Basic Understanding of E-Commerce

Simply put, E Commerce is ‘Using Electronic Platform for Business Transactions’. It is also called a ‘Virtual Market Place’. Every minute millions of people from all over the world are logging into the Internet looking for some information, for product, services, to look for news, download music, for online shopping and so on. Every individual is looking for something that he would like to obtain or buy online instead of having to go through a physical transaction. Imagine what this means to the business organisations. If they are able to identify and access those individual users who have a specific need or want, they have a ready customer in waiting.

One could wonder whether it is the online community or the technology that is paving way for E Commerce. The answer is that both these factors are driving the E Commerce. The technological developments are providing the backbone for business transactions to take place and the growing volumes of users buying online is making it possible for E Commerce and markets to grow.

E Commerce is characterized by Business to Business and Business to Customer business models. We are very familiar with the Business to Customer model for banking; insurance as well as online shopping, online booking etc that have become very popular and accepted modes in our daily lives.

On the B to B front too, business organisations have re-engineered their Business processes including Advertising, Marketing, Sales Order Management besides Supply chain management and Customer Relationship management to suit the E Commerce mode.

Dell has successfully adapted ‘online selling’ model on a global scale. It allows the customers to ‘configure the model’ and to ‘Order Online’. Once the transaction has been successfully carried out and payment has been received, Dell executes the order and ensures that the DELL Products are delivered at the Customer’s door step within seven working days.

DELL has not only used E Commerce successfully as its major selling channel, but at the backend they have put in place ‘Built to Order’ process where in the Computer is assembled against the specific customer order and is delivered to the customer. By integrating E Commerce and its Manufacturing process, DELL has managed to do away with holding inventories and managed to bring its costs down.

E Commerce has become a major business process for Global organisations and Multi National Companies. Most MNCs depend upon ‘Online selling ‘as well as ‘Online Procurement’ on global scale.

E Commerce has made it possible for them to access global markets as well as source raw materials from across the world. Besides, E Commerce has brought down the cost of selling as well as cost of procurement drastically adding to the bottom line.

In the consumer world, Insurance, banking, airlines and hospitality sectors have stood to benefit from E Commerce model of selling.

E Commerce is a reality. Several multiple technologies, platforms, agencies and networks make it possible for E Commerce to happen. EDI and Online banking and transactions have been the major enablers that have made it possible for business transactions to take place.

It is simply amazing to think that with the click of a button one can buy, sell or affect financial transactions worth millions of dollars in a few minutes. However this is true and E Commerce is the future.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.