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  • Level: GCSE
  • Subject: ICT
  • Word count: 3804

E-commerce - What is all the hype about?

Extracts from this document...

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? If you have had questions like these, then this edition of How Stuff Works will help out by exposing you to the entire e-commerce space. Let's have a look! Commerce 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. Merriam-Webster's Collegiate Dictionary defines commerce as follows: com.merce n [MF, fr. L commercium, fr. com- + merc-, merx merchandise] (1537) 1: social intercourse: interchange of ideas, opinions, or sentiments 2: the exchange or buying and selling of commodities on a large scale involving transportation from place to place 3: sexual intercourse We tend to be interested in the second definition, but that third one is interesting and unexpected - maybe that's what all of the hype is about! So commerce is, quite simply, the exchange of goods and services, usually for money. ...read more.

Middle

Nor does it justify a small business making a big expenditure on an e-commerce facility. What is driving this sort of frenzy? To understand it a bit, let's take a look at one of the most successful e-commerce companies: Dell. Dell is a straightforward company that, like Gateway 2000, Micron and a host of others, sells custom-configured PCs to consumers and businesses. Dell started as a mail-order company that advertised in the back of magazines and sold their computers over the phone. Dell's e-commerce presence is widely publicized these days because Dell is able to sell so much merchandise over the web. According to this page from IDG, Dell currently sells something like $14,000,000 in equipment every day. 25% of Dell's sales is over the web. Does this matter? Dell has been selling computers by mail over the phone for more than a decade. Mail order sales is a standard way of doing things that has been around for over a century (Sears, after all, was a mail order company originally). So if 25% of Dell's sales move over to the web instead of using the telephone, is that a big deal? The answer could be YES for three reasons: If Dell were to lose 25% of its phone sales to achieve its 25% of sales over the web, then it is not clear that e-commerce has any advantage. Dell would be selling no more computers. But what if the sales conducted over the web cost the company less (for example, because the company does not have to hire someone to answer the phone)? Or what if people purchasing over the web tend to purchase more accessories? If the transaction cost on the web is lower, or if the presentation of merchandise on the web is more inviting and encourages larger transactions, then moving to the web is productive for Dell. What if, in the process of selling merchandise over the Web, Dell lost no sales through its traditional phone channel? ...read more.

Conclusion

Similar companies: AFFILIATIONSPLUS Business Sources & Resources - Business Opportunities E-Commerce Times CashPile Directory Revenue Sharing Web Marketing Implementing an E-commerce Site Let's say that you would like to create an e-commerce site. There are three general ways to implement the site with all sorts of variations in between. The three general ways are: Enterprise computing Virtual hosting services Simplified e-commerce These are in order of decreasing flexibility and increasing simplicity. Enterprise computing means that you purchase hardware and software and hire a staff of developers to create your e-commerce web site. Amazon, Dell and all of the other big players participate in e-commerce at the enterprise level. You might need to consider enterprise computing solutions if: You have immensely high traffic - millions of visitors per month You have a large database that holds your catalog of products (especially if the catalog is changing constantly) You have a complicated sales cycle that requires lots of customized forms, pricing tables, etc. You have other business processes already in place and you want your e-commerce offering to integrate into them. Virtual hosting services give you some of the flexibility of enterprise computing, but what you get depends on the vendor. In general the vendor maintains the equipment and software and sells them in standardized packages. Part of the package includes security, and almost always a merchant account is also an option. Database access is sometimes a part of the package. You provide the web designers and developers to create and maintain your site. Simplified e-commerce is what most small businesses and individuals are using to get into e-commerce. In this option the vendor provides a simplified system for creating your store. The system usually involves a set of forms that you fill out online. The vendor's software then generates all of the web pages for the store for you. Two good examples of this sort of offering include Yahoo Stores and Verio Stores (if you'ld like to speak with someone at Verio, Gregorio Gonzalez, 877-273-3190 ext. 4672 has been helpful). You pay by the month for these services. ...read more.

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