1. Introduction
2. Requirements of E-Commerce
3. Functions of E-Commerce
4. E-Commerce Framework Architecture
5. I-way or Information Highway
1 Introduction
e-commerce which began in the early 1970s,
grew rapidly alongside the advances in telecommunication and information
technology. Thus, today we find that there is hardly any form of business that
has not adopted e-commerce. Having made this statement, let us now look into
the various requirements that one should possess to venture into e-commerce.
This unit gives you the details of the essential components that are required
for setting up an e-commerce. The unit also highlights the various components
of the Information Highway or the I-Way that routes information and services
between the business and its clients.
grew rapidly alongside the advances in telecommunication and information
technology. Thus, today we find that there is hardly any form of business that
has not adopted e-commerce. Having made this statement, let us now look into
the various requirements that one should possess to venture into e-commerce.
This unit gives you the details of the essential components that are required
for setting up an e-commerce. The unit also highlights the various components
of the Information Highway or the I-Way that routes information and services
between the business and its clients.
2. Requirements of E-Commerce
The following are the requirements of e-commerce:
• Improved customer service
• Origin of new business opportunities
• Enhanced speed and accuracy of a product
• Product cost saving
• Improved customer services: These days, consumers want better
service. Therefore, e-commerce services offer a means of communication
between the consumer and the company. The consumer can even make
online complaints to a company. Most websites provide a different e-mail
id where complaints can be mailed. Customer-oriented organizations take
complaints very seriously. Not only are the grievances given a good
hearing. Action is taken almost immediately. It is possible for satisfied as
well as dissatisfied customers to express their opinions and also make
suggestions. The bonding between the company and the customer
strengthens.
between the consumer and the company. The consumer can even make
online complaints to a company. Most websites provide a different e-mail
id where complaints can be mailed. Customer-oriented organizations take
complaints very seriously. Not only are the grievances given a good
hearing. Action is taken almost immediately. It is possible for satisfied as
well as dissatisfied customers to express their opinions and also make
suggestions. The bonding between the company and the customer
strengthens.
• Origin of new business opportunity: Bigger network between
consumers and companies can lead to new business opportunities.
For example, a business may find infinite possibilities to develop and
increase its consumer base. A company offering gardening-related
products may also think of venturing into delivery of bouquets, cakes and
gifts on request, for a price. Companies offering toys for toddlers could
also come up with a forum where parents can interact with paediatricians
or child psychologists to clarify doubts.
• Enhanced speed and accuracy of a product: The usage of e-commerce
services reduces human errors and other problems like a duplication of
proceedings. This perfection in speed and accuracy, plus easy access to
documents and information affect the increase in production. A customer
care executive may often forget to enter necessary details of a transaction.
She may have to call up and bother the customer repeatedly to get some
information. In case of online interaction, the customer will fill in his own
details. Reconfirmation may not be necessary at all. Wastage of time and
money can be checked.
money can be checked.
• Product cost saving: Despite the fact that you can reduce the cost of a
product by the use of e-commerce services, it also reduces the errors
and the cost of sending the information to partners.
Prerequisites of E-Commerce Procedure
More and more people are getting into e-commerce. This is natural because
there are hardly any barriers to entry. Online businesses can be run from home.
You do not really need degrees and certificates to get started. However, you do
need to give the venture some serious thought. A lot of work would be required,
at least initially.
there are hardly any barriers to entry. Online businesses can be run from home.
You do not really need degrees and certificates to get started. However, you do
need to give the venture some serious thought. A lot of work would be required,
at least initially.
In order to conduct e-commerce, the main things you will require include
the following:
1. A commercial website like www.e-commerceguides.blogspot.in
2. A product or service you want to sell through the respective websites
3. Shopping carts or purchase order forms
4. Current credit card account that will be accepted on e-payment
5. An online payment gateway, if you plan to process credit cards in real
time, over the Internet
6. A secure socket layer (SSL) to secure the gateway
3. Functions of E-Commerce
E-commerce applications enable various business functions and transactions
to be done electronically. Some of the functions are discussed as follows:
to be done electronically. Some of the functions are discussed as follows:
• E-Advertising: Advertising of information is currently the largest
commercial activity on the Web. For example:
(i) A company’s website contains its profile and all the information on
its products and services.
(ii) It displays banners that can be clicked.
(iii) E-commerce portals
(iv) Newsgroups also provide publicity.
• E-Catalogues: Web pages that offer information on products or services
that a company offers are available on an e-catalogue. An e-catalogue
provides information on:
(i) Packaging
(ii) Product attributes and characteristics
(iii) Availability
(iv) Payment modes
(v) Cost, etc.
• E-Publishing: This sector was among the first few to spend on this novel
technology especially on the Internet. E-publishing has led to several
successful e-commerce endeavours, such as an independent publication
through the Internet and electronic newspapers.
successful e-commerce endeavours, such as an independent publication
through the Internet and electronic newspapers.
Online publications offer services, such as:
(i) Online reading/browsing
(ii) Online search
(iii) Customized information services
• E-Banking: This facility offers remote banking electronically. Electronic
banking is also referred to as online banking, cyber banking, home banking
or virtual banking. It enables Web users to make online purchases and
pay for the same using an online-banking facility. It is cost-effective, simple
and available 24 hours. Customers have access to several services, such
as:
banking is also referred to as online banking, cyber banking, home banking
or virtual banking. It enables Web users to make online purchases and
pay for the same using an online-banking facility. It is cost-effective, simple
and available 24 hours. Customers have access to several services, such
as:
(i) Bill payment
(ii) Electronic cheque writing
(iii) Record keeping
(iv) Tracking of bank account, credit cards
3.1 Shopping Services
Shopping services are of many types. A few of them are discussed as follows:
1. Services provided by independent businesses who send their
representatives to the stores to do comparison shopping for specific
products. A shopping service is hired on contract to compare competitive
prices or prices for the same item in competitive stores, depending on the
request, and the needs of the client.
2. Shopping services that are offered to cable television subscribers where
consumers can buy products (usually at a discount) that are displayed on
a special shopping services channel.
3. Shopping services are offered to subscribers of personal information
services for home computer use. For example, a company provides online
information to subscribers. Among the many services offered by this
company is one called products guides, from which consumers can shop
and select purchases right from their own computer terminals.
3.2 Information Services
Information service is also known as information systems. For several
organizations, information systems or information services are accountable for
IT and Management Information Systems. Different types of decisions are
supported by information systems at various levels of the organizational
hierarchy. Key information systems include information management software
and structural databases. They include the following:
organizations, information systems or information services are accountable for
IT and Management Information Systems. Different types of decisions are
supported by information systems at various levels of the organizational
hierarchy. Key information systems include information management software
and structural databases. They include the following:
• Enterprise Collaboration System (ECS)
• Transaction Process System (TPS)
• Decision Support System (DSS)
• Executive Support System (ESS)
• Management Information System (MIS)
4. E-Commerce Framework Architecture
E-commerce applications are built on the existing infrastructure for online
communication, network and connection software which frames the nascent
information superhighway.
communication, network and connection software which frames the nascent
information superhighway.
E-Commerce Applications
E-commerce can be applied in:
1. Supply chain management
2. Online banking
3. Procurement and purchasing
4. Online marketing and advertisement
5. Home shopping
Figure (A) shows several e-commerce applications, including interorganizational
and customer-oriented examples. Without each of the building blocks in the
infrastructure, none of these uses will be possible.
Figure (A) E-Commerce Applications
4.1 Client–Server Architecture in E-Commerce
The client–server model is followed by the applications of e-commerce. The
model lets the client work together with the server with the help of a request–
reply sequence governed by message passing. The server handles application
tasks, storage and security and gives scalability to increase clients.
model lets the client work together with the server with the help of a request–
reply sequence governed by message passing. The server handles application
tasks, storage and security and gives scalability to increase clients.
Client–Server Architecture
4.2 Building Blocks of E-Commerce
Enterprise applications, insights, functions and IT infrastructure form the building
blocks of e-commerce.
blocks of e-commerce.
Enterprise application software refers to software that facilitates the
performance of business functions such as scheduling (of production/
manufacturing processes, etc.), accounting, management of customer
databases/information, management of bank account/dealings, etc. It is common
to see such software hosted on servers. It is capable of serving multiple
enterprises concurrently, over a computer network. This gives enterprise software
an edge over the commonly used single-user applications which can only perform
on a user’s PC. These single-user applications can only serve one user at a
time. Enterprise software provides solutions to problems that concern the
enterprise as a whole and not individual departments. Only large enterprises
can afford to build such enterprise software. This software becomes the pillar of
the IT systems on which the entire enterprise functions and communicates.
Among other things, there are enterprise applications for various functions such
as:
databases/information, management of bank account/dealings, etc. It is common
to see such software hosted on servers. It is capable of serving multiple
enterprises concurrently, over a computer network. This gives enterprise software
an edge over the commonly used single-user applications which can only perform
on a user’s PC. These single-user applications can only serve one user at a
time. Enterprise software provides solutions to problems that concern the
enterprise as a whole and not individual departments. Only large enterprises
can afford to build such enterprise software. This software becomes the pillar of
the IT systems on which the entire enterprise functions and communicates.
Among other things, there are enterprise applications for various functions such
as:
• Finance
• HRM
• Customer relationship management or CRM
• Supply chain management or SCM
• Product life cycle or PLC management
• Enterprise commerce management
• Enterprise resource planning or ERP
All these processes, such as SCM, CRM and ERP need to be integrated
properly for e-commerce to be successful. The IT infrastructure required for the
same may include the following:
• Application servers
• Web services
• Wireless technology
• Database software
• XML
• Storage systems
• Server platform
Business intelligence would also be required for Web analysis, for
managing knowledge and content and for mining data, if required, depending
on the nature of e-commerce.
For today’s growing e-commercees, it is very important to consider the
issues of security of information and the reliability and scalability of the systems
as well. This is taken care of by integration.
The two indispensable pillars that support all e-commerce applications
and infrastructure are as follows:
and infrastructure are as follows:
(i) Public policy to govern universal access to privacy and information
pricing.
(ii) User interface and transport in the interest of compatibilities across
the entire network to dictate the nature of information publishing.
Information should be accessible by any device, which the consumer
chooses, and should be supported by any type of operating system.
5. I-way or Information Highway
Any e-commerce application will need the I-Way infrastructure in the same
manner as any normal business would require the interstate highway network
to carry goods from one place to the other.
manner as any normal business would require the interstate highway network
to carry goods from one place to the other.
I-Way is a network of interconnected data highways of several types:
• Cable TV wires
• Telephone wires
• Cellular and satellite
• Radio-based wireless
I-Way is an interactive two-way high-capacity method of transporting
information and services. I-Way is applicable in large volume e-commerce
applications as it provides traffic-free telecommunication service. I-Way helps
organizations, firms and companies in upgrading their network infrastructure.
It also helps companies and organizations in recognizing the following:
organizations, firms and companies in upgrading their network infrastructure.
It also helps companies and organizations in recognizing the following:
1. Their infrastructure
2. Ways to change their business
3. Transaction strategies (marketing, advertising, etc.)
4. Ways to sell their products and services
5. Ways to change their relationship with the customer
5.1 Market Forces behind I-Way
The market forces behind I-way are divided into two categories:
1. Requirement of market participants
2. Strategic alliances and I-way infrastructure
1. Requirement of market participants
According to market-participant demands, I-Way is influenced by the user and
the organization. The I-way superhighway is based on the behaviour of the
consumer and the producer because they have multiple roles.
the organization. The I-way superhighway is based on the behaviour of the
consumer and the producer because they have multiple roles.
The following list plays an important role in the I-Way structure. The multiple
roles of the users that help in structuring the market are:
• Numbers of users who use online services
• Consumers who pay for information and products
• Persons who provide services
• Others include third-party brokers and intermediaries
Until recently, the marketplace was divided into the communication,
entertainment and information sectors. The boundaries between communication,
entertainment and information are not absolute. For example, video is a part of
information, entertainment and communication (via videoconferencing).
Television sets and PCs are now able to interact or exchange any sort of data.
2. Strategic Alliances and I-Way Infrastructure
The success of I-Way is based on market strategies. These strategies are built
according to needs that are based on market structure, i.e., communication,
entertainment and information.
according to needs that are based on market structure, i.e., communication,
entertainment and information.
The resources required for building these three segments (communication,
entertainment and information) of I-Way are driving companies to make
maximum use of existing facilities. This is done through alliances to control
costs and create test markets.
entertainment and information) of I-Way are driving companies to make
maximum use of existing facilities. This is done through alliances to control
costs and create test markets.
Two aspects of these alliances are as follows:
(i) They cut across the industry line, a diversity suggesting that a number
of companies will perform different roles within alliances, for example,
telephone or cable companies deliver information whereas computer
hardware and software firms provide access hardware and
applications to use the data information.
(ii) Many alliances are international, signalling that I-Way will be global
from the start.
5.2 Components of I-Way
There are three major components that make up the I-Way infrastructure:
(i) Network Access Equipment or Component
(ii) Local Access Equipment or Component
(iii) Global Information Distribution
(i) Network access equipment or component
To access any network, specific equipment is required at the customer’s end
and this enables the consumer to access the network. It consists of hardware,
such as routers, switches and access devices, such as computers and set-top
boxes. Software platforms are browsers and operating systems.
and this enables the consumer to access the network. It consists of hardware,
such as routers, switches and access devices, such as computers and set-top
boxes. Software platforms are browsers and operating systems.
(ii) Local access component
Local access component is the link between businesses, homes, schools and
organizations to the main communication point also referred to as the ‘last mile’.
Last mile connection represents a tremendous investment that cannot be easily
replaced or overlooked in any network strategy.
It provides the following types of connections:
(a) Telephone-based last mile
(b) Cable-based last mile
(c) Electrical-based last mile
(d) Wireless-based last mile
organizations to the main communication point also referred to as the ‘last mile’.
Last mile connection represents a tremendous investment that cannot be easily
replaced or overlooked in any network strategy.
It provides the following types of connections:
(a) Telephone-based last mile
(b) Cable-based last mile
(c) Electrical-based last mile
(d) Wireless-based last mile
(iii) Global access component
Nowadays, e-commerce activities are not limited to any country; and with the
world becoming a global village, a proper network infrastructure is required to
connect people and businesses across the world. These types of networks
include:
(a) Long distance networks (via coaxial cable or fibre optic cable)
(b) Satellite
world becoming a global village, a proper network infrastructure is required to
connect people and businesses across the world. These types of networks
include:
(a) Long distance networks (via coaxial cable or fibre optic cable)
(b) Satellite
Online Information Service
5.3 Public Policy Issues Shaping the I-Way
Governments are expected to play a crucial role in defining I-Way. However,
there are some major issues as follows:
(i) Cost
Who will pay for constructing the I-Way? Some favour the interstate-highwaymodel with government construction, ownership and maintenance. Others
support the current, regulated, telephone-system model.
(ii) Subsidies
Subsidies include tax breaks, government, business or other forms ofencouragement. These raise an open question. What will these tax subsidies
actually subsidize?
Who will pay to extend the networks to non-profit institutions such as
schools, hospitals and the police and fire departments?
(iii) Regulation
Some enterprises argue that if a highway is built with private funds, there shouldbe no government regulation. The only regulation that should exist should be to
provide public access, privacy and reasonable tools.
Yet, there are still many issues that remain undecided:
What are the rules?
Who writes them?
Who enforces them?
(iv) Universal Access
Some economists argue that the market should decide who gets access to theI-Way. Others insist that the highway operations must provide universal access,
however, at a reasonable cost.
If the I-Way is built and run by private interests without significant
government investment, these institutions may not be able to afford connecting
to the network.
Issues that may arise are:
• How are firms ‘encouraged’ to provide universal access?• How universal is universal? Is it just nationwide or international access?
Internet-Component of I-Way Network Infrastructure
The Internet is a well-known component of I-Way network infrastructure.• Its general infrastructure targets not only one e-commerce application,
such as video-on-demand or home shopping, but a wide range of
computer-based services, such as e-mail, EDI, information retrieval
and videoconferencing, online banking, game, music, movie and
chatting.
• The Internet is a unique combination of postal services, telephone
systems, research libraries, super markets and talk show centres that
enable people to share and purchase information.
The concept of the Internet is based on networking. The basic principle is
to share information between or among computers.
‘The Internet is the network of various small networks.’
The Internet includes standalone computers, local area networks or LANs,
metropolitan area networks or MANs and wide area networks or WANs.
The Internet can be differentiated by the language spoken. It is divided
into two parts:
(a) Academic Internet
(b) Business Internet
(a) Academic Internet
The characteristics of academic Internet are:
(i) All the host computers speak the same language (TCP/IP).
(ii) It consists of various government networks, regional networks, campus
networks and some international networks.
(iii) It includes (a) NSFNET-US group of research IP network. (b) EBONEEuropean
group of IP network.
(b) Business Internet
(i) The computer can speak a variety of languages other than TCP/IP. These
include:
include:
(a) ISO/OSI x.25- based packet switching networks
(b) SNA-based BITNET
(c) Other languages for networks run by commercials
(ii) The business Internet consists of online services, value-added networks
and other e-mail only services.
The academic and business networks can talk to each other through
language (protocols) transitions called gateways, stationed at the network border.
More recently, business Internet providers have begun to adopt TCP/IP
as the standard protocol on their own networks, thus allowing smooth linkage
with the academic Internet.
I-Way includes both the academic and business Internet categories and
extends the boundaries further to encapsulate non-IP based networks such as
telecom carriers network, cable TV, mobile and cellular networks.