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ELECTRONIC COMMERCE

 ABSTRACT

 

The internet has opened up many exciting possibilities for organizing and running a business that are transforming organizations and use of the information systems  in everyday life.It’s creating  a universal platform for buying and selling goods and for driving important business processes inside the firm.Along with bringing  many new benefits and opportunities, the internet has created a new set of the challenges . In this study ,  these challenges  are described.

 

1.Introduction

 

The internet has  a range of capabilties that organizations are using to exchange information internally or to communicate externally with other organizations.This giant network of networks has become a major catalyst  for both electronic commerce and electronic business. The Internet economy has arrived. Businesses and industries of all sizes have launched e-commerce storefronts on the Web.

 

2.What is Electronic Commerce?

Tobacco, seashells, precious metals and furs were the first forms of exchange. Mondex, CyberCash, DigiCash and smart cards are now replacing the greenback in addition to credit cards in this new age of "Cyber-Commerce".

The Internet's primary attraction for commercial activity is that it is relatively low in cost from an access perspective. Commercial entities no longer have to offer products and services through privately managed communications networks. The Internet also comes with an existing and expanding user population.

Many factors are causing Internet usage to explode exponentially. These factors include: lower technology costs, increased computing capacity, the proliferation of home and business PC users, new image and voice enabling protocols, advanced networking and software technologies, and easy-to-use, inexpensive access via Internet Service Providers and commercial on-line services.

The idea of commerce conducted through Internet links has posed many questions . To date, the difficulty of providing secure payment transactions has been one of the greatest barriers to wide-spread commerce. However, development is proliferating in the areas of secure-ware, proprietary and standard cryptography technology, and networking. Some of these standards have already been deployed in the marketplace. The challenge to the banking industry, as the backbone of the payment system, is to decide how to participate in Internet commerce in a profitable and secure manner.

Online home banking and financial services have been an intense focus for both banks and non-banks. Today, several institutions are moving towards providing brokerage services through the Internet.

Just as swift as the growth in the use of the Internet is the pace of emerging technologies and the changes in the development landscape. The unprecedented opportunity of open commerce and the myriad of choices it provides has forced unprecedented collaboration across industry sectors and national boundaries. Spurred by the promise of market reach, traditional competitors are working together cooperatively to build the infrastructure for electronic commerce over the Internet. Prior to mid-1996, development was largely technology driven. Now payments system, business and regulatory experts are focused on appropriate implementation of products and payments. New alliances between in-market competitors as well as alliances between technology companies and financial institutions are now being formed to facilitate rational and speedy market implementation. Various consortia and industry organizations are aligning efforts to advance technical and standards development.

New payments services are emerging to act as intermediary between consumer and merchant especially in the area of electronic cash and coin. While the aggregation these services perform promise to keep transaction costs low, questions about safety and soundness, and regulation versus free-market activity are at issue.

An electronic system of trust analogous to that of the physical world is a significant barrier to wide-spread Internet-based commerce. In an environment where buyers and sellers have only electronic personas, technology must be employed to conclusively authenticate the parties to a transaction. And while the technology is readily available, the building of an infrastructure to support its use has only just begun. The legal framework for electronic commerce is also in early stages of development. Disuniformity in the application of commercial law and regulation will challenge Internet merchants who embark on interstate and international commerce -- the very drawing card that makes the Internet an attractive delivery channel. Although many technical standards have been developed, operating rules and standards have not. Educating potential users of the Internet will be key to its commercial success and its safety and soundness. Despite these challenges investment in new products and services continues. Will businesses and financial institutions do business through the Internet? They will if it makes rational economic sense and if commerce can be conducted with reasonable safety. Many have already begun to do just that.

Depending on whom you ask, you're sure to get very different answers. To some, it's buying everyday items like books, CDs, panty hose, or watches at virtual storefronts on the Internet. To others, it's entering complex, private Value Added Networks and ordering wings for 757s in bulk. For some, only when actual financial transactions are conducted electronically is it considered e-commerce. For others, the term covers all aspects of buying and selling, including marketing, advertising, order taking, and customer service.

Electronic Commerce (E-Commerce or EC) is the exchange of business information using electronic formats, including Electronic Data Interchange (EDI), Electronic Mail (e-mail), Electronic Bulletin Boards (EBBs) and Electronic Funds Transfer (EFT). E Commerce Technologies are designed to replace traditional paper-based work flows with faster, more efficient and reliable communications between computers. To conduct business in the current environment using E Commerce technologies requires that a business have access to a computer and a modem.

But while the borders of the e-commerce field remain fuzzy, the object of the game is perfectly clear: Making money. Whether it's by streamlining the fulfillment process, facilitating communication among employees, cutting out the middleman, or reaching new markets, e-commerce is about improving the way people do business.

 

Many businesspeople still think of e-commerce as just a buzzword. They have a feeling it's the wave of the future, but aren't quite sure how to catch it--or if they even want to. But the facts behind e-commerce are quickly proving it to be more than just a fad. According to Odyssey, a market research firm, 7 million households made an online purchase in the last six months of 1997, which is more than double the number of households that made purchases a year earlier.

The good news is that e-commerce is not only available to the big guys. Anyone with a computer and an online connection can make their presence felt on the Web. But if what you're looking for is online commerce success, you'll also need knowledge. As the old saying goes, knowledge is power, and there's no easier way to gather knowledge about the Internet than the Internet itself.

3.Some Common Terms

Digital cash: Otherwise known as electronic cash or e-cash, this is the new currency for the Internet. E-cash is just a series of numbers, but those digits mean real cash to issuing banks. E-cash is more like real cash than a credit card because it's completely transferable and reusable.

Digital signature: Just as a paper document is authenticated by a signature, an electronic message can be authenticated by a digital signature. Digital signatures are another way to assure the recipient of an electronic message that the message is coming from the right party.

Disintermediation: This is when companies sell their goods directly to customers, without going through retail outlets or another intermediary.

Electronic Data Interchange (EDI): EDI is the transfer of electronic messages from one company to another using a network. Companies use EDI to facilitate business-to-business transactions like purchase orders, purchase confirmations, invoices, and payments. EDI messages can be exchanged using a VAN or the Internet.

Electronic wallet: Rather than supplying your credit card number every time you want to make an online purchase, electronic wallets allow you to store your credit card information in an encrypted form and access it from your hard drive when you buy something.

Encryption: Encryption is a way to secure electronic data transactions by transforming the readable message into an unreadable message. In this way you can guarantee that only the intended reader can decipher the message.

Extranet: An extranet is the part of a corporate intranet that allows companies to communicate with the intranets of their customers and suppliers, facilitating electronic transactions.

Secure Electronic Transactions (SET): This is a newly developed standard for making secure credit card transactions on the Internet. Security is achieved by allowing merchants to verify a buyer's identity through a digital signature. Furthermore, customers will be able to avoid giving out their credit card numbers to merchants by submitting their information directly to the credit card issuer for verification and billing.

Smart Card: Smart cards look like credit cards but act very differently. With the use of an internal computer memory chip, a smart card can be used to store a large amount of information with a maximum amount of security, including everything from medical records to digital cash. To access or alter the information on a smart card, you have to use a smart card reader.

Value-Added Networks (VANs): These are private networks that companies can use to exchange all kinds of messages and information, including financial transactions.

            Electronic Payment System:The use of digital technologies  such as electronic funds transfer,credit cards, smart card and debit cards, and internet-based payment systems to pay for products and services electronically.

            Disintermediation:The removal of organizations or business process layers   responsible  for certain intermediary steps in a value chain.

Firewal: A firewall allows a company to protect its coprorate IP addresses from being accessed by outsiders. Filtering criteria, called proxy daemons, are used to scrutinize all incoming requests for connection. But, note Catanzano and Henderson, firewalls do not provide total security. Companies really need tiers of security.

 

4.Business Models For The Electronic Markets

  Some forms of electronic commerce exists already for over 20 years, e.g. electronic data interchange(EDI), in sectors such as retail and automotive, and CALS(Computer Assisted Lifecycle Support) in sectors such as defence and heavy manufacturing.These forms of electronic commerce have been in their diffusion and take-up.It seems an explosive development in electronic commerce.The reasons  for that are , of course, the internet and the WWW(World Wide Web), which are making electronic commerce much more accessible.They offer easily usable and low cost forms of electronic commerce.

The literature about internet electronic commerce is not consistent in the usage of the term“business model“, and, moreover,often authors do not even give a definition of the term.

Reading the literature you will find business models categorized in different ways. Presently, there is no single, comprehensive and cogent taxonomy of web business models one can point to. So I am offering my own take on some of the generic forms of business models observable on the web. They include:

Brokerage Model: Brokers are market-makers: they bring buyers and sellers together and facilitate transactions. Those can be business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. A broker makes its money by charging a fee for each transaction it enables.

Advertising Model: The web advertising model is an extension of the traditional media broadcasting model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like e-mail, chat, forums) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere

Infomediary Model: Data about consumers and their buying habits are extremely valuable. Especially when that information is carefully analyzed and used to target marketing campaigns. Some firms are able to function as infomediaries by collecting and selling information to other businesses. An infomediary may offer users free Internet access  or free hardware exchange for detailed information about their surfing and purchasing habits. This is more likely to succeed than the pure advertising model.

Merchant Model: Classic wholesalers and retailers of goods and services (increasingly referred to as "e-tailers"). Sales may be made based on list prices or through auction.

Manufacturer Model: This model is predicated on the power of the web to allow manufacturers to reach buyers directly and thereby compress the distribution channel (i.e., eliminate wholesalers and retailers). The manufacturer model can be based on efficiency (cost-savings that may or may not be passed on to consumers), improved customer service, and a better understanding of customer preferences. Perishable products that benefit from fast distribution, like fresh flowers, may prove advantageous by eliminating middlemen. The model has the potential for channel conflict with a manufacturer's established supply chain.

Affiliate Model:In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model, provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant.

Community Model: The viability of the community model is based on user loyalty (as opposed to high traffic volume). Users have a high investment in both time and emotion in the site. In some cases, users are regular contributors of content and/or money. Having users who visit continually offers advertising, infomediary or specialized portal opportunities.

Subscription Model: Users pay for access to the site. High value-added content is essential (The Wall Street Journal etc.). Generic news content, viable on the newsstand, has proven less successful as a subscription model on the web.

Utility Model: The utility model is a metered usage or pay as you go approach. Its success may depend on the ability to charge by the byte, including micropayments

These models are implemented in a variety of ways. Moreover, any given firm may combine different models as part of its web business strategy. Thus, an advertising model may be blended with a subscription model to yield an overall strategy that is profitable. The taxonomy I propose is not meant to be exhaustive or definitive. Business models on the web evolve rapidly. New and interesting variations can be expected in the future.

5.Electronic Commerce Technologies

I'll look at some of the skills most in demand at the moment. If you're considering re-training to take advantage of the E-commerce boom, these are the technical skills you should be looking at.

HTML:HTML (Hypertext Mark-up Language) is probably the most familiar Web technology as it's the language that your browser uses to display pages like this one. An HTML file is just a standard text file that contains both the content of the Web page and special formatting commands to control how the page is displayed. HTML documents can be produced by typing the formatting commands directly into the document, or by a WYSIWYG editor such as Microsoft FrontPage.

DHTML: Dynamic Hypertext Mark-up Language is a development of standard HTML (i.e. some new features have been added) which, when used with the latest browsers, allow much more flexibility in creating dynamic pages. (Dynamic pages are pages that can be modified after they are loaded.). Dynamic HTML is used (or maybe is to blame) for a lot of the jazzy animation you can find on corporate Web sites at the moment.

 

XML: Yes you've guessed it. The ML bit stands for Mark-up Language. The X stands for extensible. XML is perhaps the most important of the emerging E-commerce technologies. It is a way of structuring and manipulating data within HTML code, and also a way of specifying how that data should be manipulated.

 

JAVA: Java is a programming language that is currently the language of choice for developing Internet-based applications. It was originally developed by Sun Microsystems. It is an "object-oriented" language like its predecessor C++ and is quite similar to C and C++ in some ways, but in other ways it is very different. 

 

JAVASCRIPT: JavaScript is a simplified version of Java. Right? No, wrong. JavaScript is a scripting language developed by Netscape that runs in the browser environment. Although it is object-oriented and the syntax is similar to that of Java, it is a completely different language. JavaScript is a powerful (and relatively easy) way to control browser behavior and Web-page content, but it lacks many of the more sophisticated application development features of a fully-fledged language like Java.

ASP: ASP (Active Server Pages) pretty much describes itself. Normally your browser requests a page of HTML from a Web server and the Web server delivers the requested page. ASP  is a scripting language that allows the pages to be modified before they are served up. This doesn't sound too startling until you appreciate that ASP can link into a back-end database and can therefore deliver customized Web paged depending on the contents of the database. The important thing to remember is that ASP is code that is embedded in the Web page but is executed by the server (as opposed to JavaScript which is executed by the client/browser).

6.E_Money

A digital version of currency and exchange that will soon become the most important feature of the net. The net is what we call that agglomeration of nets and networks: the Internet, the Intranets, the World Wide Web, and all the other global components of the network of networks. Though other features have brought the net into the headlines, offices and homes of millions worldwide, e-money promises to be the biggest thing yet. It has the potential to change everything (where have we heard that before), to alter the very fabric of business and, perhaps, even to shake up economies and governments all over the world.

 

7. Electronic Commerce in 2000 and Beyond

Perhaps the most inevitable trend this year will be a backlash against Electronic Commerce, both by users and by the press. We ll be bombarded by scare stories and claims that the whole thing has been a failure and will fade away. The press of course love this build it up, knock it down type of scenario and will milk it for all it'is worth, while users whose expectations have been raised will become increasingly intolerant of glitches and any failure to deliver.

             Casualties;2000 will see a shakeout in all sizes of on-line business. Many businesses will start to make real money, but many others who haven t really understood what E-Commerce is all about, or who aren t prepared to put in the time and effort that doing business on-line requires, will have a hard time.

             Customer Service;Customer Service is going to be the big E-Commerce issue in 2000. The technology for building and running Web-stores is now well developed (if far from perfect), but if companies can t keep customers happy they won t come back.

             Business to Business Growth;It will come as no surprise to learn that I reckon the Business-to-Business area will be where the real action is in 2000. While consumer sites will always be the ones to grab the attention of the media, it will be the B-2-B sites that will be generating the cash.

            Skills Shortage;I think this could be a major problem in the next year or two. E-Commerce is a very recent phenomenon and it is growing explosively. There just won t be enough professionals, in all areas of E-Commerce, with sufficient skills to meet the demand. These is bad news for the industry, but good news for those who are looking to move into E-Commerce work and are willing to take advantage of the opportunities that will undoubtedly be around

            Ok, well what about looking a bit further ahead, say 5 to 10 years. What will be the issues that will be important in Electronic Commerce (if we re still calling it that). This is real crystal-ball stuff, but for what it s worth here s some things - in no particular order - I expect to see.

            Change From Retail to Distribution Model;Firstly, on the consumer side, I d expect to see the retail industry changing drastically. Successful retailers will become closer to what we now call distributors, using warehouses and distribution centers rather than out of town stores.                 It really isn t that big a step for many retail operations. Let s take the example of a big out-of-town store selling household appliances. At the moment, if I want to buy a new cooker for example, I will drive to the store, select the appliance I want and then arrange for it to be delivered to my home at a convenient time. In most cases the cooker will be delivered, not from the store, but from a local or regional distribution center or possibly even drop-shipped by the manufacturer.

            It really isn t that big a step to cut out the store and order directly over the Web. The infrastructure is already in place, and as the proportion of the company s business done on the Web increases then the pressure to reduce the number of traditional retail outlets will increase. Especially as they will be competing with a new breed of Web-based companies who, as they have lower overheads, will offer the same goods at lower prices.

            In fact of course this process is already happening. When I did buy a cooker recently I went to the local store as usual, selected the model I wanted and then went home and ordered it directly over the Web from a Web-based company who offered it 25% cheaper. Things are changing fast!

             eCash;Sooner or later it s got to happen. We need a standardized currency on the Net. Credit cards work OK but they were never really designed to be used in this way and they are expensive for the merchant. Small or micro transactions of only a few cents aren t viable with credit cards, but would enable a whole variety of pay-as-you view payment options to be developed. An electronic currency of some form is inevitable.
 

             Globalization;The Web is truly international and this raises some interesting possibilities for international trade. Small businesses all over the world are able to access each others E-Commerce sites and this will make it much easier for very small import/export business to flourish. I d expect to see a significant increase in international trade between small and very small businesses Globalization isn t necessarily only concerned with large multinationals.

8.Conclusion

The internet  provides a universally available set of technologies for electronic commerce that can be  used to create new challanges for marketing, sales, and customer  support and to eliminate intermediaries in buy and sell transactions.There are many different business models for electronic commerce  on the internet , including virtual storefronts,marketplace concentrators, information brokers content providers, digital content delivery, and electronic clearinghouses.Interactive capabilities such as the Web, e-mail, and discussion  groups can be used to build closer relationships with the customer in marketing and customer support.

Use of the Internet for the electronic commerce and electronic business is in its fancy.Some of the new business models based on the internet have not yet found proven ways to generate profits or reduce costs.Security, privacy,legal issues, network reliability, bandwidth, and integration of internet_based applications with the firm’s legacy systems pode additional challenges to internet computing.

The electronic commerce  is the new concept for us.And  it is certain; The Changes around the world  effect  us .But it is hard to foresee the results of the electronic commerce applications on the firms and economies.

 

9.References

 

Ø      http://www.supercadde.com/dukkan/e_ticaret/index.htm

Ø      http://www.ibmturk.com

Ø      http://www.kobinet.com

Ø      http://www.ecommerce.gov

Ø      http://www.doc.gov/ecommerce

Ø      http://www.ecommerce.about.com

Ø      http://www.ecommerce.ncsu.edu

Ø      http://www.stanford.edu

Ø      http://www.dmreview.com

Ø      http://www.prenhall.com