Electronic Commerce

What is e-Commerce?

Electronic Commerce (e-Commerce) is the use of electronic communication to do business. It may be used to carry out business-to-business (B2B) or business-to-consumer (B2C) transactions.

The real benefit of e-Commerce is not that it makes old processes work better but rather it provides a means to break with tradition and create new ways of doing business. For example, using the Internet will allow some businesses to remain small while building a larger turnover by reducing the cost of doing business. For example, a greengrocer provides a service for people to order fruit and vegetables over the Internet and to have those items delivered at a cost competitive price, as a consequence people who would not normally shop in that area have become a burgeoning market.

The Internet is now a valuable communication tool which offers small business a great opportunity to market itself internationally and reach a global client base.
The best e-Commerce solution is dependent on the type of data trading partners need to exchange to run their businesses effectively. It is important to focus on the business process rather than the technical issues such as hardware and software. Different e-Commerce tools are suited to different business objectives and different trading partners.

Types of Electronic Commerce

Electronic Commerce is best understood by looking at who is talking to whom and what technology they are using. Using this definition there are four fundamental types of e-Commerce:

  1. Person-to-person, which includes telephone, fax and e-mail. The key issue for this type of communication is that the data is unstructured and provides flexibility. However, if data has to be processed, then it is necessary to re-key it into a computer which takes an operator time, introduces delays and the possibility of entry error.

  2. Computer-to-computer, which includes Electronic Data Interchange (EDI) transmissions, as well as smartcards and barcoded data. For this form of communication to be successful, the data transfer format must be to an agreed standard.

  3. Person-to-computer, which includes electronic forms and the Internet, and also Interactive Voice Response (IVR) to telephone services. Examples of this form of communication might be people paying their accounts using IVR or ordering a product on the Internet using an electronic form. This form of communication is only suitable where there are small amounts of data to be input and there are only a small number of options to choose from.

  4. Computer-to-person, which includes computer-generated faxes, e-mail and paper mail. Although the data in these messages is sourced from a computer database and is sent automatically, the end result is that it must be in a form which is understandable to a person who will read and act upon it.

Benefits of Electronic Commerce

e-Commerce can provide the following benefits over non-electronic communication:

  • Reduced Costs - Reduced labour, reduced paper, reduced errors in keying in data, etc.
  • Reduced Time - Shorter lead times, faster delivery of product.
  • Flexibility with Efficiency - The ability to handle complex situations, product ranges and customer profiles without the situation becoming unmanageable.
  • Enhanced Long Term Trading Partner Relationships - Improved communication between trading partners leads to enhanced long-term relationships.
  • Lock in Customers - The closer you are to your customer and the more you work with them to change from normal business practices to best practice Electronic Commerce, the harder it is for a competitor to upset your customer relationship.
  • New Markets - The Internet has the potential to expand your business into wider geographical locations. However, it is necessary to develop the appropriate production capacity and distribution channels to support market demands generated by promoting your business to a larger marketplace.

e-Commerce, a Business or Technical Issue

The biggest mistake made by companies implementing e-Commerce is to focus solely on technical issues. The most successful e-Commerce users are those who are re-engineering their businesses to take advantage of the available technology and not falling into the trap of buying in technology that may not fit their business methods, skills or customer interactions.

Basic Steps to Expand Your e-Commerce Capability

It is a good idea to stage the implementation of e-Commerce so that the business and its employees learn to handle the changing way of doing business.

  1. Use e-mail to replace fax. E-mail is faster and more responsive than fax. It is possible to transmit whole documents by e-mail which can then be edited elsewhere.

  2. Use Internet to locate useful business information. There is a huge range of useful information potentially available for free. Refer to the Department of State and Regional Development's website www.business.nsw.gov.au and diskette "Guide to International Market Research on the Internet for NSW Exporters" as starting points.

  3. Provide access to company information on a website. Customers can obtain up-to-date information and the need to print brochures is reduced.

  4. Set up company Intranet. Provides access to important company information to all employees.

  5. Carry out business transactions over the Internet. There is the potential to improve access to a larger market and improve business efficiency.

  6. Use business-to-business EDI. More accurate, timely and efficient transfer of information.

Ask for Help

This is only a brief outline of Electronic Commerce. If you need further assistance you may call your local Business Enterprise Centre (BEC) or visit the Australian Electronic Business Network website www.ause.net.

Better Business Tip

Are you online often? If so, don't forget to use online directories such as the Yellow and White Pages. They can save you time and a small fortune in directory assistance phone calls. Online banking is an excellent way to pay bills and online Government information services are a boon for small business.

This article brought to Perry Ure clients by the
NSW Department of State & Regional Development.


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