This is a dissertation chapter example on E-Commerce topic:
Electronic Commerce (e-commerce) is defined as the conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools such as the Internet.
E-commerce is often used in a much broader sense, to mean essentially the same as “electronic business” (EB). This includes for example, buying and selling products with digital cash via Electronic Data Interchange (EDI).
Examples of Electronic Business that are not E-commerce include registration and licensing processes, student enrolment, and court administration.
E-commerce encompasses many areas, which include electronic catalogues that refers to means whereby sellers can communicate their offerings to potential buyers. Also, electronic data interchange (EDI) that refers to a particular family of standards for expressing the structured data that represent E-commerce transactions; and electronic auctions which is a particular set of mechanisms that help in the setting of prices.
E-commerce can be understood as a system designed as an online storefront that manages orders and inventory, processing transactions, where people can buy and sell goods and services, including sports, computers, hobbies, antiques, electronics, books, music, automobiles, holidays and much more, all around the world. The goods and services available through E-commerce can be finished goods as well as raw materials for the manufacture of other goods or services that are provided for the same reason.
As a system, E-commerce built its own tools that would help its users set themselves in a new specific context where they now find new ways of communicating, buying, selling, and interacting in the market. This has been true to the point that new terminology, rules, and conditions have been created; even the interaction between customers and sellers is different and the notions of trust and confidence between them have been changed.
With appearance of e-commerce new market and business concepts arose in the world’s economy, such as Business to Business Electronic Commerce (B2B EC), that is the use of private networks on the Internet to automate business transactions between companies.
The electronic data interchange (EDI) has been the primary standard that has been used. It has typically been applied through the use of a Value Added Network (VAN) in which companies are able to do business on line after obtaining the membership to a particular Value Added Network (VAN).
The implementation costs for the technologies required excluded small businesses until the emergence of the Web electronic data interchange (EDI) that, through the use of web technologies, allows them to join in.
The Business to Consumer Electronic Commerce (B2C EC), which is a new retail sale model: the web market. It enhances the previously used business models by offering a global audience, unlimited product selection, portal sites that refer consumers to the actual purchasing site and it focuses in marketing that can be quickly tailored to consumer.
The E-business can also be understood as a process, because it is the transformation of key business processes through the use of the Internet technologies. Where large and small companies are equally using the web to communicate with their partners, to connect with their back-end data systems, and to complete transactions.
The web merges the standards, simplicity and connectivity of the Internet with core processes that are the foundation of business.
The E- commerce process includes some basic selling catches such as:
· Electronic presentation of goods and services
· Online order taking and bill presentment
· Automated customer account inquiries
· Online payment and transaction handling
Many companies have succeeded because they have used the E-business as a strategy, developing a dynamic database-driven online catalogue, providing on-line ordering by securely integrating the front-end presentation with an order entry system, moving static billing statement data to an interactive Web-based presentment server and accepting electronic payment methods for full transaction shopping or bill payment.
E-commerce is known to use some tools such as electronic commerce service and a particular payment system, to make its use easier for customers and to secure transactions.
The Electronic Commerce Server can be best defined as a web software that runs some of the main functions of an on-line storefront such as product display, on-line ordering, and inventory management. The software works in conjunction with on-line systems to process payments.
A good example of commerce server could be “Microsoft Site Server Commerce Edition” that is best suited for B2C applications.
The Payment System is based in three methods that are processes that use debit or credit card models, electronic funds (a digital cheque), and the digital cash.
Browser plug-ins known as electronic wallets present vendors with identification, credit card information and digital funds, and are freely made available to users through browser vendors and merchant sites.
Digital Cash is a payment system that simply transfers digital representations of funds from one computer to another. Like serial numbers on real dollar bills, the digital cash numbers are unique identifiers carrying a given value, while each one is issued by a participating bank and represents a specified sum of real money. One of its key features is that the real cash, it is anonymous and reusable.
E-commerce is subject to regulations and standards, some of the standards that are in use include but are not limited to Secure Electronic Transaction (SET), that have been widely adopted by credit card companies as Visa, Master Card, American Express and Novus-Discover; and Bank Internet Payment Systems (BPIS), that is the joined effort being adopted by the major US banks, government agencies and high technology firms.
This way of doing business offers benefits to its users that have been made possible by the birth of the Internet. The E-commerce is based in a new concept that as been said previously, has changed the way people buy, sell and interact in a business setting. It has created new criteria in which a much more informed decision is made by the customer. This makes the sellers responsible for informing in a suitable way now that the businesses are made totally consumer oriented, being based on a model of perceived customer value in a business-to-consumer setting. Where the customer value included in the model are valence of on-line shopping experience, perceived product quality, perceived risk, and product price.
The online shopping and selling experiences changed in a way that it became less time consuming and much less of a hassle for the customers, as well as for sellers who do not have to incur in many costs as they did before, such as the cost of a selling force, extensive paper work, and eventually the cost of installing or refurbishing a selling point.
As a benefit for both sellers and consumers, E-commerce is an optimal way to bring a product and the opportunity to make a deal with it close to the consumer.
Something else that can be considered as a value added to the value chain of products sold through E-commerce is that it is not the selling of the product in its self, but the selling of a good service, which means that without seeing what you are buying you know or assume that you can be confident of what you are buying and who you are buying it from. Trying to do on an Internet based transaction would not be safe if this service was not reliable. By this it is said that an important valued asset of E-commerce is the reliability on the service.
As consumers have on hand information available about each of the products including the quality, the dimensions, the uses, and special features, they expect to receive the products just as it was advertised, so the standards of quality are expected to be strongly enforced by the manufacturers.
Also very important becomes the easier way of comparing one product with the other and one price with the other, which makes competition stronger and more price oriented, just with a click and in minutes you can browse through the web pages of different manufacturers or providers of the same kind of products and compare quality, services and prices.
The advantages that E-commerce provides for consumers and for sellers can be seen from different scopes, depending on each industry and in some cases depending even on each individual. In the mass consumption product industry for example E-commerce has been used to sell from manufacturers to retailers and from retailers to final consumers. This two are different processes because since the first one is a bigger more complex transaction, there is a greater risk for the customer and for the seller.
Some companies, like the case of Pinturas Every, a paint factory located in Bogot Colombia, do their online business only with the customers they have known for a while by doing solid transactions. The reason for this as expressed by the company’s general manager is that in the developing countries the risk of loosing one business is too high and many people do not have the conscience of doing good in the new way of doing business. When Pinturas Every began doing online business they received a lot of orders that did not have a real recipient. This kind of fraud caused big losses in terms not only of money but also in time and effort for the company. Even having these kinds of problems, the use of telecommunications and specially the use of the Internet has been a very important tool for companies in developing countries to expand their frontiers. Pinturas Every for example is now on the World Wide Web and has been doing business in countries such as Ecuador, Peru, Venezuela and Costa Rica. Now more than thirty percent of the total sales of the company are due to exports whereas about seven years before exports only accounted for five percent of the total sales, which was almost not worth the effort. Other than increasing the amount of sales, the internet was also important for the company because it allowed the customers to provide important information on time. Information such as delivery delays and any type of claims and feedback is now received on a daily basis opposed to years before when that information had to be collected by the sales representative each time the customer was visited.
Not only the way of communicating with the customers has changed for the company. The internal scanning has been made easier because the different selling points of the company are better and faster interrelated. The general manager has the ability to communicate decisions made in the company’s headquarters to employees around the country and the world in seconds and even has personal contact with his employees at much lower cost than before.
For companies in the industry of Pinturas Every and operating in developing countries E-commerce has been a very helpful tool, but it also has limits. It is important to know that in such countries the availability of technology is limited. Mostly the high middle and the upper classes are the ones that have access to such things as Internet and telecommunications. Taking into account that only one out of every eleven Colombians has a phone line. This lack of resources makes online retailing a luxury for consumers and limits the range for the sellers because it changes the target that retailers have to focus on. For these reasons companies like the one described do not to get to the final consumer through E-commerce as easy as do companies in other conditions in other parts of the world.
Opposed to this companies that have E-commerce as a very important tool but that also have some limitations to its use, we can find another category of companies that rely totally on technology like the internet to do business. Companies that fall into this category are Ebay, Deremate.com and Amazon, to name a few. These kinds of companies offer unique benefits to its users that have been made possible by the birth of the Internet. It allows efficient person-to-person trading possibilities in an auction format on the Web. These companies are seen as communities because they try to build sites providing their users with a common interaction ground free from interference. These communities have rules that its members enforce.
The goal in companies of this type is to help build large communities all over the world. Places beyond frontiers where users can get to know other users from their own country, from a different city or neighborhood, even from other countries, thereby creating powerful trading marketplaces as well as unique places to build friendships with people who have similar interests.
Sites like these are very important because they have changed the concept of selling and buying by making it a much more informal process. Here it is not the manufacturer or retailer of products offering their uniqueness or their service. What becomes important in these kinds of businesses is that consumers can find exactly what they want even if it is no longer made and sellers can offer whatever they want as long as they follow the set rules. Prices are found to be a very important factor in the auctioning system because they are not as rigid as in normal business. The seller offers his or her product and sets a probable price, then the buyer or different buyers offer the amount of money they are willing to pay for that product and if the seller feels that the offer is good enough the deal is made even if it was not what was expected at first. The auctioning company makes profit from the commissions of each transaction that are pre-established.
Also important in these way of doing business is that there is a high involvement of trust both from buyers and sellers for the company and for each other because in these cases the negotiation is not done with a company that is backed up by a good will, it’s done with an individual that most of the times you hardly know. This is why companies that do business through the Internet have to be aware of the possibilities of insurance they have.
Traditional and E-commerce businesses use the Internet to advertise goods and services and communicate with customers, vendors and employees. Both types of business have used the Internet to deliver some goods, such as music and software, and services, such as banking and entertainment. The Internet technology that provides these opportunities also exposes its users to liabilities in the form of infringement, malfunctions and viruses, to name a few.
Insurers say that E-commerce diverges from traditional commerce in two significant ways. First, due to the wide use of the Internet, the number of suits involving an E-commerce transaction can be expected to be many times greater than a similar traditional transaction. Second, novel issues of international law and multi-jurisdictional claims will drive up the costs of defending and indemnifying the insured.
By analyzing the previous points it can be clearly stated that technology and its advances have brought new ways of doing business, mostly facilitating the way in which transactions are made and reducing the problems that were incurred in because of distances and communication costs. Important advances in telecommunications have made the world smaller and the markets bigger. E-commerce as one of these advances has been taken as an advantage by many companies around the world that have expanded its market, increased the levels of their sales and improved the way to communicate with their customers, suppliers and employees. Also using E-commerce as their pillar companies have been created to make the greatest use out of the new technologies and make profits out of the service of providing platforms for people to interact and do transactions through the Web.
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