Methods in Business Research – eCommerce
We are on the verge of a revolution that is just as profound as the change in the economy that came with the industrial revolution. Soon electronic networks will allow people to transcend the barriers of time and distance and take advantage of the global markets and business opportunities not even imaginable today, opening up a new world of economic possibility and progress.
What is e-commerce?
There is no generally accepted definition of electronic commerce (e-commerce). However, the World Trade Organization (WTO) Work Programme on Electronic Commerce is understood to mean the production, distribution, marketing, sales or delivery of goods and services by electronic means. A commercial transaction can be divided into three main stages: advertising and searching; ordering and payment; and delivery. Any of these transactions can be carried out electronically and may therefore be covered by the concept of e-commerce.
E-commerce has many advantages. It allows companies to streamline business processes; it reduces costs in the face of global competition; it provides market value-added services; it forges more profitable links to suppliers and customers around the world, it improves effectiveness in terms of widening market potential; and it creates globalization. The disadvantages of e-commerce, on the other hand, are privacy loss; censorship; transaction security; vendor reliability; getting customers to the Net; and customer retention
The advent of Internet has not only opened a new chapter in the life of an individual but has created new vistas in corporate environment. It has never been so easy to communicate, gather information and then use it one’s best advantage. The natural outcome is that globally the economies are going through transition at a very fast speed not only to compete in the global village but also to get an edge over others. Over 150 million people worldwide are connected to the internet, exploring endless benefits and resources available online. The country with the largest number of Internet users today is USA, with about 37 million on-line connectivity (in 1998). This figure is expected to exceed 67 million by 2003. Asian Internet users alone are currently estimated at 22 million but are expected to double within the next two and a half years, and exceed 60 million in four years (by 2003) surpassing even the number of US users by 2005. China is expected to be the largest user in Asia (16 million). The projected number of users in India by 2003 is 8 million (currently under l million). On the other hand, Europe has over 14 million Internet users and is expected to exceed 47 million by 2003. In other words, by 2003, almost every household in the developed world with a PC, Television, Telephone or Personal Digital Assistant will be connected to the Internet. The number of e-mail messages sent on an average day in the US was 300 million in 1995, and is expected to exceed 3.5 billion this year. By 2002, the traffic will total 8 billion messages a day.
Thanks to the growing number of internet service providers and web developers which will create your web sites for as low as $200-$300. In Pakistan, where pirated software is available, and the service charges are also low, you can get the job done for as low as Rs. 2,000/-. That is nothing as compared to the returns that are existent in the cyberspace. Last year nearly 9 million US house holds shopped on line, generating $7.8 billion in revenues, a number that is expected to grow to $108 billion by 2003. However, in Pakistan, internet buying is not very common yet. The only reason why Pakistani businesses use the internet is to have a representation of thee company and for marketing purposes.
Six industries that are expected to have the greatest impact of e-commerce on the network are Computing & Electronics, Telecommunications, Financial Services, Retailing, Energy, and Travel. The combined e-business of these industries today is estimated at $110 billion. By 2003, the estimated business to e-business is of the order of $1.25 trillion.
It took 35 years for the telephone to reach a quarter of the US population; 26 years for the television; 13 years for the mobile phone; but it took less than 5 years for the Web to take over the world. If cars had followed the same technological trajectory as computers, the cars of today would have cost less than $2000, got about 42,500 km to a liter, and have a top speed of 14 million km per hour. The present age is the age of the IT, which is growing by leaps and bounds at the rate of 40% per year. Today, within a growth period of less than 50 years, the global IT market is worth over US $643 billion. A recent study by the Italian Treasury estimated that IT made up 3.6% of the American GDP vs. 2.9% in Japan, 2.4% in Germany and 1.5% in Italy.
The process of globalization offers new opportunities besides posing many threats. E-commerce managers will have to invent new business modes that reemphasize scale, differentiation, and brands to compete effectively on the electronic infrastructure. With low transaction costs, they will also have to spend substantial time redesigning transaction processes and participating in industry groups to develop new e-commerce conventions. As the tariff and non-tariff barriers are being demolished, the competition is intensified. The countries desirous of attaining larger market share, on the one hand, have to be more competitive, and on the other hand, need to have access to more and more customers to get a bigger bite of the pie. They have to offer better quality of goods and services and cut down delivery time. The e-commerce has thus been evolved as a competitive advantage. Presence of a company on the worldwide web acts as its virtual front office — 24 hours a day. These views have been shared by quite a few articles such as ‘Booting up your business’ and ‘e-commerce in Pakistan’.
E-COMMERCE IN PAKISTAN
Pakistan cannot remain immune to the upcoming trend of e-busienss. However the government policies, shortage of skilled manpower are the largest impediments to the perfect implementation of such new technology. During Nawaz Sharif rule the draft of Information Technology Policy was prepared and circulated. The then deputy chairman planning commission and the chief coordinator Pakistan 2010 programme was nominated IT coordinator for Pakistan. The steering committee, in addition to its mandate, was to ensure implementation of the decisions and policies and formulate recommendations.
Some Key Points
This includes music, books, films, computer software and financial services architecture plans etc. The introduction and speed of Internet has established e-commerce as an important means of carrying out commercial transactions.
It raises a basic question that “Can e-commerce replace the traditional trading system?” An increase in the volume and value of transactions conducted on Internet is expected to surpass the quantum of transactions conducted by traditional means. According to some experts, e-commerce has this potential as it can reduce the cost per transaction, increase efficiency, promote competition, lower prices and enhance international demand. It can complement trade through domestic and international market research, advertising and marketing. It has the potential benefits not only for large corporation but also help small and medium size enterprises to overcome their traditional drawbacks in trade.
Delivery of an item through Internet requires use of appropriate hardware and software, compatible telecommunication system and uninterrupted electricity supply. The Internet is the means through which transactions can be conducted. Like any other developing country, Pakistan is far behind in required physical infrastructure. These include: computer hardware and software, telephone lines and uninterrupted electricity supply. The other but more important issues are: transfer of funds in foreign exchange, customs clearance, payment of duties and taxes. For example: determination of country of origin, agreements, need for original documents, establishing the authenticity of documents. UN Commission on International Trade Law has already undertaken the work on model laws for conducting e-commerce. In Pakistan, were even piracy is not discouraged, implementing e-commerce would be a challenging job.
For the government the top priority in education and training should be the information technology. Unless trained people are available, even the availability of most modern technology can help in overcoming the problem.
ATMs, on-line and tele-banking are already in use and the infrastructure available in the banking sector has the largest potential for e-commerce or e-business. While domestic e-commerce has the largest potential, it may take some time to conduct international transactions due to legal requirements. By using the current on-line system, stationery printing and delivery system can be atomized. This can help in cutting cost, improving efficiency and reducing unnecessary wastage of time.
During Nawaz Sharif rule at least some efforts were made to address the Y2K issue and to prepare the draft of information technology policy. Now all we can do is to hope for the best from the new political rule in our homeland.
The greatest implication of the internet is its marketing capability. If you are an entrepreneur or planning to be one, there is a good chance that you are going to examine the possibility of doing business on the Internet. Since the development of the WWW, commercial enterprises have been coming onto the Net in droves.
Keep in mind that the WWW, which is the only place on the Internet where commerce takes place, has only been in existence sine 1993. Before the Web, there were no graphics, sound or moving pictures on the Net. It was used mostly by researchers and technical wizards.
In the few years it has been in existence, the Web has become a force to reckon with in the business community. Recent statistics show that Web-generated revenues at commercial Websites are forecast to reach $24.4 billion in 1997. Product and service sales and fees account for 85% of the current revenues. The largest growing commercial segment is small to medium-sized companies. At the present time, one in four Websites are retailers, and that proportion is rising. Lately, many new sites are being created by manufacturers, wholesalers and distributors.
For the past two years, 30% of the commercial sites have indicated that they are already “profitable”, and another one in four anticipate profitability in the next year. There are a lot of activities that can be done on the internet. Some of the major ones are as follows:
Selling Products and Services has become more easier and less costly through the Net. The graphical nature of the Internet makes it a natural for displaying products and descriptions of services in a dynamic, interactive format. Forms can be displayed with which customers can place orders directly online. Security issues have been addressed and buyers can be assured that their credit card information is safe.
Building an Image can be done for a relatively low investment. You can make your product or service known to vast numbers of people. Even if you only have a local business or clientele, your image can be enhanced by a Web presence.
Saving Money and Time is the prime role of the internet. Many businesses go online because of the great savings made possible by communicating with customers and prospects via e-mail.
Giving Effective Customer Service is also made possible through the Net. Customers and clients want to know that they can reach you and have their questions answered and complaints handled without having to spend valuable time on the phone. Anyone who has had to deal with complicated voice-mail systems will appreciate the immediacy of using online forms and e-mail.
Other advantages or characteristics of e-commerce are that it allows to extend value added services to the clients. Through the large Network, people always stay connected and that helps to over come a number of miscommunications. Through the Net, your horizons are expanded, you are likely to find business partners on the Net and can stay informed to the latest news. Even though, marketing of the web is very effective, you have to take into consideration various factors so as to avoid the losses that can be as large as the profits. Some strategies of effective Web marketing are as follows:
- Do you present enough information to convince the prospect that you are trustworthy and willing to guarantee you products or services. What is the image that your prospect will have of you and your company.
- When describing the features of your product/service, do you include the benefits in the description. For example, don’t say, “This widget has up-teen whosies.” Instead, say, “The up-teen whosies on this widget will save you time and money.”
- After you present your product or service, can the prospect easily find information about how to order.
- Do you have, your URL plus a link to your “Who are We” page and a e-mail link on every page on your site. You also need a link to your home page and site index, if you have one. It is essential to understand that many people come to your site via the search engines and will plop down right in the middle
- What are you asking your prospect to do next? Are you clearly and pro-actively asking for the order. Are you very specific about how they should pay for your product or service. Is everything done in logical order.
- If a person is doing a search for the product you sell, would the title of the page or the meta-tags get them to the right page? The title is VERY important.
- Although optimizing for search engines is not guarantee that your page will come up, creating a title with important keywords will raise your chances of success.
Some technical details that have to be accounted for would be:
· Rich content is the key to getting your website to sell. It means combining interactivity with multimedia technologies such as full-motion video, streaming audio, and 2-D and 3-D animation. Rich media content can replace or enhance static information that is merely read, offering instead the ability to see and hear information and at the same time develop interest.
· Client platforms PCs based on the Pentium III processor and mobile computers based on the Pentium II processor offer exceptional multimedia performance, which makes these systems ideal for both creating e-business content and experiencing the rich, interactive content that helps make e-business so compelling and powerful.
- Use of networking products and client based server is not very expensive these days. Hence companies can easily add more servers as their business grows, and because these systems are standard, multipurpose machines, they can be re-deployed as business needs change.
Making e-business content compelling and effective
VRML allows customers to “play with” a product, viewing it from any angle and moving it around within a viewing environment. (A customer could, for example, arrange the furniture in a virtual living room.). Streaming audio and video make it feasible to play audio and video over corporate intranets, even to users with 28.8Kbps or 56Kbps modems. Imaging can be used to easily create interactive, 3-D-like image environments on the Web.
The above mentioned details are necessary to be kept in mind while developing websites. These services can be obtained by the web service providers.
Susan Cheng in her article ‘Globalize your Website’ has tried to give an overview of the fact that websites should be designed in such a fashion that it is adaptable and comprehendible throughout the world. Even if it is targeted towards a particular audience, the point that should be kept in mind is that it is approachable by web browsers all around the globe, and nobody should get a negative image of it. She has described two approaches that are being adapted around the world: Independent sites approach and the data driven approach. Both of these state that most companies these days are maintaining multiple language sites, however these are difficult and expensive to maintain.
In an article ‘Build secure electronic Commerce Sites’ the writer has rightfully pointed out that security measures are really important to be taken while maintaining websites. He has mentioned some methods, however, the article is very technical in nature and does not give a layman an idea of how to take or arrange for taking care of such security problems. These security measures that are required to be taken by the website managers and companies doing e-business are further detailed in two other articles; ’30 tips to protect you & your business’ and ‘Protect your business by Sarah Roberts’. In another article ‘ Are you safe online?’, the end users security perspective has been given. It says that the risks faced are viruses while downloading, hacking or use of your personal data and credit card numbers hacked which are then misused. Safety measures have to be taken to avoid all such problems. The article has been written in a layman’s language and covers almost all aspects required. These security measures are further discussed in more detail in another article, ‘Protect your Pc and Privacy’.
An article printed in the Fortune magazine, ‘Is net investing a sucker’s game?’ discusses the business that the net marketing companies have been doing in the last couple of years. It says that the stock prices of the majority of the 199 companies have been going up and have been a favorite for the investors. This success of the internet companies proves the fact that people have accepted internet greatly and companies such as aol & Yahoo are investors’ favorites.
In an article written by Anne Kornblut, a new concept has been introduced in the field of e-commerce. She has mentioned digital signatures which are getting common day by day. The process is such that you get your signature digitized and your will be given a code, which only you are supposed to know. When ever you are required to sign a document on the net, you simply enter the code. However this system has some limitations and inherent security problems.
Now coming to the marketing aspects of e-commerce. A section in this report is solely devoted to marketing properties of the internet and the prospects for good business. Articles like ‘Booting up your business’, ‘Internet a new marketing tool, & ‘Six ways to make your Website sell’ discuss the characteristics that the internet has, and advice us on how to successfully market our products. Since the audience is large and the competition is intense, you have to be really careful and watch your steps while doing anything on the Net.
Two case studies have been included in the report; Duckhead and Macy’s where the practical implications of e-commerce have been discussed. It has been said that both these companies experienced enormous benefits after they adopted e-commerce as a marketing tool. There sales drastically increased and their brand awareness went up by almost 50%. These cases discuss in detail the step by step process of the adoption of e-commerce.
All the articles in this report are taken from reliable sources and cover the topic of ‘e-commerce’ in great detail. The aspects covered mainly were the marketing capabilities of e-commerce and the security measures that are required to be taken while marketing your products and doing business on the web.
 E-commerce is generally defined as all the business activities taking place through the internet.
 The figures presented over here are collected from different surveys that were found online.
 The figure has been projected by a trend analysis.
 These figures pertain to U.S.A.
 for further details refer to article number 10 in the Appendix
 e-commerce in Pakistan, article number 22 in the Appendix.
 The views presented are that of Mr. Shabbir H. Kazmi in his article ‘e-commerce in Pakistan’.
 www is an abbreviation generally used for World Wide Web. Its is the system and compilation of websites around the globe.
 Booting up your business, Time April 19, 1999.
 URL is a technical term used for a Web Site Address.
 For detailed effective marketing tactics, refer to page 15