E-Commerce - Sustainable Business Model ?
What is E-Commerce ?
The fast and
dramatic changes in information technology specially in last one decade has
given new concept of marketing in which buyer and seller do not see each other
face to face nor see the goods physically; the whole transaction is carried out
with the help of ‘on line’ communication. The entire deal is carried out with
the help of computer – telecommunication and net working with associated
hardware.
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| What is E-Commerce ? |
In the e –
commerce internet provides information about goods and services “It is” a way
of conducting imaging and executing business transactions and services through
electronic media and net working in computers and communication net work,
websites, e-mail are resorted.Customers
know about goods and services sitting at home. The manufacturers, distributors,
suppliers and services providers let the consumers know about their products
quality, price, size, color etc. through multi-colored catalogues on website.
The consumers can ‘surface various web sites and compare their relative prices,
quality characteristic, features etc.
These
details can be obtained from suppliers around the globe. The websites are
available beside for goods for direct selling, context selling, financial and
other services such as hospitals, education, training, advertisements,
property, entertainment, product demonstrations, bill payment, exchange and all
other services which one can think of.
Types of selling:
1. Business to Business (B2B):
This implies selling by one business manufactures to other
business manufactures, trade, wholesaler or retailer. In India as yet most of
the e-commerce is B2B. The number of companies like TELCO, IBM, C1TI BANK,
BHEL, ESSAR, TVS, MARUTI, BAJAJ, and many others are doing B2B. In 1998 out of
total e-commerce of us$ 210 billion us$ 100 billion was accounted for B2B.
2. Business to Consumer (C2B):
When
business sells to customers/consumers it is called B2C and is most important
from our point of view. The products include items sold in departmental stores,
chemist shops, grocery stores, books, stationery, clothes, vegetables, fruits
and what not. As yet in India such sales are only of US$ 100 billion but are
expected to go up to US$ 900 billion by 2005 i.e. the growth of 9000 percent.
Many service sectors are adopting this mode.
3. Consumer to Consumer (C2C):
Under this
system when some consumer want to dispose off his old items, he can take the
help of selling through internet. But this type of e-commerce is not very
common at least in India and the business is negligible.
4. Business to Government (B2G) :
Business house or on singular business needs to record
salary duty and deals expense forms and different sorts of different returns.
Up 'til now this requires documenting of return in particular office and apply
for endorsement in concerned office. However, now numerous nations permit this
sort of action through email/online business. In any case, so far this isn't
being done in India.
5. Government to Consumer (G2C):
In order to provide facilities to public and speed up
information and records government in many cases provide record of information,
through this system; sale of documents, passport forms, copies of returns etc
are supplied through e-mail. The main features of e-commerce is that one does
not physically feel an item nor sees it and places order on the basis of
information supplied through website or in response to consumers inquiry, as
yet e-commerce has last preference for daily consumption items.
It is largely limited to durable goods like computers, TV’s,
automobiles, books, travel reservation. In case of service it is becoming
popular for banking and share purchases. The growth of E-commerce is restricted
as Growth of E-Commerce in India Key players in e-commerce are consumers and
sellers.
E-mail net work:
E-commerce requires visit of
website, selection of products, select a payment mode, realization of money
(which is done before dispatch) and dispatch of goods.
The process
may be depicted as under:
A. Visit of
website:
Selection of
a product
Selection of
payment mode
1. Credit
card
2. E-banking
3.
VP/courier (who collects the payment at the time of delivery, but this is
discouraged.
4. Placement
of order through e-mail
5.
Realization of money.
Dispatch to
the customer can be on line or through courier.
In order
that consumer may visit particular website, sellers have to advertise about
their website so that consumer may visit the website. The consumer decides
which websites have to be visited and after getting the information from
various sites he makes a choice and decides which one should be purchased. He
then places an order intimating the mode of payment which is generally through
credit card or e-banking and advise the bank where he has credit card to debit
the amount to his account.
After the
seller realizes the amount for the goods order he dispatches the goods. In most
of the cases whole process takes couple of minutes and goods reaches the
consumer within half an hour to one hour if he is a local consumer, it is
claimed so by sellers. In India in this business Rediff(dot)com is most popular
and sells products worth Rs. 1340 million every month.
Advantage to Consumers:
The consumer
has number of advantages and convenience and therefore the system is becoming
popular.
1. Consumer
has wider choice not from his town or country but also round the globe unless
there are import restrictions.
2.
Customized or personalized product and service. For instance if some lady wants
a bra of exact size, her size can be measured through internet and stored and
she will be supplied bra of her requirement.
3. In case
of purchase, one is not required to go from store to store to see the products
to collect their details, prices etc. Sitting at home he gets all the required
information and that too very fast without spending much time.
4. There is
absolute flexibility of time, place and distance is no hurdle; one can open the
site any time day or night to get details, there is no problem of shops/stores
opening/closing hours. Website can be opened any time. In physical sales place
and distance is also a problem which is no problem in e-commerce because one
can see sites all over the world without moving out of the house.
5. Goods are
available at cheaper price because there are lot of economies of space, rent,
interest to the seller Further, he manages with much lesser number of outlets
and cost of marketing is reduced. Part of these savings is passed on to
consumer and therefore, he gets the products cheaper than from conventional
shops/departmental stores, grocers etc.
6. It helps to globalize retail trading. One can buy things without geographical boundaries.
7. It
eliminates with the system of distributors, authorized dealers and retailers,
the manufacturer can deal with large territory with one store.
8. The
inventory is reduced, and so the cost of carrying goods and distribution cost.
9. Exports
to final consumers is possible through e-commerce, not only-just sales but
procurement, accounts, logistics product development and other related
services are also possible through e-commerce
10. The net
enables suppliers to introduce and promote new markets and new products to meet
the needs of individual buyers.
11. Long
distance, travelling and delays, pollution all are avoided because one has not
to travel to the shop.
12. Consumer
is better informed about products, price etc and therefore can make better
choice.
13.
Suppliers, competitors and customers come under one roof through internet
websites and massive exhibition of various items is possible.
Disadvantages:
1. The
biggest disadvantage of e-commerce is that one is not able to see and feel the
product.
2. Since
consumers are not able to feel and touch the products and therefore business is
on trust and as yet business is largely limited to travel, automobiles, PC’s,
services, books and CD’s entertainment. As yet sales of apparel, food products
is largely small percentage of total e-business. For instance in 1999 the
maximum ownership of internet was 50 percent in USA, in other countries it
varied between 1.8 percent to 45 percent But gradually this disadvantage is
being reduced but still there is large percentage of population which does not
own internet.
3. There is
a big problem in on-line payment. It is with regard to time and legality of
order to complete the transaction. As yet satisfactory system of payment has
not been developed by banks and financial institutions in large number of
countries.
4. The
electronic signatures acceptance has been legalized by large number of
countries but still many more have to take steps in this direction. Further,
there are great chances of fraud in-spite of all the precautions.
5. The.
e-commerce requires large investment to build a brand image on internet which
is estimated around us$ 100 million or around Rs. 500 crores which can be
invested only by big players. Thus small suppliers cannot get business through
internet.
6. The
market is restricted to high income and educated population who own and know
the use of internet. Thus in poor, illiterate or less educated countries it has
limited access.
7. Sometimes
there could be flood of orders for any particular product which makes problem
of timely supply to consumer. In 2000 there was YK2, problem and customers had
to wait to get product of their choice.
8. Consumer
has number of problems. He has to search internet/websites information on
internet, make the purchase domain and the payment. There are difficulties in searching,
surfing, browsing and wandering around the internet which costs both time and
money.
9. Privacy
of consumer is adversely affected specially in the matter of accounts; he is
required to tell his credit card number to supplier or e-banker.
10. E-commerce
is good for branded products like automobiles, electronic goods, computers,
electrical goods, branded garments, branded food products, music, books etc. If
middle class or lower middle class want to buy non branded products which are
generally cheaper, they cannot be bought through e-commerce.
In other
words e-commerce is for effluent society i.e. why population in USA use is 50%,
in Europe 13 percentage, in poor countries only 1-2 percent and in some
countries it is negligible. Thus e-commerce is for classes and not for masses.
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