20161002

Ecommerce: Technologies & Applications

Dr. Vijay Pithadia 
Introduction

Many international business researchers are of the opinion that increased globalization of markets and increasing international competition imply that firms in all nations will face similar, if not identical, competitive environments. In India due to liberalization of economy, the companies are facing acute competition in the international markets. In the new millennium, the internet-based way of doing business has certainly changed many industries and has influenced many customers and businesses. It has changed the shapes of whole set of industries and markets and has already had a great impact on consumers and is all set to have a very exciting future. It has improved services, reduce costs, open new channels and transform the competitive landscape.

This paper is divided into two parts. First part deals with how E-Business is changing business environment. Second part of the paper is designed to examine the application of E-Commerce in selected Indian industries. For the purpose of the study, the e-business applications are divided into three categories:

* E – Commerce
* E – Procurement
* E – Collaboration

E-commerce

E-Commerce, which primarily refers to buying, selling, marketing and servicing of products or services over internet. Business on the net is classified into B2B (Business to Business), B2C (Business to Consumer) and C2C (Consumer to Consumer).

B2B transactions are largely between industrial manufacturers, partners, and retailers or between companies.

B2C transactions take place directly between business establishments and consumers.

B2B sites are essentially the net meeting points for buyers and sellers of the industrial world. They serve a limited number of customers. The Turnover would be many times that of the most B2C sites and most importantly they make profits.
B2C sites are offering low value items CDs, Cassettes, Food, Toys, Flowers, and Cards etc because no complicated logistics are involved.

C2C sites don't form a very high portion of web-based commerce. Most visible examples are the auction sites. Basically, if some one has something to sell, then he gets it listed at an auction sites and others can bid for it.

E-procurement

The Internet offers a natural platform to facilitate efficient procurement as numerous buyers and sellers find each other and transact according to some pre-specified protocols. The following are the procurement strategies available for a manufacturer.

  1. Strategic Partnership
    Strategic partnership strategy is to develop a long-term supply relationship with a specific supplier.
  2. Online Search Strategy
    Online Search Strategy is to shop online for a better price.
  3. Combined Strategy
    The combined strategy is to combine both – sign a long-term purchase contract with a supplier up to a certain level, but if necessary additional quantity may be purchased online.

E-collaboration

We define e-collaboration as business-to-business interactions facilitated by the Internet. These include information sharing and integration, decision sharing, process sharing and resource sharing. There are many new cases that examine different elements of collaboration from information sharing and integration to process and resource sharing.

E-commerce application in banking industry

New information technologies and emerging business forces have triggered a new wave of financial innovation – electronic banking (e-banking). The banking and financial industry is transforming itself in unpredictable ways (Crane and Bodie 1996), powered in an important way by advances in information technology (Hollandand Westwood 2001). Since the 1980s, commercial banking has continuously innovated through technology-enhanced products and services, such as multi-function ATM, tele-banking, electronic transfers and electronic cash cards. Over the past decade, the Internet has clearly played a critical role in providing online services and giving rise to a completely new channel. In the internet age, the extension of commercial banking to the cyberspace is an inevitable development (Liao and Cheung 2003).

E-banking creates unprecedented opportunities for the banks in the ways they organize financial product development, delivery and marketing via the internet. While it offers new opportunities to banks, it also poses many challenges such as the innovation of IT applications, the blurring of market boundaries, the breaching of industrial barriers, the entrance of new competitors and the emergence of new business models (Saatcioglu et al. 2001, Liao and Cheung 2003). Now the speed and scale of the challenge are rapidly increasing with the pervasiveness of the internet and the extension of information economy (Hollandand Westwood 2001).

Products offered:

All of the major banks in India have an internet presence offering a range of products directly to consumers by way of proprietary internet sites. While the initial focus of the banks has been in the retail-banking sector, there is a growing range of small to medium enterprise (“SME”) and corporate banking products and services being offered.   The products available include

         (a)     Funds Transfer and Payment Systems

The major banks offer a range of online financial services including:

(I)     Payment of bills;
(ii)     Transfer of funds;
(iii)    Remittances;
(iv)    Applications for letters of credit; and
(v)     Settlement through the MAS Electronic Payment   System.

         (b)    B2B E-Commerce

At least one of the major commercial banks offers an integrated B2B e-commerce product directly through its website, involving product selection, purchase order, invoice generation, and payment.  However, integrated B2B products and services are not as yet generally available directly from the banks.

(c)     Securities Placement and Underwriting/Capital Markets Activities

Most commercial banks offer securities services such as online payment for shares and subscriptions for initial public offerings directly though their websites.  However, more sophisticated online brokering services are generally only available through the banks’ share-broker subsidiaries.

         (d)    Securities Trading

A full range of online securities services are provided by the specialist securities subsidiaries of the major commercial banks including online trading.

         (e)     Retail Banking

All of the major commercial banks have established websites for retail services.  Typically such sites will offer the following services:

(I)     a full range of personal account services, including foreign currency accounts;
(ii)     Funds transfers;
(iii)    Bill payments;
(iv)    Credit card services;
(v)     Investment services; and
(vi)    Online application for loan services including
(a)     Car loans;
(b)    Renovation loans;
(c)     Home loans; and
(d)    Personal credit lines.

E-Commerce has provided the platform that enables the implementation of core banking solutions (CBS). Today all the major banks have gone on to implement CBS. And with time being a premium among bank customers, banks have been ideating and developing newer modes of delivering banking services. Today there is a whole plethora of such platforms available ranging from the ATM to the mobile.

Banks like State Bank of India and its associates are recording over 100,000 transactions on a daily basis through their 5,000 plus network of ATMs. Incidentally the profile and usage pattern of ATMs in India matches that of ATMs abroad with an overwhelming (more than 80%) being used for cash withdrawal. Today with over 20,000 ATMs, India is recording one of the fastest growth in terms of ATM proliferation, though the per capita availability of ATMs doesn’t compare anywhere to markets like Japan or the US.

With most banks now providing Internet banking facility, bankers say that customers are using the bank for a variety of purposes. One commonly used service being booking of rail tickets Bankers also says that customers are using bank networks for online shopping. Most of the online banking channels are linked to major retailers. Estimates also indicate that today over 40% of the share transactions are being put through the internet.

E-commerce application in travel industry

In Indiae-commerce is being driven by the growing online travel industry and online travel bookings have increased substantially after the entry of low cost carriers. Currently, online travel industry is contributing 50% to the revenue generated by e-commerce in India. To boot, online travel industry is growing at 125% (compounded annual growth rate) annually. Generating revenues of around $300-500 million currently, the size of the online travel industry is around 2% of the entire travel industry. Online travel industry is expected to become a $2 billion industry by 2008. In India, it is basically low cost carriers like Air Deccan and the Railways, which have significantly led to increased use of e-commerce.

However, airline industry is still exploring the advantages of e-commerce. Currently e-commerce is being used mostly for e-ticketing among the domestic airlines though e-ticketing penetration in India is as low as 17% against the world average of 49% and 42% in Asia Pacific. But according to the UN’s International Telecommunication Union, about 400 million travelers worldwide are expected to book tickets on-line this fiscal.

Air Deccan launched its operations with a 100% web enabled ticketing service and in no time became India’s largest e-commerce site, with Rs.30 million worth transactions per day. Electronic ticketing now accounts for 35%-40% of tickets sold by Air Deccan. E-ticketing not only make tickets more accessible for travelers 24/7 but also eliminates the need to invest in ticketing offices and other related infrastructure reducing operational costs. Also travelers could avoid the long queues and save the service charges payable to travel agents.

Being a 100% e-ticket enabled airline, Kingfisher not only offers e-ticketing but also electronic check-in, wherein after printing the boarding card on-line the customer can use web-enabled check-in on the airline’s website and board the plane directly passing through only mandatory security check at the airport. One of the biggest advantages of e-ticketing is that one can neither lose an e-ticket nor destroy it by leaving it accidentally in the pocket.

E-commerce application in government

India is now getting used to e-tendering. The Andhra Pradesh government’s initiative is now a model for other states. It began in the year 2002 in Andhra Pradesh State government projects had been stalled by delays in awarding tenders. Cartels regularly cornered the bulk of government contracts and bids were tampered with after closure. For N. Chandrababu Naidu, the tech-savvy chief minister in a hurry, this was unacceptable. He needed a way around the mess and predictably by use of technology. Now, 90% of all the tenders in Andhra Pradesh are completed online. Last year, orders worth Rs.15, 000 crore were placed. While it earlier took anywhere between 90 and 135 days to finalize a tender, today it takes only 35 days.

Conclusion

Globally, e-commerce growth has been led by the popularity of online shopping portals like amazon.com and ebay.com but in India that has not been the case. It is mainly driven by the online travel industry and banking sector. For instance, 29% of Indian Internet users book airline tickets online and the figure is expected to touch 46% next year. Online rail ticket booking stands at 39% of the total bookings. As far as banking is concerned, there are 4.6 million online banking users in India. This figure is expected to go up to over 16 million by 2007-08 that will include both internet and mobile banking users. According to the Internet and Mobile Association of India (IAMAI), the e-commerce industry in India is expected to grow to a size of Rs.2, 300 crore by 2007 against the Rs.1, 200 crore. The total number of internet users which right now is 38.5 million is expected to reach 100 million by 2008.

Bibliography

1.    Crane, D.B. and Z. Bodie [1996], "From Follows Function: The Transformation of Banking, " Harvard Business Review, Vol. 74, No. 2: 109-117,
2.     Holland, C.P. and J.B. Westwood [2001], "Product-Market and Technology Strategies in Banking," Communications of the ACM, Vol. 44, No. 5: 53-57
3.    Liao, Z. and M.T. Cheung [2003], "Challenges to Internet E-banking," Communications of the ACM, Vol. 46, No. 12: 248-250
4.    Saatcioglu, K., J. Stallaert, and A.B. Whinston [2001], "Design of a Financial Portal," Communications of the ACM, Vol. 44, No. 5: 33-38