IV B.Com E-BUSINESS and ACCOUNTING

IV B.Com E-BUSINESS AND ACCOUNTING

UNIT 1

E-BUSINESS

Meaning of E-Business

E-business is the conduct of business on the internet not only buying and selling of goods but also serving the customer and also collaborating with business partner aimed at improving and/or transforming business process and efficiency.

Definition:

E-business (electronic business) is the conduct of business processes on the Internet. These electronic business processes include buying and selling products, supplies and services; servicing customers; processing payments etc

E- Commerce

E- Commerce is where business on the transaction takes place by our telecommunication network especially through internet it means doing business electronically.

History of E-Commerce

1960-1982 - Paving the way for electric commerce was the development of theElectronic Data Interchange (EDI). EDI replaced traditional mailing and faxing of documents.

Michael Aldrich, an English inventor, innovator and entrepreneur is credited with developing the predecessor to online shopping.

In 1982, France launched the precursor to the Internet called,Minitel.

In 1990 Tim Berners Lee, along with his friend Robert Cailliau, published a proposal to build a “Hypertext project” called, “Worldwide Web.”

In September 1995, the NSF began charging a fee for registering domain names.

TheSecure Socket Layers(SSL) – encryption certificate by Netscape in 1994 provided a safe means to transmit data over the Internet.

The largest online retailer in the world Amazon, launched in 1995 as an online bookstore.

EBay, an online auction site that debuted in 1995.

Also in 1995, was the inception of Yahoo followed by Google in 1998, two leading search engines in the US.

Global ecommerce company, PayPal, began its services in 1998 and currently operates in 190 markets.

As more and more people began doing business online, a need for secure communication and transactions became apparent. In 2004, thePayment Card Industry Security Standards Council(PCI) was formed.

Features of E- Commerce Technology

Improved sales: E- Commerce is fast, cost efficient, time saving and easy to use were it can result in better transaction, wide market coverage by offering the benefits of speed, convince, being cost effective, impact and control over the market.
Improved responsiveness: It helps by improving responsiveness to market conditions and customer preferences. Improve responsiveness by revising price change and marketing programs as and when required.
Efficient Inventory Management: Using E- Commerce, inventory management of products becomes automated. Product management inventory becomes very efficient and easy to maintain. It enables reduced inventories and overheads by enabling “pull” – type supply chain management by collecting the customer order and then delivering through JIT (just In Time).
Effectiveness and Efficiency: Electronic commerce can increase the efficiency and effectiveness of public relation programs, broadcast press releases, financial updates and other corporate communications.
Planning and Execution of meetings: The mechanism of electronic operations in business facilitates planning and execution of meetings. Executive management meetings, seminars, workshops take a great deal of time and effort to manage.
Ubiquity: It is available just about everywhere and at all times. Consumer can connect it to the Internet at any time, including at their homes, their offices, on their video game systems with an Internet connection and mobile phone devices.
Global reach: The potential market size is roughly equal to the size of the online population of the world. E- Commerce Technology seamlessly stretches across traditional cultural and national boundaries and enables worldwide access to the client.
Personalization/Customization: E-commerce technologies enable merchants to target their marketing messages to a person’s name, interests and past purchases. They allow a merchant to change the product or service to suit the purchasing behaviour and preferences of a consumer..
Information Density- Information density: The total amount and quality of information available to all market participants is vastly increased and is cheaper to deliver. Most business owners use the shopping cart and do the order of product and purchasing online.
Interactivity and support: Consumer/user can interact with the content. TV is a passive activity. Engaging consumer/user is a powerful feature.

Difference between E-Business and E-Commerce:-

E-BUSINESS / E-COMMERCE
E-Business covers online
transaction but also extends to all
internet based interaction goods
with business partners, suppliers
and customers. / It covers the online transaction
buying and selling the goods and
Services over the internet.
E-business such as selling direct
to customer, monitoring &
exchanging information auctioning
surplus inventory & collaborating
product design. / E-Commerce is such as online
shopping, internet banking, online
ticketing & electronic payment.
E-Business is comprehensive in
Essence / E-Commerce is only a subset and
branch of E-Business
E-business is refers to aiming at
improving or transforming
business process and efficiency
form of trading using electronic
means to connect buyers &
seller who gives a boost to any
business. / E-Commerce is where business
transaction takes place by a
telecommunication networks
especially with the internet which
means doing business
electronically.
Business status is received when
business is handled using phone
Call, email Order, postal order
and also the online activities. / E-Commerce status is received on
buying and selling of goods on the
internet.

Difference between Traditional commerce and E-commerce :-

TRADITIONA L COMMERCE / E-COMMERCE
Heavy dependency on information exchange from person to person / It covers the online transaction
buying and selling the goods and
services over the internet.
Manual intervention is require for each communication or transaction. / E-Commerce is such as online
shopping, internet banking, online
ticketing & electronic payment.
It is difficult to establish and
maintain standard practices in
Traditional commerce. / A uniform strategy can be easily
established and maintain in Ecommerce.
Communication of business
depends upon individual skill. / There is no human upon
individual skill.
Unavailability of a uniform
platform as it depends heavily on
personal communication / Availability of a uniform platform
where all information is available
at one place
No uniform platform for
information sharing / Universal platform to support
commercial or business activities
across the globe.

E- Commerce Business models

E-Commerce or Electronics Commerce business models can generally categorized in following categories.

Business - to - Business (B2B)
Business - to - Consumer (B2C)
Consumer - to - Consumer (C2C)
Consumer - to - Business (C2B)
Business - to - Government (B2G)
Government - to - Business (G2B)
Government - to - Citizen (G2C)

Business - to - Business (B2B)

Business-to-business(B2B) refers to a situation where one business makes a commercial transaction with another.

Website following B2B business model sells its product to an intermediate buyer who then sells the product to the final customer. As an example, a wholesaler places an order from a company's website and after receiving the consignment, sells the end product to final customer who comes to buy the product at wholesaler's retail outlet.

Impact of B2B markets on the economy:

Reduces search costs: Buyers need not go through multiple intermediaries to search for information about suppliers, products and prices as in a traditional supply chain.
Reduction in the costs of processing transactions.
Suppliers are able to interact and transact directly with buyers, thereby eliminating intermediaries and distributors.
Large number of buyers and sellers in one single market increases the price transparency.

Advantages of B2B

Replacing a purchasing bureaucracy with online links means savings

Improved efficiency in ordering material

Lower the search cost.

Just-in-time environment that minimizesinventory sitting in the warehouse

Increase opportunities for collaboration.

Reduces marketing and sales cost.

Creates new sales opportunities.

Disadvantages of B2B

Possible antitrust violations.

Low barriers to entry for competitors.

Delay of goods delivering

Fraud websites and scams

Perishable goods cannot be purchased online.

Business - to – Consumer (B2C)

Website following B2C business model sells its product directly to a customer. A customer can view products shown on the website of business organization. The customer can choose a product and order the same. Website will send a notification to the business organization via email and organization will dispatch the product/goods to the customer.

Advantages of B2C

Shrinks the Competition Gap

Unlimited Market Place

A 24 Hour Store ReducedSaleCycle

Lower Cost of Doing Business

Eliminate Middlemen

Easier Business Administration

Frees Your Staff

Customers will love it

More Efficient BusinessRelationships

Workflow Automation

Secure Payment Systems

Disadvantages of B2C

Catalogue Inflexibility

High Marketing / Advertising Expenses

Limited Market Place

High Sales Cycle

Required Higher Cost of Doing Business

Require a middleman

Inefficient Business Administration

Need to employ number of staff

Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential property, cars, motorcycles etc. or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.

Some Important Features or Functionalities of C2C Web Application

The buyer can purchase products from multiple sellers.

The same customer can act as both buyer as well as seller.

The online market place will allow buyer to browse products by using different criteria such as; best seller, most popular product, from your city and many more

The social media linking functionalities include, community or forum discussion and blog and other social media website link interface.

Blogging phenomenon (there is regular updating of the website).

The back end interface includes features for administration to manage buyer and seller accounts.

Advantages of C2C E-Commerce

It is always available so that consumers can have access to whenever they feel like shopping.

There is regular updating of the website.

Consumers selling products to other consumers benefit from the higher profitability that result from selling directly to one another.

There is a low transaction cost; sellers can post their goods over the internet at a cheaper rate far better than higher price of renting a space in a store.

Customers can directly contact sellers and do business without intermediary.

Disadvantages of C2C E-Commerce

Payment made has no guarantee

There could be theft as scammers might try to create their website with names of some famous C2C websites such as eBay to attract customers.

There is lack of controlling quality of the products.

Consumer - to - Business (C2B)

In this model, a consumer approaches website showing multiple business organizations for a particular service. Consumer places an estimate of amount he/she wants to spend for a particular service. For example, comparison of interest rates of personal loan/ car loan provided by various banks via website. Business organization that fulfils the consumer's requirement within specified budget approaches the customer and provides its services.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and exchange information with various business organizations. Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support auctions, tenders and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support auctions of vehicles, machinery or any other material. Such website also provides services like registration for birth, marriage or death certificates. Main objectives of G2C website are to reduce average time for fulfilling people requests for various government services.

Peer to Peer Model:

In a P2P network, the "peers" are computer systems which are connected to each other via the Internet. Files can be shared directly between systems on the network without the need of a central server.

Advantages:

It is easy to install.

All the resources and contents are shared by all the peers, unlike server-client architecture.

P2P is more reliable as central dependency is eliminated.

There is no need for full-time System Administrator.

The over-all cost of building and maintaining this type of network is comparatively very less.

Disadvantages

In this network, the whole system is decentralized thus it is difficult to administer. That is one person cannot determine the whole accessibility setting of whole network.

Security in this system is very less viruses, spywares, Trojans, etc malwares can easily transmit.

Data recovery or backup is very difficult.

Each computer should have its own back-up system

E-Commerce - Advantages

Advantages to Organizations

Using E-Commerce, organization can expand their market to national and international markets with minimum capital investment.
An organization can easily locate more customers, best suppliers and suitable business partners across the globe.
E-Commerce helps organization to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.
E-commerce improves the brand image of the company.
E-commerce helps organization to provide better customer services.
E-Commerce helps to simplify the business processes and make them faster and efficient.
E-Commerce reduces paper work a lot.
E-Commerce increased the productivity of the organization. It supports "pull" type supply management. In "pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.

Advantages to Customers

24x7 supports Customer can do transactions for the product or enquiry about any product/services provided by a company anytime, anywhere from any location.
E-Commerce application provides user more options and quicker delivery of products.
E-Commerce application provides user more options to compare and select the cheaper and better option.
A customer can put review comments about a product and can see what others are buying or see the review comments of other customers before making a final buy.
E-Commerce provides option of virtual auctions.
Readily available information. A customer can see the relevant detailed information within seconds rather than waiting for days or weeks.
E-Commerce increases competition among the organizations and as result organizations provides substantial discounts to customers.

Advantages to Society

Customers need not to travel to shop a product thus less traffic on road and low air pollution.
E-Commerce helps reducing cost of products so less affluent people can also afford the products.
E-Commerce has enabled access to services and products to rural areas as well which are otherwise not available to them.
E-Commerce helps government to deliver public services like health care, education, social services at reduced cost and in improved way.

E-Commerce Disadvantages

Disadvantages to business

There can be lack of system security, reliability or standards owing to poor implementation of e-Commerce.

Software development industry is still evolving and keeps changing rapidly.

There could be software/hardware compatibility issue as some E-Commerce software may be incompatible with some operating system or any other component.

Sometimes, it becomes difficult to integrate E-Commerce software or website with the existing application or databases.(older and newer).

The cost of creating / building E-Commerce application in-house may be very high. There could be delay in launching the E-Commerce application due to mistakes, lack of experience.

Disadvantages to Customers

Security/ Privacy: Difficult to ensure security or privacy on online transactions.

Internet access is still not cheaper and is inconvenient to use for many potential customers like one living in remote villages.

Lack of touch or feel of products during online shopping.

Disadvantages to Society

Breakdown in human interaction:-Sometimes people feel that they do not have received sufficient personal attention.

User resistance: User may not trust the site being unknown faceless seller. Such mistrust makes it difficult to make user switch from physical stores to online/virtual stores.

Difficulty in policing the internet: which means that numerous crimes can be perpetrated and often go undetected.

Wasted Resources: As new technology dates quickly we need to dispose of all the old computers, keyboards etc.

VIRTUAL COMMUNITIES

Virtual Community is a community of people sharing common interest, ideas, and feelings over the internet or other collaborative networks.

Types:

1) Internet Message Boards: An onlinemessage boardis a forum where people can discuss thoughts or ideas on various topics or simply express an idea.A user will start a discussion by making a post.Other users who choose to respond can follow the discussion by adding their own posts to that thread at any time.

2) Online Chat rooms:onlinechat roomsallowed people to talk to whoever was online at the same time they were. This way, messages were sent and online users could immediately respond. Chat room users communicate through text-based messaging. Most chat room providers are similar and include an input box, a message window, and a participant list.

3) Virtual Worlds:are the most interactive of all virtual community forms. In this type of virtual community, people are connected by living as anavatarin a computer-based world. A virtual world simply gives users the opportunity to build and operate a fantasy life in the virtual realm.

4) Social network Services:is the most prominent type of virtual community. They are either a website or software platform that focuses on creating and maintaining relationships. Facebook, Twitter, and MySpace are all virtual communities.

Advantages:

1) Worldwide Expose:It is a common place where people can get easy access to these communities anywhere they may be in the world.

2) Knowledge from other online members: Interact with other people who are members in online community and put their principles, whenever it is appropriate.

3) Formidable Partnership: The online community is where you build your credibility as an entrepreneur, before you approach complementing businesses.

4) Maximize Presence: If any marketer is marketing his business in online community he should be sure that his profile and course of business information is updated.