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e-Commerce: A Student's Perspective

Overview
There is no question that the Internet has changed the way people live, do business and interact with one another. E-commerce has become an integral part of the way businesses use the Internet to do business. Improvements to security and ease of making purchases has made e-commerce very popular not only with businesses but with consumers as well.

When the Internet and e-commerce was first introduced in the business world, it was possible for small businesses to ignore the necessity of incorporating them into their business models. It is clear now that neither is going away, so even small businesses need to address e-commerce if they want to compete in today’s market.

The following information has been gathered to help students gather relevant and up-to-date information regarding e-commerce and how it affects the business world.

E-Commerce History
The history of e-commerce is relatively short. E-commerce as we know it started between 1994 and 1995 when the first third-party services for processing credit card transactions began. A company called Verisign also began developing a way to verify identities of businesses online through digital IDs. (Roos, 2012)

It was also around this time that Jeff Bezos, founder of Amazon.com, sold his first book online. Amazon.com became the standard for all of the following e-commerce websites, and today it is arguably the most successful e-commerce site, depending on your definition of success. The key to Amazon’s success is that it was able to diversify its offerings to stay current and compete with other e-commerce businesses. (Roos, 2012)

Around the same time, eBay was also changing the way business was done on the Internet. Pierre Omidyar, the creator of eBay, made it possible for just about anyone to sell products online, including small business owners or anyone looking to get rid of extra junk around their house. (Roos, 2012)

Today almost every business has a presence on the Internet. The smart ones work in collaboration with other larger online companies such as Amazon or eBay. It extends their reach without much cost to them. It is hard to say just how far e-commerce will go or how it will evolve to meet the ever-changing needs of today’s consumers, but one thing is certain. The Internet and e-commerce aren’t going away, and for any business to compete in today’s global market it needs to incorporate both into its business model and infrastructure.

What is a business model?
Many people think of a business model as a map of how the business will be run. This is not the case. “A business model is a set of planned activities designed to result in a profit in a marketplace.” (Kenneth C. Laudon, 2010) In today’s market we can go one step farther and say that an e-commerce business model is the same but focuses on the uniqueness of the internet.

When a business manager, a banker, or an investor asks about a company’s business model, the question they are really asking is, “How do you plan to make money?” (Defining Your Business Model, 2012). To answer this question you will have to answer questions like: Who's your target audience? How will you generate revenue? What's your cost structure? What's your profit margin? These are just of few of the questions but it is a start.

How important is a business model to a successful business? Without a business model a business will fail. When e-commerce started bumming in the 90’s the business models were overlooked. However, when the dot-com businesses began to fail the smart businesspeople learned about and created a successful business model (Defining Your Business Model, 2012).

What are the key elements of a business model?
According to our text book there are eight key elements of the business model. They are:


 * Value proposition – Why should the customer buy from you?
 * Revenue model – How will you earn money?
 * Market opportunity – What marketspace do you intend to serve, and what is its size?
 * Competitive environment – Who else occupies your intended marketspace?
 * Competitive advantage – What special advantages does your firm bring to the marketspace?
 * Market strategy – How do you plan to promote your products, or service to attract your target audience?
 * Organizational development – What types of organizational structures within the firm are necessary to carry out the business plain?
 * Management team – What kinds of experiences and background are important for the company’s leaders to have? (Kenneth C. Laudon, 2010)

What are the different business models?
Probably the biggest decision you will have to make is what kind of business you are going to run. The choice that you make will determine the business model that you will need to follow. The business models consist of: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Peer to Peer (P2P), and Mobile Commerce (M-commerce). The models are self-explanatory as to who the customer audience is. One thing with e-commerce is that an internet business may actually have more than one business model.

Infrastructure
Dictionary.com defines infrastructure as: “the basic, underlying framework or features of a system or organization” (Dictionary/Infrastructure, 2012). Of course this is a more traditional definition of the word. While it is still a true definition, we have to understand that its meaning has evolved over time with the introduction of e-commerce.

In the information technology and on the Internet, infrastructure would better be defined as: “the physical hardware used to interconnect computers and users. Infrastructure includes the transmission media, including telephone lines, cable television lines, and satellites and antennas, and also the routers, aggregators, repeaters, and other devices that control transmission paths. Infrastructure also includes the software used to send, receive, and manage the signals that are transmitted” (Search Data Center/Infrastructure, 2012). It is important to be aware of how data transmissions are carried through the infrastructure. By keeping this in mind while designing your e-commerce site, you can avoid some of the pitfalls that others have encountered. You want to make sure that the site you develop will not take long time to be transmitted so the customer will not leave.

Security and Payment Systems
The Internet has become a very important resource in today’s society it is used for everything from chatting with friends to taking care of your finances and keeping track of your bank account. With all these things happening on the web there are bound to be concerns about the security of information sent and received online and how payments online are taken care of. This section will cover the use of Security and Payment Systems. (Laudon & Traver, 2010)

In addition to the legal uses of the Internet, crime has also risen on the web. There are people who sell secret information online, perform auction fraud, credit/debit card fraud and identity theft. There are hackers and crackers (hackers with criminal intent), spyware, adware, viruses and many other things that can cause problems to computers that are connected to the Internet. E-mail messages can be altered, and a good hacker can get your info for your instant messengers too. All these things would seem to make the Internet an unsafe place to do business or even just browse, but there are security measures have been put into place to keep things like these from happening. (Laudon & Traver, 2010)

With the new technology that has come out since the beginning of the Internet it has become safer than ever, although it can still be risky if you’re not over careful. Sometimes the security can cause the sites you use to run slower than others but it is for your protection. Some of the security systems used is encryption and firewalls. Encryption is used many different ways there are private and public keys. They way encryption works, whether you use a private or public key, is you send the message to the key it changes it to a mathematical code then sends it over the Internet, if it is intercepted someone who doesn’t have an key to unencrypt the massage it takes a long time to get what they want if they get it at all. Once the message gets to the correct recipient then they have the key to unencrypt it and read what is there. Many of us use encryption but don’t know it because the programs we use to communicate have the key already in it. These kinds of precautions make the Internet safer to use than it was in its beginning stages. (Laudon & Traver, 2010)

As for making payments over the Internet there are different ways to go about it. You can use direct withdraw from your bank account, a credit/debit card or an online account like PayPal. This can seem risky but with the afore-mentioned security measures this is not a bad way to take care of business. There are ways to take care of payments other than straight from the bank or with cash as has been previously mentioned. If you are paying online you can use the PayByCheck option where you use an electronic check to make a payment, or you can set up a PayPal account that you can add money to or just connect it to your credit/debit card which will take it from your account a few days later. Other people pay their monthly bills online using Electronic Billing Presentment and Payment (EBPP). There are two models for this option the main one is Biller-direct which, as you can guess, is where the money goes from your account directly to the company the bill is from. The other is a Consolidator which means all your bills get put together you send the payment to one place and they send it to the correct places. (Laudon & Traver, 2010)

Marketing Communication
Communication is extremely important to all aspects of life. It used to be so hard to get in touch with one another; mail could take days or even months to reach its destination. Today we have cell phones that can do everything from text messaging to checking our email, making communication very easy. Just like in everyday life, communication is vital to any organization. To ensure effective communication there is a department in charge of it called Marketing Communication, or corporate communication, depending on the company (Snow, 2012).

Marketing Communication takes care of information shown to the public. The communication can cover several areas, new product introduction, enhanced community involvement or marketing an existing product. To quote an article it is “a science and an art,” a science to know who to communicate each item to and an art to know how to do so in a way that will capture their attention (Snow, 2012). Marketing Communication takes information discovered on the internet, based on user behavior, and customizes its approach to appeal to each particular user. If a company does not communicate its products correctly and to the proper audience it could cause the company to shrink or even collapse.

What is Marketing Concept?
Marketing concept is the philosophy that urges organizations to focus on their customers’ needs, by analyzing their needs and making such decisions that satisfy those needs in a better way than competitors (What is Marketing? and Basic Marketing Concepts, 2012).

Past Marketing Concepts
In the Industrial revolution in the 1920’s they used the production concept to marketing. Here the firms produce, whatever their product was, at low cost and let demand create itself because most of what they produced was the basic necessities and the demand was still great.

Then in the early 30’s the sales concept begin to take the lead. Here the pattern switched. The demand was not so great anymore for the products being produced. The focus here was to simply sell more than the competition. No-one really cared or thought about customer satisfaction.

After World War II, companies began to satisfy the marketing concept. The market contained a variety of products now and income was low. Consumers begin to really search for what they needed at the best price they could find. This change in the economy forced the change in the company’s focus (What is Marketing? and Basic Marketing Concepts, 2012). Marketing research is a key element in the marketing mix today. Without carefully conducted research into what the consumer is looking for the best way to provide it the marketing concept itself is worthless. When this is done properly it leads to customer satisfaction which is the ultimate goal.

Top 10 Marketing Concepts for Small Businesses
Nate Stockard published an article in EzineArticles.com concerning the top 10 marketing concepts that people looking to go into small business should consider before doing so. Below is the list of these concepts and a brief description of each as seen by Mr. Stockard.
 * 1) Consistency: Consistency helps lower the cost of marketing and increase the effectiveness of branding.
 * 2) Planning: Putting time into planning your marketing strategy, budget, and other concepts presented here helps to ensure success.
 * 3) Strategy: Strategy is the foundation for the rest of your marketing activities it identifies who you will target, how you will target them, and how will you keep them as a customer.
 * 4) Target Market: A well-defined target market will make every other marketing concept so much easier to implement successfully.
 * 5) Budget: The most important part of this marketing concept is to actually establish a marketing budget. From there, you can worry about how to distribute your available funds.
 * 6) Marketing Mix: The marketing mix is usually defined as product, pricing, place, and promotion.
 * 7) Website: Customers, be it businesses or consumers, will search the web over 60% of the time before making any purchasing decisions so you must at least develop a small web presence of some kind and keep it updated.
 * 8) Branding: Branding consists of the pictures, logo, design scheme, layout, make up, and image of your products and even your company.
 * 9) Promotion and Advertising: Proper promotion and advertising will result in effective brand recognition, and, ultimately, increased sales.
 * 10) Customer Relationship Management (CRM): Maintaining proper customer relationship management is essential to creating loyal and consistent customers.

Links

 * http://www.ecommercetimes.com/?welcome
 * http://www.nethistory.info/
 * http://money.howstuffworks.com/ecommerce.htm
 * http://money.howstuffworks.com/online-biz-do-it.htm
 * http://money.howstuffworks.com/identity-theft.htm
 * http://money.howstuffworks.com/personal-finance/online-banking/electronic-payment.htm