The market for information technology electronic commerce (E-commerce) is changing rapidly, courtesy recent developments in Internet technologies and the changing requirements of clients. Strategic challenges exist for all market participants as companies compete for position in the delivery of a variety of goods and services.
However, one constant remains: clients attempt to speed up the delivery of their core products and services while controlling the costs associated with operations. Industry professionals believe that this can be done by using the Internet as an advertising medium or as a distribution channel.
E-commerce customers have tried to maximise effective use of the Internet, specifically the world wide web (WWW). Many clients have attempted to use E-commerce services, which may not be appropriate for all businesses. Their usage depends on the logical fit of the client's business and other factors.
Two groups have accepted the Internet as a mode for selling goods: early adopter end-users of the Internet and progressive companies with sales organisations that are gearing to or have already targeted this group. The Internet must find a wider base before mainstream companies, as opposed to leading-edge firms, adopt internet E-commerce as part of sales and promotion strategies. This is the segmented internet E-commerce market as understood by Frost & Sullivan.
Internet E-commerce services marketThe business community understands e-commerce in varying ways, as it is too new a technology to have a standard definition. E-commerce as defined by Frost & Sullivan includes Internet transactions, advertisements on the Net, certain forms of network E-commerce, point-of-sale network, some computer-to-computer transactions and, some forms of electronic transfer of funds.
E-commerce also includes the sale of information technology (IT) hardware, software, services that assist companies in the development, maintenance and, administration of an E-commerce presence. To date, making product and service information available has been the most lucrative of all these.
The initial idea was that E-commerce would entail orders and exchange of funds using the Internet as the pipeline. However, this has not proven to be the case for many reasons. The greatest global concern regarding the exchange of funds over the Net is security. Secure Internet trading is the "Holy Grail" of vendors, who see lack of consumer confidence as the biggest obstacle to the e-commerce revolution.
To overcome this, vendors are offering proprietary solutions involving software keys and hardware devices. Many have developed software solutions to thwart unauthorised access and use of transaction content such as credit card numbers. Other firms have developed hardware solutions they believe as the best method for securing electronic transactions. As these and other tools are implemented, security should become less of an issue.
Simultaneously, the industry in general is working on a public key initiative (PKI) on these areas. Major companies are also investing in secure electronic trading (SET) and secure sockets layers (SSL) as standards to provide secure browser technology. General industry consensus suggests that secure Internet trading will "soon" be possible. Skeptics, though, point out that no software protocol is totally safe. One or two high-profile fraud cases will destroy confidence much faster than it is built up.
Another concern for some is the perception that the end-users have about E-commerce. End-user perceptions could promote or hinder the growth and acceptance of Internet E-commerce. The view that the Web is not a secure environment for monetary transactions is likely to change dramatically in a short time, due to efforts by credit card, smart card and other companies to dispel this perception.
Internet-based E-commerce is perhaps the most discussed topic in European business circles. In its various forms it threatens to change the business paradigm, in Europe and globally, in the foreseeable future.
E-commerce is perhaps the most important change in recent history in the way in which companies conduct business. Consider the way in which the fax machine transformed telecommunications. At first, telephone companies believed that the fax would make letters redundant. But soon it became clear that facsimile, letters and voice were all part of the communication media.
The Internet is a new medium, one that offers images, sound, video and text at a speed comparable to, or faster than a fax machine. Its potential is greater, offering cheap video conferencing, cheap international telephony and interactive customer communication in real-time over vast distances.
Understanding the implications of the Internet and e-commerce has never been more important.
For businesses, the main advantages are cost saving and enhanced customer communications. An e-commerce solution provides better opportunity to develop a personal relationship with the customer, at a lower cost compared to the conventional media. For marketers, it is very close to the ideal of "individual customer segments".
Internet growth is fundamental to the development of consumer e-commerce markets. Frost & Sullivan 1996 estimates put European e-commerce transactions at around $5.5 million, which grew to $128.2 million in 1998. By end 2000, this is expected to touch around $727.6 million.
E-commerce in the Asia-Pacific region is still in its infancy. However, success of this new business medium is expected to spur the development of this market in Asia. Australia, Hong Kong, Malaysia, New Zealand and Singapore are expected to be the first in the Asia Pacific region to show rapid growth in E-commerce.
Others including Indonesia, the Philippines and, Thailand are witnessing a growing interest in this new electronic based platform. But rapid progress is largely dependent on the development of telecommunications, IT, infrastructure sectors and, liberalisation of the regulatory environment.
Asian countries are either still setting up or have recently set up a framework for e-commerce transactions. These include having in place a security, legal and, regulatory framework to govern the electronic marketplace. However, there are other issues too which need to be addressed before e-commerce gets widely adopted.
Respective governments and private companies in these countries are aggressively trying to catalyse e-commerce. IT integration and use significantly enhances a country’s and company’s competitiveness in the global marketplace.
Asia is the world’s rmanufacturing base, making it the ideal region for e-commerce. Dominance of the western world in the international marketplace further emphasises the importance of e-commerce in facilitating a level playing field for Asian companies. This has sunk in gradually. The economic crisis had impeded IT investments. But 1999 is expected to witness a resurgence in investments fueling growth in the IT industry.
The Indian e-commerce market is still nascent. Also, there are multiple socio-economic, political and, cultural factors impeding growth. Offering banking services could be one of the more potential areas for e-commerce. It is happening now. So far banks have been used by customers for the limited purposes of crediting their salaries only.
Internet banking may open up avenues for banks to serve their customers better, understand their needs, customise and fine-tune their offerings and develop a closer customer-relationship than in traditional banking. The few banks offering electronic banking services will benefit from the first-mover advantage.
Not only is Internet banking creating a ‘click and mortar’ attitude among customers, it is also introducing an inexpensive, novel, customer-friendly services model.Banks have woken up to the enormous reach of net bankingand the lower costs of new branches, ATMs, etc. Apart from enabling banks to connect to their customers, intranets are facilitating leveraging of internal data resources for competitive and timely decision-making.
Indian banks are trying to fill cyberspace with innovative services. Private banks like HDFC Bank, ICICI Bank and, Global Trust Bank are in the lead. IDBI Bank also has plans to offer Internet banking facilities to its corporate clients, starting with bill presentment for large corporate houses.
Even state-run banks have realised the advantages of this strategy. UBI expects Net banking to account for 60-65 per cent of total business. SBI proposes to launch e-banking services in March. Foreign banks like Citibank and HSBC are also geared for Internet banking. However, for propagating e-commerce in India there are a number of tasks before the government: