MECHANICS AND FUNCTIONALITY

IN E-COMMERCE

Contents
Introduction..........................................................................................................................2
Mechanics - How eCommerce works..................................................................................3
Functions of Ecommerce.....................................................................................................5
Benefits Of Ecommerce.......................................................................................................5
Basics Of Ecommerce Website Development.....................................................................7
Selecting a Right Ecommerce Shopping Cart Software..................................................7
Conclusion...........................................................................................................................9
 Introduction

The cutting edge for business today is Ecommerce. Broadly defined Electronic
Commerce is a modern business methodology that addresses the needs of organizations,
merchants, and consumers to cut costs while improving the quality of goods and services and
also increasing the speed of service delivery. More commonly, e-commerce is associated with
the buying and selling of information, products, and services via computer networks today and in
the future via any one of the myriad of networks that make up the Information Superhighway (I-
way).
The traditional business environment is changing rapidly as customers and businesses
seek the flexibility to change trading partners, platforms, carriers and networks at will. Many
companies are looking outside their organizations as well as within when shaping their business
strategies. These activities include establishing private electronic connections to consumers,
suppliers, distributors, industry groups and even competitors, to increase the efficiency of
business communications, to help expand market share, and to maintain long term viability in
today's business environment. The Information Superhighway has been able to expand this trend
to another level altogether. It allows businesses to exchange information among constantly
changing sets of customers, suppliers and research collaborators in government and academia on
a global basis. It will indeed become a powerful business tool that no organization can do
without.
In the good old days, business was pretty simple. I had a pig, you had some wool; we
showed up at the market and haggled, then I went home to knit a cardigan while you fired up
some barbecue.
Nowadays we don't have to show up at the market, and we don't even need physical
goods or currency to conduct business. Ecommerce is the most recent step in the evolution of
business transactions. It replaces (or augments) the swapping of money or goods with the
exchange of information from computer to computer.
Within a few years, Internet has turned businesses upside down, be prepared or die. This
might seem like an over-hyped statement – but it is not. If we look around, even today, the
Internet is fundamentally changing the way companies operate – from conducting business
internally to conducting business with trading partners. Entirely new companies and business
models are emerging. It is helping companies to lower costs dramatically across their supply and
demand chains, take their customer service into a different league, enter new markets, create
additional revenue streams and redefine their business relationships. If a company does not use
the Internet to do any or all of these things in the near future, it will be destroyed by competitors
who are leveraging the power of the Internet to conduct business, which literally means e-
commerce or electronic commerce is the most crucial reality of today’s business scenario.
Electronic commerce, or e-commerce, is a very broad term. E-commerce conducted
between businesses differs from that carried out between a business and its consumers. For
business-to-consumer e-commerce, the Web has become the dominant pipeline. Think
Amazon.com. The Company offers lots of books for sale on its Web site. Consumers find what
they like, type in their credit card number and unpack the books a few days later. Conducting
individual stock trades, moving money from checking to savings or tracking an overnight
package delivery via the Internet are other examples.
Business-to-business e-commerce takes many forms, some of which have been around
for years. Electronic data interchange (EDI) is a format for exchanging business information over
private networks. It was created to automate and speed the exchange of information between
companies that regularly did business together. For example, on Tuesday your computer can
automatically tell my computer that you've shipped the 500 pallets of wool I ordered. Then on
Wednesday my computer acknowledges your shipping confirmation and tells you that I'll mail
you a few thousand pigs on Thursday. No money actually changed hands electronically here but
plenty of business data did. If your business and my business do transactions like this often, the
automated system beats having our clerks stand by the fax machine every day and then retype the
information they receive into our respective computer systems.
EDI is still used, and there are many other mechanisms for business interaction, such as
electronic catalogs and electronic payment systems. The Web plays an expanding role just as it
does in consumer e-commerce. For instance, you might let your office-supply provider put an
ordering page on your intranet.
Electronic Commerce is one of the most important aspects of the internet to emerge. It
allows people to exchange goods and services immediately and with no barriers of time or
distance. Any time of the day or night, you can go online and buy almost anything you want.

Mechanics - How eCommerce works

The consumer moves through the internet to the merchant's web site. From there, he
decides that he wants to purchase something, so he is moved to the online transaction server,
where all of the information he gives is encrypted. Once he has placed his order, the information
moves through a private gateway to a Processing Network, where the issuing and acquiring
banks complete or deny the transaction. This generally takes place in no more than 5-7 seconds.
There are many different payment systems available to accommodate the varied
processing needs of merchants, from those who have a few orders a day to those who process
thousands of transactions daily. With the addition of Secure Socket Layer technology,
eCommerce is also a very safe way to complete transactions
There are several basic steps involved in becoming Commerce Enabled.
 Getting an Internet Merchant Bank Account
In order to be able to accept credit cards over the internet, you must apply to your bank
for an Internet Merchant Bank Account. This can be relatively easy or somewhat difficult,
depending on which country you live in and what bank you are with.
In the US, this is a fairly simple procedure. Many banks offer Internet Merchant
Accounts, and most Online Transaction Providers will support them.
Since the vast majority of Online Transaction Providers are located in the US and are
restricted in their ability to interact with banks outside their own country, international merchants
have very little choice. An international merchant has to find a way to get a US merchant
account, embark on the equally difficult task of finding a local Online Transaction Provider, or
utilise one of the few companies that services the international market. Also, many banks outside
the US have very restrictive policies regarding internet accounts. Luckily, the situation is
improving, and most Online Transaction Providers will help you with this if you get in touch
with them.
 Web Hosting
Web hosting is a very important step in this process, as this is how you gain a presence
on the internet in the first place. It is important that the web hosting company is capable of
providing you with the level of service that you need to maintain your Web Store. A few things
to look for are:
o Good uptime
o Good technical support
o Fast connection to the Net
o Staff that is knowledgable about eCommerce
o Compatibility with major eCommerce providers
It is always good to spend some time when choosing a web hosting company, as there are
many 'fly-by-night' businesses out there. For the money you're spending, make sure that the
company is reputable.
 Obtaining a Digital Certificate
A digital certificate, also known as a SSL Server Certificate, enables SSL (Secure Socket
Layer encryption) on the web server. SSL protects communications so you can take credit card
orders securely and ensure that hackers cannot eavesdrop on you. Any eCommerce company will
require you to have SSL before you can use their services. Thankfully, for most people obtaining
a digital certificate is not a problem. For a minimal fee, one can usually use the certificate owned
by the web hosting company where your page resides. Larger company, however, may want to
get their own digital certificate.
 Finding a Provider of Online Transactions
Before you start looking for a provider, you should stop for a moment and consider what
exactly you need. How many transactions do you expect to be completing in a month? How
many products do you have to put on your web site? How complex does the software need to be?
How much are you willing to spend?
 Creating or Purchasing a Shopping Cart Software
Shopping cart software is an operating system that can be used to allow people to
purchase items, keep track of accounts and tie together all of the aspects of your eCommerce site
into one cohesive whole.
While there are many other types of software that you can use in it's place, such as
catalog software or a flat order form, shopping cart software is the most popular and the most
widely known.
Many Online Transaction Providers will have shopping cart software that comes with
their service, but it can often be very expensive, so be warned. If you cannot afford to spend at
least a couple of hundred dollars on this software, you should be looking for a package that
offers it as a rental included in the monthly service charge, or one that offers a simple flat order
form.

Functions of Ecommerce

Web applications implement the functions of electronic commerce: the customer

touching marketing, shopping, ordering, fulfillment, and customer service business processes for
B-to-B and B-to-C applications.
 Business to Consumer Ecommerce
Business-to-consumer (B-to-C) electronic commerce is online retailing or e-tailing. It
involves consumers shopping for and buying personal and household products. It involves
merchants using electronic marketing and merchandising techniques to attract and retain
customers as well as to promote products and services to them.
 Business to Business Ecommerce
Business-to-business (B-to-B) electronic commerce covers a broad range of business
activities. For example, B-to-B systems exchange business documents, such as purchase orders
and invoices, between pairs of partners in a supply chain. They may implement a virtual
marketplace (e-marketplaces or exchanges), wherein a single large manufacturer can consolidate
the purchase of the goods that are the input to its manufacturing process from many smaller
companies. Such a marketplace may enable a large retailer to purchase the goods that it sells in
its stores. Or, marketplaces can become trading marts or exchanges for commodity products or
the range of products of a given type or associated with a particular industry segment. B-to-B
systems also automate the purchase of goods that support businesses’ maintenance, repair, and
operation (MRO).

Benefits Of Ecommerce

E Commerce is one of the most important facets of the Internet to have emerged in the
recent times. Ecommerce or electronic commerce involves carrying out business over the
Internet with the assistance of computers, which are linked to each other forming a network. To
be specific ecommerce would be buying and selling of goods and services and transfer of funds
through digital communications.
Ecommerce allows people to carry out businesses without the barriers of time or distance.
One can log on to the Internet at any point of time, be it day or night and purchase or sell
anything one desires at a single click of the mouse.
The direct cost-of-sale for an order taken from a web site is lower than through traditional
means (retail, paper based), as there is no human interaction during the on-line electronic
purchase order process. Also, electronic selling virtually eliminates processing errors, as well as
being faster and more convenient for the visitor.
Ecommerce is ideal for niche products. Customers for such products are usually few. But
in the vast market place i.e. the Internet, even niche products could generate viable volumes.
Another important benefit of Ecommerce is that it is the cheapest means of doing
business.
The day-to-day pressures of the marketplace have played their part in reducing the
opportunities for companies to invest in improving their competitive position. A mature market,
increased competitions have all reduced the amount of money available to invest. If the selling
price cannot be increased and the manufactured cost cannot be decreased then the difference can
be in the way the business is carried out. Ecommerce has provided the solution by decimating the
costs, which are incurred.
From the buyer’s perspective also ecommerce offers a lot of tangible advantages:
 Reduction in buyer’s sorting out time.
 Better buyer decisions
 Less time is spent in resolving invoice and order discrepancies.
 Increased opportunities for buying alternative products.
The strategic benefit of making a business ‘ecommerce enabled’, is that it helps reduce
the delivery time, labor cost and the cost incurred in the following areas:
 Document preparation
 Error detection and correction
 Reconciliation
 Mail preparation
 Telephone calling
 Data entry
 Overtime
 Supervision expenses
Operational benefits of ecommerce include reducing both the time and personnel required
to complete business processes, and reducing strain on other resources. It’s because of all these
advantages that one can harness the power of ecommerce and convert a business to ebusiness by
using powerful turnkey ecommerce solutions made available by ebusiness solution providers.
 Basics Of Ecommerce Website Development

Any ecommerce web site acts as the online storefront for the products and services you
wish to sell online. Your website visitors are, for the most part, window shoppers and browsers.
An ecommerce web site's aim is to convert these browsers into buyers.
Some of the important things to remember while developing the content for a website or
while carrying out website design are:
 The website should have a format which maintains a smooth flow of text which
leads the visitor to the appropriate page.
 There is also the need to take care that the site has an ample number of web pages,
which keeps the visitor as well as the web spiders interested.
 The website content development should be done in such a way that the website
content is keyword rich and key phrase rich.
 The web pages on the website should have a multi-browser capability i.e. they
should open up in Internet explorer with the same ease as they are able to open in
Opera.
It is important that all of the website pages in a website are thoroughly linked together.
How we link them together can have an influence on ranking of our website. In general it is
better to use text links over graphic button/image links. The reason being that we can include a
keyword in the link text (aka anchor text). Adding a keyword in the link text provides a ranking
boost for the linked page amongst many search engines
Images are an effective 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.
Apart from the points mentioned above, it is imperative that an ecommerce website offers
absolute security for the transactions that are carried out using credit cards. For the success of
any ecommerce website it is necessary that a proper choice of payment gateway is made. A
payment gateway is a separate service and acts as an intermediary between the website’s
shopping cart and all the financial networks involved with the transaction, including the
customers' credit card issuer and the ecommerce website. If the ecommerce website has already
purchased an shopping cart software, it needs to ensure that the payment gateway service is
compatible with that shopping cart.

Selecting a Right Ecommerce Shopping Cart Software

Basically an ecommerce-shopping cart is a series of scripts that keep track of items a

visitor picks to buy from your site until they proceed to the "checkout”. A popular misconception
is that online shopping carts handle the whole financial transaction, but they only really act as a
front end which passes sensitive information like the credit card number via a secure connection
to a payment gateway.
 The payment gateway service then channels the requests and transfers it throughout
relevant financial networks and sends back confirmation or denial back to the shopping cart
software.
There are a number of points that one should consider before selecting a shopping cart:
 The e-commerce shopping cart should be compatible with the payment method.
There are dozens of different payment gateways, which plug into various
shopping cart packages, so one needs to make sure if the shopping cart that has
been selected is compatible with the right payment method. One should check out
what kinds of payments are supported by the ecommerce shopping cart. In today’s
virtual world credit cards have become the most widely accepted method of
payment. So one needs to make sure that the shopping cart solution supports
credit card payments. It is also essential that the shopping cart, which is selected,
accepts payment in multi-currencies, so as to enable the site to serve customers
around the globe. The shopping cart must also be able to offer various payment
options apart from payment using credit cards to the client like payment by
cheque or payment on delivery.
 The shopping cart should also be compatible with the hosting service. The
shopping carts are coded in various coding formats like Perl, Asp etc so one must
make sure that the cart that one selects is compatible with the hosting service.
 Security is the most essential feature for any ecommerce shopping cart software.
A secure shopping cart normally will have a firewall, which safeguards it against
any intruders. Apart from this the shopping cart should also have an excellent
connectivity. Excellent connectivity ensures that the transactions carried out are
executed efficiently and smoothly.
 A good shopping cart application will have excellent support for backing up files
and allowing for export into a variety of formats. This will take care of disaster
management.
 Finally and most importantly one should check out if the shopping cart fits ones
budget.
 Conclusion

eCommerce can be a very rewarding venture, but it should not be undertaken lightly.
There is a lot of information to absorb. Here are some additional tips on creating a successful
Online Store:
 If you know nothing about web design, it is probably a good idea to hire a
designer.
 Marketing your site is very important on the web. Here are some useful tips:
 Submit your site to as many search engines as possible.
 Try finding web sites with similar themes and make deals to create reciprocal
links.
 Create an advertising banner and purchase space from a popular website to
display it.
 Put your URL in the signature file of your email and the header of all business
correspondence.
 Word of mouth is very powerful on the Net; tell all of your friends about your
page.
 Avoid spamming - it is a sure way to get a very bad reputation.
 Investigate the web sites that are possible rivals and formulate a strategy for
competing against them.
 If you anticipate a lot of growth in the amount of orders coming through your site,
figure out how you are going to cope with the increased load before you get
swamped.