Electronic Commerce is not a completely new phenomenon, as companies have exchanged business data for many years by using different communication networks. In modern business the barriers between the company and its customers and suppliers are lowering very fast. Business processes are being reengineered so that they cross the old boundaries. As Internet is growing rapidly, e-commerce is no longer limited to big companies, but to everyone around the world. Driven by this Internet revolution, e-commerce is dramatically expanding and undergoing radical changes. So what exactly is electronic commerce?

What is e-commerce?

There is no universally accepted definition for e-commerce so far. One possible definition of electronic commerce at the simplest level is doing business through electronic media rather than rational media. It is doing business on the web. It is a technology for change. It enables companies to be more efficient and flexible in their internal operations, to work closely with their suppliers, and to be more responsive to the needs and expectation of their customers.

Those who are familiar with traditional electronic data interchange (EDI) systems may be questioning what makes electronic commerce different from the EDI systems that have been in place for the past three decades. There is no doubt that EDI was an early form of e-commerce. EDI is a subset of electronic commerce. It was business-to-business and application-to-application, so it had none of the interactivity that you see in today's e-commerce. The relatively smooth EDI to web based EDI as is happening today is another indicator that EDI is electronic commerce. Even more interesting, there is a lot of reinventing of the wheel in today's e-commerce. Many of the legal and security issues that are at the centre of attention in global policy discussions were already explored in EDI days.

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Three pillars of e-com

Electronic information, electronic relationships, and electronic transaction are the three main pillars of e-commerce. Electronic information can be viewed as documents and multimedia data in a web readable format. The central pillar, electronic relationship is about building a site that has the feeling of being a port of entry onto the community. A differentiating feature of e-commerce from other medium, such as print and broadcasting, is that is interactive. The third pillar, the electronic transaction pillar, is the virtual distribution space. And the foundation of the pillars is the existing market space.

Scope of e-com

Scope of electronic commerce as a general concept covers any form of business transaction that is conducted electronically, using telecommunication networks. Such transactions occur between companies, between companies and their consumers or between companies and public administrations. Electronic commerce encompasses a broad range of activities. The core component is addressing the commercial transaction cycle. Electronic commerce includes electronic trading of physical goods and services and of electronic material. In upstream and downstream of the transactions, it also includes the advertising and promotion of the products and services, the facilitation of contracts between traders, the provision of market intelligence, pre- and post-sales support, electronic procurement and support for shared business processes. Reduced advertising costs, reduced delivery cost, notably for goods that can be delivered electronically, reduced design and manufacturing cost, improved market intelligence and strategic planning, more opportunity for niche marketing, equal access to markets, access to new markets, customer involvement in product and service innovation are some of the examples of specific business benefits of electronic commerce.

Scope of electronic commerce

E-commerce encompasses all manner of commerce, including Business-Business, Business-consumer, Consumer-Consumer, Business-Administration, Consumer-Administration.

In the business-business (B-B) category one business sells to other business, like a manufacturer selling to distributors. This category of electronic commerce has been well established for several years, particularly using Electronic Data Interchange (EDI) over private or value-added networks.

The business-consumer (B-C) category is quite new, largely equates to electronic retailing, is like traditional business selling to a multitude of customers. This category has expanded generally with the advent of the World Wide Web. There are now shopping malls all over the Internet offering all manner of consumer goods, from cakes and wine to computers and motorcars.

The business-administration category covers all transactions between companies and government organisations. Currently this category is in infancy, but it could expand quite rapidly as governments use their own operations to promote awareness and growth of electronic commerce. The Consumer-Administration category has not yet emerged

And finally there is Consumer - Consumer (C-C), where one consumer can buy and sell from and to others. A typical example is an auction site like ebay.com. This is also in its infancy state. You will find B-B e-commerce is four times larger than B-C because of its main success of cutting costs.

There are various "levels" at which electronic commerce can be conducted, ranging from a simple network presence to electronic support for processes that are jointly owned and enacted by two or more companies. Electronic commerce is essentially global in concept-but rather legislative. Electronic commerce is more complex in international level than the intra-national level because of such factors as taxation, contract law, customs payments, and differences in banking practices. The lower levels of electronic commerce are concerned with basic network presence, company promotion and pre-and post-sales support.

Impact of Electronic Commerce

Electronic commerce is not some futuristic dream. Its still on the ascend, and more and more business are getting web enabled. It is happening fast. And, with maturing of EDI and the rapid growth of Internet and the World Wide Web, it is accelerating. The impact of electronic commerce is pervasive, both on companies and on society as a whole. For those companies that fully exploit it's potential, electronic commerce officers the possibility of breakpoint changes-that so radically alter customer expectations that they redefine the market or create entirely new markets. All other companies including those that try to ignore the new technologies. Will then be impacted by these changes in markets and customer expectations. Equally, individual members of the society will be presented with entirely new ways of purchasing goods, accessing information and services, and interacting with branches of government. Choice will be greatly extended, and restrictions of geography and time eliminated. The overall impact on lifestyle could well be comparable to, say, that of the growth in car ownership or the spread of the telephone.

Electronic commerce offers several opportunities to suppliers and commensurate benefits to customers as summarized in table 1. These include: Global presence/global choice because it is not defined by geography and national borders, but coverage of computer networks; global competitiveness/quality of service; mass customisation/personalized products and services to individual needs; shorten or eradicate supply chains/rapid response to needs; substantial cost savings/price reductions and novel business opportunities/new products and services.

There are well established examples of electronic commerce in a wide range of industry sectors and application areas such as hdfc.com in financial sector, oracle.com in distribution sector, hp.com post and pre sales support, the hindu.com in publishing , ebay.com in auctions, etc.

Table 1 Opportunities and benefits

Privacy and security

Electronic commerce over open networks demands effective and trusted mechanisms for privacy and security. These mechanisms must provide for confidentiality, authentication (i.e. enabling each party in a transaction to ascertain with certainty the identity of the other party), and non-repudiation (i.e. ensuring that the parties to a transaction cannot subsequently deny their participation). Since the recognized privacy and security mechanisms depend upon certification by a trusted third party (such as a government body), global electronic commerce will require the establishment of a global certification system.

BUZZWORDS THAT ARE INTEGRAL PART OF E-COMMERCE 

Cryptography

Cryptography is a method of mathematical encoding used to transform messages into an unreadable format in an effort to maintain confidentiality of data. The encryption process transforms a clear text message into a non-decipherable form known as cipher-text. And decryption keys are necessary to transform clear text into cipher text and vice-versa. Good encryption methods mask the underlying message, and deciphering a well-encoded message should be virtually impossible without the decryption key. The larger the key size, the stronger the encryption process. Because of the inability to decipher well-encoded messages, government bodies and law enforcement agencies are very concerned with issues surrounding the length of the key. 128-bit encryption keys are virtually unbreakable. It is estimated that a 64-bit coded message could be broken in less than 34 days while a 128 Bit coded could take more than 2000 years to break the code. Thus the demand for strong encryption products by business engaged in any form of electronic commerce is great.

Electronic Agreements and Digital Signatures 

Traditionally, legal agreements have been made in a written, hard copy format that bears the handwritten (or equivalent, such as thumb or footprint) signatures of the parties involved. Transactions conducted on the Internet typically in real time. Thus, new methods of delivering enforceable legal agreements (contracts) and producing valid signatures in a digital format are necessary for most aspects of completing electronic sale transactions. The delivery of electronic legal agreements on the Internet is typically via an electronic form with a delivered statement that user (signer) reads and "clicks" on an "I Accept" button. The clicking of an "I Accept" button is not considered to be a sufficient legal signature by many members of the legal profession because it lacks some formal requirements necessary for a signature to be enforceable in a court of law, especially for negotiated contracts that may be reasonably expected to go through a few iterations of revisions before finally signing.

Digital signatures are designed to bind the message originator with the exact content of the message. The sender uses his private key (which contains binary code used to mathematically transform the message) to compute the digital signature. The recipient uses the sender's public key to decrypt the message.

Firewalls 

The term "firewall" is borrowed from the construction industry. If a fire breaks out in a section of the building, these walls retard the spread of the fire to other locations. In regard to networking, firewalls provide similar controls-they can allow employees on a corporate network to access resources on other networks (such as the Internet) and preventing unauthorized users on these other networks to access to access to systems on the corporate network. A firewall can be defined as "a system or group of systems that enforces an access control policy between two networks".

Firewalls should be used as component of enterprise security, not as the only solution. While firewalls provide a robust set of controls, they are not foolproof, and an organization that relies solely on firewalls for network security is turning a blind eye to many exposures that firewalls do not address.

The SET/SSL Protocol 

The Secure Electronic Transaction (SET) protocol was developed jointly by Master Card, VISA with the goal of providing a secure payment environment for the transaction of the credit card data. Secure Socket Layer (SSL) is designed to establish a secure connection using private key encryption. Both protocols provide confidentiality of data transmitted over the Internet such as credit card account information via encryption.

Electronic Cash

The primary payment mechanisms for the traditional commerce are cash. Cheques, credit cards, debit cards, and electronic fund transfer are the payment mechanism used in e-commerce. Electronic cash is a term that is used to refer to a prepaid, stored value that can be sued for electronic purchases in lieu of cash. By this broad definition, payment mechanisms such as magnetic strip cards, smart cards and even electronic cheques can be classified as forms of electronic cash. Electronic cash is a form of stored value that is easily exchangeable in an electronic format and is tamper-resistant.

Smart Cards

A smart card is a small plastic card that looks similar to a credit card. But it contains a microprocessor and a storage unit. Smart card technology is an innovation that overcomes most of the limitations mentioned in the previous section to which magnetic strip cards are susceptible, however, they are more expensive to issue. The stored data is not externally exposed to physical damage, such as scruffs and scratches, and it is not vulnerable to damage from the magnetic fields. Further, smart cards can store at least 100 times more data than magnetic strip cards. Smart cards can be divided into two categories; memory smart cards and intelligent smart cards. Memory smart cards contain less information and processing capabilities than intelligent smart cards, they are typically used to record a monetary or unit value.

Electronic Cheques

Another mechanism for Internet payment is electronic cheques. With electronic cheques, the payer (either an individual consumer or a business) instructs his financial institution to pay a specific amount to another part, the payee.

Electronic Commerce Markup Language (ECML)

ECML, a new universal format for online checkout from data fields, was announce in June 1999. ECML provides a simple set of guidelines for web merchants that enable digital wallets from multiple vendors to automate the exchange information between consumers and merchants. The end-result is more consumers will find shopping on the web to be easy and compelling. Founding members that comprise the ECML Alliance Steering Committee are: America Online, American Express, Brodia, Compaq, CyberCash, Discover, FSTC, IBM, Master Card, Microsoft, Novell, SETCo, Sun Microsystems, Trintech and VISA.

Portal

Portal is a personalised single point of interaction in the WWW with relevant applications and information internal and external to the company. Portals provide numerous benefits to users through easy to use and easy to customize web browser interface. Portals provide broad access to different kids of information from a variety of sources such as customised news, stock quotes, etc. the users can search the site by category, subscribe to new content query and analyse information and develop and execute plans. Enterprise portals also alert users via email, pager, phone, etc. when new information to which they have subscribed is available. Yahoo.com is an example of a portal. Portals are available for business as well, for example, WINnet's e-commerce portal is exclusively designed for B-B commerce. 

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