What Is E-Commerce?
E-Commerce is the ability of a company to have a dynamic presence on the Internet which allowed the company to conduct its business electronically, in essence having an electronic shop. Products can be advertised, sold and paid for all electronically without the need for it to be processed by a human being.
Due to the vastness of the internet advertising and the website can be exposed to hundreds of people around the world for almost nil cost and with information being able to be changed almost instantly the site can always be kept up to date with all the latest products to match with consumers demands.
The biggest advantage of E-Commerce is the ability to provide secure shopping transactions via the internet and coupled with almost instant verification and validation of credit card transactions. This has caused E-Commerce sites to explode as they cost much much less than a store front in a town and has the ability to serve many more customers.
In the broad meaning electronic commerce (E-Commerce) is a means of conducting business using one of many electronic methods, usually involving telephones, computers (or both).
E-Commerce is not about the technology itself, it is about doing business using the technology.
Benefits Of E-Commerce
An E-Commerce website offers many advantages to most types of businesses of all types and sizes. The main advantages are:
Access To A Global Market
The internet allows companies to have access to a global market rather than just the potential customers in the surrounding area of there physical location. Due to the fact that the website is open 24-hours a day (more below) time differences between countries are no longer a problem, you wouldn’t have to get up early in America to order something in England anymore.
Cutting Out The Middleman
Businesses can sell direct to the consumer rather than having to sell to a supplier and then them sell it on, this means the company can usually offer the product at a discount compared to there retailers because only one company has to make profit rather than two or more.
A Level Playing Field
A small business can compete and show itself as a professional company as much as a large ones as budgets for setting up a professional site are relativly cheap to the amount of return you can get on them.
Open 24 Hours A Day
With fully automated payment and order processing systems your site need never be closed even if your office/warehouse is. Orders can be dispatched during opening hours while orders can be taken 24 hours a day, this has great advantages for people who might be at work or busy during normal working hours of some shops.
Greater Customer Satisfaction
An E-Commerce website can be a powerful tool for building customer loyalty if it is effective enough, a well designed website puts the customer in charge of the relationship, they can buy, browse, ask for help or track the progress of order they have placed where they want and when they want.
Reduced Marketing Costs
Word of mouth can be incredibly powerful on the Web through e-mail recommendations and search engine rankings. You can achieve a great deal through growth by treating customers well, keeping them informed about your activities and benchmarking yourself against competitors. Also with the internet advertisement being relativly cheap you can reach many more people at a cheaper cost than using convential advertising methods.
Better Customer Information
You can quickly and easy analyse your customers by location and area as well as the products they buy as you will have to request a customers name and address from them when processing a transaction. As well as you being more informed about your customers, your customers are also more informed as generally on E-Commerce sites there is more information on a product including reviews etc to help customers choose the right product for them. This works in the best interest for the site as it cuts down on the amount of returned goods.
Most E-Commerce suits offered by companies come with built in security in the software and with the purchase of a dent SSL certificate and some good server configeration you can safely know that all the details of your customers will be safe and secure. You can get approved certificates to show that your site is secure and meets up the certain standards, this lets your customers know that they are safe to shop at your site and the data will not end up in the wrong hands.
Also sensitive information such as credit card numbers are usually automatically processed so do not require any staff at the company to see them, making purchasing online even more secure.
Implications Of E-Commerce
When using the Internet and E-Commerce is is important to remember that there are many legal, moral and ethical issues to consider.
Ethical & Morel Implications
Businesses entering the e-commerce world will be facing a new set of ethical challenges. It is easy for businesses to become sidetracked in the technical challenges of operating in this way and to pay little attention to the ethical implications.
There are many ethical implications for businesses to run into that would normally be addressed when doing business face to face, for example selling tabacco and alcohol to an under age minor over the internet, this is impossible to regulate easily and affectivly as it would be if the person walked into a store, not only is this inethical but it is also illegal.
Another case of this was a case when a community pharmacy decided to start up a E-Commerce site, of course here there was plenty of Morel and Ethical decisions to be made here, as Pharmaceuticals are different from other items of commerce, particularly in that they should only be used as and when they were required.
Obviously there any a list of items that have Morel & Ethical decisions to be made about them being sold online such as Weight Loss Pills, which could be bought by a already underwright anerexic girl on eBay, Viagra, which could be flown in from America and taken by someone with a high risk of heart attacks and suffers from one. You could say that cases like these the person shouldn’t be so stupid, but then again isn’t it unethical and immorel to sell these items on the bases that you know that could happen?
The central issues of E-Commerce and the law include the development of E-Commerce, the role of consumers and regulation of e-commerce in regards to consumer protection.
E-commerce is a new way of conducting business that takes place on the Internet, it has become an important way in which consumers purcchase goods across the world as well as due to internet technology progesssing rapidly in the last few years.
Although E-Commerce has a big effect on the global trade, goverments also have a large effect on the growth of E-Commerce on the internet by regulating is accordingly. As Governments set regulations for E-Commerce organisations managers are starting to worry if the regulations will be to tight or may reduce the market in the online trade.
Regulation of E-commerce is very important for the cyberspace market as it can help or stop the organisations working with E-Commerce, as well as being able to protect the consumers in the online market.
There are a few security implications that come about when setting an E-Commerce website, especially when handling sensitive information such as credit card information and personal details such as address. Many parts will have to be protected well including communication between the customer and the website server and the server itself from any hacker trying to intercept information or from trying to retrieve existing information from databases.
Customer & Server
To secure data between the customer and the webserver there is a system called SSL (Secure Socket Layer) which encrypts the information between them so no one else can read it. The theory of it is quite basic and uses the following steps:
- User want to send data to the server, before it leaves it is encrypted with a unique key for the session.
- The server recieves this information then encrypts the information one more time this time using its own unique session, this is completly different from the users unique key. It then sends back the data.
- The users computer now unlocks the data with the key it locked it with earlier, the data is still encrypted but now only with the servers key. The users computer then sends the data back.
- The server then recieves this information and unlocks it with its key and now has the unencrypted data of what the user was sending to the server.
This type of encryption comes in different streghs depending on the SSL certificate you purchae for your server, you can get certificates from 40-bit encryption up to 256-bit encryption.
As well as security between the consumer and server there is also security needed on the server(s) as well, especially if sensitive information is stored under customers accounts, such as credit card information and other personal information.
Servers will have to be protected to withstand any hack attempts to retrieve the information that is stored. Prevention measures such as firewalls, checking for root kits, antivirus systems and others should be put in place, as well as encryption of the data if possible so should a hacker gain entry the information he see’s is useless to him or her.
This is something that our sister company Tech Approach can look to work with you on.
Setting Up A Site
There are a number of steps that need to be taken and considered when setting up an E-Commerce website. Some of these steps are below:
Choosing A Company Name
When setting up an E-Commerce site is it important to choose a sensible company name, a name such as “Jelly Penos Peppers Currys” with a domain jellypenospepperscurrys.com probably isn’t the best idea as most people will not remember the company name let alone the domain name. At the very least you want a company name that is memorable because then even if a customer can’t remember your companies domain name at the very least he or she can search for your company in a popular search engine. A simple name, possibly to do with what your business supplies would be sensible for example Johns Hardware or Sams PC Parts or use a single made up word that is easy to spell, for example Tescos, Sainsburys & Microsoft, you don’t need a degree to spell those names even if they were not popular companies.
In order to setup a sucessfull site you need to analyze and research the potential for the products that you wish to sell and to find out if the market is already saturated with similar ideas, if you cannot offer anything different to other well known companies what will make customers attracted to your site, in short, nothing.
You need to know the type of customer you are aiming for and what they require, for example if you are aiming at business users you may have E-Commerce software that allows different logins to do different things to the company account etc, plus everything would have to have a VAT invoice, where as if you are just selling to home users you would not need to have the VAT invoice and would only really need one account per household, any additional accounts would be totally seperate.
The financial costs involved in setting up an E-Commerce site range from almost nothing to many thousands of pounds, it all depends on what you want the site to do and how customised you would like the package. For the cost of just simple hosting, which can be for as little as £1 a month, you could set-up a basic site using OS Commerce (a free E-Commerce PHP program) and using PayPal as your payment processor, unfortunatly these sites are obvious to most users as not professional organsations and often put users off with lack of security and professionalism.
There is a medium cost solution where by you use an external card processing site such as 2CheckOut or WorldPay and use a bought E-Commerce package and customise it to your needs and use a SSL server while handling sensitive information. This would cost you around £1,000 mark for everything for a year, including card processing (All thought the card processing company also does take a percentage of the transaction.). This option will give the site a professional look and feel but may be off putting to the user when completing a transaction that they are referred to an external site to pay for there items.
Then finally there is the higher cost solution that most organisations will not start at as the costs are quite high. Here you would have a custom designed E-Commerce package made specfically to your requirements either by in or out of house developers, this would be tailored to your everyneed and should be easily upgradable in the future, you would have an SSL certificate for your site and all credit card transactions would be handeled by your site instead of referring them to an external one. This type of system will cost in the range of £5000+ depending on how customised the system is and the quality of the end result.
Training & Development
Depending on the scale of the system, training may not be needed, if for example you were a large scale business with an existing ordering system you would get the E-Commerce system to intergrate with the old one so it is easy and familier to staff.
On smaller systems staff would have to be trained to retrieve and manage order off the system and also some staff trained how to add, modify and basically manage the E-Commerce site. None of this training will need to be advanced and would be able to give most users a good knowledge within a few hours of being shown.