What is Commerce ?

Commerce is the exchange of items of value between persons or companies. Any exchange of money for a product, service ,or information is considered a deal of commerce. In other words, substantial commerce is a process of distribution of goods from a place where they are produced and found in plenty to a place where the goods are in short supply or scarce (limited) and hence in demand. The concept of commerce is a very comprehensive and complex organism and includes all the necessary functions involved in buying and selling. It consists of all persons, organizations and institutions engaged in the distribution of goods. They include railways, road transport, shipping, merchants, banks, insurance companies, brokers, wholesalers, retailers, stock market, distributors, agents, service providers etc.

Commerce-Generation
Barter System: This is system of exchange of goods against goods. This process is having limited scope and extend to near villages. Money Economy : Exchange of goods and service against money. This is extended to city to city, after development of modern transport and also implementation of foreign trade. Face to face : Finds and designs a variant and new ways of business to sell, buy products and services including new methods of payment. Conducting business face to face has been the business practice for centuries. Mail order business : Later generations introduced mail order business and the catalogue method. Super Market: Departmental stores; consumer cooperative stores and super markets came into existence that put a roof over goods. These developments drove some of the small shops out of business. Telephone ordering: Another significant event is telephone ordering, which is nothing but a process of buying from a catalogue but without orders in writing. Television: Television brought the sales pitch into our living rooms and creating an impact on our buying behavior. Internet: Buying and selling of products and services through web.

Limitations of Conventional Commerce: Manually and paper work: Traditionally, commercial transitions have been carried out mainly through paper work. They are manually transmitted and forwarded by postal services. The process is called paper-based system of commerce. Delay in finalizing transitions : There are many associated delays like transportation delay, manual processing delay and ordering delay etc. Higher Cost : It is known for higher labor cost due to manual processing and related paper works. Other costs include data typing, retyping, document storage, handling, maintenance etc.

Continue. Error Prone : The conventional commerce system is error prone. Uncertainty of events : Another limitation of conventional commerce system is relating to the uncertainty of events. These uncertainties mainly pertain to transportation. There is uncertainty about whether the transaction is received at the other end, and there are uncertainties of cheque clearance. Time Consuming : The entire process of business is time consuming. Timely analysis update and current position cannot be ascertained instantly.

Continue. Lack of business communication process: In the traditional business communication, orders cannot be raised to reflect both the demand and no stock availability. Immediate instructions cannot be sent to the distributors in time with the other to ensure fast delivery of the service. The advantage of the potential market cannot be obtained quickly, thereby losing customers. Offline processing (manual) will never increase sales and nor will it provide the means for immediate payment. There is no place in the old practice for impulse (desire/wish) buying.

Continue. Absence of round the clock buying: The absence of round the clock buying and level playing field are great drawback of conventional commerce. Fails to benefits modern consumers: In many respects, conventional commerce fails to benefits modern consumers who want and appreciate on-line transaction. Lack of enhance the market size : Enhancing market size is a long time consuming process not advantageous to the remote merchants and customers. This fails to generate substantial business.

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No direct contact between producer & the consumer : The traditional method of doing business involves middlemen like distributors, resellers, agents etc. There is no direct contact between the producer and the consumer. Consumers would get goods through several market intermediaries. This subsequently increase the price of goods which consumers finally pay. Not cost effective : It is not cost effective and does not permit lowest transaction cost in a traditional commercial practice.

What is E-Commerce ?
E-commerce is a revolutionary form of industry that enables organizations to interact electronically with their customers. It allows companies to be more flexible and efficient in their operations and also leads to enhancing closer relationships with both the customers and suppliers. E-commerce is the tool which can extend a company's reach to a global level. The Internet is a global business platform for companies all over the world. Electronic commerce (EC) is the ability to deliver products, services, information, or payments via networks such as the Internet and the World Wide Web.

Need of E-commerce
 From the communication perspective: It is the ability to deliver products, services, information, or payments via networks like the Internet.  From an interface view, e-commerce means information and transaction exchanges; business-to-business (B2B), business to-Consumer (B2C), Consumer-to-Consumer (C2C),and Business-to-Government (B2G).  As a business process, e-commerce means activities that support commerce electronically by networked connections. For example, business processes like manufacturing and inventory and business-to-business processes like supply chain management are managed by the same networks as businessto-consumer processes.

Benefit of E-commerce to organisation, consumers and society

 Lower cost to the E-merchant : Doing e-business on the internet is cost effective; it reduces logistical problems and give small business equal visibility with giants (huge) like Amazon. COM, General Motors, or Bank of America. Any financial transaction, which is done electronic is cheaper as compare to manually.  Economy : By any standard, e-commerce is economical. Unlike the brickand-mortar environment, there is no rental of physical store space, insurance or infrastructure investment. As you need is an idea, a unique product, and a well-designed web storefront to reach your cyber-customers, and a partner to make the delivery.  Higher Margins : E-commerce means higher margins. For e.g., the cost of processing a conventional airline ticket is $8. According to a local travel agency, processing the same ticket ( called an e-ticket) over the web costs $1. Along with higher margins, businesses can gain more control and flexibility and save time when manual transactions are done electronically.

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 Better Customer Services: E-commerce means better and quicker customer services. Web-based customer service makes customers happy. Instead of calling a company on the phone, holding for 20 minutes, then connecting to a clerk to tap into your account, customers have direct access to their accounts over the web. It save time and money.  Quick Comparison shopping: E- commerce helps consumers to comparison shop and according to that customer can select the product as per his/her taste and budget.  Productivity gains : E-commerce means productivity gains. weaving the web throughout an organisation means improved productivity.  Teamwork: E-commerce means working together. E-mail is one example of how people collaborate to exchange information and work on solutions. It has transformed the way organizations interact with suppliers, vendors, business partners and customers. More interaction means better overall results.

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 rowth in knowledge market: E-commerce helps create knowledge markets, small groups inside big firms can be funded with seed (beginning) money to development new ideas.

 Information sharing, convenience, and control : Electronic marketplaces improve information sharing between merchants and customers and promote quick, just-in-time deliveries. Customers and merchants save money; are online 24 hours a day, 7 days a week; experience no traffic jams, no crowds and do not have to carry heavy shopping bags. Control is another major driving factor. Instead of banks controlling the relationship with the customers, they can have more control of their banking need via web sites. todays bank provide facility to access their accounts via. web.  Customization : Digital products are highly customizable. They are easy to reorganize, revise, or edit. With information about consumer tastes and preferences, products can be differentiated ( customized) and matched to individual needs.

Drawback of E-commerce
 The Cost Factor: To set up an e-commerce infrastructure, we need cash, beyond a sophisticated interactive web site, networks, servers, terminals, software, staffing and training. Transaction costs are another issue. The electronic market place appears to be a perfect market, where worldwide sellers and buyers share information and trade without intermediaries. New types of intermediaries like electronic malls that guarantee product quality, mediators for bargaining, and certification authorities to ensure the legitimacy of transactions add to transaction costs.  Security : with crackers, file corruption and misuse's, no company can afford to do business online without protection via firewalls, specialized antivirus products etc. For millions of potential cyber-customers, the fear of credit card theft and identity theft continues to be concern. The goal of an online merchant is to assure customers secure lines and secure sites that will protect their privacy, whatever the transaction.  System and Data Integrity : Data protection and the integrity of the system that handles the data are serious concerns. Computer viruses are (uncontrolled ), with new viruses discovered every day. Viruses cause unnecessary delays , file backups , storage problems etc. The danger of hackers accessing files and corrupting accounts adds more stress to an already complex operations.

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 System Scalability (upgradeable) : A business develops an interactive interface with customers via a web site. After a while, statistical analysis determines whether visitors to the site are one-time or recurring customers. If the company expects two million customers and six million show up , web site performance is bound to experience degradation, slowdown, and eventually loss of customers. To keep this problem from happening, a web site must be scalable or upgradeable on the regular basis.  E-Commerce is not Free : For a long time, success stories in e-commerce have favored (special) large businesses with deep pockets and smart finding. Small retailers that go head-to-head with e-commerce giants (huge) could be in for a surprise. As in the brick-and-mortar environment, they simply cannot compete on price or product offering. Brand loyalty is related to this issue. Brands are expected to lower search costs, build trust and communicate quality. Users remain suspicious (doubtful) of search engines for locating product information; instead, they rely on recognized dot-com brands for purchases.

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 Fulfillment and Customer Relations Problem : Fulfillment and customer relations is the one of the big issues in e-commerce. Without prompt delivery of product and less quick response to customer complaints is effect the relationship. The interpersonal part of e-commerce between e-merchants and customers continues to be a setback. Many web sites lack a phone contact to discuss order problems with humans. This is also the case with help desks that are designed to help customers wade through technical problems. The lines are either busy or simply do not answer. This is directly related to fulfillment problems, when customers have a difficult time receiving or returning items purchased over a merchants web site. The best approach is to have customers who purchase items via the companys web site go to the nearest companys brick-and-mortar store and settle the complaint in person. This is what has been recently called click n brick business.  Cultural, language and trust issues: There are global issues. When e-commerce and the internet went global, there was an obvious pressure to adapt e-market, eproducts, and interfaces to cultural expectations and constraints. Culture is the set of norms. Some merchants are display their product in their languages. It become difficult to the customer to understand. Trust is another issue to know the product is qualitative and reasonable .

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 Lack of awareness : There is a continuing shortage of eliterate people in the workplace. Most of the surveys conducted in 2003 and 2004 conclude that few managers have e-commerce skills, Internet experience, or foresight. They also have a tough time attracting people wanting to take advantage of online opportunities. Traditional organizational structures and cultures were also found to inhibit progress in ecommerce.  Corporate weakness : The availability of products details, catalogs and other information about a business through its web site makes it vulnerable to access by the competition. The idea of extracting business intelligence from the competitions web pages is (called web farming) dangers to selecting right product.