Commerce Enabled.

Getting an Internet Merchant Bank Account. Web Hosting Obtaining a Digital Certificate. Finding a Provider of Online Transactions. Creating or purchasing a Shopping Cart Software.

Getting an Internet Merchant Bank Account

In order to be able to accept credit cards over the Internet, you must apply to your bank for an Internet Merchant Bank Account. This can be relatively easy or somewhat difficult, depending on which country you live in and what bank you are with. U.S.A.: In the US, this is a fairly simple procedure. Many banks offer Internet Merchant Accounts, and most Online Transaction Providers will support them. See your bank for details. International: Since the vast majority of Online Transaction Providers are located in theUS and are restricted in their ability to interact with banks outside their own country, international merchants have very little choice. An international merchant has to find a way to get a US merchant account, embark on the equally difficult task of finding a local Online Transaction Provider, or utilise one of the few companies that services the international market. Also, many banks outside the US have very restrictive policies regarding Internet accounts. Luckily, the situation is improving, and most Online Transaction Providers will help you with this if you get in touch with them. In the ratings section, I have included information on which providers give international service. Here are some additional issues to keep in mind when you apply for a Merchant Bank Account: A US merchant account can take up to a month to come through.

 If you already have a merchant bank account, you will probably also need to upgrade it to an Internet account. Ensure that your bank accepts Internet merchant accounts and has credit card processors that can connect to FDC, Paymentech or CyberCash. Your account must be able to handle Card Not Present transactions.

Finding a Provider of Online Transactions

Before you start looking for a provider, You should stop for a moment and consider what exactly you need. How many transactions do you expect to be completing in a month? How many products do you have to put on your web site? How complex does the software need to be? How much are you willing to spend? There are a lot of online transaction providers out there, and they all have varying packages. Deciding on a provider's package that fits your needs is perhaps the most important aspect in creating an E-Commerce website. The Directory page provides a good cross section of the companies out there. It is a good idea to go through a few of them and compare their prices and services. For a quick breakdown of the most popular packages these companies provide, visit the summary section.

Obtaining a Digital Certificate

A digital certificate, also known as a SSL Server Certificate, enables SSL (Secure Socket Layer encryption) on the web server. SSL protects communications so you can take credit card orders securely and ensure that hackers cannot eavesdrop on you. Any E-Commerce company will require you to have SSL before you can use their services. Web hosting is a very important step in this process, as this is how you gain a presence on the Internet in the first place. It is important that the web hosting company is capable of providing you with the level of service that you need to maintain your Web Store. A few things to look for are: Good uptime Good technical support

 Fast connection to the Net Staff that is knowledgeable about E-Commerce Compatibility with major E-Commerce providers

Shopping Cart Software

Shopping cart software is an operating system that can be used to allow people to purchase your items, keep track of your accounts, and tie together all of the aspects of your E-Commerce site into one cohesive whole. While there are many other types of software that you can use in it's place, such as catalog software or a flat order form, shopping cart software is the most popular and the most widely known. Many Online Transaction Providers will have shopping cart software that comes with their service, but it can often be very expensive, so be warned. If you cannot afford to spend at least a couple of hundred dollars on this software, you should be looking for a package that offers it as a rental included in the monthly service charge, or one that offers a simple flat order form.

Conclusion
E-Commerce can be a very rewarding venture, but it should not be undertaken lightly. There is a lot of information to absorb. Here are some additional tips on creating a successful Online Store: If you know nothing about web design, it is probably a good idea to hire a designer. Marketing your site is very important on the web. Here are some useful tips: Submit your site to as many search engines as possible. Try finding web sites with similar themes and make deals to create reciprocal links. Create an advertising banner and purchase space from a popular website to display it. Put your URL in the signature file of your email and the header of all business correspondence. Word of mouth is very powerful on the Net; tell all of your friends about your page. Avoid spanning - it is a sure way to get a very bad reputation. Investigate the web sites that are possible rivals and formulate a strategy for competing against them.

 If you anticipate a lot of growth in the amount of orders coming through your site, figure out how you are going to cope with the increased loadbefore you get swamped. Now that you know the basics, you should be able to make some informed decisions about how to proceed. Remember that you can ask for further advice from the company that you decide to employ.