Introduction
Unless you have been living under a rock for
the last two years, you have heard about e-commerce! And you have
heard about it from several different angles. For example:
-
You have heard about all
of the companies that offer e-commerce because you have been
bombarded by their TV and radio ads.
-
You have read all of the
news stories about the shift to e-commerce and the hype that has
developed around e-commerce companies.
-
You have seen the huge
valuations that web companies get in the stock market, even when
they don't make a profit.
-
And you may have
actually purchased something on the web, so you have direct personal
experience with e-commerce.
Still, you may feel like you
don't understand e-commerce at all. What is all the hype about? Why the
huge valuations? And most importantly, is there a way for you to
participate? If you have an e-commerce idea, how might you get started
implementing it?
How
E-commerce Works
Before we get into a
complete discussion of e-commerce, it is helpful to have a good
mental image of plain old commerce first. If you understand commerce,
then e-commerce is an easy extension.
So commerce is, quite
simply, the exchange of goods and services, usually for money. We see
commerce all around us in millions of different forms. When you buy
something at a grocery store, you are participating in commerce. In the
same way, if you cart half of your possessions onto your front lawn for
a yard sale, you are participating in commerce from a different angle.
If you go to work each day for a company that produces a product, that
is yet another link in the chain of commerce. When you think about
commerce in these different ways, you instinctively recognize several
different roles:
-
Buyers - these are
people with money who want to purchase a good or service.
-
Sellers - these are the
people who offer goods and services to buyers. Sellers are generally
recognized in two different forms: retailers who sell
directly to consumers and wholesalers or distributors
who sell to retailers and other businesses.
-
Producers - these are
the people who create the products and services that sellers offer
to buyers. A producer is always, by necessity, a seller as well. The
producer sells the products produced to wholesalers, retailers or
directly to the consumer.
You can see that at this
high level, commerce is a fairly simple concept! Whether it is something
as simple as a person making and selling popcorn on a street corner or
as complex as a contractor delivering a space shuttle to NASA, all of
commerce at its simplest level relies on buyers, sellers and producers.
The
Elements of E-Commerce
You must have the following
elements to conduct e-commerce:
-
A product
-
A place to sell the
product - in the e-commerce case a web site displays the products in
some way and acts as the place
-
A way to get people to
come to your web site
-
A way to accept orders -
normally an on-line form of some sort
-
A way to accept money -
normally a merchant account handling credit card payments. This
piece requires a secure ordering page and a connection to a bank. Or
you may use more traditional billing techniques either on-line or
through the mail. Currently the only bank in Brunei who provides
this merchant account is HSBC.
-
A fulfillment facility
to ship products to customers (often outsource-able). In the case of
software and information, however, fulfillment can occur over the
Web through a file download mechanism.
-
A way to accept returns
-
A way to handle warrantee
claims if necessary
-
A way to provide
customer service (often through email, on-line forms, on-line
knowledge bases and FAQs, etc.)
In addition, there is often
a strong desire to integrate other business functions or practices into
the e-commerce offering. An extremely simple example -- you might want
to be able to show the customer the exact status of an order.
Page
2 of 3 - Easy and Hype of E-Commerce
