E-COMMERCE RESEARCH

Prepared by: awad elsayed awad ibrahim

Contents

Chapter one :overall view of e-commerce1.1 definitions.

1.2 terminology. 1.3 applications.

1.4 forms. 1.5 types.

1.6 operations . 1.7 history.

chapter two : the way to e-commerce

2.1 development of e-commerce website.

chapter three : advantages and disadvantages of E-commerce.

3.1 advantages of e-commerce. 3.2 drawbacks of e-commerce .

Chapter four : E-commerce benefits and limitations

4.1 benefits of e-commerce4.2 limitations of e-commerce

references.

Chapter one

Definitions of E-commerce

1.1 definitions

There does not exist a simple definition of E-Commerce that adequately describes the coverage of its operations, functions and underlying technologies. One common view is:

E-Commerce is online shopping via the Internet.

Although this is correct, online shopping is only one of many types of E-Commerce activities. In broader terms:

E-Commerce is any commercial activity conducted electronically, particularly via private or open networks, such as the Internet.

The key point of this definition is that E-Commerce is a confluence of business operations with electronic and network technologies. Telephony and non-networked technologies such as CD-ROM media may integrate into operations, but the core of E-Commerce is network technologies and especially open networks such as the Internet.

Electronic Commerce or e-commerce is the trade of products and services by means of the Internet or other computer networks. E-commerce follows the same basic principles as traditional commerce that is, buyers and sellers come together to swap commodities for money. But rather than conducting business in the traditional way in shopping stores or through mail order catalogs and telephone operators

— in e-commerce buyers and sellers transact business over networked computers.

eCommerce, is a shortened IT term for Electric Commerce. E-Commerce is the conducting of business communication and transactions over computer networks and through individual computers linked to the Word Wide Web. also eCommerce is the buying and selling of goods and services, and the transfer of funds, through digital communications.

It is also true to say, however, that eCommerce also includes all inter-company and intra-company functions (such as sales, marketing, accounts, logistics, manufacturing, and negotiation) that enable commerce and use electronic mail, EDI (Electronic Data Interchange), file transfer, digital fax, video conferencing, workflow, or interaction with a remote computer.

e-Commerce also includes buying and selling over the World-Wide Web and the Internet, electronic funds transfer, smart cards, digital cash, and all other methods of completing business transactions over digital networks.

Electronic commerce, commonly known as e-commerce or eCommerce, 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 since the spread of the Internet. A wide variety 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.

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.

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.

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.

At it's most simplistic level; eCommerce is simply the buying and selling of goods, services or information via the World Wide Web, email or other pathways on the Internet.

Ecommerce and Ebusiness are interchangeable terms. As with any other industry, ecommerce has introduce new terms into our language. 

__________________________________________________

1.2 terminology

The following are more widely used terminology relating to ecommerce and their definitions :

B2B (Business to Business)

The exchange of goods and services between business.

B2C (Business to Consumer)

The exchange of goods and services with the end consumer being the target market.

Chargeback

Where a transaction is debited against a merchant account in cases of refunds and fraud. Chargebacks usually attract a fee that is debited against the merchant.

Certificate Authority

A third party company that issues digital certificates that confirms a company or individuals' identification. A digital certificate is a crucial part of secure ecommerce

Cobranding

Where two companies identify a partnership between them through one company displaying their logos, color schemes etc on another companies application.

Cookies

Small text files stored on your computer when visiting a site that record preference for that particular site's usage. Cookies are also common in shopping cart applications in order to remember visitors as they move throughout product pages.

CRM - Customer Relationship Management.  

The entire process of a pre-sales, sales and service relationship with a customer. Many software applications are now available that permit you to record this relationship from the time the clients asks their first question. Good CRM software is much more efficient than fragmented records as it can save time in tracking communications and transactions with a particular person.

EDI (Electronic Data Interchange)

This is the business to business (b2b) flow of information between companies or within a company itself. The 90's saw the concept of

information equaling power. Whatever creates power also generates money and therefore creates new enterprises to supply this information. 

Encryption

Process of transforming data into a type that prevents casual observers from deciphering.

Etailing

These are mainly "virtual" storefronts which act as a catalogue of products of merchants and usually include a "shopping cart" system to enable consumers to purchase online with the use of credit cards.

Firewall

Software/hardware used to prevent unauthorized access from a computer system or network of computer systems.

Gateway

Computer that allows communications between networks one network with another. Used in ecommerce to act as an interface between a merchant and a bank; i.e, a Payment Gateway.

Infomediary

An infomediary is an online resources that collates data from a variety of sources and acts as a middleman between those distributing the information and people who want the information.

Luhn algorithm

The LUHN algorith is used for credit card number generation and validation. 

eCheck

An E-Check is a form of payment that deducts funds directly from your own standard checking account. eCheck services are usually managed by third party companies that interface with a number of different banks.

An echeck provides a more fraud resistant option in terms of ecommerce transactions.

Merchant account

A special account account where money from credit card sales is first routed to and held before transfer to your own business account. This process is usually fully automated in ecommerce transactions. Money may be transferred into your standard business account in real-time or during various points in a 24 hour period. A merchant account is a crucial part of ecommerce.

Merchant Identification Number (MIDS)

Unique merchant identification number that is used in conjunction with all transactions.

Out of the box

Refers to an applications suitability to be rapidly integrated into an existing system

P2P (Peer-to-Peer)

Process whereby computers can trade information between each other directly without the assistance of a third party network.

Payment threshold

The minimum accumulated commission an affiliate must earn to trigger payment from an affiliate program.

Privacy policy

A Web site's official statement on the type of information collected on a site, how the information will be used, how the person can access this data and the steps for having the data removed. A privacy statement will also usually include information regarding systems that are in place to protect the information of web site visitors.

Privacy seal programs

Independent organizations that verify if an online companies' Privacy Statement is verifiable and accurate.

Scalability

The ability and flexibility of an application to meet growth requirements of an organization

Secure servers

Special servers that utilize encryption to prevent unauthorized users from intercepting and reading a message that passes through its system..

Session cookie

Temporary cookie stored in a computers memory for remembering preferences during a web site visit that is flushed on leaving the site.

Shareware

Software that is distributed at no cost that can be used for free for a specific period of time or under certain circumstances to allow evaluation.

Shopping cart

Software that keeps track of items a visitor picks to buy from your site until they proceed to the "checkout".

SLA (Service Level Agreement)

Used in many merchant/institution and merchant/consumer transactions to define the boundaries of what the service is committed to deliver and under what circumstances.

SSL (Secure Socket Layer)

A secure protocol that ensures the integrity of information that is transmitted via this means. 

Uptime

The amount of time a web site is available. The industry benchmark at this point in time for availability is 99.99%.

SOHO

Stands for Small Office/Home Office and refers to a specific group of people who work from home or very small companies. 

Turnkey

Refers to an application that with very few adjustments is ready for use, such as a remotely hosted shopping cart service.

User session

Each visit to a web site by one person. The session is usually "ended" when all pages have been closed or after a specific time of inactivity.

Vortals (vertical industry portals)

Online resources that are gateways to specific industry related information.

WYSIWYG  

What You See Is What You Get. An application that displays how the resulting page will look as it is being developed by the user in which the screen displays what the end result will look like, while the document is being created or modified.

1.3 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 Domestic and international payment systems Shopping cart software Teleconferencing Electronic tickets

1.4 forms

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.

1.5 e-commerce types

there are different types of today e-commerce such as :

1- Business to Business (B2B)

Business-to-Business e-commerce has been around for some time. Over 90% of all e-commerce transactions on the Internet are B2B. B2B enables automating transactions between trading partners for business efficiency. B2B is also known to be Electronic Data Interchange (EDI).

2- Business to Consumer (B2C)

Business-to-Consumer is considered to be one of the best things to happen for e-commerce and the Internet. It continues to grow by leaps and bounds with every passing day. Popular websites such as Amazon and like have cashed in over the rise of purchases that happen over the Internet. B2C involves direct selling to the consumer over the Internet. The service or product that is being sold does not necessarily be virtual or intangible, but as a matter of fact most transactions that happen are related to tangible goods.

3- Consumer to Business (C2B)

Consumer-to-Business model is a complete reversal of Business-to-Consumer model. In a Consumer-to-Business Model a consumer offers goods or services to companies and the companies pay for them. We can see examples of C2B in forms of affiliate marketing, answering online polls for companies, being a free lance developer, etc.

4- Business to Employee (B2E)

In a Business-to-Employee e-commerce, companies offer products or services to their employees in an intranet environment. B2E typically is used for automating employee related work processes. Examples of B2E applications can be seen in online insurance policy management for employees, offers and rewards program for employees, etc.

5- Consumer to Consumer (C2C)

In Consumer-to-Consumer e-commerce a third party builds a transaction bridge between two or more consumers involved. Online Auctioning can be considered to be a good form of Consumer to Consumer e-commerce model where consumers set up sale of goods and services for other consumers where other consumers have to bid and win the specific good or service. The third party which connects consumers charges a nominal

fee for their services. They are in no way related to the goods and services being sold or bought and they are not responsible for QA and other such factors.

1.6 operations of e-commerce

An E-Commerce operation is an integration of Internet technologies, systems, applications and practices. It may use any technology, such as e-mail clients, mailing lists, newsgroups, videoconferencing, IRC chat, web servers, web channels, telephony, CD-ROM media, and Internet fax, etc. It may use any information system, such as web sites, intranets, extranets, groupware, and document management systems. It may incorporate any Internet application or practice, such as communication, research, publishing, and marketing. There is no standard configuration to build an E-Commerce operation. Each one is unique and designed specifically for each business.

The configuration of an E-Commerce operation is determined by two dynamic factors:

1. The company's business goals 2. The capabilities of the supportive technology

Whereas business goals are relatively stable, E-Commerce technology is continually evolving. For this reason business goals should drive the design of the E-Commerce operation. Like traditional commerce, successful E-Commerce operations are fluid and adaptable to technological change. E-Commerce operations will modify and define new applications as the technology advances, but successful E-Commerce operations harness only the functionality of technology that support specific business needs or help achieve predetermined goals. It is ill-advised to design business services and goals strictly around the capabilities of the technology because it may:

Confound the purpose of the business Distract the business from its primary goals

Lead the business from a position of strength, effectively executing the business it knows, to one of weakness, pioneering new services which may require an extended learning curve to understand and operate efficiently.

The technology should support the services. Select tools and technologies that serve business goals. Do not define services according to the features and functionality of the technologies.

E-Commerce includes both traditional activities like providing product information and new activities like conducting online retail in virtual malls, publishing digital information . Some of the common operations that define E-Commerce are specific business-to-business and business-to-customer interactions, such as:

Information exchange

Goods or services trading

Sales promotion and advertising

Online digital content delivery

Electronic funds transfers and transaction processing

Electronic share trading

Electronic bills of lading processing

Collaborative work interaction

Manufacturing management

Accounts settlement

Online sourcing

Public procurement

Direct consumer marketing

Inventory management

Post-sales service

Commercial auctions.

1.7 history of e-commerce

History of ecommerce dates back to the invention of the very old notion of “sell and buy”, electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991 when the Internet was opened to commercial use. Since that date thousands of businesses have taken up residence at web sites.

At first, the term ecommerce meant the process of execution of commercial transactions electronically with the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions. The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically.

Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols (for example, HTTP) and DSL which allowed rapid access and a persistent connection to the Internet. In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web. At this time the meaning of the word ecommerce was changed. People began to define the term ecommerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services. Although the dot-com collapse in 2000 led to unfortunate results and many of ecommerce companies disappeared, the “brick and mortar” retailers recognized the advantages of electronic commerce and began to add such capabilities to their web sites (e.g., E-Commerce is not an entirely new type

of commerce. It first emerged in the 1960's on private networks, as typically large organizations developed electronic data interchange (EDI) installations and banks implemented electronic funds transfer (EFT). Today, however, E-Commerce is no longer the exclusive domain of large organizations or private networks. The open network Internet and particularly the World Wide Web not only present new commercial potential for large organizations, but also provide a viable entry point for small and medium-sized enterprises (SMEs) into E-Commerce opportunities.

Even though E-Commerce has existed for over thirty years, it has just recently sustained significant growth. In the past 5 years the Internet has transformed from an auxiliary communication medium for academics and large organizations into an entrenched communication medium that spans across nearly all parts of mainstream society. E-Commerce growth is tied directly to these socio-technological changes. The more entrenched the medium becomes, the more users are drawn to it. An increase in users increases markets. As markets expand, more businesses are attracted, which in turn drives the development of better, more stable and secure technology to facilitate E-Commerce. A stable, secure environment for exchanging mission-critical and monetary information only draws more businesses and consumers to the Internet and ensures the growth pattern continues. All these related factors contribute to a burgeoning E-Commerce marketplace that should continue to grow well into the new millennium.

Only now is it becoming apparent how large the potential for E-Commerce will be in the next few years. With E-Commerce prospects continuing to improve, most large corporations have already developed preliminary E-Commerce strategies. Although many SMEs are not following this trend of large corporations, others have found that a modest investment in a simple Web site can develop into a commitment to E-Commerce as a major component of the business plan. At this stage of development, E-Commerce is not an essential operation for every type of SME, but in the near future it may become standard for many.

Online vendors, in their turn, also get distinct advantages. The web and its search engines provide a way to be found by customers without

expensive advertising campaign. Even small online shops can reach global markets. Web technology also allows to track customer preferences and to deliver individually-tailored marketing.

History of ecommerce is a history of a new, virtual world which is evolving according to the customer advantage. It is a world which we are all building together brick by brick, laying a secure foundation for the future generations.

Chapter two

2 - contents and development of e-commerce website

the website is the most used tool to buy and sell goods though the internet, the website is considered the main tool of the e-commerce, so it is important for our research to cover the contents and development of the website.

The web site

The web site should be designed to gently lead the client through the learning and sales process. Your sales text must be grammatically sound and spelled correctly. Poor spelling loses credibility points straight away.

Ensure that there is plenty of well laid out textual content on the site to attract search engines as well as to inform prospective clients. Use keyword and keyphrase rich text; that is, utilize copy that includes common phrases that people would enter into search engines when performing a query. The copy you use shouldn't just be informational, it needs to actively sell to the site visitor. Learn more about crafting marketing copy and creating effective landing pages.

What search terms are commonly used?

A useful tool in understanding how people are searching is freely available from Google. With Google Insights for Search, you can compare search volume patterns across specific regions, categories, and time frames on particular keywords, finding the most popular terms for a given topic or industry sector.

Attracting search engines and targeted site traffic is a huge ongoing learning curve, and there are plenty of other articles and tools on our site to assist you with this. View our search engine marketing resources or our general promotion archives.

Cross Browser Compatibility

Internet Explorer isn't the only browser on the market. There are currently over 100 different brands of Internet browser currently available. IE's major competitor is Firefox and what looks good in Internet Explorer may look terrible or even crash other browsers Between these two browsers, you'll have well over 90% of market covered. By paying attention to even simple things like browser compatibility issues, you will increase your sales.  

The use of images

All images used should clearly depict the product/service and where possible, don't use stock images that come with products such as Photoshop. Seasoned Internet surfers will recognize these as they appear on thousands of sites around the world. Use original photography or scanned images wherever you can, or make use of the many stock photo archives where you can purchase high quality images for as little as a couple of dollars each.

Ensure that you optimize your images for rapid download. Much of the world still does not utilize broadband, and no-one is going to wait around for 2 minutes to see a photo of a "happy customer" or "successful businessperson who uses our product". All popular graphics packages support compression for web based graphics, usually through easy to use wizards. Try your graphics software program's help file and search for "optimization" or "compression".

Images are a wonderful medium to assist in the online sale of your products/services, especially useful to those clients with poor literacy levels or

who are in a rush, as we all seem to be these days. But remember, while a picture may be worth a thousand words in the offline world, it's worth next to nothing when it comes to search engines as spiders do not 'see' pictures.

Site Navigation.

Site navigation should be simple and all the questions a consumer may ask should be answered along the way. Where possible, adhere to the "three click rule" - that is, a visitor should be able to access any information regarding your product or service within 3 clicks of any other area of your web site. Pay close attention to cross-browser compatibility issues as many complex menu systems play havoc with browsers.

Recommended pages.  

Along with the home page, your sales pages and the shopping cart, I recommend implementing the following web pages as part of your ecommerce site:

About Us Page.

The "About Us" page is crucial to boosting consumer confidence. It provides a summary of the business, your commitments and direction. 

While we are all protective of our privacy, online business is no different to traditional business in that we all like to 'put a face to the name' - we need to reassure our site visitors. When purchasing goods online, I always go to the 'About Us' or company profile pages before parting with my money (especially after one bad experience - another story for another time). The page should also provide other contact details for your business and your various registrations, associations and affiliations. View further information relating to "about us" or company profile pages.

Privacy policy.

What are you going to do with my information? - a question asked by many online shoppers. Putting together a privacy policy doesn't necessarily require a legal team! Learn more about developing Privacy statements.

FAQ's (Frequently asked questions)

No doubt you'll be asked many questions about your product. Many of these questions will be repetitive. It's these questions and answers that you'll want to add to your FAQ page. This promotes customer confidence and saves your valuable time. A prospective client may be somewhat hesitant in asking questions and this hesitancy may translate into a lost sale. A well constructed FAQ will help coax these online customers into purchasing. 

You don't need to spend a lot of money on a basic FAQ system. Simply list the questions at the beginning of the FAQ in dot-point format, perhaps broken down into various categories to make searching easier. Each of these questions should be directly linked to the answer further down the page with the use of bookmarks. This basic design also allows for scalability. 

You can link to the FAQ not only through the main menu system, but after every "buy me" type statement. The FAQ should be accessible within one click of any other area of your web site that is dedicated to selling the product or service.

Testimonials page

A dollar value can not be placed upon positive client testimonials; this is some of the best promotional copy around. Elicit feedback from your current customers and ask their permission to publish their comments on your site. 

Testimonials can be implemented on a page of their own, or interspersed between your own statements regarding the product. If you do implement a Testimonials page, ensure that it can be accessed with one click from any other page on the site. 

Chapter three : advantages and disadvantages of e-commerce

3.1 advantages :

The advantages of E-commerce are basically increased sales and decreased costs through the use of electronical media, especially the Web. The advantages of E-commerce will be divided into the benefits it provides to organizations, consumers, and society.

Advantages to Organizations

Due to the global reach of the Internet, businesses organizations are able to send messages worldwide, exploring new markets and opportunities. This breaks down geographic limitations, and reaches narrow markets that traditional businesses have difficulties accessing. Through the Internet, business now offer a wide range of choices and higher levels of customer information and details for individuals to search and compare. Some build-to-order companies such as Dell Computer Corp can even provide a competitive advantage by inexpensive customization of products and services.

In terms of cost reduction, E-commerce helps organizations decrease costs in creating, processing, distributing, storing and retrieving

information. For example the communication and advertising costs could be lower by sending e-mails and using online advertising channels, than by using television commercials or the print media. In terms of online ordering and online auction organizations, the costs could be lower than running an actual shop with the associated manpower.

Extended trading hours is another benefit, the 24 hours a day. 7 days a week in 365 days allows business always free to open on the Internet without overtime and extra cost. Other advantages includes the up-to-date company material, current inventories, improved customers service, better customers communication, increased operating and trading flexibility

Advantages to Consumers

For customers, the advantages occur in the buying process, product research, evaluation and execution. E-commerce provides customers with a platform to search product information through global markets with a wider range of choices, which makes comparison and evaluation easier and more efficient. With the ubiquity in accessing the Internet, consumers are able to search for shops or perform other transactions anytime in almost location. Cheaper goods and services is one of the benefits for consumers who purchase online. Furthermore, delivery time and costs can be saved by buyers when they purchase digital goods and services. Examples are e-books, music and audio clips, software, games, and distance education delivered via the Internet.

Advantages to Society

By telecommuting, individuals can nowadays work and do their purchasing at home rather than by traveling around. This will result in less traffic and air pollution. For people in Third World countries, many service and products are now available which were unavailable in the past; opportunities and higher education services are more achievable for students. Non-profit organizations, including government services, also benefit from E-commerce by the online payment system which supports the payment of tax refunds and pensions quickly and securely. Public services such as health care, education, and public social service also benefit from E-commerce. For example, rural doctors and nurses can

access professional information and the latest health care technologies. Overall, e-commerce makes products and services more easily available without geographic limitations.

E-commerce offers buyers maximum convenience. They can visit the web sites of multiple vendors round the clock a day to compare prices and make purchases, without having to leave their homes or offices from around the globe. In some cases, consumers can immediately obtain a product or service, such as an electronic book, a music file, or computer

software, by downloading it over the Internet .

For sellers, e-commerce offers a way to cut costs and expand their markets. They do not need to build, staff, or maintain a physical store or print and distribute mail order catalogs. Automated order tracking and billing systems cut additional labor costs, and if the product or service can be downloaded then e-commerce firms have no distribution costs involved. Because the products can be sold sell over the global Internet, sellers have the potential to market their products or services globally and are not limited by the physical location of a store. Internet technologies also permit sellers to track the interests and preferences of their customers with the customer’s permission and then use this information to build an ongoing relationship with the customer by customizing products and services to meet the customer’s needs.

Other advantages :

100% Business Uptime

E-Commerce systems are available for people for 24 hours a day, 7 days a week and 365 days a year. They never take a break or close down for the day or take public holidays.

Global Access

E-Commerce systems can be accessible by any one across the World Wide Web. Any person or business having just an Internet Connection can access e-Commerce systems.

Quick Response Time

Transactions can be handled over the Internet instantaneously without high response times, most of the times much faster than offline systems. Messages are delivered to the end of the globe at the snap of finger, enabling quick commerce.

Cost Efficiency

E-Commerce is very cost efficient and economical. General costs of running a business otherwise are far higher than that operated with the help of technology and e-commerce. Staffing, middlemen, overhead costs, etc can be reduced drastically making handling business handling and administration much more easier. Most of the transaction procedures

3.2 drawbacks of e-commerce .

Delivery Time

Physical goods take some time to reach your home when you buy them online whereas if you go to the local store and buy them, you can get them instantly. Delivery times may range anywhere from a day to even a month. Moreover, perishable goods cannot be considered to be shipped for such long delivery times as they tend to get destroyed during transit.

Hesitancy

Most customers and businesses are hesitant to do transactions online. This is due to the fact that if a person wants to feel the service or goods he is paying for, he lacks that on the Internet. Moreover, some people are accustomed to shop with family and friends and hang out to malls and big outlets, which is otherwise unavailable on the Internet.

Also, according to Consumers, they are hesitant to buy some products online. Online furniture businesses, for example, have failed for the most part because customers want to test the comfort of an expensive item such as a sofa before they purchase it. Many people also consider shopping a social experience. For instance, they may enjoy going to a store or a shopping mall with friends or family, an experience that they cannot duplicate online. Consumers also need to be reassured that credit card transactions are secure and that their privacy is respected.

Online Safety

Online safety is a critical factor that most people consider before even thinking of performing commercial transactions. Customers and businesses should be assured of privacy implications, confidentiality, security and like factors. An amount of trust has to be developed before starting or involving into transactions.

Other drawbacks

One of the biggest drawbacks of e-commerce is that many people may not be satisfied with the virtual experience of trading and buying products lying possibly thousands of miles away just by seeing its picture. International trade, import/export and global sourcing all involve great geographical distances spanning over continents or nations, and this lack of physical proximity comes to the disadvantages sometimes. Secondly the question of safety of payments and trust is also there which will be discussed in detail in another article. For many people e-commerce is not about big international trade, import/export or global sourcing but simply about enjoying shopping over the net, and sometimes the electronic experience does not satisfy their social needs or holiday lust hence they become distanced to the concept of e-commerce. From the seller's point of view, e-commerce does not offer a direct face to face proximity with the probable customer and therefore things may not work out the way they would have done otherwise. However many times international trade, import/export and global sourcing does require personal interaction for a couple of times before things can later be carried out via e-commerce.

Therefore in such cases, e-commerce tends to act as an extension of the trader for carrying out activities related to international trade, import/export and global sourcing rather than as an alternative for it.

Many products are such that it is not possible to check them online for their effectiveness in terms of customer satisfaction parameters. For example if someone wants to buy a comfortable sofa set, no amount of pictures would deliver the experience of sitting on that sofa if it were present in a shop having physical proximity to the customer.

Chapter four :E-commerce benefits and limitations

4.1 benefits of e-commerce

In the short-term, entry into E-Commerce may offer a competitive advantage over slower to act competitors. The market for E-Commerce is growing, as more consumers and businesses gain Internet access and transaction processing technologies improve security. Companies that establish an operation today, still in the early stages of Internet based E-Commerce, will have a fuller understanding of the issues and be better prepared to capitalize on emerging technologies when E-Commerce markets open up in the next few years.

The benefits of E-Commerce to a small business may include capabilities to:

Extend the range of sales territory

Streamline communication to suppliers and clients

Expand reach to new clients

Improve service to existing clients

Reduce paperwork and time spent on correspondence

Track customer satisfaction

Expedite billing

Improve collaboration on work projects

Expand markets beyond geographical, national boundaries

Leverage legacy data

Improve inventory control, order processing

Establish position in emerging E-Commerce marketplace

Lower costs of overhead

Realize economies of scale by increasing sales volume to new markets

Monitor competition and industry trends

Improve or expand product lines - locate new suppliers, products that could be included in catalogue.

The benefits to organizations are as follows:

1- Electronic commerce expands the marketplace to nationaland international markets. With minimal capital outlay, acompany can easily and quickly locate more customers, thebest suppliers, and the most suitable business partnersworldwide. For example, in 1997, Boeing Corporationreported a savings of 20 percent after a request for a proposalto manufacture a subsystem was posted on the Internet. Asmall vendor in Hungary answered the request and won theelectronic bid. Not only was the subsystem cheaper, but itwas delivered quickly.

2- Electronic commerce decreases the cost of creating,processing, distributing, storing, and retrieving paper-basedinformation.

3- Ability for creating highly specialized businesses.

4- Electronic commerce allows reduced inventories andoverhead by facilitating “pull”-type supply chainmanagement. In a pull-type system the process starts fromcustomer orders and uses just-in-time manufacturing.

5- The pull-type processing enables expensive customizationof products and services, which provides competitiveadvantage to its implementers.

6- Electronic commerce reduces the time between the outlay ofcapital and the receipt of products and services.

7- Electronic commerce initiates business processesreengineering projects. By changing processes, productivityof salespeople, knowledge workers, and administrators canincrease by 100 percent or more.

8- Electronic commerce lowers telecommunications cost-theInternet is much cheaper than VANs.

9- Other benefits include improved image, improved customerservice, newfound business partners, simplified processes,compressed cycle and delivery time, increased productivity,eliminating paper, expediting access to information, reduced transportation costs, and increased flexibility.

The benefits of EC to consumers are as follows:

1- Electronic commerce enables customers to shop or do othertransactions 24 hours a day, all year round, from almost anylocation.

2- Electronic commerce provides customers with more choices;they can select Electronic commerce frequently providescustomers with less expensive products and services byallowing them to shop in many places and conduct quickcomparisons.

3- In some cases, especially with digitized products, EC allowsquick delivery.4- Customers can receive relevant and detailed information inseconds, rather than days or weeks.

5- Electronic commerce makes it possible to participate invirtual auctions.

6- Electronic commerce allows customers to interact with othercustomers in electronic communities and exchange ideas aswell as compare experiences.

7- Electronic commerce facilitates competition, which results insubstantial discounts.

The benefits of EC to society are as follows:

1- Electronic commerce enables more individuals to work athome and to do less traveling for shopping, resulting in lesstraffic on the roads and lower air pollution.

2- Electronic commerce allows some merchandise to be sold atlower prices, so less affluent people can buy more andincrease their standard of living.

3- Electronic commerce enables people in Third Worldcountries and rural areas to enjoy products and services thatotherwise are not available to them.

4- This includes opportunities to learn professions and earncollege degrees.

5- Electronic commerce facilitates delivery of public services,such as health care, education, and distribution ofgovernment social services at a reduced cost and/or improved quality. Health-care services, for example, can reach patients in rural areas.

6- Expands markets from local to global

7-Reduces costs with telecommunications and physical maintenance

8-Minimizes resources used for storing physical receipts

9- Instant product updates, including descriptions and pricing 10- 24-hour store visibility to anyone with an Internet connection 11- Large portals enable large product bases, manufacturers and prices 12- Search utilities far surpasses the speed used to find products through catalogs 13- Encourages competition between small and large online retailers

4.2 limitations of E-commerce

The limitations of EC can be grouped into technical andnontechnical categories.

Technical Limitations of EC

1- There is a lack of system security, reliability, standards, andsome communication protocols.

2- There is insufficient telecommunication bandwidth.

3- The software development tools are still evolving andchanging rapidly.

4- It is difficult to integrate the Internet and EC software with

some existing applications and databases.

5- Vendors may need special Web servers and otherinfrastructures, in addition to the network servers.

6- Some EC software might not fit with some hardware, ormay be incompatible with some operating systems or othercomponents.As time passes, these limitations will lessen or be overcome;appropriate planning can minimize their impact.

NonTechnical Limitations

1- Cost and justification The cost of developing EC in-housecan be very high, and mistakes due to lack of experience mayresult in delays. There are many opportunities foroutsourcing, but where and how to do it is not a simpleissue. Furthermore, to justify the system one must deal withsome intangible benefits (such as improved customer serviceand the value of advertisement), which are difficult toquantify.

2- Security and privacy These issues are especially important inthe B2C area, especially security issues which are perceived tobe more serious than they really are when appropriateencryption is used. Privacy measures are constantly improved.Yet, the customers perceive these issues as very important,and, the EC industry has a very long and difficult task ofconvincing customers that online transactions and privacyare, in fact, very secure.

3- Lack of trust and user resistance Customers do not trust anunknown faceless seller (sometimes they do not trust evenknown ones), paperless transactions, and electronic money.So switching from physical to virtual stores may be difficult.

4- Other limiting factors. Lack of touch and feel online. Some

customers like to touch items such as clothes and like toknow exactly what they are buying.

5- Many legal issues are as yet unresolved, and governmentregulations and standards are not refined enough for manycircumstances.

6- Electronic commerce, as a discipline, is still evolving andchanging rapidly. Many people are looking for a stable areabefore they enter into it.

7- There are not enough support services. For example,copyright clearance centers for EC transactions do not exist,and high-quality evaluators, or qualified EC tax experts, arerare.

8- In most applications there are not yet enough sellers and buyers for profitable EC operations.

9- Electronic commerce could result in a breakdown of human relationships.

10- Accessibility to the Internet is still expensive and/orinconvenient for many potential customers. (With Web TV,cell telephone access, kiosks, and constant media attention,the critical mass will eventually develop.)

11-Credit Card security is a serious issue if vulnerable

12-Costs involved with bandwidth and other computer and server costs

13-Extensive database and technical knowledge and experience required

14-Customer apprehension about online Credit Card orders

15-Constantly changing technology may leave slow businesses behind

16-Some customers need instant gratification, and shipment times interrupt that

17-Search utilities far surpasses the speed used to find products through catalogs

18-Encourages competition between small and large online retailers

References

websites :

http://www.tamingthebeast.net/articles/ecommerce.htmhttp://en.wikipedia.org

science direct database

E-Commerce: Fundamentals and Applications England: John Wiley & Sons

Contact me : hany_hagr40@yahoo.com