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INTRODUCTION
E-commerce is a revolution which has changed the way in which businesses buy and sell
products and services. It is associated with buying and selling of information, products and
services over computer communication networks. In fact, it has transformed the way in which
the organisation separate. E-commerce enables paperless exchange of information using
Electronic Data Interchange (EDI),Electronic Mail and other networks based technologies.it
not only automates manual processes and paper transactions, but also helps organisations in
moving to a fully electronic environment and change the way they operate.
WHAT IS E-COMMERCE??
Electronic commerce, commonly known as (electronic marketing) e-commerce consists of
the buying and selling of products or services over electronic systems such as the Internet and
other computer networks. The amount of trade conducted electronically has grown
extraordinarily with widespread Internet usage. The use of commerce is conducted in this
way, spurring and drawing on innovations in electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic data interchange
(EDI), inventory management systems, and automated data collection systems. Modern
electronic commerce typically uses the World Wide Web at least at some point in the
transaction's lifecycle, although it can encompass a wider range of technologies such as e-
mail as well.


Electronic commerce that is conducted between businesses is referred to as business-to-
business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or
limited to specific, pre-qualified participants (private electronic market). Electronic
commerce that is conducted between businesses and consumers, on the other hand, is referred
to as business-to-consumer or B2C. This is the type of electronic commerce conducted by
companies such as Amazon.com.
A large percentage of electronic
commerce is conducted entirely
electronically for virtual items
such as access to premium
content on a website, but most
electronic commerce involves the
transportation of physical items
in some way. Online retailers are
sometimes known as e-tailers and
online retail is sometimes known
as e-tail. Almost all big retailers
have electronic commerce
presence on the World Wide
Web.

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Electronic commerce is generally considered to be the sales aspect of e-business. It also
consists of the exchange of data to facilitate the financing and payment aspects of the
business transactions. In the emerging global economy, e-commerce and e-business have
increasingly between traditional markets and the global electronic marketplace-such as
business capital size, among others-are gradually being narrowed down. The name of the
game is strategic positioning, the ability of a company to determine emerging op-port unities
and utilize the necessary human capital skills (such as intellectual re-sources) to make the
most of these opportunities through an e-business strategy that is simple, workable and
practicable within the context of a global information milieu and new economic environment.
With its effect of levelling the playing field e-commerce coupled with the appropriate
strategy and policy approach enables small and medium scale enterprises to compete with
large and capital-rich businesses. On another plane, developing countries are given increased
access to the global marketplace, where they compete with and complement the more
developed economies. Most, if not all, developing countries are already participating in e-
commerce, either as sellers or buyers. However, to facilitate e-commerce growth in these
countries, the relatively underdeveloped information infrastructure must be improved.


Among the areas for policy intervention are:
High Internet access costs, including connection service fees, communication
fees, and hosting charges for websites with sufficient bandwidth;
Limited availability of credit cards and a nationwide credit card system;
Underdeveloped transportation infrastructure resulting in slow and uncertain
delivery of goods and services;
Network security problems and insufficient security safeguards;
Lack of skilled human resources and key technologies (i.e., inadequate pr
HISTORY
1979: Online shopping was invented in the UK by Michael Aldrich.
1982: Minitel was introduced nationwide in France by France Telecom and used for
online ordering.
1987: Swreg begins to provide software and shareware authors means to sell their
products online through an electronic Merchant account.
1990: Tim Berners-Lee writes the first web browser, Worldwide Web, using a NeXT
computer.
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1992: J.H. Snider and Terra Ziporyn publish Future Shop: How New Technologies
Will Change the Way We Shop and What We Buy. St. Martin's Press. ISBN
0312063598.
1994: Netscape releases the Navigator browser in October under the code name
Mozilla. Pizza Hut offers pizza ordering on its Web page. The first online bank opens.
Attempts to offer flower delivery and magazine subscriptions online. Adult materials
also become commercially available, as do cars and bikes. Netscape 1.0 is introduced
in late 1994 SSL encryption that made transactions secure.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour,
internet-only radio stations, Radio HK and Net Radio start broadcasting. Dell and
Cisco begin to aggressively use Internet for commercial transactions. EBay is founded
by computer programmer Pierre Omidyar as AuctionWeb.
1998: Electronic postal stamps can be purchased and downloaded for printing from
the Web.
1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in
1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG
Stores launches to sell decorative items for the home online.
2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion . Niche retail companies CSN Stores and
Net Shops are founded with the concept of selling products through several targeted
domains, rather than a central portal.
2003: Amazon.com posts first yearly profit.
2007: Business.com acquired by R.H. Donnelley for $345 million.
2008: US eCommerce and Online Retail sales projected to reach $204 billion, an
increase of 17 percent over 2007
ADVANTAGES OF E-COMMERCE
Some advantages that can be achieved from e-commerce include:



Access the global marketplace . The Internet spans the world, and it is possible to do
business with any business or person who is connected to the Internet. Simple local
businesses such as specialist record stores are able to market and sell their offerings
internationally using e-commerce. This global opportunity is assisted by the fact that, unlike
traditional communications methods, users are not charged according to the distance over
which they are communicating.
Being able to conduct business
24 x 7 x 365 . E-commerce
systems can operate all day
every day. Your physical
storefront does not need to be
open in order for customers and
suppliers to be doing business
with you electronically.

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Speed- Electronic communications allow messages to traverse the world almost
instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that
communications delay is not a part of the Internet / e-commerce world.
Marketspace- The market in which web-based businesses operate is the global
market. It may not be evident to them, but many businesses are already facing
international competition from web-enabled businesses.
Opportunity to reduce costs- The Internet makes it very easy to 'shop around' for
products and services that may be cheaper or more effective than we might otherwise
settle for. It is sometimes possible to, through some online research, identify original
manufacturers for some goods - thereby bypassing wholesalers and achieving a
cheaper price.
Computer platform-independent - 'Many, if not most, computers have the ability to
communicate via the Internet independent of operating systems and hardware.
Customers are not limited by existing hardware systems' (Gascoyne & Ozcubukcu,
1997:87).
Efficient applications development environment - 'In many respects, applications
can be more efficiently developed and distributed because the can be built without
regard to the customer's or the business partner's technology platform. Application
updates do not have to be manually installed on computers. Rather, Internet-related
technologies provide this capability inherently through automatic deployment of
software updates' (Gascoyne & Ozcubukcu, 1997:87).
Allowing customer self service and 'customer outsourcing'- People can interact
with businesses at any hour of the day that it is convenient to them, and because these
interactions are initiated by customers, the customers also provide a lot of the data for
the transaction that may otherwise need to be entered by business staff. This means
that some of the work and costs are effectively shifted to customers; this is referred to
as 'customer outsourcing'.
Stepping beyond borders to a global view-Using aspects of e-commerce technology
can mean your business can source and use products and services provided by other
businesses in other countries. This seems obvious enough to say, but people do not
always consider the implications of e-commerce. For example, in many ways it can be
easier and cheaper to host and operate some e-commerce activities outside Australia.
Further, because many e-commerce transactions involve credit cards, many
businesses in Australia need to make arrangements for accepting online payments.
However a number of major Australian banks have tended to be unhelpful laggards on
this front, charging a lot of money and making it difficult to establish these
arrangements - particularly for smaller businesses and/or businesses that don't fit into
a traditional-economy understanding of business. In some cases, therefore, it can be
easier and cheaper to set up arrangements which bypass this aspect of the Australian
banking system. Admittedly, this can create some grey areas for legal and taxation
purposes, but these can be dealt with. And yes these circumstances do have
implications for Australia's national competitiveness and the competitiveness of our
industries and businesses.
As a further thought, many businesses find it easier to buy and sell in U.S. dollars: it is
effectively the major currency of the Internet. In this context, global online customers can
find the concept of peculiar and unfamiliar currencies disconcerting. Some businesses find
they can achieve higher prices online and in US dollars than they would achieve selling
locally or nationally. Given that banks often charge fees for converting currencies, this is
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another reason to investigate all of your (national and international) options for accepting and
making online payments.
In brief, it is useful to take a global view with regard the potential and organisation of your e-
commerce activities, especially if you are targeting global customers.
A new marketing channel- The Internet provides an important new channel to sell to
consumers. Peterson et al. (1999) suggest that, as a marketing channel, the Internet
has the following characteristics:
the ability to inexpensively store vast amounts of information at different virtual
locations
the availability of powerful and inexpensive means of searching, organising, and
disseminating such information
interactivity and the ability to provide information on demand
the ability to provide perceptual experiences that are far superior to a printed
catalogue, although not as rich as personal inspection
the capability to serve as a transaction medium
the ability to serve as a physical distribution medium for certain goods (e.g., software)
relatively low entry and establishment costs for sellers
no other existing marketing channel possesses all of these characteristics.
Some of these advantages and their surrounding issues are discussed below in further detail.

DISADVANTAGES OF E-COMMERCE
Some disadvantages and constraints of e-commerce include the following.
Time for delivery of physical products - It is possible to visit a local music store and
walk out with a compact disc, or a bookstore and leave with a book. E-commerce is
often used to buy goods that are not available locally from businesses all over the
world, meaning that physical goods need to be delivered, which takes time and costs
money. In some cases there are ways around this, for example, with electronic files of
the music or books being accessed across the Internet, but then these are not physical
goods.
Physical product, supplier & delivery uncertainty- When you walk out of a shop
with an item, it's yours. You have it; you know what it is, where it is and how it looks.
In some respects e-commerce purchases are made on trust. This is because, firstly, not
having had physical access to the product, a purchase is made on an expectation of
what that product is and its condition. Secondly, because supplying businesses can be
conducted across the world, it can be uncertain whether or not they are legitimate
businesses and are not just going to take your money. It's pretty hard to knock on their
door to complain or seek legal recourse! Thirdly, even if the item is sent, it is easy to
start wondering whether or not it will ever arrive.
Perishable goods- Forget about ordering a single gelato ice cream from a shop in
Rome! Though specialised or refrigerated transport can be used, goods bought and
sold via the Internet tend to be durable and non-perishable: they need to survive the
trip from the supplier to the purchasing business or consumer. This shifts the bias for
perishable and/or non-durable goods back towards traditional supply chain
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arrangements, or towards relatively more local e-commerce-based purchases, sales
and distribution. In contrast, durable goods can be traded from almost anyone to
almost anyone else, sparking competition for lower prices. In some cases this leads to
disintermediation in which intermediary people and businesses are bypassed by
consumers and by other businesses that are seeking to purchase more directly from
manufacturers.
Limited and selected sensory information- The Internet is an effective conduit for
visual and auditory information: seeing pictures, hearing sounds and reading text.
However it does not allow full scope for our senses: we can see pictures of the
flowers, but not smell their fragrance; we can see pictures of a hammer, but not feel
its weight or balance. Further, when we pick up and inspect something, we choose
what we look at and how we look at it. This is not the case on the Internet. If we were
looking at buying a car on the Internet, we would see the pictures the seller had
chosen for us to see but not the things we might look for if we were able to see it in
person. And, taking into account our other senses, we can't test the car to hear the
sound of the engine as it changes gears or sense the smell and feel of the leather seats.
There are many ways in which the Internet does not convey the richness of
experiences of the world. This lack of sensory information means that people are
often much more comfortable buying via the Internet generic goods - things that they
have seen or experienced before and about which there is little ambiguity, rather than
unique or complex things.
Returning goods- Returning goods online can be an area of difficulty. The
uncertainties surrounding the initial payment and delivery of goods can be
exacerbated in this process. Will the goods get back to their source? Who pays for the
return postage? Will the refund be paid? Will I be left with nothing? How long will it
take? Contrast this with the offline experience of returning goods to a shop.
Privacy, security, payment, identity, contract- Many issues arise - privacy of
information, security of that information and payment details, whether or not payment
details (eg credit card details) will be misused, identity theft, contract, and, whether
we have one or not, what laws and legal jurisdiction apply.
Defined services & the unexpected - E-commerce is an effective means for
managing the transaction of known and established services, that is, things that are
everyday. It is not suitable for dealing with the new or unexpected. For example, a
transport company used to dealing with simple packages being asked if it can
transport a hippopotamus, or a customer asking for a book order to be wrapped in blue
and white polka dot paper with a bow. Such requests need human intervention to
investigate and resolve.
Personal service -Although some human interaction can be facilitated via the web, e-
commerce can not provide the richness of interaction provided by personal service.
For most businesses, e-commerce methods provide the equivalent of an information-
rich counter attendant rather than a salesperson. This also means that feedback about
how people react to product and service offerings also tends to be more granular or
perhaps lost using e-commerce approaches. If your only feedback is that people are
(or are not) buying your products or services online, this is inadequate for evaluating
how to change or improve your e-commerce strategies and/or product and service
offerings. Successful business use of e-commerce typically involves strategies for
gaining and applying customer feedback. This helps businesses to understand,
anticipate and meet changing online customer needs and preferences, which is critical
because of the comparatively rapid rate of ongoing Internet-based change.
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Size and number of transactions- E-commerce is most often conducted using credit
card facilities for payments, and as a result very small and very large transactions tend
not to be conducted online. The size of transactions is also impacted by the economics
of transporting physical goods. For example, any benefits or conveniences of buying a
box of pens online from a US-based business tend to be eclipsed by the cost of having
to pay for them to be delivered to you in Australia. The delivery costs also mean that
buying individual items from a range of different overseas businesses is significantly
more expensive than buying all of the goods from one overseas business because the
goods can be packaged and shipped together.
Reflecting some of the comments above, the following chart (Figure 1.6) shows some of the
complaints made by Australian e-consumers.

Reasons for consumer complaints (Australia 2002)


CHARACTERISTICS OF E-COMMERCE

1. Ease of Navigation
When attempting to sell products to visitors, the first requirement for selling a product is that
the shopper has to be able to find specifically what he or she is looking for. Effective
navigation is important to any website, but its especially critical for e-commerce sites. Lost
visitors will result in lost sales, so every effort should be made to have a site with clear,
logical navigation.
E-commerce sites often face considerable challenges with navigation because of the number
of products that are presented on the site. Large sites, such as those of department stores,
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have to be especially careful with navigation, because finding what you want will usually
become increasingly difficult with more options. One factor to consider is how the average
visitor will attempt to find a particular product. What makes sense to the designer or to the
company owing the site may not be the same path that the average visitor would take to find a
product. Sufficient user testing is extremely helpful for identifying potential navigational
issues.

2. The Design Does Not Overpower the Products
The focus of an e-commerce site should be on the products that are available for purchase. A
design that is extravagant for no legitimate reason will usually do more harm than good, as it
will draw attention to the design of the site and away from the products. Yesterday we posted
a showcase of e-commerce sites with a minimal design approach. There sites have chosen to
keep the design simple so that the products dont have to compete for the attention of visitors.

3. Easy Checkout
User experience on e-commerce sites is critical to success. If the checkout process involves
too many steps or is confusing, shoppers will wind up abandoning their cart with items left
unpurchased. Ideally, the checkout should involve a minimal amount of steps and should be
as easy as possible for shoppers.


5. The Design Style Matches the Products
Like any other type of website, e-commerce sites can have countless different design styles.
However, when designing an e-commerce site its important to consider the style of the
products that will be available on the site. This is a little bit more relevant for smaller stores
4. Branded
Many shoppers are influenced in
their purchasing decisions by the
brand, and so the need to
establish a strong brand is import
for both online and offline
selling. In the cases of stores that
sell online as well as in physical
locations, the website is only a
part of an overall branding
strategy. In these cases the
website should work well with
other branding efforts of the
company so that customers feel
comfortable on the website.

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with a specific type of product and for websites of a particular brand or company that has
established a certain identity.
If the design style does not match very well with the particular products that are for sale,
there will be a disconnect that exists and visitors may have a hard time relating to products
and determining if it is right for them.

6. Showcases the Most Popular Products
Many e-commerce sites make an effort to showcase items that are likely to be of interest to
visitors, obviously with the intention of helping visitors to find something that they will buy.
A number of sites are using a large area on the homepage that they can use to promote current
sales, new product lines, or whatever will generate interest. On theses sites, this area will
often be updated frequently, or it may include some type of slideshow.

7. Promotes Related Products
One of the keys to a successful e-commerce store is the promotion of related products that the
customer may also be interested in. Sometimes you will see related products listed and shown
on item detail pages, and other times you will see suggestions being made after adding an
item to your cart. Promoting the right products that buyers are likely to be interested in is key
regardless of the approach that is used.


8. Effective, Accurate Product Photos
Selling online is different than selling in a physical store because the buyer cannot touch the
product or see it in person before making a buying decision (unless they have seen it
somewhere else). Providing quality photos that accurately portray the product can help to
overcome this challenge and can make the buying decision easier on visitors.
9. Effective Site-Wide Search
Although navigation is critical for making it easy on visitors to find what they want, there is
still the need to allow them to search. Some visitors will still have trouble finding a specific
product even with good navigation, and with larger e-commerce sites it may often be more
feasible to simply do a search than to move through several layers of links. The type of search
and the amount of options that should be offered to narrow the search should be based on the
size of the site and the items that are available.

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RESOURCES REQUIRED FOR SUCCESSFUL IMPLEMENTATION OF
ECOMMERCE
The following resources should be available for successful implementation of e-
commerce:
1. A product or service to be purchased/sold
2. A place to sell the product or service. In e-commerce, a website displays the
product/service and serves as the place
3. A means of getting people to visit the website i.e.,Hardware,network
infrastructure and system software .
4. A means of accepting orders-normally an on- line form of some sort.
5. A way to accept money-normally a merchant account handling credit card
payments. this piece requires a secure ordering page and a connection to a bank.
Alternatively the company may use more traditional billing techniques, either
online or through the mail.
6. A fulfilment capacity to deliver products to customers. In the case of software and
information, however, fulfilment can occur over the web through a download
mechanism.
7. A way to accept returns
8. A way to handle warranty claims, if required.
9. A way to provide customer service often through e-mail, on line form ,etc.


DRIVERS OF E-COMMERCE
A number of factors are responsible for the rapid growth of the e-commerce. These can be
classifies into three broad categories, namely, economic factors, customer interaction factors
and technological factors.
(a) Economic factors
The economic efficiencies offered be e-commerce have been one of the primary driving
forces in its growth. These economic efficiencies include:
(a) Low infrastructure cost,
(b) Reduced transaction cost, and
(c) Low cost of sharing information, advertising, and business interactions.
The economies may be internal as well as external. Application of e-commerce for
integrating internal business processes has the potential of growing internal economies. The
external economies may flow from networking information system of suppliers, customers
and other business associates in order to facilitate business interactions and promote
cooperation.
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(b) Marketing and customer interaction factors
E-commerce infrastructure can also be used to provide marketing channels, to cater to niche
markets and to improve post sales customers by creating new channels of customer
interaction anda support. Companies can provide the target customers with product and
service information in greater detail. The increasing competition is making it imperative to
emply technologies for low cost customer prospecting, establishing and maintaining closer
relationship with customers and improved band loyalty. Thus, need for low cost methods of
customers interaction is important factor fueling growth of e-commerce.
(c)Technological factor
The convergence of Information technology and Communication technology has opened a
new range of opportunities in the development and delivery of new products and services.
Multimedia technologies and quicker transmission of information in different forms and
formats without any loss of quality has opens new avenues for improving both the content
and delivery of goods and services. These technological developments have transformed the
business scenario, particularly, in industries such as communication, publishing,
entertainment, etc. Bringing them closer to each other and converging them in a form in
which their separate identities are difficult to recognize. It may be pointed out that these are
not only the industries that have been influenced. Almost all the industries have experienced
the change, though in some industries the change is most profound as in others.


MYTHS OF E- COMMERCE

Myth: All I Have to Do is Create A Website, People will Come to My Website, Buy My
Goods or Services, and I Can Sit Back and Collect the Money.

Fact: If it were only that easy! There is nothing magical about an Internet Business, no
special formulas. The fact is, most of the same factors that make a successful On-line
business are the same factors that lead to successful with traditional businesses.
1. A good business plan and marketing strategy
2. Excellent Customer Service
3. Understanding the unique demographic and psycho-graphic factors that are in
your market place (in this case, the market place is the Internet).
4. Offer a reason for people to buy from you rather than your competition.
This does not imply that there are no advantages to an Internet business. More often
than not, it is easier to get an Internet business up and running with less startup costs
and operating expenses. In addition, the Web can allow you to grow your traditional
business by taking advantage of the Internet's unique features. From Browser's To
Buyers and Customer Oriented Website explore the Internet's unique features and how
to use them to grow your business.
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Myth: Doing Business on the Internet Is a Waste of Time. No one is really making
money or growing their business.

Fact: Many businesses and organizations, both large and small are benefiting from the
Internet. The fact is, that e-commerce is currently enjoying a growth rate of over 145%
with sales topping 36 billion dollars (source: cyberatlas.com).The Internet offers several
unique opportunities for businesses:
1. Instant Access to Information About Your Company's Goods and Services.
2. Better Customer Feedback though response forms, on-line discussion and focus
groups.
3. A Business that is highly adaptable to your customer's needs.
4. Services that are not possible with traditional businesses. such as customer
reviews of products and services, or computer generated suggestions of products
based on customer preferences.
5. Sell Your Product 24 hours a day, 7 days a week from the comfort of the
customer's living room or bedroom.



Myth: Taking Credit Cards Over the Internet is Next to Impossible for A Small Start Up
Business.
Fact: Actually, unless you have bad credit, getting a Merchant Account in order to take
Mastercard, Visa and American Express is not that difficult. It can, however, be daunting
trying to find someone who can offer you a merchant account. Most banks and financial
institutions do not offer their small business customers merchant accounts for "mail
order" or "on-line" sales because they consider these high risk. You can find many
companies offering this service but it is often expensive or complicated to setup. Also,
there are unfortunately some "fly by night" operations that only stay in business long
enough to take your substantial deposit.

With this in mind, we have decided to offer Merchant Accounts through ............ a well
known card processing service. Of course, we are here to stay, we have been providing
Internet services to many satisfied customers since 1992 ! Click Here to find out more
about obtaining a merchant account through us.

Myth (Version 1): If I Put a Site on the Information Super Highway, I will have Instant
Access to Millions of Potential Customers.
Myth (Version 2): I Put Up a Site On the Net and Nobody Come. Only Huge Sites with
Big Budgets Enjoy a Large Volume of Traffic.
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Fact: "Build it and they will come" may work in the movie Field of Dreams, but not on
the Web. Building a website and putting it on the World Wide Web is analogous to
putting up a billboard on a highway covered with billboards as far as the eye can see. On
the other hand, version 2 of the Myth is also false. True, many people do spend a lot of
time building their website only to find that no one is looking at it.

But the fact is, that with some work, we can drive a moderate amount of traffic
to your site. On our servers, there are, unfortunately, sites that enjoy little or no traffic.
There are also sites that enjoy over a million hits a month.

There are many ways to drive traffic to your site. Some are traditional and some are
unique to the Internet If you are trying to expand your traditional business on the net,
one method is to promote your website in your traditional advertising.


KEY SUCCESS FACTORS IN E-COMMERCE
Several factors have a role in the success of any e-commerce venture. They may include:








1. Providing value to customers.
Vendors can achieve this by
offering a product or product-
line that attracts potential
customers at a competitive
price, as in non-electronic
commerce.
2. Providing service and
performance. Offering a
responsive, user-friendly
purchasing experience, just
like a flesh-and-blood retailer,
may go some way to achieving
these goals.
3. Providing an attractive
website. The tasteful use of
colour, graphics, animation,
photographs, fonts, and white-
space percentage may aid
success in this respect.

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4. Providing personal attention. Personalized web sites, purchase suggestions, and
personalized special offers may go some of the way to substituting for the face-to-face
human interaction found at a traditional point of sale.
5. Providing a sense of community. Chat rooms, discussion boards, soliciting customer
input, loyalty schemes and affinity programs can help in this respect.
6. Providing reliability and security. Parallel servers, hardware redundancy, fail-safe
technology, information encryption, and firewalls can enhance this requirement.
7. Providing a 360-degree view of the customer relationship, defined as ensuring that all
employees, suppliers, and partners have a complete view, and the same view, of the
customer. However, customers may not appreciate the big brother experience.
8. Owning the customer's total experience. E-tailers foster this by treating any contacts
with a customer as part of a total experience, an experience that becomes synonymous
with the brand.


Streamlining business processes, possibly through re-engineering and information
technologies and provision of a self-serve site, easy to use without assistance, can help in
this respect.
Helping customers do their job of consuming. E-tailers can provide such help through
ample comparative information and good search facilities. Provision of component
information and safety-and-health comments may assist e-tailers to define the customers'
job.
Constructing a commercially sound business model. If this key success factor had
appeared in textbooks in 2000, many of the dot.coms might not have gone bust.
1. Engineering an electronic value chain in which one focuses on a "limited" number of
core competencies -- the opposite of a one-stop shop. (Electronic stores can appear
either specialist or generalist if properly programmed.)
2. Operating on or near the cutting edge of technology and staying there as technology
changes (but remembering that the fundamentals of commerce remain indifferent to
technology).
3. Setting up an organization of sufficient alertness and agility to respond quickly to any
changes in the economic, social and physical environment.

CATEGORIES OF E-COMMERCE
Ecommerce (e-commerce) or electronic commerce, a subset of ebusiness, is the purchasing,
selling, and exchanging of goods and services over computer networks (such as the Internet)
through which transactions or terms of sale are performed electronically. Contrary to
popular belief, ecommerce is not just on the Web. In fact, ecommerce was alive and well in
business to business transactions before the Web back in the 70s via EDI (Electronic Data
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Interchange) through VANs (Value-Added Networks). Ecommerce can be broken into four
main categories: B2B, B2C, C2B, and C2C.

BUYER
BUYER CONSUMER
BUSINESS
SELLER
CONSUMER



1. Business- to-consumer(internet )- B2C is selling of goods and services to a
customer and the transactions takes place through internet. E-commerce may be
termed as a tool that provides a way to sell goods using Web based technologies.
In this model, sellers sell products and services directly to customers. E.g.
Amazon.com. B2C e-business models include virtual malls, which are Web sites
that host many online transactions. B2C e-commerce refers to the buying and
selling of goods via the Web retailers to Web customers. This really is the same
thing as B2B e-commerce with one major difference . with B2B implementations,
the parties are Trusted Business Partners who have an established business
relationship. However, with B2C e-commerce , the retailer is often selling to
unknown, entrusted strangers. Therefore, extra effort must be made to capture
customer and payment information. Further, this data is typically verified before
orders are fulfilled. In this respect, B2C is a tougher solution to provide thab B2B.

2. Business-to-business(intranet and extranet)- B2B is a commercial
transaction between two or more businesses. Although B2C is the most familiar
form of e-business, transaction between and within businesses account for a
large share of commercial activity. Business activities within a company are
increasingly transacted on-line via the company intranet. An intranet uses
internet technology to allow employees to view and use internal Web sites that
are not accessible to the outside world. B2B E-commerce primarily refers to
supply chain technology, which is by far the largest and most successful e-
commerce technology employed today .

3. Consumer-to-business: The C2B model, also called, reverse auction or
demand collection model, enables buyers to name their own prices, often
B2B B2C
C2B C2C
16

binding, for a specific good or service generating demand. The Website collects
the demand bids and then offers the bids to the participating sellers. Examples
of this model are : Reverse Auction.com (travel, autos, consumer electronics) and
priceline.com(travel, telephone ,mortgage)

4. Consumer-to-consumer: with C2C e-business model, consumer sells directly
to other consumers via online classified ads and auctions, or by selling personal
services and expertise online. C2C e-commerce allows unknown, untrusted
parties to sell goods and services to one another. C2C model facilitates plain and
simple commerce between consumers. In this model, revenue streams are
typically matching buyers with sellers and vice versa. The most famous C2C
company is e-bay, the worlds largest personal online trading community, which
for-a small fee-allows consumers to offer their goods directly to others consumer
in auction format. To accommodate this activity, several technologies have
emerged. Firstly e-bay allows all sellers and buyers to rate one another. In this
manner, future prospective purchaser may see that a particular seller has sold to
more than 5000 customers all of whom rate the seller as excellent. In another
example, a prospective purchaser may see a seller who has previously sold only 5
times and all 5 have rated the seller poorly. This type of information is helpful.
Another technology that has emerged to support C2C activities is that of
payment intermediary. A good example of payment intermediary is Pay Pal.
Instead of purchasing items directly from an unknown, untrusted seller, the
buyer can instead send the money to Pay Pal =. From there , Pay Pal notifies the
seller that they will hold the money for them until the goods have been shipped
and accepted by the buyer
Companies using internal networks to offer their employees products and services online--
not necessarily online on the Web--are engaging in B2E (Business-to-Employee) ecommerce.

G2G (Government-to-Government), G2E (Government-to-Employee), G2B (Government-to-
Business), B2G (Business-to-Government), G2C (Government-to-Citizen), C2G (Citizen-to-
Government) are other forms of ecommerce that involve transactions with the government-
-from procurement to filing taxes to business registrations to renewing licenses. There are
other categories of ecommerce out there, but they tend to be superfluous.

E-COMMERCE APPLICATIONS
Some common applications related to electronic commerce are the following:
Email
Enterprise content management
Instant messaging
Newsgroups
Online shopping and order tracking
Online banking
Online office suites
17

Domestic and international payment systems
Shopping cart software
Teleconferencing
Electronic tickets

FORMS OF E-COMMERCE
Contemporary electronic commerce involves everything from ordering "digital" content for
immediate online consumption, to ordering conventional goods and services, to "meta"
services to facilitate other types of electronic commerce.
On the consumer level, electronic commerce is mostly conducted on the World Wide Web.
An individual can go online to purchase anything from books or groceries, to expensive items
like real estate. Another example would be online banking, i.e. online bill payments, buying
stocks, transferring funds from one account to another, and initiating wire payment to another
country. All of these activities can be done with a few strokes of the keyboard.
On the institutional level, big corporations and financial institutions use the internet to
exchange financial data to facilitate domestic and international business. Data integrity and
security are very hot and pressing issues for electronic commerce today.

E-COMMERCE COVERS THE FOLLOWING:
Dot-com company
E-government
Electronic money
Internet marketing
Paid content
Online shopping.

DOT COM COMPANY
A dot-com company, or simply a dot-com (alternatively rendered dot.com or dot com), is a
company that does most of its business on the Internet, usually through a website that uses
the popular top-level domain, ".com" (in turn derived from the word "commercial").
While the term can refer to present-day companies, it is also used specifically to refer to
companies with this business model that came into being during the late 1990s. Many such
startups were formed to take advantage of the surplus of venture capital funding. Many were
launched with very thin business plans, sometimes with nothing more than an idea and a
catchy name. The stated goal was often to "get big fast", i.e. to capture a majority share of
whatever market was being entered. Others were existing companies that re-styled
18

themselves as Internet companies, many of them legally changing their names to incorporate
a .com suffix.
With the stock market crash around the year 2000 that ended the dot-com bubble, many failed
and failing dot-com companies were referred to punningly as dot-bombs, dot-cons or dot-
gones. Many of the surviving firms dropped the .com suffix from their names.
Contents
1 The three Cs
2 List of well-known failed dot-coms
3 Acquisitions
4 Notes and references


The three Cs


Examples of companies divided over the Three Cs.
Various different ways to do business and make money with the Internet have been proposed.
They are emphasized in the three Cs, which stand for Commerce, Content and Connection.
Commerce is about selling products over the Internet, as Amazon.com does. Content refers to
placing content on the Internet, varying from news headlines to web-logs. Some examples are
BBC News and Facebook. Lastly one can do business by supplying an Internet connection, as
with AOL, one of the largest Internet service providers (ISP) in the US.
Some companies, like Google, Microsoft and AOL, offer all three of them,
[citation needed]
which
gives them an advantage on their competitors. This combination should be a success formula
according to some information specialists.


19

List of well-known failed dot-coms
In the late 2000s (as well as today) many businesses were interested in investing in the
Internet to expand their market. The Internet has the ability to reach out to consumers
globally as well as providing more convenient shopping to the consumer. If planned and
executed correctly, the Internet can greatly improve sales. However, there were many
businesses in the early 2000s that did not plan correctly and that cost them their business
One of the biggest mistake early dot com businesses made was that they were more interested
in attracting visitor to their website but not necessarily winning them over to customers. Early
e-commerce thought the most important factor was to have as many visitors as possible
gather to their website and this would eventually translate into profit for their business. This
wasnt necessarily the case and businesses failed. Early dot com businesses also failed to take
the time to properly researching the situation before starting their business. There are many
factors that come into play when starting a new business. Research needs to go into the
product the business is actually trying to sell. The business also need to research price of their
product. They need to be competitive with the cost of their product compared to their
competitors. Early businesses failed to research how they promote their product. If they
decide to advertise their product only through the cheapest avenues (i.e. banner ads, radio),
most likely they will not get the amount of consumers they would if they advertised through
more popular means.
There are thousands of failed companies from the dot-com bubble of the late 1990s. Here are
a few of the largest and most famous.
360HipHop: Promoted as 'the ultimate hip-hop destination on the web' and funded by an
array of big name investors like Russell Simmons, the lack of consistent content and an
inability to earn more in advertising or ecommerce than they spent tanked the project. The
site is now parked at Domain Sponsor.
AmCy.com: American Cybercast was the publisher of pioneering episodic sites TheSpot.com
and EON4.com, with backing from Intel and Softbank. The company's collapse is
documented in the book "Digital Babylon: How the Geeks, the Suits, and the Ponytails
Fought to Bring Hollywood to the Internet."
boo.com
Broadband Sports: A network of sports-content Web sites that raised over $60 million
before going bust in February 2001.
Cyberian Outpost: Founded in 1994 and one of the first successful online retailers.
Controversial marketing campaigns. Acquired by Fry's Electronics in 2001.
Cyber Rebate: Promised customers a 100% rebate after purchasing products priced at nearly
ten times the retail cost. Went bankrupt in 2002, leaving thousands of customers holding the
bag. The bankruptcy was settled in 2005 and customers received about eight cents on the
dollar from their original rebates.
DigiScents: Tried to transmit smells over the internet.
E-Loft.com: A paneuropean portal for university students, covering Italy, Germany, UK, Spain
and France.
Zap.com: an internet media venture founded by Zapata Corporation, a fish protein company
intent on monetizing its domain name.

20

E-GOVERNMENT
E-government (short for electronic government, also known as e-gov, digital government,
online government or transformational government) is a diffused neologism used to refer
to the use of information and communication technology to provide and improve government
services, transactions and interactions with citizens, businesses, and other arms of
government.

DELIVERY MODELS AND ACTIVITIES OF E-GOVERNMENT
The primary delivery models of e-Government can be divided into:
Government-to-Citizen or Government-to-Customer (G2C)
Government-to-Business (G2B)
Government-to-Government (G2G)
Government-to-Employees (G2E)
Within each of these interaction domains, four kinds of activities take place:
[1][2]

pushing information over the Internet, e.g: regulatory services, general holidays, public
hearing schedules, issue briefs, notifications, etc.
two-way communications between the agency and the citizen, a business, or another
government agency. In this model, users can engage in dialogue with agencies and post
problems, comments, or requests to the agency.
conducting transactions, e.g: lodging tax returns, applying for services and grants.
governance, e.g: online polling, voting, and campaigning.


NON INTERNET E-GOVERNMENT
While e-government is often thought of as "online government" or "Internet-based
government," many non-Internet "electronic government" technologies can be used in this
context. Some non-Internet forms include telephone, fax, PDA, SMS text messaging, MMS,
wireless networks and services, Bluetooth, CCTV, tracking systems, RFID, biometric
identification, road traffic management and regulatory enforcement, identity cards, smart
cards and other Near Field Communication applications; polling station technology (where
non-online e-voting is being considered), TV and radio-based delivery of government
services, email, online community facilities, newsgroups and electronic mailing lists, online
chat, and instant messaging technologies.


21

POTENTIAL RISKS AND BENEFITS OF E-GOVERNMENT

Risks
There are many considerations and potential implications of implementing and designing e-
government, including disintermediation of the government and its citizens, impacts on
economic, social, and political factors, vulnerability to cyber attacks, and disturbances to the
status quo in these areas.
[3]
. See also Electronic leviathan

Cost
Although a prodigious amount of money has been spent on the development and
implementation of e-government, some say it has yielded only a mediocre product. The
outcomes and effects of trial Internet-based governments are often difficult to gauge or
unsatisfactory.

Inaccessibility
An e-government site that provides web access and support often does not offer the potential
to reach many users including those who live in remote areas, are homebound, have low
literacy levels, exist on poverty line incomes, suffer from chronic illness, are single parents or
older adults.

False sense of transparency and accountability
Opponents of e-government argue that online governmental transparency is dubious because
it is maintained by the governments themselves. Information can be added or removed from
the public eye (i.e. the Internet) with or without public notice. For example, after the World
Trade Center in New York City was attacked on September 11, 2001, United States federal
officials removed a large amount of government information from its websites in the name of
national security. This act went relatively unnoticed by United States citizens. To this day,
very few organizations monitor and provide accountability for these modifications. Those
that do so, like the United States OMBWatch and Government Accountability Project, are
often nonprofit volunteers. Even the governments themselves do not always keep track of the
information they insert and delete.



22



BENEFITS
It is convenient and cost-effective for businesses, and the public benefits by getting easy
access to the most current information available without having to spend time, energy and
money to get it.
E-government helps simplify processes and makes access to government information more
easily accessible for public sector agencies and citizens. For example, the Indiana Bureau of
Motor Vehicles simplified the process of certifying driver records to be admitted in county
court proceedings. Indiana became the first state to allow government records to be digitally
signed, legally certified and delivered electronically by using Electronic Postmark
technology. In addition to its simplicity, e-democracy services can reduce costs. Alabama
Department of Conservation & Natural Resources, Wal-Mart and NICdeveloped an online
hunting and fishing license service utilizing an existing computer to automate the licensing
process. More than 140,000 licenses were purchased at Wal-Mart stores during the first
hunting season and the agency estimates it will save $200,000 annually from service.
[10]

The anticipated benefits of e-government include efficiency, improved services, better
accessibility of public services, and more transparency and accountability.
[3]

Democratization
One goal of e-government will be greater citizen participation. Through the internet, people
from all over the country can interact with politicians and make their voices heard. Blogging
and interactive surveys will allow politicians to see the views of the people they represent on
any given issue. Chat rooms can place citizens in real-time contact with elected officials and
their offices, allowing voters to have a direct impact and influence in their government. These
technologies can create a more transparent government, allowing voters to immediately see
how and why their representation in the capital is voting the way they are. This helps voters
better decide who to vote for in the future. A government could theoretically move more
towards a true democracy with the proper application of e-government. Government
transparency will give insight to the public on how decisions are made and hold elected
officials accountable for their actions. The public could become a direct and prominent
influence in government legislature to some degree.
[11][12][13][14]

Environmental bonuses
Proponents of e-government argue that online government services would lessen the need for
hard copy forms. Due to recent pressures from environmentalist groups, the media, and the
public, some governments and organizations have turned to the Internet to reduce this paper
use. The United States government utilizes the website http://www.forms.gov to provide
internal government forms for federal employees and thus produce significant savings in
paper.
Speed, efficiency, and convenience
23

E-government allows citizens to interact with computers to achieve objectives at any time
and any location, and eliminates the necessity for physical travel to government agents sitting
behind desks and windows. Improved accounting and record keeping can be noted through
computerization, and information and forms can be easily accessed, equaling quicker
processing time. On the administrative side, access to help find or retrieve files and linked
information can now be stored in databases versus hardcopies stored in various locations.
Individuals with disabilities or conditions no longer have to be mobile to be active in
government and can be in the comfort of their own homes.
Public approval
Recent trials of e-government have been met with acceptance and eagerness from the public.
Citizens participate in online discussions of political issues with increasing frequency, and
young people, who traditionally display minimal interest in government affairs, are drawn to
e-voting procedures.
Although internet-based governmental programs have been criticized for lack of reliable
privacy policies, studies have shown that people value prosecution of offenders over personal
confidentiality. Ninety percent of United States adults approve of Internet tracking systems of
criminals, and fifty-seven percent are willing to forgo some of their personal internet privacy
if it leads to the prosecution of criminals or terrorists.



TECHNOLOGY SPECIFIC E-GOVERNMENT
There are also some technology-specific sub-categories of e-government, such as
m-government (mobile government), u-government (ubiquitous government), and
g-government (GIS/GPS applications for e-government.
E-government portals and platforms The primary delivery models of e-Government are
classified depending on who benefits. In the development of public sector or private sector
portals and platforms, a system is created that benefits all constituents. Citizens needing to
renew their vehicle registration have a convenient way to accomplish it while already
engaged in meeting the regulatory inspection requirement. On behalf of a government
partner, business provides what has traditionally, and solely, managed by government and
can use this service to generate profit or attract new customers. Government agencies are
relieved of the cost and complexity of having to process the transactions.
To develop these public sector portals or platforms, governments have the choice to internally
develop and manage, outsource, or sign a self-funding contract. The self-funding model
creates portals that pay for themselves through convenience fees for certain e-government
transactions, known as self-funding portals. Early players in this space include government
ONE Solutions, First Data Government Solutions and NIC, a company built on the
self-funded model.
24

Social networking is an emerging area for e-democracy. The social networking entry point is
within the citizens environment and the engagement is on the citizens terms. Proponents of
e-government perceive government use of social networks as a medium to help government
act more like the public it serves. Examples of state usage can be found at The Official
Commonwealth of Virginia Homepage, where citizens can find Google tools and open social
forums.
Government and its agents also have the opportunity to follow citizens to monitor satisfaction
with services they receive. Through ListServs, RSS feeds, mobile messaging, micro-blogging
services and blogs, government and its agencies can share information to citizens who share
common interests and concerns. Government is also beginning to Twitter. In the state of
Rhode Island, Treasurer Frank T. Caprio is offering daily tweets of the states cash flow.
Interested people can sign up at here. For a full list of state agencies with Twitter feeds, visit
Real Life. Live document. For more information, visit transparent-government



UN GOVERNMENT READINESS INDEX
There are several international rankings of e-government maturity. The Eurostat rankings,
Economist, Brown University, and the UN e-Government Readiness Index are among the
most frequently cited. The United Nations conduct an annual e-Government survey which
includes a section titled e-Government Readiness. It is a comparative ranking of the countries
of the world according to two primary indicators:
i) the state of e-government readiness
ii) ii) the extent of e-participation. Constructing a model for the measurement
of digitized services, the Survey assesses the 191 member states of the UN
according to a quantitative composite index of e-government readiness
based on website assessment; telecommunication infrastructure and human
resource endowment.
The following is the list of the few countries according to the UN's 2008 e-Government
Readiness Index.
Rank Country Index
1 Sweden 0.9157
2
Denmark
0.9134
3 Norway 0.8921
4 United States 0.8644
25

5 Netherlands 0.8631
6 South Korea 0.8317
7 Canada 0.8172
8 Australia 0.8108

ELECTRONIC MONEY
Electronic money (also known as e-money, electronic cash, electronic currency, digital
money, digital cash or digital currency) refers to money or scrip which is exchanged only
electronically. Typically, this involves use of computer networks, the internet and digital
stored value systems. Electronic Funds Transfer (EFT) and direct deposit are examples of
electronic money. Also, it is a collective term for financial cryptography and technologies
enabling it.




While electronic money has been
an interesting problem for
cryptography use of digital cash
has been relatively low-scale.
One rare success has been Hong
Kong's Octopus card system,
which started as a transit payment
system and has grown into a
widely used electronic cash
system. Singapore also has an
electronic money implementation
for its public transportation
system (commuter trains, bus,
etc), which is very similar to
Hong Kong's Octopus card and
based on the same type of card
(FeliCa). There is also one
implementation in the
Netherlands, known as Chipknip.

26

OFF LINE ANONYMOUS ELECTRONIC MONEY
In the use of off-line electronic money, the merchant does not need to interact with the bank
before accepting a coin from the user. Instead he can collect multiple coins Spent by users
and Deposit them later with the bank. In principle this could be done off-line, i.e. the
merchant could go to the bank with his storage media to exchange e-cash for cash.
Nevertheless the merchant is guaranteed that the user's e-coin will either be accepted by the
bank, or the bank will be able to identify and punish the cheating user. In this way a user is
prevented from spending the same coin twice (double-spending). Off-line e-cash schemes
also need to protect against cheating merchants, i.e. merchants that want to deposit a coin
twice (and then blame the user).
Using cryptography, anonymous e-cash was introduced by David Chaum. He used blind
signatures to achieve unlinkability between withdrawal and spend transactions. In
cryptography, e-cash usually refers to anonymous e-cash. Depending on the properties of the
payment transactions, one distinguishes between on-line and off-line e-cash. The first off-line
e-cash system was proposed by Chaum and Naor. Like the first on-line scheme, it is based on
RSA blind signatures.

FUTURE EVOLUTION:
The main focuses of digital cash development are:
1) being able to use it through a wider range of hardware such as secured credit cards
2) linked bank accounts that would generally be used over an internet means, for exchange
with a secure micropayment system such as in large corporations (PayPal).

ISSUES
Although digital cash can provide many benefits such as convenience and privacy, increased
efficiency of transactions, lower transaction fees, new business opportunities with the
expansion of economic activities on the Internet, there are many potential issues with the use
of digital cash. The transfer of digital currencies raises local issues such as how to levy taxes
or the possible ease of money laundering. There are also potential macroeconomic effects
such as exchange rate instabilities and shortage of money supplies (total amount of digital
cash versus total amount of real cash available, basically the possibility that digital cash could
exceed the real cash available). These issues may only be addressable by some type of
cyberspace regulations or laws that regulate the transactions and watch for signs of trouble.



27

ALTERNATIVE SYSTEM
Technically electronic or digital money is a representation, or a system of debits and credits,
used to exchange value, within another system, or itself as a stand alone system, online or
offline. Also sometimes the term electronic money is used to refer to the provider itself. A
private currency may use gold to provide extra security, such as digital gold currency. Also,
some private organizations, such as the US military use private currencies such as Eagle
Cash.
Many systems will sell their electronic currency directly to the end user, such as Gogopay,
Paypal, WebMoney and Wirex, but other systems, such as Liberty Reserve, sell only through
third party digital currency exchangers.
In the case of Octopus Card in Hong Kong, deposits work similarly to banks'. After Octopus
Card Limited receives money for deposit from users, the money is deposited into banks,
which is similar to debit-card-issuing banks redepositing money at central banks.
Some community currencies, like some LETS systems, work with electronic transactions.
Cyclos Software allows creation of electronic community currencies.

INTERNET MARKETING
Internet marketing, also referred to as i-marketing, web-marketing, online-marketing, or
e-Marketing, is the marketing of products or services over the Internet.
The Internet has brought media to a global audience. The interactive nature of Internet
marketing in terms of providing instant response and eliciting responses, is a unique quality
of the medium. Internet marketing is sometimes considered to have a broader scope because
it not only refers to the Internet, e-mail, and wireless media, but it includes management of
digital customer data and electronic customer relationship management (ECRM) systems.
Internet marketing ties together creative and technical aspects of the Internet, including:
design, development, advertising, and sales.

ADVANTAGES
Internet marketing is relatively inexpensive when compared to the ratio of cost against the
reach of the target audience. Companies can reach a wide audience for a small fraction of
traditional advertising budgets. The nature of the medium allows consumers to research and
purchase products and services at their own convenience. Therefore, businesses have the
advantage of appealing to consumers in a medium that can bring results quickly. The strategy
and overall effectiveness of marketing campaigns depend on business goals and cost-volume-
profit (CVP) analysis.
Internet marketers also have the advantage of measuring statistics easily and inexpensively.
Nearly all aspects of an Internet marketing campaign can be traced, measured, and tested.
28

The advertisers can use a variety of methods: pay per impression, pay per click, pay per play,
or pay per action. Therefore, marketers can determine which messages or offerings are more
appealing to the audience. The results of campaigns can be measured and tracked
immediately because online marketing initiatives usually require users to click on an
advertisement, visit a website, and perform a targeted action. Such measurement cannot be
achieved through billboard advertising, where an individual will at best be interested, then
decide to obtain more information at a later time..
Because exposure, response, and overall efficiency of Internet media are easier to track than
traditional off-line mediathrough the use of web analytics for instanceInternet marketing
can offer a greater sense of accountability for advertisers. Marketers and their clients are
becoming aware of the need to measure the collaborative effects of marketing (i.e., how the
Internet affects in-store sales) rather than sirloin each advertising medium. The effects of
multichannel marketing can be difficult to determine, but are an important part of
ascertaining the value of media campaigns.


DISADVANTAGES
Internet marketing requires customers to use newer technologies rather than traditional
media. Low-speed Internet connections are another barrier. If companies build large or
overly-complicated websites, individuals connected to the Internet via dial-up connections or
mobile devices experience significant delays in content delivery.
From the buyer's perspective, the inability of shoppers to touch, smell, taste or "try on"
tangible goods before making an online purchase can be limiting. However, there is an
industry standard for e-commerce vendors to reassure customers by having liberal return
policies as well as providing in-store pick-up services.
A survey of 410 marketing executives listed the following barriers to entry for large
companies looking to market online: insufficient ability to measure impact, lack of internal
capability, and difficulty convincing senior management.


EFFECTS ON INDUSTRIES
The number of banks offering the ability to perform banking tasks online has also increased.
Online banking is believed to appeal to customers because it is more convenient than visiting
bank branches. Currently over 150 million U.S. adults now bank online, with increasing
Internet connection speed being the primary reason for fast growth in the online banking
industry, Of those individuals who use the Internet, 44 percent now perform banking
activities over the Internet.
Internet auctions have gained popularity. Unique items that could only previously be found at
flea markets are being sold on eBay. Specialized e-stores sell items ranging from antiques to
movie props. As the premier online reselling platform, eBay is often used as a price-basis for
29

specialized items. Buyers and sellers often look at prices on the website before going to flea
markets; the price shown on eBay often becomes the item's selling price. It is increasingly
common for flea market vendors to place a targeted advertisement on the Internet for each
item they are selling online, all while running their business out of their homes.
The effect on the advertising industry itself has been profound. In just a few years, online
advertising has grown to be worth tens of billions of dollars annually. Price water house
Coopers reported that US$16.9 billion was spent on Internet marketing in the U.S. in 2006.
This has had a growing impact on the electoral process. In 2008 candidates for President
heavily utilized Internet marketing strategies to reach constituents. During the 2007 primaries
candidates added, on average, over 500 social network supporters per day to help spread their
message. President Barack Obama raised over US$1 million in a single day during his
extensive Democratic candidacy campaign, largely due to online donors.



vl* Lt--l.
Online shopping is the process consumers go through to
purchase products or services over the Internet. An online shop, eshop, e-store, internet shop,
webshop, webstore, online store, or virtual store evokes the physical analogy of buying
products or services at a bricks-and-mortar retailer or in a shopping mall.
The metaphor of an online catalog is also used, by analogy with mail order catalogs. All types
of stores have retail web sites, including those that do and do not also have physical
storefronts and paper catalogs. Online shopping is a type of electronic commerce used for
business-to-business (B2B) and business-to-consumer (B2C) transactions.
A professionally designed and built e-commerce online shop can open up your business to
potentially millions of customers. There are variety of e-shopping packages, from small start-
ups to fully functional database management systems.
Safe and secure Payment Gateways can be set-up to suit your requirements and we can help
and advise which would be most suitable for your online shop.
30

The web based, shop administration area enables you to easily change the content of your
website, create and edit pages, add new products, write newsletters, and much more...
Shop Features
- Fast online shopping sites developed in 2 to 3 weeks
- It's easy because there is no additional software or training required.
- Total shop management from your browser
- Pay by any of the major credit cards and by Paypal
- Safe, secure, encrypted online transactions
- Payments upon your authorization, paid directly into your bank account
- Easily add or delete products, change prices, descriptions, special offers
- Fully interactive database, all orders are tracked and updated to your account
- Automatic stock level inventory warnings



WEB SHOP
The term "webshop" also refers to a place of business where web development, web hosting
and other types of web related activities take place (Web refers to the World Wide Web and
"shop" has a colloquial meaning used to describe the place). Buying online introduced new
ways of reducing costs by reducing the number of staff needed. It is a more effective way of
getting products to people and spreading into different demographics.


BENEFITS OF ONLINE SHOPPING
1. Bargaining power of consumers. They enjoy a wider choice
2. Supplier power. It is more difficult for consumers to manage a non-digital channel.
3. Internet increases commoditisation
4. Threat of new entrants. Online means it is easier to introduce new services with lower over-
heads
5. Threat of substitutes
6. Rivalry among competitors. It is easier to introduce products and services to different
markets


31

HISTORY
Online shopping pre-dates the internet/www, the IBM PC and Microsoft. It was invented in
the UK in 1979 by Michael Aldrich of Redifon Computers. Aldrich connected a modified 26"
colour television to a real-time transaction processing computer via a domestic telephone line
and demonstrated online shopping. From 1980 onwards he sold his systems in the UK with
considerable success.
The world's first recorded B2B online shopping system was Thomson Holidays in March
1981. The world's first recorded B2C was Gateshead SIS/Tesco in May 1984. The world's
first recorded online home shopper was Mrs Jane Snowball of Gateshead, England in May
1984. During the 1980s online shopping was also used extensively in the UK and some parts
of continental Europe by auto makers Peugeot-Talbot, Ford, Nissan and General Motors.All
these organizations and others, particularly in Financial Services and manufacturing industry,
used the Aldrich systems. These systems operated over the switched public network in dial-
up and leased line modes. There was no broadband capability.



TRENDS
One third of people that shop online use a search engine to find what they are looking for and
about one fourth find websites by word of mouth. Word of mouth has become a leading way
by which people find shopping websites. When an online shopper has a good first experience
with a certain website, sixty percent of the time they will return to that website to buy more.
Books are one of the things bought most online. However, clothes, shoes, and accessories are
all very popular things bought online. Cosmetics, nutrition products, and groceries are
increasingly being purchased online. About one fourth of travelers buy their plane tickets
online because it is a quick and easy way to compare airline travel and make a purchase.
Online shopping provides more freedom and control than shopping in a store.
From a sociological perspective, online shopping is arguably the most predictable way to
shop. One knows exactly what website to go to, how much the product will cost, and how
long it will take for the product to reach them. Online shopping has become extremely routine
and predictable, which is one of its great appeals to the consumer.

LOGISTICS
Consumers find a product of interest by visiting the website of the retailer directly, or do a
search across many different vendors using a shopping search engine.
32

Once a particular product has been found on the web site of the seller, most online retailers
use shopping cart software to allow the consumer to accumulate multiple items and to adjust
quantities, by analogy with filling a physical shopping cart or basket in a conventional store.
A "checkout" process follows (continuing the physical-store analogy) in which payment and
delivery information is collected, if necessary. Some stores allow consumers to sign up for a
permanent online account so that some or all of this information only needs to be entered
once. The consumer often receives an e-mail confirmation once the transaction is complete.

PAYMENT
Online shoppers commonly use credit card to make payments, however some systems enable
users to create accounts and pay by alternative means, such as:
Debit card
Various types of electronic money
Cash on delivery (C.O.D., offered by very few online stores)
Cheque
Wire transfer/delivery on payment
Postal money order
Reverse SMS billing to mobile phones
Gift cards
Direct debit in some countries

While credit cards are currently the most popular means of paying for online goods and
services, alternative online payments will account for 26% of e-commerce volume by 2009.



PRODUCT DELIVERY

Once a payment has been accepted the goods or services can be delivered in the following
ways.
Download: This is the method often used for digital media products such as software, music,
movies, or images.
Shipping: The product is shipped to the customer's address.
Drop shipping: The order is passed to the manufacturer or third-party distributor, who ships
the item directly to the consumer, bypassing the retailer's physical location to save time,
money, and space.
33

In-store pickup: The customer orders online, finds a local store using locator software and
picks the product up at the closest store. This is the method often used in the bricks and
clicks business model.
In the case of buying an admission ticket one may get a code, or a ticket that can be printed
out. At the premises it is made sure that the same right of admission is not used twice.

DESIGN
Why does electronic shopping exist? For customers it is not only because of the high level of
convenience, but also because of the broader selection; competitive pricing and greater access
to information. For organizations it increases their customer value and the building of
sustainable capabilities, next to the increased profits.
CONSUMER EXPECTATIONS:
The main idea of online shopping is not in having a good looking website that could be listed
in a lot of search engines and it is not about the art behind the site. It also is not only just
about disseminating information, because it is all about building relationships and making
money. Mostly, organizations try to adopt techniques of online shopping without
understanding these techniques and/or without a sound business model. Rather than
supporting the organizations culture and brand name, the website should satisfy consumer's
expectations. Many researchers notify that the uniqueness of the web has dissolved and the
need for the design, which will be user centered, is very important. Companies should always
remember that there are certain things, such as understanding the customers wants and
needs, living up to promises, never go out of style, because they give reason to come back.
[18]
And the reason will stay if consumers always get what they expect. McDonaldization
theory can be used in terms of online shopping, because online shopping is becoming more
and more popular and website that wants to gain more shoppers will use four major principles
of McDonaldization: efficiency, calculability, predictability and control.
Organizations, which want people to shop more online for them, should consume extensive
amounts of time and money to define, design, develop, test, implement, and maintain
website. Also if company wants their website to be popular among online shoppers it should
leave the user with a positive impression about the organization, so consumers can get an
impression that the company cares about them. The organization that wants to be acceptable
in online shopping needs to remember, that it is easier to lose a customer then to gain one.
Lots of researchers state that even when site was a top-rated, it would go nowhere if the
organization failed to live up to common etiquette, such as returning e-mails in a timely
fashion, notifying customers of problems, being honest, and being good stewards of the
customers data. Organizations that want to keep their customers or gain new ones try to get
rid of all mistakes and be more appealing to be more desirable for online shoppers. And this
is why many designers of web shops considered research outcomes concerning consumer
expectations. Research conducted by Elliot and Fowell (2000) revealed satisfactory and
unsatisfactory customer experiences.

34

MARKET SHARE
E-commerce product sales totaled $146.4 billion in the United States in 2006, representing
about 6% of retail product sales in the country. The $18.3 billion worth of clothes sold online
represented about 10% of the domestic market.
For developing countries and low-income households in developed countries, adoption of e-
commerce in place of or in addition to conventional methods is limited by a lack of
affordable Internet access.

ADVANTAGES
1. Convenience
Online stores are usually available 24 hours a day, and many consumers have Internet access
both at work and at home. A visit to a conventional retail store requires travel and must take
place during business hours.
Searching or browsing an online catalog can be faster than browsing the aisles of a physical
store. Consumers with dial-up Internet connections rather than broadband have much longer
load times for content-rich web sites and have a considerably slower online shopping
experience.
Some consumers prefer interacting with people rather than computers sometimes because
they find computers hard to use. Not all online retailers have succeeded in making their sites
easy to use or reliable.
In most cases, merchandise must be shipped to the consumer, introducing a significant delay
and potentially uncertainty about whether or not the item was actually in stock at the time of
purchase. Bricks and clicks stores offer the ability to buy online but pick up in a nearby store.
Many stores give the consumer the delivery company's tracking number for their package
when shipped, so they can check its status online and know exactly when it will arrive. For
efficiency reasons, online stores generally do not ship products immediately upon receiving
an order. Orders are only filled during warehouse operating hours, and there may be a delay
of anywhere from a few minutes to a few days to a few weeks before in-stock items are
actually packaged and shipped. Many retailers inform customers how long they can expect to
wait before receiving a package, and whether or not they generally have a fulfillment
backlog. A quick response time is sometimes an important factor in consumers' choice of
merchant. A weakness of online shopping is that, even if a purchase can be made 24 hours a
day, the customer must often be at home during normal business hours to accept the delivery.
For many professionals this can be difficult, and absence at the time of delivery can result in
delays, or in some cases, return of the item to the retailer. Automated delivery booths, such as
DHL's Packstation, have tried to address this problem.

2. Information and reviews
35

Online stores must describe products for sale with text, photos, and multimedia files, whereas
in a physical retail store, the actual product and the manufacturer's packaging will be
available for direct inspection (which might involve a test drive, fitting, or other
experimentation).
Some online stores provide or link to supplemental product information, such as instructions,
safety procedures, demonstrations, or manufacturer specifications. Some provide background
information, advice, or how-to guides designed to help consumers decide which product to
buy.
Some stores even allow customers to comment or rate their items. There are also dedicated
review sites that host user reviews for different products.
In a conventional retail store, clerks are generally available to answer questions. Some online
stores have real-time chat features, but most rely on e-mail or phone calls to handle customer
questions.

3. Price and selection
One advantage of shopping online is being able to quickly seek out deals for items or services
with many different vendors (though some local search engines do exist to help consumers
locate products for sale in nearby stores). Search engines and online price comparison
services can be used to look up sellers of a particular product or service.
Shoppers find a greater selection online in certain market segments (for example, computers
and consumer electronics) and in some cases lower prices. This is due to a relaxation of
certain constraints, such as the size of a "brick-and-mortar" store, lower stocking costs (or
none, if drop shipping is used), and lower staffing overhead.
Shipping costs (if applicable) reduce the price advantage of online merchandise, though
depending on the jurisdiction, a lack of sales tax may compensate for this.
Shipping a small number of items, especially from another country, is much more expensive
than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially
those selling small, high-value items like electronics) offer free shipping on sufficiently large
orders.

4. Privacy
Privacy of personal information is a significant issue for some consumers. Different legal
jurisdictions have different laws concerning consumer privacy, and different levels of
enforcement. Many consumers wish to avoid spam and telemarketing which could result
from supplying contact information to an online merchant. In response, many merchants
promise not to use consumer information for these purposes, or provide a mechanism to opt-
out of such contacts.
36

Brick-and-mortar stores also collect consumer information. Some ask for address and phone
number at checkout, though consumers may refuse to provide it. Many larger stores use the
address information encoded on consumers' credit cards (often without their knowledge) to
add them to a catalog mailing list. This information is obviously not accessible to the
merchant when paying in cash.

PAID CONTENT
Paid Content is the non-free electronic commerce of digital content and information goods
in digital media. Examples of digital media are, for example, the Internet, the World Wide
Web or mobile media (cellphones, PDA). Features of digital contents are their usability,
applicability, exchangeability and recoverability.
Paid Content differ from Paid Services in the way that digital content can be passed on and be
used by different individuals. Digital services can be characterized as a right which can be
exercised, but not passed on without it being lost. The difference can be made clear by
considering the differences between an MP3 music file and online games. The MP3 file can
often be duplicated, passed on and exchanged - without capacity boundaries or losses
suffered by an individual. These features of MP3 files as an example of digital content are
one of the main reasons for the huge revenue collapses in the music and media industry since
the existence of the Internet. Online games, however, as an example of digital services, is
only a right to participate when the purchased input is offered and traded. This right can be
traded and passed on, but, contrary to MP3 files, the vendor forfeits the benefit of this right at
the moment it is passed on.
The term Paid Content has become the centre of a debate on the future of Print Media . As
Newspaper and magazine sales decline, and online readership increases, the media industry
has been forced to re-evaluate their business models to offset the fall in paper sales with the
new market in online readers. As discussed above this has proved incredibly hard to do and,
much like in the music industry much content is currently being given away for free, whether
legally or illegally. It is clear that while the ability to share information and comment has
been vastly improved , the industry's ability to obtain revenues from this shared information
has been put to the test.
Rupert Murdoch's proposed method of Micropayments has been largely lambasted by
thinkers on the subject. In his seminal blog post on the questions raised by this shift, Clay
Shirky discusses the many models being put forward, concluding that "No one experiment is
going to replace what we are now losing with the demise of news on paper, but over time, the
collection of new experiments that do work might give us the journalism we need". There is,
however, some evidence of opportunity for revenue already - Custom publishing is one area
proven to be thriving in the online media world . The music industry has had some success in
creating new markets of legal downloading where lower costs and accessibility have led to
success, and some suggest there are parallels between the major victims of digitalisation - the
music industry and the media.
37

The increased accessibility and interactivity of online journalism has also created new
opportunity in the guise of crowdsourcing, enabling people to get investigative journalists
working on stories that they themselves have suggested and funded.




IMPACT OF E-COMMERCE ON WORLD ECONOMY.....

E-commerce is the process of managing online financial transactions by individuals and
companies. This includes business-to-business (B2B), business-to-consumer (B2C) and
business-to-government (B2G) transactions. The focus of e-commerce is on the systems and
procedures whereby financial documents and information of all types are exchanged. This
includes online credit card transactions, e-cash, e-billing, e-cheques, electronic invoices,
purchase order and financial statements. E-commerce is particularly concerned with the
technologies that enable EDI-type functionality on the Internet.

The broad definition considers an electronic transaction to be the sale or purchase of goods
or services, whether between businesses, households, individuals, Governments, and other
public or private organizations, conducted over computer mediated networks. The goods
and services are ordered over those networks, but the payment and the ultimate delivery of
the good or service may be conducted on- or offline.

The narrow definition considers an Internet transaction to be the sale or purchase of goods
or services, whether between businesses, households, individuals, Governments, and other
public or private organizations, conducted over the Internet. The goods and services are
ordered over the Internet, but the payment and the ultimate delivery of the good or service
may be conducted on-or offline.

Concerning the processes that ought to be included many countries want to restrict the
definition to the purchasing and selling aspect incorporated in the above definitions, many
others want to include other types of business processes, such as marketing and advertising.
Developing countries will also favour a definition that includes business activities that go
beyond purchasing and selling, given the restrictions that some of those countries face in
conducting online payments.

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E-commerce is often described as being one of three varieties business-to-business (B2B),
business-to-consumer (B2C) or business-to-government (B2G).
Much of the interest and the literature has focused on B2B and B2C electronic commerce and
most of the statistical indicators have also been in respect of these two forms. About 80 per
cent of the total value of electronic commerce in the world today are accounted for by B2B e-
commerce. It provides also the greatest potential benefits in terms of productivity gains. B2C
e-commerce has the potential to substantially affect the way in which people live and interact
with each other and is therefore a key aspect for statistical measurement. Only a small
number of countries have so far undertaken much work with respect to the measurement of
B2G e-commerce.

E-commerce today is very much a business-to business affair. Enterprises in developing
countries should not let themselves be fooled by the much higher visibility of the business-
to-consumer dotcoms. Those enterprises in developing countries that make goods or deliver
services that are necessary for the productive process of other enterprises are the ones that
should first consider incorporating the Internet (which does not necessary mean the web) as
an instrument to enhance their opportunities to complete and grow.

Due to the lack of reliable and internationally comparable e-commerce statistics, numerous
national statistical offices have started to collect data on e-commerce and, generally, the use
of ICT and the Internet. They have the advantage of guaranteeing the confidentiality of the
collected data, having a more neutral position when it comes to collecting and interpreting the
data and being able to use their existing methodologies and infrastructure for data collection,
processing and analysis. Some countries are already benefiting from the results: they are now
in a position to benchmark their economies with competitors internationally; they are able to
identify the number of qualified people needed to advance their countrys information
economy or to calculate the amount of investments needed to provide business with access to
the Internet.

There are several important steps involved in collecting e-commerce-related data.
First, a country needs to decide what kind of data it wants to measure, reflecting the level of
its e-commerce activity. Most developing countries would be probably focus on collecting
readiness indicators, such as the number of businesses with computers and access to the
Internet, and intensity indicators, such as the number of businesses the receive orders
over the Internet and the value of those orders. But how does one define these indicators?
The member States of the Organization for Economic Co-operation and Development
(OECD) have agreed on the above-mentioned working definition of e-commerce that could
be used in the measuring process. The definition includes the network over which e-
commerce is carried out (Internet or other), the specific business processes related to e-
commerce and the different actors involved (business, households or Governments). On the
basis of this definition, a set of priority indicators for e-commerce has been established by a
number of international and national bodies.

39

Examining the e-commerce important question is what impact ICT and the Internet have
had on the productivity growth. It reduces transaction costs; allocates recourses better;
increases economies of scale; improves the competitiveness of business in general;
increases efficiency; generates important changes in the management and production
processes of business.

Acceleration of the growth of productivity is notified but the reason for this is rather
controversial. However the UNCTAD secretariat agrees that there are reasons to believe
that much of the acceleration of productivity growth is structural and attributable to
changes induced by ICT and the Internet, through improvements in all aspects of corporate
organization, production, finance, marketing and logistics.

Although the speed at which companies in several advanced countries invest in ICT has
decreased in the past few months, in the medium term there are several reasons to expect
that ICT will continue to support rapid productivity growth. First, the cost of computing
power is predicted to keep falling at a steep rate for several years. Secondly, most
enterprises are still learning how to reorganize themselves in order to benefit fully from the
Internet. Finally, in many countries there is a lot of catching up to do in the application of
ICT to business. As firms in other developed economies and, most importantly, in
developing countries engage in e-business, global productivity growth should accelerate.

We should have a look at the process of moving from traditional to online payment. Online
versions of nearly all-existing payment methods are appearing rapidly. Conventional
financial instruments with online analogues include cash, money orders, giro transfer,
cheques, drafts, notes and bills of exchange. The existing modes of third-party protection
against the risks of non-payment and non-performance, including documentary credit, credit
insurance, bonding, factoring and forfeiting, are also rapidly developing their online
equivalents. The same applies to wholesale payment systems, including so-called automated
clearing house (ACH) networks, wire transfers for large-volume payments and interbank
payments networks.

Credit and debit cards are principal payments instrument in B2B and B2C e-commerce. The
move from cards with magnetic strips to smart cards with multifunctional chips that
include security features is the next Internet-centered stage in the development of the
payments cards industry.
In parallel, Internet technologies to provide security in online payments have been evolving.
Still the most widely accepted standard, is the Secure Socket Layer (SSL), a set of built-in
browser protocols designed initially by Netscape to protect card-based financial transactions
on the Internet. A more secure and complex bank-centered Secure Electronic Transactions
(SET) software is being used more and more by online payments providers.

40

In the field of Internet banking ACH debits and credits, as well as domestic and international
wire transfers became possible with systems such as the Bank Internet Payment System
(BIPS). The Society for Worldwide Inter-Bank Financial Telecommunications (SWIFT) also
started its move to the open Internet platform.

Banks and financial services companies in the developing countries will need to adopt online
payment systems and practices that will meet their clients new needs arising from a shift to
e-commerce. They will need to adopt systems that address the key issue of concern to users,
namely security, confidentiality, identification of sellers and buyers, verification of buyers
solvency guarantee of delivery.

To obtain e-trade finance and equity investment, companies from developing countries
need to be registered in local, regional and global Internet-based commercial risk database.
For that, company registries, public courts, accountancy and audit, and other business-
related services should undergo substantial enhancements. Non-bank financial services such
as credit information, credit insurance, factoring and leasing should develop. Local banks
should adapt to e-banking and move online their customer credit risk databases, and their
individual and corporate customer payment services and financing, including trade finance
instruments.



TOURISM AND ITS INTERNET INCARNATION, OFTEN CALLED E-TOURISM,
IS REGULARLY CITED AS ONE OF THE FASTEST GROWING E-COMMERCE
SECTORS.

Considering the importance of the tourism economy for Bulgaria and many other
developing countries, and in particular its role as an employer and earner of foreign
currency, the need to maintain and increase competitiveness through adopting e-commerce
best practice is acute.
The main actors in the tourism industry include Governments, tour operators, distributors
and wholesalers, hotels, airlines and other transport operators, and most important of all,
the tourists themselves. Each of these actors has a stake in the development of the
electronic market and will be affected in different ways by electronic commerce.

Tourism is an interesting sector for appreciating the potential of electronic commerce for the
economies of developing countries in several respects. Tourism is a sector in which a
significant number of developing countries have established competitive advantages over the
41

years and it has remained largely a traditional service activity in which, until recently, buyers,
sellers and intermediaries were well defined.

Tourism producers and destination organizations in developing countries that adopt the
Internet and e-commerce best practice have a chance to improve their competitiveness by
producing better products, with greater tailoring to clients, more efficiently, faster to market
with less waste and fewer inputs, and at better prices.

Infomediaries in developing countries should develop their e-business strategy having in
mind the technical capacities of their national or regional tourism producers for using Internet
technologies. Solutions must be appropriate for both consumers and producers.
The fundamental challenge is to take the traditional tourism product, delineate its information
from its physical components, and selectively manage them using Internet and e-commerce
technologies.

The winner in the competitive etourism game will be the company that inspires consumer
confidence, through quality data and physical product performance, and is able to offer a
comprehensive yet tailor-made product.

While Internet and e-commerce technologies offer unprecedented possibilities for
interactivity and dialogue, traditional surveying and gauging tools estimating customer
preferences and satisfaction are still very relevant. Footwork and face-to-face interviewing
may be a necessary starting point for building a B2B network or business web. Market
research, whatever the technology or even without technology, is a hugely important activity.

A fundamental factor for success is to speak the language of the prospective customers. A
successful etourism strategy must assess the linguistic origins of its major client groups and
replicate Internet content in their languages. Understanding their Internet habits and ways of
learning, openness to on-line dialogue and attitudes towards privacy, as well as the
underlying legal system.

Online payment facilities for retail clients using credit cards are an absolutely fundamental
business toll that must be made available to the national tourism sector. Destination
marketing organizations (DMOs), be they government bodies or business associations, can
favorably contribute to modernizing the tourism industries of developing countries. DMOs
can provide a voice to the fragmented industry producers in promoting their requests to the
financial authorities and banks to provide them with online payment. When online payment is
in place DMOs may, on behalf of the entire tourism industry, negotiate with domestic banks
better terms and conditions for online payment than particular tourism companies would
manage on their own.

Most of the above actions cannot be implemented without empowering and enabling people
to take advantage of new Internet and e-commerce technologies.
E-commerce and Internet technology can improve communication and can make doing
business easier. The ability of people at both ends of the message or transaction to use these
technologies is a precondition for their wide adoption and impact.

In conclusion, it is expected that in the few years the productivity gap between the European
countries and the United States (leader in e-commerce activities) will close rapidly as
European productivity growth increases faster than that of the United States. This process is
42

known as convergence in productivity. Convergence in productivity takes place when the
countries that lag behind the technological frontier grow more rapidly in productivity than the
leading countries.

The same could be true for developing countries, with a reasonable degree of readiness. The
impact of e-commerce on developing countries could be even stronger than that on developed
countries because the scope for reducing inefficiencies and increasing productivity is much
larger in the developing countries.

To summarize, by cutting costs, increasing efficiency and reducing time and distance, e-
commerce could become an important tool for development.














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MOBILE COMMERCE

INTRODUCTION
Mobile Commerce (also known as M-Commerce, ucommerce or U-Commerce, owing to
the ubiquitous nature of its services) is the ability to conduct commerce, using a mobile
device e.g. a mobile phone (cell phone), a PDA, a smartphone and other emerging mobile
equipment such as dashtop mobile devices. Mobile Commerce has been defined as follows:
"Mobile Commerce is any transaction, involving the transfer of ownership or rights to use
goods and services, which is initiated and/or completed by using mobile access to computer-
mediated networks with the help of an electronic device."

HISTORY
Mobile commerce was born in 1997 when the first two mobile phone enabled Coca Cola
vending machines were installed in the Helsinki area in Finland. They used SMS text
messages to send the payment to the vending machines. In 1997 also the first mobile phone
based banking service was launched by Merita bank of Finland also using SMS.
In 1998, the first digital content sales were made possible as downloads to mobile phones
when the first commercial downloadable ringing tones were launched in Finland by
Radionlinja (now part of Elisa)
In 1999, two major national commercial platforms for m-commerce were launched with the
introduction of a national m-payments system by Smart as Smart Money in the Philippines
and the launch of the first mobile internet platform by NTT DoCoMo in Japan, called i-
Mode. i-Mode was revolutionary also in offering a revenue-sharing deal where NTT
DoCoMo only kept 9% of the content payment and returned 91% to the content owner.
Mobile commerce related services spread rapidly in early 2000 from Norway launching
mobile parking, Austria offering mobile tickets to trains, and Japan offering mobile purchases
of airline tickets.
PDAs and cellular phones have become so popular that many businesses are beginning to use
m-commerce as a more efficient method of reaching and communicating with their
customers. Although technological trends and advances are concentrated in Asia and in
Europe, Canada and the United States are also beginning to experiment with early-stage m-
commerce.


44


ADVANTAGES OF MOBILE COMMERCE
New advanced mobile applications typically involve high-speed services being
accessed by devices remotely, any where, at any time. Introduction of higher data
speeds and packeted 'always on' technology will enable mobile devices to be used to
receive, send and access a huge range of information and services in real time.
Across all e-commerce applications there are barriers to adoption. M-commerce seeks
to remove even further the sense of a consumer having to go to the business for
products or services, or needing to be skilled in multiple technologies or having to
plan whenever they want to access a business using the Internet.
Mobile phone-based devices are now permitting visual and data transfer (Eg. emails,
multimedia messaging, etc) across spectrums and networks usually preserved for
voice traffic alone. Evidence suggests as devices and networks converge with existing
technologies (eg. Internet, mobile phones and video conferencing or TV broadcast
systems), consumers are reacting to the technology in a very positive manner.

DISADVANTAGES OF MOBILE COMMERCE

small screens of most devices still limit types of file and data transfer (i.e. streaming
videos, etc.)
standards guiding applications and technology development and connection(s)
WAP and SMS limited to small number of characters and text.
use of graphics limited
less functionality for mobile Internet over mobile phones and existing generation of
handhelds than for mobile computers (laptops and next generation handhelds)
user interface is often difficult to learn how to use
limited bandwidth
limited roll out of higher bandwidth mobile networks and devices (i.e. 3g networks
and wireless broadband networks are predominantly located in cities)
cost of establishing mobile and wireless broadband infrastructure
technology constraints of mobile devices (memory, processing power, display
capabilities, input methods)
security of data moved across some mobile and wireless networks
businesses investment in hardware and infrastructure is seen as riskier as rapid
evolution of mobile and wireless technologies continues.

HOW MOBILE PHONES HAVE CHANGED OUR LIVES:
These days its more likely that youll forget your keys than your mobile phone when
you leave home in the morning. As technology advances, mobile phones are able to
be used to extend the reach of the person and delegate many functions that would
previously have been more time consuming or would have to be carried out in person.
45

As individuals, we expect to be able to do things whenever we want to and mobile
phones are core devices enabling this expectation to be fulfilled. This means that
there is a fundamental shift in our perception of space and time - of what is possible
where and when. On the other hand, mobile phones are connecting people more than
ever before and becoming new glue holding together social interactions and
relationships. A mobile phone makes us available to
others, be they businesses or individuals, 24 hours a day, 7 days a week. This is an
enormous break with the past, when we needed to know where a person was in order
to contact them. It gives enormous opportunities for businesses to really connect with
and understand consumers and for consumers to have more meaningful relationships
with businesses



MOBILE PHONES:REVOLUTIONARY DEVICES

Mobile phones are central to the lives of most people in developed countries and are
growing in importance in less developed countries. Since their mainstream adoption
in the 1990s, they have remained primarily communication devices. We use mobile
phones to talk to other people and we carry mobile phones with us so that other
people can talk to us.
However, the situation is changing. Mobile phone manufacturers have developed
mobile devices that can serve many functions beyond voice communication such as
taking photos and listening to music.

Mobile network operators are ofering services that give greater value to subscribers,
such as portable email for business users. Mobile phones are now equipped with
cameras with the potential to turn them into portable bar code scanners. Handset
manufacturers are developing RFID chips that can turn mobile phones into mobile
wallets able to carry and exchange electronic money securely and engage
in other transactions with RFID readers in the physical world.
The combination of more powerful mobile devices, more innovative mobile operators
and change in the mobile network infrastructure (such as 3G networks able to carry
large amounts of data at high speed as broadband connections do for computers) is
setting the stage for an enormous change in a already fast-moving sector. Mobile
devices are fast becoming the place where numerous technologies
meet and create applications that are useful for both consumers and businesses across
the globe.
The mobile phone of the future is a device that enables users to communicate,
connect, transact and innovate. In most markets, phones with the characteristics below
are already becoming available:


A communicative device
The mobile phone will continue to be a device that is used to communicate with
others. Although this may be extended beyond voice to instant messaging and email,
it is important not to forget communication is a central strength of mobile devices. As
it becomes easier and cheaper to transfer larger amounts of data, sharing photos and
videos with others will further extend this role.

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A connective device
Mobile phones enable people to connect to other sources of data anytime, anywhere.
This is what is happening with mobile email. As data on the web becomes more
structured, mobile devices will become more and more powerful as entry points to
tasks that have moved from offline to online but are currently still only available
through fixed computers.

A transactional device
Mobile phones are ideal devices to be used for payments and transactions. There are a
wide range of applications that aim to transform the mobile phone into an electronic
wallet that can be used as a payment device.

An intelligent device
Mobile phones are a place where multiple applications can meet and fuse. Mobile
devices that integrate a phone, a camera, a location finder (GPS) and a connection to
the internet make it possible for a user to request context-dependent information such
as finding out where a store selling a product they want to buy is located. As usage
increases, mobile phones can become agents of change, tools that facilitate connecting
things in the physical world to information about them in the digital world



MOBILE COMMERCE : BEYOND E-COMMERCE


Throughout the 1990s the introduction of the internet and ecommerce reshaped the
way that businesses do business and the way that consumers interact with businesses.
Businesses took the opportunity to automate many processes that before would have
been handled manually, from ordering to customer service. One clear example is the
way that spending on advertising has begun to shift from traditional of-line media
to online and digital media as advertisers have seen an opportunity to better connect
with their target audience. IBM forecasts 22% growth in mobile, digital and
interactive advertising formats between 2006 and 2010 against 4% growth in
traditional advertising formats. Mobile commerce, often referred to as m-commerce,
builds on the advances made by ecommerce (such as automated, electronic processes)
but makes interaction available to a wider audience in a more personalised way.
Like any emerging market, there are many propositions about how to use this
technology. Some organisations adopt an aggressive policy and want to get something
moving as fast as possible whilst others adopt a wait-and-see approach. As a
result, proprietary solutions are developed that make integration with existing systems
or by multiple partners complex and costly. At the same time, multiple solutions
create a complex landscape for businesses and consumers alike - making it difficult to
choose which solution to use.
The other difference between ecommerce and m-commerce is the opportunity to
connect information with objects in a more direct way than has been possible until
now. This is the world predicted by the Internet of Things, a report published by the
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International Telecommunications Union (ITU) in 2005, where objects have a life and
history of their own that we can use to our advantage. The mobile phone can be the
tool that connects the physical and virtual world. At the base of this vision is the
ability to identify objects uniquely.
Many more people have access to a mobile phone that to a computers and this means
that m-commerce has the opportunity to connect not just big businesses but also small
business and consumers on a massive scale. In this sense, mobile phones have the
potential to bridge the digital divide and allow organisations and individuals to reach
out to one another more easily than ever before.

SUCCESS FACTORS FOR MOBILE COMMERCE

Mobile commerce is an emerging market. As with any emerging market there are
significant opportunities and significant risks. The temptation at this stage is for key
players to impose their own rules based on their own business models. Although this
can be beneficial for a few in the short-term and in some markets may be the only
way to start doing mobile commerce, in the long-term this will have a negative impact
on business because lack of interoperability and higher operating costs will create
barriers to growth and adoption. However a dynamic marketneeds an environment
that favours innovation and a diversity of stakeholders.


1. Innovative Business Models. Companies that want to take advantage of the
opportunities presented by this new technology will have to understand how this
technology fts with existing business models or provokes new ones.

Retailers and manufacturers have to consider that they have the opportunity to
become providers of services as well as providers of products. Providing services
requires diferent resources, diferent internal organisation and diferent thinking to
providing products, but there are many benefts to be gained from embracing a service-
based approach that will strengthen core business.

Mobile Network Operators need to consider how mobile commerce can be
integrated with existing tools for revenue generation such as SMS, Premium SMS and
MMS as well as the huge potential to drive data trafc (which in most markets is still
priced highly and discourages increases usage). Additionally, the fact that mobile
operators have an existing billing structure is of great advantage, particularly as far as
payments for low amounts are concerned.

Mobile Phone Manufacturers need to consider how to provide mobile devices that
suit the needs of the market but also drive the market in new directions, with open
architecture and tools allowing new applications to develop based on their devices and
platforms.

Solution Providers need to understand how to collaborate with diferent players,
bearing in mind that in many mobile commerce applications they will only be one part
of a solution.

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2. Consumer adoption. Mobile phones are already starting to become a basic device
available to everyone: anytime, anywhere. This means that the question is not so
much Will every consumer adopt his mobile phone as a universal interface to
connect to any digital service? as When will consumers do this, under what
circumstances, how much will they use it and how quickly will this adoption take
place?.
For mass adoption of this technology to take place quickly, consumers must:
be able to access services as easily as possible (just a few clicks and no more).
be convinced that the services are useful and make a diference to their lives.
be confdent about the costs of these services (for free, part of the monthly fee they
already pay as a subscriber or a transparent one-of fee (such as SMS)).
be confdent about the source and reliability of the information delivered (for
example bank, brand-owner, retailer, government organisation).
be confdent about respect of privacy and personal information.
be confdent that security measures protecting their devices (such as biometrics and
pass codes) are efective.
For consumers to adopt any of these new services on their mobile phones confdently,
they will need to be able to use these services whatever kind of mobile phone they
buy, whatever kind of subscription contract they have signed and whatever mobile
network operator they have chosen.








3. Technology availability. Without certain technologies, mobile commerce is
impossible. The full potential of the mobile phone as an ubiquitous object is only
released when local interaction technologies are embedded, such as the combination
of camera and image recognition software (to read whether bar codes or recognise
specifc images) and ways of exchanging and communicating wireless information
with products, point-of-sale and other devices. The integration of a secure element,
such as a tamperproof chip card, inside the mobile phone will provide security and
trust for handling valuable data (such as personal and payment information).
Support for high quality display of the information to the users, supporting state of art
internet technologies are required to provide a satisfying and consistent user
experience.Mobile networks need to be able to deal with large amounts of trafc at
high speed. Availability of technologies is vital to success of mobile commerce. As
for internet and e-commerce, increased user comfort and reactivity provided by high
speed connections encourage use of networks for data transfer. High speed mobile
network technologies are now in place in many locations.




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M-COMMERCE INCLUDES

MOBILE TICKETING
1. Mobile ticketing is the process whereby customers can order, pay for, obtain and validate
tickets from any location and at any time using mobile phones or other mobile handsets.
Mobile tickets reduce the production and distribution costs connected with traditional paper-
based ticketing channels and increase customer convenience by providing new and simple
ways to purchase tickets. Mobile ticketing is a prime example of horizontal
telecommunication convergence.
2. Mobile ticketing is a method by which law enforcement agencies use in-car computers to
create traffic citations in the field, then print a hard copy for the offender. The advantages of
mobile ticketing include reduced paperwork time, reduced chance of tickets being made void
by human error and immediate accessibility of citation information by other departments.
APPLICATINS FOR MOBILE TICKETS
Mass transit.
Airline check-in.
Cinema ticketing.
Concert/Event ticketing

ADVANTAGE OF MOBILE TICKETS
Reduced costs of ticket printing/mailing.
Improved consumer convenience.
Reduced infrastructure costs.
Increased revenue by increasing accessibility


MOBILE TICKET DELIVERY
Delivery of tickets to mobile phones can be done in a variety of ways:
Text messaging (SMS) - visual inspection or OCR
Text messaging with WAP Push - visual inspection or OCR
Picture messaging (SMS, EMS, WAP Push and MMS) - usually uses a barcode
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Southend United Football Club is currently the only team in the UK to have a mobile
ticketing facility offered to fans. Very few phones outside Japan have RFID/NFC tags and so
this method of delivery is largely unsupported. Picture messaging is supported by almost all
phones and is generally the delivery method of choice. It usually requires the sender to know
the phone model in advance so that the picture is rendered at the correct resolution. Text-only
messaging is supported by all mobile phones and is the simplest method of delivery.


MOBILE TICKET REDEMPTION
Visually validated mobile tickets are validated without connection to a back office system.
Other forms of mobile ticket systems contact a server that is able to verify the ticket and
record that it has been used.New systems that make use of encryption of the data inside the
barcode enable off-line scanning and validation, which is especially important if users are
purchasing tickets immediately prior to use, and the portable venue or on-vehicle scanning
devices cannot always have a connection to the live ticket database.


MOBILE VOUCHERS,COUPONS AND LOYALTY CARDS
Mobile ticketing technology can also be used for the distribution of vouchers, coupons and
loyalty cards. The voucher, coupon, or loyalty card is represented by a virtual token that is
sent to the mobile phone. Presenting a mobile phone with one of these tokens at the point of
sale allows the customer to receive the same benefits as another customer who has a loyalty
card or other paper coupon/voucher. Coupons may be sent to a customer utilizing location
based services when he is in a certain physical proximity


CONTENT PURCHASE AND DELVIRY
Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones,
wallpapers, and games for mobile phones. The convergence of mobile phones, mp3 players
and video players into a single device will result in an increase in the purchase and delivery
of full-length music tracks and video. Download speeds, if increased to 4G levels, will make
it possible to buy a movie on a mobile device in a couple of seconds, while on the go.



51



LOCATION BASED SERVICES
Unlike a home PC, the location of the mobile phone user is an important piece of information
used during mobile commerce transactions. Knowing the location of the user allows for
location based services such as:
local maps
local offers
local weather
people tracking and monitoring


SERVICES INFORMATION
A wide variety of information services can be delivered to mobile phone users in much the
same way as it is delivered to PCs. These services include:
news services
stock data
sports results
financial records
traffic data and information
Particularly, more customized traffic information, based on users' travel patterns, will be
multicast on a differentiated basis, instead of broadcasting the same news and data to all
Users. This type of multicasting will be suited for more bandwidth-intensive mobile
equipment.


MOBILE BANKING
. Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used
for performing balance checks, account transactions, payments etc. via a mobile device such
as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the
Mobile Internet but can also use special programs called clients downloaded to the mobile
device.


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MOBILE BANKING SERVICES
Mobile banking can offer services such as the following:
ACCOUNT INFORMATION
1. Mini-statements and checking of account history
2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management
8. Pension plan management
9. Status on cheque, stop payment on cheque
10. Ordering check books
11. Balance checking in the account
12. Recent transactions
13. Due date of payment (functionality for stop, change and deleting of payments)
14. PIN provision, Change of PIN and reminder over the Internet
15. Blocking of (lost, stolen) cards


PAYMENTS,DEPOSITS, WITHDRAWLS AND TRANSFERS
1. Domestic and international fund transfers
2. Micro-payment handling
3. Mobile recharging
4. Commercial payment processing
5. Bill payment processing
6. Peer to Peer payments
7. Withdrawal at banking agent
8. Deposit at banking agent



INVESTMENTS
1. Portfolio management services
2. Real-time stock quotes
3. Personalized alerts and notifications on security prices
4. mobile banking
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SUPPORT
1. Status of requests for credit, including mortgage approval, and insurance coverage
2. Check (cheque) book and card requests
3. Exchange of data messages and email, including complaint submission and tracking
4. ATM Location

CONTENT SERVICE
1. General information such as weather updates, news
2. Loyalty-related offers
3. Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the
younger, more "tech-savvy" customer segment. A third of mobile phone users say that they
may consider performing some kind of financial transaction through their mobile phone. But
most of the users are interested in performing basic transactions such as querying for account
balance and making bill payment.
AUCTIONS
Over the past three years mobile reverse auction solutions have grown in popularity. Unlike
traditional auctions, the reverse auction (or low-bid auction) bills the consumer's phone each
time they place a bid. Many mobile PSMS commerce solutions rely on a one-time purchase
or one-time subscription; however, reverse auctions are high return applications as they allow
the consumer to transact over a long period of time.

MOBILE PURCHASE
Over the past 10 years, e-commerce has exploded, with many consumers becoming
increasingly comfortable with purchasing online. The next logical step for consumers who
are looking for even more convenient methods of doing business is mobile purchase. This
trend will be accelerated by the increased functionality of today's mobile devices.
Mobile Tickets can be purchased in a variety of ways including online, via text messaging or
over the phone from a voice call, WAP page, or a secure mobile application. For repeated
purchases such as daily train tickets, mobile applications or text messaging are good options.
The drawbacks to text message purchasing is that either the vendor loses 40% of their
revenue to the mobile operator, or any credit card purchase has to be achieved through a web
54

page as the SMS has no security suitable for credit card entry, and very few ticket choices can
be easily remembered and entered by SMS.



MOBILE MARKETING AND ADVERTISING
Mobile marketing is an emerging concept, but the speed with which it's growing its roots is
remarkable. Mobile marketing is highly responsive sort of marketing campaign, especially
from brands experience point of view. And almost all brands are getting higher campaign
response rates. Corporations are now using m-commerce to expand everything from services
to marketing and advertisement. Although there are currently very few regulations on the use
and abuses of mobile commerce, this will change in the next few years. With the increased
use of m-commerce comes increased security. Cell phone companies are now spending more
money to protect their customers and their information from online intrusions and hackers.



M-COMMERCE INFLUENCE ON YOUTH MARKETS
The hierarchy of mobile media is changing very rapidly and mobile WiMax or other
technologies may increase the impact of, for example, location-based mobile ecommerce. As
of 2007 many companies have been trying to penetrate this market. Early pioneers in this new
Mobile advertising are companies such as Vodafone, Orange France Telekom, SK Telekom
and several others. The diagram made explained the vital aspects of mobile adoption and
sales of mobile global products/services in the mobile space. They performed an experiment
in which the use of viral mobile marketing within the context in the form of mobile
commercials were created to attract an audience and retention.
Through using Bluetooth technology, smart phones offer fax, e-mail, and phone capabilities
mobile companies believed that mobile technology would become synonymous with youth
life style. This was based on generations of South Koreans driving content back and forth
worldwide including music to drive the mobile market. The early worked was transformed
through dissemination they are along with few others have developed methodology to be
deployed global through concerts and events and any form of youth related culture from
South Korea to Japan to Europe, America in 2008 with world leading mobile software
provider and world leading mobile provider. Companies such as European giant
www.orange.com and www.overcell.com and world leading personal mobile software
provider www.vidiator.com and other companies in South Korea, Japan and Britain,
Germany lead this evolutions of Mobile advertising. Content Generation are the global end
55

users who are changing the way products and services are purchased and marketed
...everything must be centre around their life styles





MOBILE COMMERCE SERVICE PROVIDER

Mobile Commerce Service Provider (MCSP) - An organization (or company) that provides
any combination of consulting, software and computer systems for mobile e-commerce
platforms, mobile devices (cellular phones, smart phones), mobile commerce, mobile content
or mobile web sites.
MCSPs supply businesses with the tools and services they need to distribute and sell products
and services over both the Internet and Mobile Internet and manage their online enterprises.
Specifically, these firms specialize in all aspects of mobile commerce, including for all digital
goods (games, video, ringtones, wallpapers and applications) that are downloaded to mobile
devices.

LIST Of MCSP
Aerialink offers a hosted application service that enables content providers or
administrators to manage and distribute their content or data directly to their target
audiences or remote equipment devices. Website
Digby provides retailers with a mobile commerce solution, offering branded
applications for iPhone, BlackBerry, Windows Mobile, Android and the mobile web.
Website
Handango is an aggregator of smartphone applications, website tools and direct to
consumer offerings. Website
Luup is payment solution that allows users to pay, send and receive money via their
mobile phone. Website
mBlox is a provider of text messaging services. Website
Mobile Strategy Partners provides consulting services to organizations wanting to
provide mobile commerce solutions.
Singlepoint is a provider of text messaging services. Website
Movaya provides a mobile content platform for aggregation, distribution, billing and
merchant tools. Website
Motricity is a carrier grade content aggregator and services provider. Website
OpenMarket_Inc. provides mobile messaging, payment and delivery services.
Website
iLoop is a mobile services firm. Website
2sms is a provider of text messaging and mobile data collection services. Website
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Ngpay is payment solution that allows users to pay money & buy via their mobile
phone. Website
TrueSenses is a provider of premium sms text messaging services.



MOBILE PAYMENT
Mobile payment is new and rapidly-adopting alternative payment method especially in
Asia and Europe. Instead of paying with cash, check or credit cards, a consumer can use a
mobile phone to pay for wide range of services and digital or hard goods such as:
Music, videos, ringtones, online game subscription or items, wallpapers and other
digital goods.
Transportation fare (bus, subway or train), parking meters and other services
Books, magazines, tickets and other hard goods.

There are four primary models for mobile payments:
Premium SMS based transactional payments
Direct Mobile Billing
Mobile web payments (WAP)
Contactless NFC (Near Field Communication)
Mobile payment has been well adopted in many parts of Europe and Asia. Combined market
for all types of mobile payments is expected to reach more than $60B globally by 2013 ,
while mobile payment market for goods and services, excluding contactless NFC transactions
and money transfers, is expected to exceed $300B globally by 2013.
Some mobile payment solutions are also used in developing countries for micropayments.

PREMIUM SMS BASED PAYMENT SYSTEM
This is where the consumer sends a payment request via an SMS text message to a short code
and a premium charge is applied to their phone bill. The merchant involved is informed of the
payment success and can then release the paid for goods.Since a trusted delivery address has
typically not been given these goods are most frequently digital with the merchant replying
using a Multimedia Messaging Service to deliver the purchased music, ringtones, wallpapers
etc.A Multimedia Messaging Service can also deliver barcodes which can then be scanned for
confirmation of payment by a merchant. This is used as an electronic ticket for access to
cinemas and events or to collect hard goods.Transactional payments have been popular in
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Asia and Europe but are now being overtaken by other mobile payment methods such as
mobile web payments (WAP) and Direct Mobile Billing for a number of reasons:
1. Poor reliability - transactional payments can easily fail as messages get lost
2. Slow speed - sending messages can be slow and it can take hours for a merchant to
get receipt of payment. Consumers do not want to be kept waiting more than a few
seconds.
3. High cost - There are many high costs associated with this method of payment. The
cost of setting up short codes and paying for the delivery of media via a Multimedia
Messaging Service and the resulting customer support costs to account for the number
of messages that get lost or are delayed.
4. Low payout rates - operators also see high costs in running and supporting
transactional payments which results in payout rates to the merchant being as low as
30%.
5. Low follow-on sales - once the payment message has been sent and the goods
received there is little else the consumer can do. It is difficult for them to remember
where something was purchased or how to buy it again. This also makes it difficult to
tell a friend.

DIRECT MOBILE BILLING
This is where the consumer uses the mobile billing option during checkout at an e-commerce
site--such as an online gaming site--to make a payment. After two-factor authentication
involving a PIN and One-Time-Password, the consumer's mobile account is charged for the
purchase. It is a true alternative payment method that does not require the use of credit/debit
cards or pre-registration at an online payment solution such as PayPal, thus bypassing banks
and credit card companies altogether. This type of mobile payment method, which is
extremely prevalent and popular in Asia, provides the following benefits:
1. Security - Two-factor authentication and a risk management engine prevents fraud.
2. Convenience - No pre-registration and no new mobile software is required.
3. Easy - It's just another option during the checkout process.
4. Fast - Most transactions are completed in less than 10 seconds.
5. Proven - 70% of all digital content purchased online in some parts of Asia uses the
Direct Mobile Billing method

MOBILE WEB PAYMENTS (WAP)
The consumer uses web pages displayed or additional applications downloaded and installed
on the mobile phone to make a payment. It uses WAP (Wireless Application Protocol) as
underlying technology and thus inherits all the advantages and disadvantages of WAP.
However, using a familiar web payment model gives a number of proven benefits:
1. Follow-on sales where the mobile web payment can lead back to a store or to other
goods the consumer may like. These pages have a URL and can be bookmarked
making it easy to re-visit or share with friends.
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2. High customer satisfaction from quick and predictable payments
3. Ease of use from a familiar set of online payment pages
However, unless the mobile account is directly charged through a mobile network operator,
the use of a credit/debit card or pre-registration at online payment solution such as PayPal is
still required just as in a desktop environment.


DIRECT OPERATOR BILLING
A direct connection to the operator billing platform requires integration with the operator, but
provides a number of benefits:
1. Simplicity - the operators already have a billing relationship with the consumers
2. Instantaneous payments giving the highest customer satisfaction
3. Accurate responses showing success and reasons for failure (no money for example)
4. Security to protect payment details and consumer identity
5. Best conversion rates from a single click-to-buy and no need to enter any further
payment details.
6. Reliability that builds confidence
7. Reduced customer support costs for merchants and operators
8. Higher payout rates with operators such as Vodafone in the UK delivering up to
86% in some cases
CREDIT CARD
A simple mobile web payment system can also include a credit card payment flow allowing a
consumer to enter their card details to make purchases. This process is familiar but any entry
of details on a mobile phone is known to reduce the success rate (conversion) of payments.
In addition, if the payment vendor can automatically and securely identify customers then
card details can be recalled for future purchases turning credit card payments into simple
single click-to-buy giving higher conversion rates for additional purchases.

ONLINE
Online companies like PayPal, Amazon Payments and Google Checkout also have mobile
options. These require customers to register with a personal PIN before making payments.
Subsequent payments also require a PIN code to be used. This is known to lower the success
rate (conversion) for payments. These systems can be integrated with directly or can be
combined with operator and credit card payments through a unified mobile web payment
platform.

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CONCLUSION

Wireless communications is a mature industry that has been globally available for some time.
However, in no way this means that market growth for mobile & wireless communications
is showing growth fatigue. Contrary to the expected the growth is becoming more robust
with passing time, continuous evolution and new innovations. This segment, once again is
gearing up for unprecedented growth due to advancement in wireless broadband
technologies, as well as emergence of innovative applications, business models and
cheaper but powerful hansets. These new trends, with emergence of new technologies
and players, are changing the industry landscape and creating many new and exciting
opportunities in existing as well as unexplored market segments. As service providers
experience growth of subscribers, traffic, and most importantly revenues, they have
realized many a times that this growth is by no means automatic. Also with lower entry
barriers and available technology choices, new entrants are posing greater threats then ever.
Factors like increasing competition, enhanced customer expectations and falling
profitability have made, aggressive yet prudent adoption of business enhancing
technology to ensure current and future competitiveness compelling. To stay ahead of
competition leading players need to overcome challenges and find answers to questions
faced by them today and resolve varied and complex strategic issues including alliances
and partnerships throughout the value chain, while they differentiate their products by
means of new technologies and innovative business models. Wireless technology applications
is gearing up for unprecedented growth due to substantial increase in number of users
across most segments, advancement in wireless data technology as well as user terminals,
falling price points and success of initial 3G roll out and WiFi/WiMAX spread. Global
trend looks very positive. This positive surge is likely to be accompanied by dramatic
changes in the industry value chain, with emerging wireless network technologies like
WiMAX, WiFi, WCDMA and MBWA on one hand while content, transaction security
and presentation technologies on other. With the emerging user inclination towards
applicability and mobility due to benefits as well as utility it offers wireless industry is
pushing towards new audience specific applications like never before. These new trends
are changing the industry landscape and creating many new and exciting investment
opportunities in existing as well as unexplored market segments. Given the complexity of the
challenges and exceptional opportunity, all the stake holders need a clear assessment of the
wireless applications technology, and industrys future. This research provides a complete
360 degree perspective of wireless applications, associated issues like user needs, evolution
and not to forget inherent technology advancements in areas like end user device, M-
Banking, M-Gaming, M-Commerce, M-Payment, Radio Frequency Identification Device
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to name few and examines M-Commerce in details and provides answers to questions
having vital impact of future of this industry. Todays business decision-makers need deeper
understanding of the markets they operate in. Along with thorough insight about the markets
and its inherent dynamics they should also be abreast of the latest events in their area of
operation as they face unprecedented challenges created by extremely competitive
environment. This Report from R4B provides strong fact-based foundation for solid
business strategy. Market information like size, segmentation, and active players along
with market intelligence & analysis from an independent third party like R4B, having
extensive experience, resources and network to cater to market intelligence requirement of
worlds top companies, adds clarity to decision making or can provide validation for
key decisions helping organization march towards success.