Research Articles Base: E-commerce Principles

Application of e-commerce principles to business markets

Application of e-commerce principles to business markets

The main focus: • Explore the main drivers of e-commerce and then comment on the application of E-commerce principles in Business to Busin...

TRENDS AND BUSINESS ADVANTAGES OF e-COMMERCE

TRENDS AND BUSINESS ADVANTAGES OF e-COMMERCE   Introduction             E-commerce is continuously marking its significance in the daily life of internet users.  However, its use is largely limited to modern countries because of cultural, economic and structural compatibilities.  Poor and developing countries that represent most of the unfilled space for e-commerce are undermining the benefits of technology-based trade.  As a result, the capabilities of global e-commerce are significantly undermined because majority of nations have underdeveloped infrastructures and cultures.  Trading in a global scale is not really attained rather on its partial and minute phase.  Until less developed countries can catch-up, the effectiveness and scope e-commerce will continuously puzzle businesses and consumers.  This paper discusses the definition of e-commerce, some statistics, trends and factors that can affect the direction of e-commerce growth.          What is e-Commerce? Short for electronic commerce, it is the process of buying and selling goods in the Internet particularly using the platform World Wide Web (2007).  It can take the simplest form of ordering via telephone to more advanced exchanged exhibited in Internet transactions.  In strict sense, it only includes negotiations through online systems such as the Internet, Extranet, Electronic Data Interchange Network and electronic mail system.  This definition would exclude facsimile and telephone networks because parts of the transaction such as payment are done in an offline manner.  Advanced e-commerce requires combination of different applications and systems such as shopping cart, network, security and payment processing (2007).  According to  (2007), e-commerce is also classified according to transactions between business to business (B2B) and business to consumers (B2C).   Businesses and transactions that are supported by e-commerce are embraced by a concept called network externality.  It is a phenomenon that injects domino effect for the users of the online service particularly the consumers (2007).  These consumers would be either positively or negatively affected by the network depending on the by changes of purchase trends of the consumer base.  This makes e-commerce a highly advantageous yet highly risky engagement and platform.  It provides interactivity, convenience and efficiency to transactions which businesses highlight on their marketing campaigns to attract consumers.  However, there are threats of computer and network attacks which can prevent online service of the web interface of the business and can also lead to hacking confidential information of the consumers (2003).  Once the e-commerce system of the business is tarnished, finding abrupt solution can be problematic and costly while decline in loyalty from current customers is very likely.     What is e-Commerce Statistics? Global statistics of internet usage will reflect the number of potential and current users of e-commerce (refer to Figure 1).  Asia, Europe and American regions posted the highest internet users by number garnering 418, 322 and 233 million heads respectively ( 2007).  On the other hand, internet penetration or the percent of internet users to total population is ranked the highest in North America, Australia and European regions with 69, 54 and 40 percents respectively.  This means that there are numerous potential internet users in Asia that are yet to be inclined in internet technology which only have 11% internet penetration.  The global average of penetration is 18%.  As e-commerce is also positively-related to advertising, top-1 Adverstising.com results of 88% reach or 157 out of 178 million unique visitors can also mean that most internet users are involved in trading online (2007).    What are the Trends in e-Commerce? e-Banking             The banks’ enter into the realm of insurance provision to its customers brings forth a needed strategy to deliver the service in a fast, flexible and reliable manner which information technology has the advantage.  According to the study and review conducted by  progressive on-line insurance offerings were characterized by interactivity and simplicity of insurance forms with policy holder’s ability to update their insurance through a secured log-in account ( 1997).  Simply put, insurance application and execution need to be customer-friendly.  Can the bank maintain e-commerce and still be profitable?  Is there a need to locate strategic partners who has the knowledge and experience in insurance industry?               According to  (2000), insurance internet carriers capitalize on e-commerce due to cost advantages brought by the absence of overhead costs of maintaining branch locations and agents (p. 71).  They transact and serve customers on-line or through phone.  Most banks are popularly known because of heavy marketing and establishment of several offices across a country.  Also, there is a possibility brokers can infiltrate and “steal valuable banking customer through virtual offerings”.  Because of the cost-savings and security doubts to e-commerce in transacting insurance services, banks opted not to sell insurance in the internet while others used cooperative strategies (like First Union Bank’s alliance to The Hanford) and acquisitions (like North Carolina-based Wachovia Bank’s purchase of Tampa-based , an insurance broker) wherein the risks became diverse and minimal.  However, these cases were few.                Most insurance companies have difficulties to adopt e-business model and strategy because of the likelihood to commit alienation of the existing distribution channel built by the firm’s agents, tedious application procedures, lack of universality in business processes and complex regulation from government intervention (1986).  Such factors serve as disincentive for them to exploit the positive prospects of information technology.  How then could banks create competitive advantage with them?  The above challenges created a suitable condition for banks to pursue integrated financial services model which not only highlights the traditional lending and keeping services but also advisory, brokerage and now, insurance offerings.  Since several banks are evaluated to be limited on cost-savings and security aspects, a context strategy can spark opportunities to exploit the estimated 38% annual growth rate on bank insurance premium that forecasted to start on 2004.               Context strategy situates a bank to offer different line of services from the traditional (i.e. lending) to more unusual but effective (i.e. legal services, postage) that could be sold profitably on the web.  This can be obtained through diversification on its own or through others’ help by acquisition, strategic alliances and other cooperative endeavors.  However, a “strong brand and relationship management capabilities” (2003) are needed to be successful in this strategy.  The knowledge of a bank on customer needs and trends, synergy in culture and resources against the prospective insurance partners and experience in banking industry are the short lists to consider.               Engaging in e-commerce and context strategy in providing insurance services can foster “growth, large revenues and customer loyalties” (2000).  There is a potential market awaiting an interactive and convenient alternative to insurance application.  A bank only have to realize its strengths and weaknesses, put it in a framework, plan and determine if there is a need to partner an insurance firm and introduce or perhaps create a virtual synergy to top the strategy with profitable icing.  With this, it could survive the present competitive landscape wherein banks offer other value-added services as brokerage and insurance firms are acting like the former.      e-Transactions             Until 1997, Massachusetts Institute of Technology (MIT) was adopting campus computer resale (1999).  As environment changed and competition intensified, problems of this operational scheme started to emerge.  The organization was doing business with 14,000 suppliers, 7,000 requisitions were done annually, inventory costs rose to million, storefront manpower requirement was 19-fulll time employees and 80% of the paperwork was orders under 0 at a cost of 0 per paper transaction.  As margins decreased and overhead increased, MIT had to use a different purchasing model to fit the current competitive environment.  MIT teamed-up with NECX, a vendor with e-commerce and Electronic Data Interchange (EDI) capabilities.  The partnership created an online catalog where the former recommended-products and the latter pre-sales information were viewable.    In 1997 and 1998 operations, the e-procurement purchasing model had provided several benefits which can be discussed suing value-added equation (refer to Figure 2).  The right hand side of the value-added equation is largely affected.  S increased as 1997 sales reached .8 million while 1998 sales rose by 44% up to .8 million.  On the other hand, B decreased as cost of good sold was reduced to 0,000 in 1997.  The pressure to S was also lessened as inventory and carrying cost were eliminated while paper procurement process was reduced up to a level where it was regarded as the most significant cost saving.  DP was also trimmed down when the floor space of the store was transformed to a mere showroom for the display of MIT selected and largely recommended computer products.  However, there is an obvious adverse effect to the left hand side of the equation when employees were downsized to only four from the original nineteen.  This is a scenario when one major stakeholder was undermined in favor of operational efficiencies (2005).                The increase in S, decrease in B and DP as well as other costs aggregately increase value-added distributable to stakeholders. The revitalized purchasing strategy generated by MIT led to this favorable state.  Through e-procurement, individual and departmental customers that use the institution’s network can readily check the availability, price and specifications of the recommended products.  MIT and NECX only included in the electronic catalog computer products compatible within the network.  When customers order, the 30,000 suppliers and EDI capability of NECX will efficiently ship and provide after-sales service to end-users.  On the other hand, MIT was responsible for consultancy (with four showroom employees) regarding the future status of compatible hardware, software and other accessories for the network.  This, however, beat employee welfare as the adverse effect to the right hand side is isolated to W which in turn benefits other stakeholders.                    Value-added was derived in the increase in S due to faster response to orders as MIT purchasing activities was relieved and passed to NECX.  MIT was able to focus its core competencies in improving the network environment and making the products of NECX buyable.  MIT did not led to complex operation as the partnership developed 30,000 from 14,000 suppliers.  This advent even increased product differentiation, order availability and customer convenience.  B is deducted with academic discounts aside from operation efficiencies and reduction in overhead from the former resale store.  Consequently, the absence of resale store resulted to lesser DP in inventory, delivery vans, building use and other assets.  The right hand side is maximize while deductions were minimized leading to optimal value-added outcome.  Obviously, wealth distributable to stakeholders will be in better amounts except to MIT employees.                  The interesting point here is that the supposedly increased in wealth of MIT could be in doubt as they downsized employees from 19 to 4 after e-procurement.  This would mean that the contribution of employees was paid without regards to positive value added phenomenon (1999, ).  It can be argued that by efficiency or automation other stakeholders can benefit from reducing the workforce as long as one right hand side factor will be undermined before distribution.  Clearly, the bold demarcation of value-added and profit accounting can be derived.  Profit equation (see figure 2) does not highlight the impact of the net result of operations to all major stakeholders.  In the contrary, value-added equation separates the beneficiaries of wealth (the right hand side) from the catalysts of wealth (the left hand side elements).  This implicitly indicates that the right hand side is untouchable or not responsible to any stakeholder welfare.                The value-added statement in Britain referred its profit-undermining concept as a part of social responsibility reporting (Belkaoui, 1999, p. 30).  With this reference, authorities can question MIT about its workforce reduction as value-added reporting shows how productive (p. 39) not how efficient an organization is in using its resources.  Efficiencies in paperwork, inventory costs, supplier communication, among others are in doubt if such were eliminated in a productive manner.  Productive in the sense that they are managed to positively affect value-added attributable to stakeholders and not to prevent MIT responsibility on stakeholders.  In this case, the net value-added is overstated (if not, distorted) because the operation failed to sustain the productive capacity of these purchasing activities to sustain the social responsibility of the organization particularly to its employees.                      As the left hand side of the equation is the catalysts of value, the right hand side should be static at the end of the operation.  In addition, the latter should not be responsible to other corresponding elements or other stakeholders.  Value-added reporting concerns social responsibility and not the isolated welfare of shareholder, government, creditor or the firm.  Further, the operation cycle of an organization is reflected in the equation.  As pre-operation requirement, the organization employs labor, borrows money to creditors when financing fall short of budget, gets shareholder support for continuing the business or expansion, uses government roads and other infrastructures and involves its internal funding (W + I + DD + T + R).  At the end of the productive operations, the organization results to a level of gross productive outcome deductible by input payments and asset reconciliation (S – B – DP).  The residual or the level of the net productive outcome will be evaluated based on its ability to repay stakeholders.               When analyzed, MIT has became efficient rather productive during the adoption of e-procurement.  Profit model rather value-added can best highlight this evolution.  Since at the end of the operation, W in the right hand side is reduced, the contribution of W during the non e-procurement years (like friendship of sales people with customers) is undermined and extracted by automation.  In addition, the marketing contribution of the former campus computer resale store was undermined and extracted by virtual environment.  This made the distorted rise in the wealth of MIT as the accumulated contribution of W and store are passed to e-procurement as there was a pick-up of S and cost-efficiencies in B and DP.  MIT should had paid for W or DP specifically at the end of operations but e-procurement made the organization efficient that enabled them to avoid the payment, thus, seemingly led to increase in wealth. e-Learning There are counter-arguments to the stated advantages of e-books in Gates’ essay that can be illuminated across the society ( 2004). For an individual, the provision of e-books of “audio-visual and flexibility through web linkages” not only improve understanding to a book’s contents but also impede pacing and concentration.  Audio unique intonation, startling images and explanatory quotes from external links need additional time and effort for a curious reader.  Unlike the traditional book, a reader is confronted by mere words with supporting illustrations on the same page that develops reader intimacy and flow. For the household, the “storage portability of e-books” prevents simultaneous reading that will result to isolation of other interested members of the family.  Information tends to slow.  Or the other scenario, the first reader would slip of telling the important facts of the story that could spoil the interest of other members.  On the other hand, when there is a common library, family members have wide array of books to select at.  Even old ones, when securely stored, are worth reading.  No need to pressure the current user of e-books that could minimize comprehension, or worse, result to conflict.  In the macroeconomic view, situating the technology in the less developed country would detach Gates’ projection of “improving literacy and education”.  In most of them, poverty is the result of heavy corruption, warfare and strong belief of mediocrity practices that are likely to hamper the introduction of such technology.  With paper books’ simplicity, any interested citizen would not be deprived for information only because of deprivation or absence of technology.             The opportunity lies in the ability of e-books to flourish in top-20 countries that have the technological and cultural infrastructure to use and maintain demand for them.  Developing countries and other poor nations cannot support the demanding requirements of e-books and are more inclined to traditional learning process in print books.  Business must establish the potential of e-books to strategic locations where electronic learning is accepted and exercised.  If e-books will be located in poor economies, problems and difficulties cited above will only be the result.  However, if it will be situated to economies that can embrace its features, the efficiency and interactivity it offers can fully be realized.  E-books are part of e-learning and online education that universities cater to offshore students who wanted international education at local study room.  In this view, e-books also develop in developing nations particularly in the upper market sector and urban areas.      e-Government E-commerce is created and developed largely to make life easy, processes simple and broaden possibilities (2003).  People can do many things in a moment and complete them in fast manner with minimal effort.  As for not-for-profit organizations (NPO), the use of computers including key features like office programs (e.g. MS Word, MS Excel, etc.), networking, Internet and automation/ robotics is relatively less rampant or less required compared to for-profit ones.  NPO like the offices and bureaus of the government are not only responsible to provide services to citizens per se but also balance the interactions of other sectors like business, foreign and other sub-groups (e.g. environmentalists, activists, terrorist, criminals, etc.).    The functionality of e-commerce is demanded to indefinite expansion to the needs of universal stakeholders within the jurisdiction of the specific government office.  Computers are not only means to one end but ends in this situation.  As a result, the impression creates bottleneck and confusion to politicians and public servants.  For example, once toll fee payment is automated where car-owners and drivers do not have to speak to the toll teller and this strategy is dubbed as breakthrough in the transportation industry, the Department for Transportation would shoulder substantial risks of “break-away” or increase in hijacking due to reduction of toll fee guards.    In this particular issue, the government would prefer status quo rather drastic innovation because the former is attached with lesser risk of negative public opinion and even rage in times of innovation failure.  In addition, there are no promises in connection with status quo that processes are familiar with the public and there is minimal need for substantial investment in both construction/ planning of the innovation and information to the public on how to use it.  Therefore, computers which are integral element of any government-led innovation (i.e. also true to for-profit ones) are not used entirely in such feats that also limit potential public benefits (i.e. also costs).    Investments in computerization of government offices especially up to the point of maximizing the boundaries of information technology also serve as burden not only financial but also in terms of adaptation of the workforce and acceptance of managers/ officials.  This issue is particularly eminent in developing and poor countries wherein the difference of public and private firms is significant.  One is the requirement of training to employees which can be difficult as motivation of mostly old-age employees is at low levels.  Another, there arises conflict of interest in automation and the extent of employees to minimize the demand of their job.  When computers are introduced, there is likely demand for efficiency and re-engineering in the stages of job completion which may be resisted by employees who used to have “extended breaks”.  Lastly, questions of validity in automation is advised as it displaces labor productivity that can be detrimental of government’s objective of job creation.                Perhaps, the last point is the strongest and valid (e.g. it is supported with macroeconomic models) in three of the arguments.  The government would not predate its own objective particularly to the extent that is would ultimately demise their ability to address unemployment and underemployment problems.  When computers are already installed in public terminals, withdrawal of them would cost the public substantial loss in both financial and “expectation” areas.  As a result, the government does not commit its funds to increase computer usage to prevent cost and risk of unfamiliarity of the aftermath and the bold challenge of trying to bypassed and be exempted in labor economic models.   E-Government is a phenomenon that is happening in the developed world but the arguments above are more directed to developing nations.  However, the entry of government to e-commerce can defeat free market structures as they can overlap the objectives of the private sector.  Developed nations can do this because the actions of government are well-aligned with the actions of the private sector and definitely these governments have substantial funds compared to poorer nations.  This is a call for less developed countries to iron-out corruption and increase monitoring of private sector activities for the government to have a framework on where to invest its limited funds.  The opportunities of following developed nations are beneficial to the improvements of the economy and undermine the arguments presented above which is rooted to imperfect information between less developed governments and their private sector.      What are the Factors that Affect e-Commerce Growth?             The major barrier against the big developments in internet security and computer applications is the inequality of technology distribution in the world.  E-commerce is limited to top-20 countries that average 50% internet penetration compared to bottom-200 countries that average less than 5% (2007).  Another issue to consider is cultural restrictions which can disrupt each institution of a nation towards internet adoption.  This is especially true when addressing human capital capabilities with available technological infrastructure.  If ability and willingness is absent, government and corporate efforts will be ineffective.  The best example is the Chinese conservative model in e-commerce adoption where information and transaction are filtered by the government due to fear of political and cultural implications from the West (2005).  When cultural barriers are surpassed, it would only be useful to address requirements for foreign direct investments (i.e. through trade pacts) to stimulate supply and demand for e-commerce.                  Threat of entry in e-commerce is low because first mover advantage is inherent to businesses that gain customers loyalty through time ( 2001).  The new entrant may find it difficult to create its own network externality and arrive at the same customer volume as the first mover.  Switching costs are moderate because there consumers that are naturally more concern to personal observation than virtual inspection of products that are expensive, promotes status/ personality and used over long periods.  Bargaining power of suppliers is low because internet platform can bridge numerous sellers and buyers in global scale (2001).  Bargaining power of customers is also low because businesses that are conducting e-commerce are exposed to international customers and their products tend to be heterogeneous depending on their intrinsic resources (2004).  Threat of substitute products like malls, door-to-door delivery, drive-through chains and convenient stores are moderate because there are customers that are not yet inclined with security features of some e-commerce including their reputation of delivering the good service.  Rivalry among e-commerce competitors is moderate depending on the tendency of businesses to serve as merely middleman or provide a vertically-integrated service that only uses e-commerce as part of the system.               Opportunities lay in the further modernization of retail sector and realization of global markets particularly those in top-20 of the efficiency, convenience and diversity of e-commerce.  Threats are identifiable in bottom 200’s cultural and political boldness that would take decades of ideology cycle, perhaps, long-term negative economic recession due to failure of market actors to use and exploit available resources efficiently.  Strengths of patented software innovations would give the firm sustained competitive advantage that can leverage long-run internet penetration of untapped global markets.  However, weakness on niche competition would ultimately carry with it more valuable competencies due to focus strategies that would possibly be applied to win a share in certain markets.                                   Conclusion             Investing in e-commerce is a profitable engagement for firms whether they are in manufacturing, merchandizing, logistics, and services sector.  Apart from the unstoppable computerization and modernization of countries especially the role of developing nations in providing offshore services, e-commerce promotes quality of life for internal and external customers of businesses ( 2003).  It provides efficiency, convenience and security to transactions that minimize costs, time and threat to security of transacting parties.  With considerable focus on making a safe, reliable and ethical e-commerce, the internet technology can be useful tool in making corporate objectives part of consumer objectives.  Perfect competition also supports the advantages of conducting business online as prices are lower, consumers have more choices on a global scale and security of supplying products/ services are attained also in global scale.       Appendices Figure 1: World Internet Usage and Penetration    Figure 2: Value-Added Equation Profit accounting is R = S – B – DP – W – I – DD – T (with little mathematical manipulation) value added equation will be S – B – DP = W + I + DD + T + R.  Where, R = retained earnings S = sales revenue B = bought-in materials and services DP = depreciation W = wages I = interest DD = dividends T = taxes                         Credit:ivythesis.typepad.com

TRENDS AND BUSINESS ADVANTAGES OF e-COMMERCE

TRENDS AND BUSINESS ADVANTAGES OF e-COMMERCE Introduction E-commerce is continuously marking its significance in the dai...

E-Commerce

E-Commerce             INTRODUCTION             Information and Communication Technology (ICT) can contribute to economic growth. One of the most visible examples of the way in which ICT can improve the economy is E-commerce. However, it is not enough to know that this instrument is powerful. In order to utilize E-commerce to the best possible use, we need to understand every aspect of it. We must fully know how it works and how it should be used. To maximize its power, we must find creative ways to put this knowledge to practice and widely disseminate it. (199 7- 2006 ).             There are many issues concerning E–commerce. Such a powerful tool must be understood thoroughly in order to put it in the best possible use. One of the issues regarding e-commerce that gained global concern is security. To fully understand the issue, let us first discuss the history of the World Wide Web (Internet) and the development of e-commerce (2001).    WHAT IS INTERNET?             Before we explore the legal and commercial realities of e commerce, it is first necessary to consider the nature of the Internet. We must do this in order to be able to apply the law to it. Common misconceptions can arise merely from the description of the Internet. Use of `the’ implies that it is some constant `thing’, which has definable edges and a shape and even a legal presence. Actually, the Internet is a communications infrastructure, nothing more. It is made up of countless thousands of computers that are connected together by means of telecommunications systems. Not all these computers will be connected at any one time and hence it is impossible to define its size and presence. When one user’s computer is in communication with another user’s computer, the information that is sent and received by each will travel in different and unpredictable routes and will pass through many computers on its journey. All the computers and communications services providers that are not either the original sender or the final recipient of the information are intermediaries or `conduits’.             Internet connectivity is commonly established by using an Internet Service Provider (ISP). ISP’s are organisations that have a permanent presence on the Internet and provide a fixed line or dial-up service. Some ISP’s make a charge for this service, but many do not. However, most businesses will require a website, and hence web space on the ISP’s server, and this is normally a chargeable service. Businesses wishing to establish a web presence for the first time are advised to consult the trade press (business Internet magazines such as The Industry Standard) for information on ISP’s ( 2001). ELECTRONIC COMMERCE             Before looking at the legal detail and common pitfalls of e-commerce, we will initially consider the nature of e-commerce — what exactly is it? We will also look at some terminology that is frequently used by e-commerce lawyers and business people. E-commerce (or electronic commerce) is the term used to denote a commercial (usually contractual) transaction that takes place between two or more people using the communications infrastructure known as the Internet. The first thing to note is that there is a range of e-commerce transactions, the following of which are examples: 1.the purchase by an individual of a book from a commercial website such as that run by Amazon.com 2.the ordering by Company A of office stationery from Company B’s website. 3.the exchange of e-mails between two persons whereby it is agreed that a certain service will be carried out by one party in exchange for a fee from the other.              We do not usually think of the latter type of transaction as falling within the category of e-commerce, but it is just as much an electronically formed contract as the other two examples: an exchange of e-mails can result in a legally binding contract. For example, if I send you an e-mail offering to sell you one dozen doughnuts, and you respond accepting my offer, this is just as much an e-commerce transaction as one taking place using the colorful pages and flash technology of the World Wide Web. Initially it will be important for an e-commerce business to identify whether its e-commerce transactions will be classified as B2B (business-to-business) or B2C (business-to-consumer).This is because the law applies in a different way to each. Of course, it may be that the e-commerce business anticipates engaging in both types of transaction. World Wide Web — that part of the Internet which uses the Hyper Text Transfer Protocol (HTTP) to display so-called web pages and to allow links between such pages anywhere on the Internet, ISP (Internet Service Provider) — a provider of Internet connectivity, ASP (Applications Service Provider) — an online provider of computer applications, such as software (2001). THE LAW OF COMMERCE             The law does not currently recognise an e-commerce transaction as being inherently different from a non e-commerce transaction. However, due to the online nature of e-commerce, particular aspects of the law apply differently where a transaction takes place online. This section will briefly consider those aspects of the law that apply to both online and offline transactions. This will be followed by an introduction to those areas of the law that have particular application in the case of e-commerce (2001). Trading vehicle In the case of an existing business, wishing to move online, the legal infrastructure will already be in place. For start-ups, it is important to consider the way that trading is to be carried out. It may be that the business will be a partnership. Alternatively, it might be a registered limited company. E-commerce start-ups should usually be advised to use a company for trading purposes. The advantages are many, the two main ones being that it is easier to attract investment capital, and that the owners of the company (its shareholders) will benefit from limited liability(2001).   Shares and responsibilities This is an issue for start-ups. If a company is chosen as the appropriate trading vehicle then there will be a number of issues that must be agreed upon by the participants: What are the appropriate proportions for share ownership? Who are the directors going to be? Who will be Company Secretary? Will a shareholder agreement be needed? Appropriate legal advice should be sought on these issues(2001). Taxation Once again the normal considerations will apply to both offline and online transactions. The position is slightly complicated in an e-commerce transaction due to the greater likelihood that such a transaction will involve parties who are not located in the same country (2001). Intellectual property rights The subject of intellectual property is relevant to all businesses but may be particularly important to e-commerce as the business model may involve a greater use of intellectual property. Terms and conditions of trade Again, this is relevant to all businesses. The terms on which a business obtains its supplies, and upon which it trades with its customers, are of fundamental importance. Incorporation of a business’s terms into its contracts is not usually a problem with offline transactions but significant issues commonly arise with an e-commerce business — see Chapter four for further details. Choice of law and jurisdiction will be an issue in some contractual arrangements, both on and offline(2001). THE LAW OF E-COMMERCE             Of greater significance are those areas of the law that apply specifically to e-commerce. This may be due to the fact that `old’ law applies in an unusual way to e-commerce due to the unpredictable (at the time that law was made) nature of the transaction. Alternatively, it may be due to the presence of ‘new law ‘, which, though it may not have been formulated to deal with e-commerce exclusively, clearly has it in contemplation as the main target of its intended regulation. The list that appears below contains those areas of law that are of particular (and in some cases exclusive) interest to e-commerce businesses: Formation of contract             How does the law of offer and acceptance apply to an online transaction? In other words, how will a contract be formed in the virtual world? Will a web page that displays a product for sale be an offer or an invitation to treat? This issue has yet to be decided by the courts (2001).     Intellectual Property Rights             Much of the value in an idea for an e-commerce website can be tied up in the Intellectual Property Rights (IPR’s).It is essential, particularly when trying to attract seed money from venture capitalists, that these IPR’s are delineated and transferred to the trading vehicle. They may be owned by a number of different people and so IPR assignments will need to be executed at an early stage. In any event the value of IPR’s is notoriously underestimated by businessmen. Appropriate steps must be taken to protect this value and to take steps to safeguard any brand name and associated goodwill ( 2001). Copyright             Copyright is of course comprised in IPR’s, but there are some specific considerations in relation to copyright that need to be looked at. We know that the law of copyright protects literary and artistic works and that these are the sorts of works that comprise a web page. So far so good. But what about links from one web page to another? Could they constitute breach of copyright? Of course in most instances, there would be no complaint because a link from one website to another would generate increased traffic and this surely is the objective of websites. But in one case a newspaper’s website contained a link to the news section of another newspaper’s website. It was held in an interim application to the court that this could constitute copyright infringement. The reason for the case was that the link bypassed the front (or home) page of the other website and so the users did not get to see the advertising messages on that home page — this technique is known as deep-linking. Sites that undertake deep-linking should be aware of the potential legal challenges that could arise (2001). Domain names and cybersquatting             The fact that every website must have a unique Internet address means that many commercial enterprises will be disappointed in their desire for a specific domain name. This is the problem that is inherent in a first-come-first-served system of domain name registrations. Difficulties can arise when one business feels it should be entitled to use a domain name that has already been registered by someone else(2001). Data protection             This area of the law governs what may and what may not be done with individuals’ personal information. In many cases much of the value in an e-commerce business is in its customer database, which may consist of a variety of information including name, address, e-mail address, date of birth, shopping habits, annual household income, etc. The law establishes a code of conduct (known as the Eight Data Protection Principles) for the processing of such data as well as a right for every individual to see a copy of such data if they request it( 2001).   Distance Selling Regulations             Towards the end of 2000, and in response to European Union legislation, the UK passed the Consumer Protection (Distance Selling) Regulations. These regulations require all UK businesses that enter contracts with consumers `at a distance’ (clearly this includes, but is not exclusive to, Internet transactions) to do two main things that they were not legally obliged to do before. The first is to provide certain specific information to the consumer and the second is to allow consumers a `cooling-off’ period of seven working days from receipt of goods to return the goods for a full refund (2001). IT requirements             There will be a number of legal considerations which arise from the infrastructure and services which are required for an e-commerce business. Hence there may be purchase or rental of hardware and software, rental of server space if required and a website hosting and development agreement where the hosting is to be outsourced (2001). Law and jurisdiction             One of the difficulties with an Internet transaction is that the buyer and seller may be in different parts of the world. The question then arises as to which legal system will govern the contract in the absence of any binding express provision. A related question but one which is more complex and somewhat political is which court system will have jurisdiction to hear any relevant litigation? WORLDWIDE DEVELOPMENT OF E-COMMERCE Arab Countries: Information and communication in general, is making its mark in the Arab World. Companies are slowly embracing the new technology to give them an advantage in the global economy. E commerce is becoming more widespread. Governments and companies expect benefits of participating in e-commerce. Enterprises are reviewing their strategies, incorporating e-commerce in their plans for the future. Arab enterprises are exposed to stiff global competition. Enterprises see advances in ICTs as opportunities for them to penetrate the globally and access remote markets. The future looks bright for businesses in the Arab countries but visibility and success in the international market require globally competitive technologies. Asia-Pacific: E-commerce is seen as a big contributor in the economic growth all throughout the region. E-commerce is considered as a powerful tool in the global economic competition, enhancing productivity, promoting gender equality, increasing efficiency, raising the quality of goods and services. E-commerce also aids in the promotion of international trade and investment. It is considered as a key to economic and social development in the region. The countries are seeking to develop cooperation the region. They base national ICT and e-commerce strategies on the economic and social context of each country. Europe: Perhaps The United Kingdom, France and other European countries are leading when it comes to E-commerce. Members of the European Union (EU) are making strategic developments in the field of electronic commerce. EU Member States have developed an electronic commerce action plan. France, Italy and Great Britain created concrete action plans that aim at fast action and success. The European Commission’s goal is to promote electronic commerce all throughout the region with all available means. The developments of electronic commerce in the region are being supported through structural and cohesion funds. The introduction of Euro aided in the development of e-commerce in Europe.  V. Ellis writes, “Combined impact of the single currency and e-commerce in the region will result to a stronger and deeper single market”. Latin America: E-commerce in Latin America is developing in a tremendous rate. It is expected to make up a big part of the Mexican and Brazilian economy because of its fast growth rate. E-commerce is growing the fastest in Brazil in areas such as online advertising and user numbers. However, the available market in Latin America is still small. Developments must be made to improve e-commerce in other Latin American countries. The economy of Latin American countries is expected to flourish once the developments in ICT are completed. Many companies are investing on infrastructures that will accelerate economic growth. In general, e commerce in America is showing a great potential and will remain exiting for the years to come. Australia:  (2005) reports that E-commerce offers potential benefits to Australians. E commerce in Australia is growing. Internet is being widely used as a business tool (p.20).  E-commerce helps bridge the gap between Australia and major commerce centers in Asia, Europe and America (2002) Africa: Africa is far behinb when it comes to the adoption of e-commerce. The impact of e-commerce in the region is very minimal. The countries that are taking the lead on e-commerce are Egypt, Ethiopia, Morocco, Tunisia and South Africa. There is a need to build telecommunication infrstructure in order to promote growth in e-commerce. The lack of telecommunication policy and a regulatory authority in the region impede the flourish of e-commerce. Africa is widely seen by the International Community as corrupt, full of crimes and fraud-ridden. There have been efforts to unite the continent and promote cooperation among African nations and established a strong internal and external trade policy. United States: The United States of America is generally seen as the global leader in e-commerce. E-commerce is the fastest growing sector in the American market (2002). E-commerce is now an essential feature of every Ameriacan Business ( 2005).  The tremendous growth of e-commerce in The United States is due to a higher presence of globalized establishments and high usage of technology. E-commerce benefits the economy, improving customer service and generating more sales and improving productivity ( 2002).   WORLWIDE REGULATIONS, SECURITY AND PROTECTION             United States:  The United States of America is one of the leading e-commerce law and policy developer. There are many agencies and organizations in the country that play important roles in e-commerce protection and security. The leading enforcer of priavcy and consumer security is The Federal Trade Commission. The American Bar Association created policies regarding jurisdiction and privacy.  The Federal Trade Commission (FTC) is in charge of the enforcement of the laws protecting the privacy of children online, fair trading practices and consumer credit information.There is no comprehensive privacy protection law for the private sector in the United States. In the year 1998, the Congress passed the Children’s Online Protection Act (COPPA) but it was only implemented in 2000. The law requires parental consent before the collection of data from children under thirteen. In 2003 the nation’s first spam regulation – the Fair Credit Reporting Act (FCRA). Also in 2003 the Controlling the Assault of Non-Solicited Pornography and Marketing Act was passed by the Congress.  The Electronic Communications Privacy Act of 1986 and the Omnibus Safe Streets and Crime Control Act of 1986 governed the surveillance of wire, oral and electronic communications for criminal investigations. In the wake of the 9/11 attacks, an act has been passed that weakened the privacy protections in federal wiretapping statutes. The USA Patriot Act authorizes national application of wiretap order. A warrant  can be issued by the court that could apply anywhere in the country.  The Priavcy Protection against wiretapping  was weakemned further when the Congress passed the Cyber Security Enahancement Act (CSEA) The law states that any computer involved in interstate commerce or communication is a protected computer, therefore granting law erforcers the power to install pen register and trap and trace devices without a court order.               Thailand: In April 2002, the Electronic Transactions Bill came in full effect. The law acknowledges the use of electronic documents as evidence in court. Also the E-commerce Act and the Credit Bureau Act have been enacted in 2002. To combat comruter crimes in Thailand, the Royal Thai Police established the Crime Suppression Center in 2003. Police Offecers were assigned to monitor computer crimes.  A Cybersecurity Division was also established by The Thai National Intelligence Agency (NIA).  The Official Information Commision (OIC) is in charge of implementing the Official Information Act. The act entitles every citizen to access public information.             Philippines: In the year 2000, the “Electronic Commerce Act” was passed. The said law recognizes the role of Informations and Communications Technology (ICT) and E-commerce in economic growth and nation-building. It seeks to facilitate domestic and international dealings, transactions and agreements through the use of ICT. The law promotes the creation of an information-friendly environment, identifying the role of the private sector in rendering services and investment contributions to develop and utilize to the fullest the benefits of The Information and Communication Technology in the country. The private sector is obliged ensure network security.             Spain: The Spanish constitution recognizes the right to privacy. The Spanish Data Protection of 1992 (LORTAD) was amended and succeeded by the Data Protection Act in 1999 in conjunction with the European Data Protection Directive. The Law of Information Society Services an Electronic Commerce (LSSI) was implemented in June 2002. The controversial law prohibits the distribution of spam and mandates retention for one year of Internet uses traffic data.             Germany: Among the members of the European Union, Germany has one of the strictest data protection laws. The information used in computer networks is protected by The Information and Communication Services Act of 1997. The Federal Data Protection Law has been revised in 2002.  The law includes regulations on transmitting personal data abroad and sensitive data collection. A data protection officer must be appointed by companies if they collect, process, or use personal information.  Another law that requires service providers to allow law enforcement to monitor data as well as voice lines is the G-10 law.             Canada: The Federal Access to information Act provides individuals with a right of access to information held by the federal public sector.             India:  The Information and Technology Act was passed in May 2000.  The law provides comprehensive regulations on electronic commerce. A Cyber Crime Investigation Cell was established by the Central Bureau of Investigation to investigate offences under the IT Act.              United Kingdom: An act was introduced in The United Kingdom in 1998. The Data Protection Act aims to ensure privacy and data protection  of the citizens. The Electronic-commerce Directive is being implemented in the United Kingdom to ensure consumer protection. The consumers are entitled to fair service and clear information about the company and how to complete a transaction.             Singapore: The National Internet Advisory Board released the  “E-Commerce Code for the Protection of Personal Information  and Communications of Consumers of Internet Commerce” in 1998. Providers are encouraged to ensure the confidentiality and protection of  personal information users. The Media Development Authority (MDA) regulates the media content – including internet, radio and  television.             Netherlands: A revised and expanded version of the Data Registration Act of 1998 was made in 2002. The Personal Data Protection Act  regulates the disclosure  of personal data to countries outside of the European Union.  A law on e-commerce that implements the EU E-commerce Directive has been passed by the Parliament. In 2004, spam has been outlawed in The Netherlands.             Romania: The Law NO. 676/2001 was enacted by the Parliament in November 2001. The Law  is about the Processing of Personal Data and Protection of Privacy in the Telecommunications Sector. Another law – Law No. 667/2001 for the Protection of Persons concerning the Processing of Personal Data and the Free circulation of such Data was enacted was also enacted in the same year.  Laws regarding “spam” or unsolicited commercila e-mails was enacted in 2002.             France: Personal information held by government agencies and private sectors are protected by The Data Protection Act of 1978.  In 2004, France’s Data Protection Act was revised. The  “Commission nationale de l’informatique et des libertés” (CNIL) is an independent agency that is in charge of the implementation of  the Data Protection Act. The Internal Safety Law has authorized the law enforcement authorities an immediate access to the computer data of telecommunications companies, including the Internet service providers.               Japan: A guideline has been issued by the Japanese Internet Service Providers to protect the privacy of online users. The said guideline was made in response to the Internet Responsibility law of 2001. Four bills that seek to uphold personal information protection in Japan were passed in 2003. The bills are as follows: The Act Concerning the Protection of Personal Information, The Information Disclosure and Personal Information Protection Council Establishment Act, The act concerning the Protection of Personal Data and The act concerning the Preparation of Related laws for the enforcement of the Act concerning the Protection of Personal Information. In 2002, two new anti-spam laws were implemented.             South Korea: Acts that protect Personal Information in the private sector includes: Protection of Communications Secrets Act, Telecommunications Business Act, Medical Service Act and the Real Name Financial Trade and Secrecy Act. Data protection system similar to that of the United States and Japan has been adopted by South Korea.               South Africa: In 2002, the Electronic Communications and Transactions Act was implemented. The said act aims to create legal certainty and promote trust and confidence in Electronic Transactions.             Sri Lanka: The rapid growth of the Information Technology in Sri Lanka has affected the legal system. There is a need to create laws that will effectively regulate new technologies. An act that aims to combat computer crimes in Sri Lanka has been approved by the Cabinet in 2003 – The Computer Crime Bill. Another bill that is still waiting for the Cabinet’s approval is the Electronic Transaction Bill. The said act is based on the UNCITRAL Model Law on e-Commerce of 1996.             China: Regulations aimed at controlling Internet Usage was introduced in the year 2000 by the Ministry of Information Industry. Controversial topics inside online chat rooms are monitored by service providers. Online activists are continuously being cracked down by the government. China has adopted the principle “guarded openness “in its legislations. The government preserves the benefits of the new information technology while at the same time guarding anti-government activities. Conclusion:             Electronic Commerce has dramatically changed the global economy. It is a powerful tool to improve the economic standing of a nation. E-commerce is spreading the fastest among developing countries. E-commerce provides opportunities for small business to reach a wider market and compete in the global economy. However, there are issues that must be considered and dealt with, like security and protection. Various international organizations are trying to solve the problems. Efforts have been made by countries all around the world to ensure the safety and protection of users.                 Credit:ivythesis.typepad.com

E-Commerce

E-Commerce INTRODUCTION Information and Communication Technology (ICT) can contribute to economic growth. One of...

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN?

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN? The outlook of e-commerce in Pakistan is positive with its growing economy, technology and supportive policies and regulations for e-commerce. But how one launches an e-commerce booking in this country requires a little bit of knowledge and skills to navigate the world of e-business. Analyze the Market.  Analyzing the market is the first step and the very basic and most essential requirement for any type of businesses wanting to establish its foothold in the long-term. Analysis of the market includes, consumer behavior, and trends in the demand and supply of the services to be offered. The supply and demand trend is further dictated by culture, social trends and tourism season. Draft a Business Plan. The market analysis facilitates the formulation of a successful business plan that can withstand the peaks and valleys of the business. The business plan also includes what hotels, motels and halls to include in the service and how to contact or recruit them into your e-commerce online booking. A business/memorandum of agreement will also be made between your company and the participating establishments. The business plan includes how to attract customers and how to keep them. It also includes the business strategy, operational strategy and financial plan, among others. Check and Abide By Governmental Policies. Check with your local and national regulatory policies any requirements for setting up a legitimate e-commerce online business. Check also if there are government regulations and laws pertaining to e-commerce business. Now that your papers are ready, we turn to the technical stuff. Choose a Hosting Service. You need a web hosting service. Find a hosting service that is compatible with the technical requirements of your e-commerce online booking service. Make sure that the hosting service has the capabilities that are in line with what you want and need in your website, such as an SSL (Secure Socket Layer) and a shopping cart of sorts. Shopping cart is important for potential clients to select and place their order. Write an Online Private Policy. This is very important. E-commerce is built on absolute trust. Without trust your business will fail. A private policy is necessary to establish trust and most importantly build ones credibility through honesty and transparency. The private policy includes the statement of what you collect from your clients: such as email address , IP and physical address, contact information and bank or credit card information and whether you save or share or sell their information to others. If there are third-party services, state that they will use the information that they provided in order to place their booking order. If the third party will save their information, tell them how it will be used. Tell your users or clients what you will do with their information and credit card information after their booking is processed.  Use of cookies should also be declared in your policy. Cite also how the customers are protected from hackers. Put a business or contact information on your policy such as email, physical address and or phone number. Most importantly write your private policy with a legal counsel. Make a List of the Technical Requirements of An E-Booking Service. The technical requirements include an online booking software, SSL (Secure Socket Layer), internet merchant account payment system and shopping cart. Choose an online booking software that is compatible with the technical needs of your website. There are a number offering on the website. The SSL or Secure Socket Layer encryption is important because it protects sensitive information that are entered by the customers during the online transaction. SSL can be shared with your hosting company if they have, or you can pay annually at 0 to 0 dollars. Some web hosting package includes an internet merchant account capability. There are a variety of them and you need to choose one that is suited for your business. Make sure to also check their terms of service and fees. Make Sure Your Online Booking Service Is Efficient. In other words, make sure there is no unnecessary glitch in the service. This means that you got to have an efficient web host and server, as discussed above, that can manage a great number of orders very efficiently. Provide Option. Some customers do not feel secure by giving their personal and bank information online. Give an option for customers who are more comfortable to place an order over the phone. Advertising. Finally, allocate a budget for marketing. Advertise your e-commerce website in social networks, other websites and through conventional marketing efforts like pamphlets and banners. Good luck!   REFERENCES All Business, n.d. E-Commerce 101: How to Start Selling Online. [online] Available at: < http://www.allbusiness.com/sales/internet-e-commerce/2637-1.html> [Accessed 19 May 2011]. All Business, n.d. What a Business Website Private Policy Covers. [online] Available at:< http://www.allbusiness.com/legal/contracts-agreements-internet-legal/2639-1.html>  [Accessed 19 May 2011]. Callihan, JR. How to Start and E-commerce Business. [online] Available at:< http://www.buzzle.com/articles/how-to-start-an-e-commerce-business.html> [Accessed 19 May 2011]. Ropelato, n.d. What is Needed to Start an E-commerce.  [online] Available at:< http://shopping-cart-review.toptenreviews.com/what-do-i-need-article.html> [Accessed 19 May 2011]. Thompson, T., n.d. What is a Merchant Account. [online] Available at: < http://www.wisegeek.com/what-is-a-merchant-account.htm> [Accessed 19 May 2011]. Credit:ivythesis.typepad.com

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN?

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN? The outlook of e...

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN?

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN?

HOW TO LAUNCH AN E-COMMERCE ONLINE BOOKING OF HOTELS, MOTELS, HALLS FOR WEDDING AND ALL KINDS OF PARTIES IN PAKISTAN? The outlook of e...