Strategic Issues For A Successful E-Commerce

Strategic Issues For A Successful E-Commerce Debajyoti Mukhopad hyay , Sangeeta Mishra Web Intelligence & Di stributed Co mputing Research Lab Green Tower, C -9/1, Golf Green, Calcutta 700 095, India Email: {debaj yoti.mukhopadhyay, sangeeta. mishra}@g mail.com E-commerce is an emerging technolo gy. Impact of this new techn ology is getting clea rer with time and results are tangible to the user community. In this paper we have tried to focus some of its issues like paradig ms, infrastructure integration, and security, which is con sidered to be the most imp ortant issue in E -Commerce. At first we have elaborated the paradigms of E -Commerce (Business- to -Busin ess and Bu siness- to -Consu mer). Then comes the necessity of infrastructure in tegration with the legacy system. S ecurity concerns co mes next. Rest of the p art contains co nclusion and references. Keywords : B2B, B2C, JIT, EDI, ER P 1. INTRODUCT ION Electronic Comm erce is for the age of Information Technology what mercantilism, the quest for gold and the conquest o f new lands were for the age of discovery. Like the prow of a l arge fishing boat, it draws towards itself all other interests and elements of s ociety, and it will leave new discoveries and changes in its wake. The vast networking of world through optic fibers, sate llites and wireless communication is creating a new global community and a new global market, in which most of the countries should participate. It is strengthening, almost paradoxically, the identity of small groups, isolated communities and minority interests and driving t hem towards a less costly social and economic activity and widening their opportunities. And most importantly, it is empowering small businesses to compete with multinationa l corporations and enabling consumers to search the world for exactly what they needed. E-C ommerce basically means using networks (Internet) to carry out al l the activities involved i n business manag ement and operation: buy ing and selling of products and se rvices, techno logy and partner search, dealing with counterparts, choosing the most convenient transportation and i nsurances, performing bank tr ansactions, paying and billing, communicating with company sal esmen, picking up orders, and any oth er activities ne cessary for trad ing. A company will be abl e to post a complete catalog of it‘s product s and serv ices on the Internet, which can be continuously updated to present new or updated products, proving a large virtual showcase for potential clien ts, a means to comm unicate with clients and i n that way, adjusts it‘s offer to their 2 requirements; whil e at the same time it will get access to virtual markets where it can purchase wha t it needs. Through integral systems already under development, one company will connect t o other companies located a nywher e in the world, to buy and sell, choosing the products a nd services wh ich best meets its needs from a huge netwo rk. And it‘s true th at this revolution inv olves us all. 2. BUSINESS- TO -BUSINESS (B2 B) B2B e- comm erce means companies buying from and selling to each ot her online. It automates and streamlines th e process o f buying and selling the intermediate pr oducts. I t provides m ore reliable updating of business data. B2B makes product information available globally and updates it in real time. Hence, procuring org anizat ion can take adv antage of vast am ount of produc t inform ation. [3] Now, we m ust know what are the entities of B2 B e-comm erce & their concer ns: Selling company: w ith marketing manag ement perspective. Buying company : with procurem ent manag ement perspect ive. Electronic intermediary: A third party intermediating service provider (the scope of service may be extended to inc lude the order fulfillm ent ). Deliverer: who shou ld fulfill the JIT ( Just in Time Deliv ery) Network platfor m: such as the I nternet, I ntranet, and Extranet. P rotocols and communicati on: such as EDI ( Electronic Data I nterchange) and comparison shopping, possibly using software ag ents. B ack-end information system: possibly implem ented usi ng the intranet and E nterprise R esource P lanning ( ERP ) system s. B2B e-comm erce i mplies that both the sellers and buyers are business corp orations. It co vers a broad spectrum of applications that enable an enterprise or business to form electronic relationship with their distributors, re-sellers, suppliers, and other partners. B2B applications will offer enterprises access to the following sorts of information : Product: Specific ations, prices, sa les history . Customer: Sales h istory and for ecasts. Supplier: Product lines an d lead tim es, sales terms an d conditions. 3 Product process : Capacities, com mitments, produc t plans. Transportation: C arries, lead-tim es, costs. Inventory: I nventory levels, ca rrying costs, loca tions. Supply chain all iance: Key contacts, partners role s and responsibi lities, schedule s. Competitor: Benchm arking , competitive product of fering, m arket share. Sales and marke ting: Point of sal es (POS), prom otions. Supply chain process and performance: Process descriptions, performance measures, quality, delivery tim e and customer satis faction. 2.1 How to get the b est People always want to get t he best shot in life. T o deliv er a sound return on your investm ent you must add on ti me delivery and flavor of some strategies. T his strategy shoul d include proper mark eting, channel managem ent, soli d technology , strategic partners and great products. Let us have a look on each of them. 2.1.1 Just in Time delivery (JIT) In such a ca se (JIT) , delivery materials and parts on time is a must. Usi ng E -Commerce, it i s highly possible to assure JIT deliveries. Just in time delivery ca n be realized by the co -coordinated effort of delivery- service company and suppliers inven tory policy. Quick delivery does not necessarily mean JIT delivery, but the system for quick delivery is the backbone of JIT delivery. For the B2B E-Commerce environm ent the advance confirmation of the delivery date at the contract stag e is very im portant. [5][15] 2.1.2 Add stra tegies to your busin ess 2.1.2.1 Direct Marke ting In a typical business organization, buying decisions, especial ly for products over a few thousand dollars, are made by group of individuals. A s a result, direct mark eters need to extent the reach of thei r programs to different func tional areas and pe rhaps even diff erent levels w ithin a functiona l area. There are multi ple buyers and i nfluences in any organization who play a r ole in t he buying decision. You may know wi th reasonable certainty who your primary t arget is, but secondary target can be just as important to reach. You may have to reach business buyers and influencers in three basic manag ement area s ( functio nal management, financial manag ement and general manag ement) and do it at middle to upper managerial, as well as technical levels. To do it companies need accurate E -mail list, 4 which they can develop by viewing companies Websites and reviewing annual reports and other public documents. 2.1.2.2 Relationship Marke ting Business buyers ar e not alway s ready to buy pr oducts or services when you are ready to sell them. Factors you cannot control, such as the companies‘ budg eting process, the need for additional approv als, or purchasing procedures, may have a direct impact on plans to purchase. T here may be a casual interest in the product bu t not an imm ediate need. The smart B2B direct marketer compensates f or t his uncertainty by making sure a program of regular, ongoing communications (often called a continuity pr ogram ) is in front of prospects periodically. This can be done by direct E-mail and by placing the information on the website. 2.1.2.3 Internet Mark eting Several potential mark eting strategies can be us ed i n B2B E-Commerce marketing. These strategies can be classified in to the follow ing five categ ories: 1. Generating and qua lifying leads with the Intern et. 2. Using I nternet events to prom ote products and serv ices. 3. Executing instant f ulfillment on the Internet. 4. Generating order s through the I nternet. 5. Enhancing custom er relationship w ith the I nternet. 2.1.2.4 Channel Manage ment The first element is cohe rent m arketing or channe l m anagement. The true test of a successful E - Comm erce implem entation is how well it exploits the Internet to reach, capture and retain t he right customers. Choosing which products and serv ices will be offered throug h which channel is also a crucial decision. E-com merce runs across multiple sales channels, including direct, i ndirect and E-m arketplaces. The choice of wh ich marketplaces to use as s ales channels is a crucial decision. In addition to marketplaces, using indirect sales channels is also an area for explosive sales opportunities. Enabling your selling partners to host your catalog, inventory and fulfillm ent databases on their systems can create efficiency that grows their business and yours. You also can continue your direct one- to - one trading relationship with long time strategic vendors by ―E - enabling‖ the entire business process from the initial r equest for quote throug h order fulfillment t o automatic billing and payment. 5 These channels create a situation where the E-Commerce sell side platform must transact across multi-channel sel ling strateg ies -- which brings us to the nex t element of your strategy : technology . 2.1.2.5 Technology Industry standard tools often allow a seller to build and manage product catalogs and content once and use them throughout the entire multi-channel selling conduits. Evolving tools and ca pabilities allow you to develop customer friend ly w eb sites and win repeat customers by building custom er loyalty. The front end for e -com merce selling is an important piece of B2B success, connecting your new web systems with your existing systems. T he 24*7 online marketplace means your E -business has to be continually available. IT infrastru cture must pr ovide more performance, reliability, security and process integration than a bricks-and-m ortar environment. In addition, mainframes ho sting t he databases and ERP ( E nterprise R esource P lanning) systems operating the management systems must be seamlessly integrated with the e-commerce engine to provide the caliber of service customers expects and to realize the cost efficiencies B2B E-Commerce can provide. Choosing a fl exible E -C ommerce platf orm s and a system integrator e xperienc ed with the entire bu siness process is a must for success. 2.1.2.6 Partners Like choosing the Internet as a sales channel, it‘s also important to select the righ t partners, including an integration partner who is experienced in helping to move ahead rapidly across the entire E -business process. we have to accept that any move to E -Commerce is not about incremental improvem ent, rather fundamental redes ign of th e key business proces ses. 2.1.2.7 Products With t he pr esence on the web, we can effectively and efficiently transact business with our clients 24*7. But so can our competitors. Survivals and success in E -Commerce entails more than simply building a storefront to se ll online. [5] 3. BUSINESS- TO -CONSUMER (B2C) While t he term E -Comm erce refers to all online transactions, B2C stands for "Business- to -Con sumer" and applies t o any business or organization that sells its products or services to consumers ov er the Internet for the ir own use. In the late 90s, dotcom s — which were quickly gaining in size and market capitalizat ion — posed a threat to traditional brick and mortar businesse s. In many ways, these dotcoms seemed t o be rewriting the rules of business — they had the custom ers without the expense s of maintaining phy sical stores, little 6 inventory, unlimited access to capital and little concern about actual earnings. The idea was t o get big fast and worry about profits later. And a popular tho ught automatically comes int o our mind: ― Learn t o swim while the tide is out. Learn fr om the kinds of customers that are out there now. It is a small mark et- play with it; learn to price business in this mark et, learn how to assess risk . If you can do it well , the stakes will g et higher and y ou will succeed wh ere others may not.‖ 3.1 What are the major cha llenges o f B2C e-commerce Getting browsers to buy things — Your E- Commerce site cannot live on traffic alone. Getting visitors to the site is only half the battle. Whether they buy something is what det erm ines if you win. Some ways to boost the B2C conversion rate include improving navigation, simplifying checkout process (such as one-step checkout and easily r eplace d passwords), and sending out e-mails with special offers. Building customer loyalty — With so many si tes out t here, how can you build a strong relationship w ith custom ers? Here are som e tips:  Focus on personaliz ation: A wide array of so ftware pack ages are available to help e - commerce sites cr eate uniq ue boutiques tha t target spe cific custom ers.  Create an easy- to - use cust om er service application. Providing just an e -mail address can be frustrating to customers with questi ons. Live chat or, at the very least, a phone number will help.  Focus on mak ing your site easy to us e. Ful fillment — E-Comm erce has increased t he focus on customer satisfact ion and delivery fulfillment. Companies should improve t heir logistical system s in order to guarantee on -tim e delivery. Providing instant gratification for customers still isn't easy, but successful B2C E- Comm erce operations are finding that fulfillment headaches can be eased with increased f ocus and investment in supp ly chain and logistica l technologies. [5] 3.2 Six Keys to B 2C E-Comm erce success So, what does it really tak e to capture the E-consum er and generate onl ine insurance sa les? Based on Insurance & Technology' s interviews with bo th early adopte rs and industry analysts, there ap pear to be six key success fac tors: 7 i. Strategi c Goals Assess ment/Customer N eeds Asses sment What are your goals as a company? Who are your customers? What are their needs? T hese may sound like basic questions, but both insurers and analysts emphasize t hat a company' s Web presence must reflect this inform ation. ii. Create a Usable, Targeted and Sticky W eb Site Usability and site perform ance are some of t he key factors insurers need to keep in mind when developing their B2C E- Commerce strategies. Insurers also need to be aware of all of their various constituencies when dev eloping B2C initiativ es. The Web can reach multiple audienc es and none should be overlooked. A good Web si te will comm unicate with consumers as well as business partners, agents, suppliers and v endors. Stickiness, or the success of a Web s ite in attracting and keeping new and returning visit ors, is another success factor. T urning th e site into more of an inform ation portal with real-time news feeds with keeping content up dated and sy nchronized will h elp keep cus tomers com ing back. iii. Integration The I nternet is no t a stand -alone platform or medium. To be an ef fective service and distribution channel, it must be i ntegrated with back-end legacy systems, agent systems, call centers , marketing initiatives and pricing and underwriting systems. T he Internet is simply another customer relationship channel and integ ration wit h other custom er service fu nctions is defini tely a num ber-one priority. iv. Innovate with Web App lications and Re al-Time Tr ansactions B2C online applications range from t he relatively basic, such as updating policy inf ormation, to the complex, such as comparat ive rate quot ing and electronic claims submission. Regardless of t he specific functions a company plans t o add to its Web site, they must serve the needs of t he E -consumer. This means that web s ites should hav e interactivity and imm ediate gratification. v. Partnerships Although insurers need to be selective in initia ting online partnersh ips, such agreem ents have the potential t o extend market reach and add f eatures in a r elatively low-cost manner. According to a recent Gartner Group study, 46 percent of insurance firms active on t he Web have partnerships with banks, 30 percent have partnerships with other i nsurance companies and 22 percent have partnerships with 8 in vestm ent firms. Partnerships with i nsurance portals provide com parative quoting capabilities and m ay generate busine ss. vi. Put Tools in Plac e To Keep L earning E-consum er is a m oving target. I nvestor should always say that the y are still playing a nd always capturing inform ation from all of t heir channels. They must focus on groups, used third -party assessments and have hired user interface specialists. "The pr ocess is iterative: You just keep learning." [5] 4. INFRASTRUC TURE INT EGRA TION In this web enabled world, customers rule. The ability to o ffer mass custom ization has becom e a practical reality . To rapidly meet these requir ements, tim e to deploym ent of new or enhanced application is shrinking dramatically. These application s must be bui lt to be ea sy t o use, nimble, open, extensible, and available across all platforms and all these demanding characteristics must be achieved at minimal cost. Replacement of legacy s ystem application is costly so it is seen that people started to aggregate information from disparate sources and integrate them for seamless informatio n flow, the demand to communicate with a wide variety of mobile devices, and the shortage of skills and knowledg e t hat are further compounded by shrink ing time- to - deployment r equirements. These software integration tec hnologie s lower development and deployment costs by doi ng the following: Supplying the communication and integration code so application developers can concentrate on the value-added bu siness log ic; Providing a standard p latform on which to build, d eploy, and m anage distributed a pplications; Reducing the IT sk ills requ ired to deliv er difficult ente rprise requirem ents; Providing rapid application development tools to eliminate custom coding and simp lify integration; and Enabling the reus e of integr ation component s over many projects. 4.1 What is needed for Integration i. Requirements Traditional requi rements definition based on the functionality desired is yielding to a definition Based on time- to - deploym ent and the ability to integrate future technologies. New infrastructure requirements are 9 emerging which pl aces more importance on the task of planning the migration path to newer technologies. ii. Technology selection For the best result the right technology should alway s be picked up. Technology should be such that the integrated solution fulfill the following criteria‘s: Extensibility and reusability , Flexibility, Efficiency, Interoperability and br eadth, Cost effectivenes s, Ease of maintenance, Deployment ea se and efficiency, Ease of administr ation, Industry acceptabil ity, Enterprise in tegration, Technological innov ation. [1] iii. Organizational p reparati on The integration project manager needs to have a so lid understanding of all aspects of the project. He may assu me some or a ll o f the following critical roles: development manager, delivery co- ordinator, integration evangelist, and p roject administrator . The requirement team must see that the business requirements for the integration project are specified in sufficient detail to enable the selection of appropriate techno logies, identification of acceptable tradeoffs and development of success measurements. The development team must meet the goal of correct tradeoff and adequate technology choices. The specialists required in clude development language, middleware technologies, integration architectures, database products, information modeling, and distributed application architectures. An integration evangelist must be thereto help articulate the strategic va lue of making certain in tegration choices, sponsor the investment in integration technologies that transcend any one integration project, mediate an y conflicts in priorities that impact resource availability or schedule, and obtain resolution to architectural issues. Teams needed for effective integration 10 4.2 Benefits of In tegratio n It has been survey ed that the end use rs are benefi ted in v arious ways after the com pletion of Integ ration project. Benefi ts thus obtained a re : 1. Simple and comple te developm ent platform , 2. Platform independe nce, 3. Network- aware development and run-time platform , 4. Technologically uni fied intrane t, extranet and I nternet, 5. Central adm inistration of new sof tware versions, 6. Easy access to en terprise IT resources, 7. Rich and highly func tional user interface com ponent, 8. Simple and robus t security model. [1] 5. SECURITY ISSU ES Security is a major issue in developing E -Comm erce because this is pr obably the most important reason people hesitates to buy things on the Net. Buying on the Net requires your credit ca rd number and other personal information. But broadcasting your credit card number through the ether? It sounds pretty dicey. So, it‘s a challeng e for companies to mak e thei r site secure and safe so that people can fully rely on them. What does secur ity imply Whatever the env ironment, p aper or electron ic, securing it necess arily im plies the prevent ion of Destruction of inform ation and Unauthoriz ed availability of inform ation. Security issues The issues that conf ront us in rela tion to secur ing electronic t ransaction are th erefore: Confidentiali ty Integ rity Availability 11 Authenticity/Non- repudiabi lity Auditability Confidentiab ility Inform ation should be protected from prying eyes of unauthorized internal users, external hackers and from being intercepted during transmission on communica tion networks by making it unintelligible to the attacker. The content should be transformed in such a way that it is not decipherable by anyone who does not know the transform ation information. Integrity On r etrieval or re ceipt at the other end of a comm unication network the information should appear exactly as was st ored are sent. It shoul d be possible to generate an alert on any modification, addition or deletion to the origina l content. Integrity also precludes informati on ―replay‖ i .e., a fresh copy of the data is generated or resent usi ng t he authorization features of the earlier authentic message. Suitable mechanism s are required to ensu re end-to end m essage content and co py authentic ation. Availability Th e information that is being stored or transm itted across communication networks should be available whenever required and to whatever extent as desired within pre -establ ished time constraints. Network errors, power outages, operational errors, application software errors, hardware problems and viruses are some of the causes of unavailability of information. The mechanism s for implem entation of counter measures to these threats are available but are beyond the sc ope of end - to -end message security for implem enting Electronic Com merce. Authenticity It shoul d be possible any person or object from m asquerading as som e other person or object. When a message is received it should therefore be possible to verify it has indeed been sent by the person or object claim ing t o be the originator. Similarly, i t should also be possible to ensure that the message is sent to the person or object for whom it is meant. T his implies t he need for reliable identification of the originator and rec ipient of data. Non-repudiabil ity 12 After sending / authorizing a message, t he sender should not be able to, at a later date, deny having done so. Similarly the recipient of a message should not be able to deny receipt at a later date. It should, therefore be possible to bind m essage ack nowledgem ents with their originat ions. Auditability Audit data must be r ecorded in such a way that all specified confiden tiality and integrity requirements are met.[2] Security solution s Cryptography is the most widely used techniqu e for implementing technology solution for the above mentioned security problems. It comprises encryption -- the process of mak ing information unintelligible to the unau thorized reade r and decryption – reserving encryption to make the information readable once again. Conventiona l crypto graphy uses a secret code or key to encrypt information. Th e same secr et key is used by the receiver to dec rypt the info rmatio n.[14] Password is the most common mechanism used for authenticate people. Pa sswords are expected to be known only by the ow ner. The onus is o n the owner to k eep the password secret. Digital signature can be used not only to verify the authenticity of the message and the claimed identity of the sender, but also to verify the message i ntegrity. The recipient, howev er, should not be able to use the received digital signature to falsely ―sign‖ messages on behalf of the original sender. Here a message is encrypted with the sender‘s private key to generate the ‗si gnature‘. The message is then se nt to the destination a long with this signature. The recipient decrypts the signature using the sender‘s public key, and if the result matches with the copy of t he message received, the recipient can be sure that the message was sent by the claimed originator and that the message has not been modified during transmission, since only the origina tor is in possession of the corresponding encryption k ey. It is a two k ey cryptosystem s. A more effective solution can be obtained by using a biometric authenticatio n device, such as a fingerprint scann er, in the e-wallet. Smart card are similar to credit cards except that they have chips embedded in them. T hese cards can be used to sto re value a nd carry authent ication inform ation. 6. CONCLUSI ON 13 Changing market scenario puts pressure on business persons to adapt new and smart st rategies to reach the pinnacle of success. New inventions are rapidly bec oming part of IT infrastructure. But t o get effective feedback we need a multifunctional team appr oach consisting of business people who can correctly identify business requirements, technology requirements and success criteria. People can reduce the risk and time- to -deploym ent by considering the factors de scribed above. 7. REFERENC ES 1. Aberdeen Group, Inc. ―e - Business Infrastructure Integration: Practical Approaches,‖ An Exec utive White Paper, Bo ston, Massachusetts 021 08, USA, November 2001 2. Kamlesh K. Bajaj and Debjani Nag, ―E - Co mmerce: The Cutting Edge o f Business,‖ Tata -McGr awHill, 1999 3. Efraim Turban , Jae Lee, David King, H. 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