E-commerce and its Relation to E-business
The United States Census Bureau defines e-commerce as “any transaction completed over a computer mediated network that involves the transfer of ownership or rights to use goods and services. Transactions occur within selected e-business processes eg. selling process and are ‘completed’ when agreement is reached between buyer and seller to transfer ownership or rights to use goods or services.” So while e-business covers the entire range of online business dealings (from customer service to selling), e-commerce refers specifically to one entity paying for goods or services from another entity via the internet. With this in mind, remember that e-commerce can relate to all types of e-business involved in the transfer of goods or services, including but not limited to B2C, B2B and B2G.

E-BUSINESS

E-Business and its Significance in Today’s Marketplace

Although it may seem like a new word, the term e-business was hatched back in 1997, making it no spring chicken. Considering the fact that it describes an entirely new way of conducting business, however, it is safe to say that it’s still in its early stages of use. With every turn of the page you’ll see the term defined in a different way, shape or form. Perhaps this is because it describes such a large scope of processes, ranging from sending out a newsletter to selling an Audi online. So, what exactly is e-business and what does it mean to the future of a business owner?

E-business Defined
The United States Census Bureau defines e-business as “any process that a business organization conducts over a computer mediated network. Business organizations include any for profit, governmental, non-profit entity. Their processes include production-, customer-, and internal or management-focused business processes.” In a shorter broader sense, e-business is the process of conducting business electronically or over the internet. Electronic mail is e-mail, electronic commerce is e-commerce, and following this formula, electronic business is e-business. Every time business is conducted over the internet, e-business takes place and as the internet grows, so grows e-business.

Where does e-business take place?
E-business is offered to all users via the internet, to internal users via an intranet (similar to the internet, an intranet is a smaller network of computers usually within a single organization), and to specified users via an extranet (an intranet partially accessible to specified users from outside an organization via a valid username and password).

Three Main Types of E-business

1. Business to Consumer (B2C)
The most widely recognized form of e-business, B2C is the exchange of information, products or services taking place between a business and a consumer over the internet. As the internet develops, B2C is continually changing the way consumers acquire information, the way products are compared against one another and the way in which they are purchased.
An example of a B2C only site is amazon.com. Ae.com is an example of a B2C site housing a physical location as well.

2. Business to Business (B2B)
The largest form of e-business in terms of money spent is B2B. Business-to-business allows trading to take place between businesses, using a low-cost sales channel for the sale of goods and services and is responsible for constantly changing corporate buying habits.
An example of a B2B site would be a car part company selling parts to a car dealership, another company, rather than directly to consumers.

3. Business to Government (B2G)
B2G is the online exchange of information and transactions between businesses and government agencies, also known as e-government. B2G allows government agencies and businesses to use electronic means to conduct business and interact with each other over the internet.
An example of a B2G site would be one that offers electronic tax filing.

Overview of e-commerce in Pakistan

FROM THE ECONOMIST INTELLIGENCE UNIT

When the government started an information-technology (IT) and e-commerce initiative in early 2000, the banks were expected to lead the way into e-commerce. However, although the banking sector is the leading spender on information communications technology, the most progress in e-commerce has been in “e-government”. Some business-to-business (B2B) portals are available, but they are designed more for information than transactions.

Half of the country’s 7,000 commercial-bank branches, including 90% of the branches in urban areas, had been computerised by August 2006. Many banks and exchange companies offer online funds transfers from overseas, such as for workers remittances. A few of banks offer mobile-phone banking, where customers can pay utility bills using their mobile phones. The National Institutional Facilitation Technologies (NIFT), an automated check-clearing house, was operating in 14 cities in August 2006, and it processed 60m checks per year in 2005/06. NIFT is a public-private company owned 51% by banks.

Internet merchant accounts (used for processing financial transactions of Internet vendors) were permitted by the State Bank of Pakistan (the central bank) in February 2001. However, inadequate infrastructure and security concerns remain, and in mid-2006 only Citibank (US) offered these accounts, which were used by airlines, mobile companies, Internet service providers and merchants. The transactions that do occur use international credit cards, which are processed outside Pakistan. Users of Internet merchant accounts undertaking transactions outside Pakistan need to submit electronic forms for transactions valued at US$500 or more to their banks, which must then submit the same in consolidated form on a monthly basis to the central bank.

In December 2005 the Central Board of Revenue, the tax authority, started allowing electronic filing of sales tax and federal excise returns by registered private and public companies. At that time, it said that it expected about 1,500 large taxpayers out of 22,000 to use the facility. Government efforts to promote the IT sector include the establishment of the Information Technology and Telecommunications Division in July 2000, various incentives, and the commitment of resources for education and infrastructure building. The Ministry of Science and Technology launched the National Information Technology Policy in August 2000. It was developed by a team that included working groups on the following: human-resource development; IT in government and databases; IT market development and support; IT fiscal issues; telecoms, convergence and deregulation; cyberlaw, legislation and intellectual-property rights; IT research and development; Internet development; software export; e-commerce; and incentives for IT investment.

Total spending (by the government and private sector) on information, communications and technology in Pakistan was US$10bn during 2005/06. Various e-commerce projects and initiatives were underway in the public and private sectors in August 2006. The government said in May 2004 that it has planned new IT and e-commerce projects worth well over PRs4.5bn up to 2007, and by then it aims to produce 100,000 graduates a year in IT studies from the seven new IT universities it has already set up.

Pakistan is part of the 15-member Asia Pacific Council for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. The council aims to support the United Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and Electronic Business, a non-governmental organisation that promotes trade facilitation, electronic business policies and activities in the Asia–Pacific region.

E-commerce: Growth of e-commerce

Pakistan has a number of barriers to electronic commerce, including inadequate infrastructure (insufficient telephone lines and frequent power failures); relatively few Internet users; and lack of security for online transactions. The government is working to overcome these problems and has made some progress.

The number of Internet users in Pakistan is growing fast. According to the government’s economic survey for 2005/06, there were an estimated 2.1m Internet subscribers and about 10m Internet users in June 2005 (latest figures available), and Internet access had expanded from 29 cities in August 2000 to 2,339 cities and towns by June 2006. Optical-fibre networks were available in 500 cities in June 2006, compared with 53 cities in August 2000. Pakistan had 170 Internet service providers in June 2006.

The Sustainable Development Networking Programme (SDNP), funded by the UNDP, started providing e-mail services and then Internet connectivity beginning in 1993. This remained the country’s largest network until 1996. The government began allowing private Internet service providers (ISPs) in 1995. Paknet, a fully owned subsidiary of Pakistan Telecommunication Company, the formerly government-owned telcoms firm, began offering ISP services in 1999. Paknet is Pakistan’s largest ISP, followed by cyber.net, part of the local Lakson Group. Other leading ISPs include Comsats, Brainnet, Fascom, Supernet, Worldtel (an affiliate of Worldtel Canada) and NetSolConnect (owned by NetSol Technologies of the US and the Akhter group of the UK).

Telecoms deregulation has resulted in an increase in the country’s teledensity, especially in mobile telephony. Landline teledensity (the number of landline phone connections per 100 persons) was 3.9% in June 2006, compared with 3.6% the previous year; whereas cellular density (the number of cellular connections per 100 persons) was a substantial 21%, up from just 7%, over the same period. These improvements should help spur the use of the Internet and e-commerce.

During August 2006 various e-commerce projects and initiatives were underway in the public and private sectors, including electronic-government projects worth US$300m at the federal and provincial level. For example, a five-year, US$30m project funded by World Bank at the State Bank of Pakistan (the central bank) to interlink the countrywide regional office network of the central bank was almost complete. A real-time gross settlements (RTGS) project with backward linkages to commercial banks and the clearing house is scheduled to be completed by end-2006.

The Pakistan Software Export Board (PSEB) has a number of programmes to activate the local information-technology (IT) sector. For example, the Bridge 2002 programme seeks to computerise small and medium-sized enterprises and to provide projects to local software companies, with technical and financial assistance from the board. Another programme, the GEMS-2002, was launched in August 2002 to incubate small software companies, providing logistics support, infrastructure, and marketing and financial guidance. The PSEB also provides financial subsidies and technical support for various training programmes and for securing internationally-recognised quality certifications.

Software-technology parks have been established to develop the IT industry in Lahore, Karachi and Islamabad. But a software-technology park set up in Peshawar in June 2004 was abandoned because of lack of funds and poor infrastructure. Other IT incentives include the following:

• IT companies qualify for an income tax exemption on software-export revenues until June 30th 2016.
• Software exporters may retain 35% of their earnings in foreign-exchange accounts.
• Computers and related hardware are exempt from customs duties, though the 2006/07 budget subjected them to a 15% sales tax.
• Depreciation on computer equipment was raised to 30% (from 10%) in the 2001/02 budget.
• Financing options provided by banks and development finance institutions for IT-sector contracts are acceptable as collateral for the export-finance facility.
• Accreditation and Quality Testing Councils are being set up to ensure a high standard of IT education in the public and private sector.

E-commerce: Foreign investment

Foreign investment of 100% is permitted in the telecommunications sector. About 100 IT and telecoms companies from the United States, Europe and Japan have offices in Pakistan, including Oracle, Cisco Systems, International Business Machines, Microsoft and Intel. Two leading ISPs have foreign connections: Worldtel is an affiliate of Worldtel Canada and NetSolConnect is owned by NetSol Technologies of the US and the Akhter group of the UK.

Foreign investors are allowed to invest up to 100% in software companies, and foreign interest in Pakistan’s technology sector has been increasing. Local entrepreneurs have set up around 100 call centres in recent years in Pakistan; one of the first was a call-centre that Align Technologies (US) set up in 2000.

The United Nations Industrial Development Organisation and the World Bank also support projects for information-technology development.

ecommerce

Benefits of E-Commerce

Expanded Customer Base
Increase Visibility through Search Engine Marketing
Provide Customers valuable information about your business
Available 24/7/365 - Never Close
Build Customer Loyalty
Reduction of Marketing and Advertising Costs
Collection of Customer Data

Advantages of Electronic Commerce
Type of e-commerceThere are mainly five types of e-commerce models:
1. Business to Consumer (B2C) -

As the name suggests, it is the model involving businesses and consumers. This is the most common e-commerce segment. In this model, online businesses sell to individual consumers. When B2C started, it had a small share in the market but after 1995 its growth was exponential. The basic concept behind this type is that the online retailers and marketers can sell their products to the online consumer by using crystal clear data which is made available via various online marketing tools. E.g. An online pharmacy giving free medical consultation and selling medicines to patients is following B2C model.
2. Business to Business (B2B) -

It is the largest form of e-commerce involving business of trillions of dollars. In this form, the buyers and sellers are both business entities and do not involve an individual consumer. It is like the manufacturer supplying goods to the retailer or wholesaler. E.g. Dell sells computers and other related accessories online but it is does not manufacture all those products. So, in order to sell those products, it first purchases them from different businesses i.e. the manufacturers of those products.

3. Consumer to Consumer (C2C) -

 It facilitates the online transaction of goods or services between two people. Though there is no visible intermediary involved but the parties cannot carry out the transactions without the platform which is provided by the online market maker such as eBay.

4. Peer to Peer (P2P) -

 Though it is an e-commerce model but it is more than that. It is a technology in itself which helps people to directly share computer files and computer resources without having to go through a central web server. To use this, both sides need to install the required software so that they can communicate on the common platform. This type of e-commerce has quite low revenue generation as from the beginning it has been inclined to the free usage due to which it sometimes got entangled in cyber laws.

5. m-Commerce -

It refers to the use of mobile devices for conducting the transactions. The mobile device holders can contact each other and can conduct the business. Even the web design and development companies optimize the websites to be viewed correctly on mobile devices.
There are other types of e-commerce business models too like Business to Employee (B2E), Government to Business (G2B) and Government to Citizen (G2C) but in essence they are similar to the above mentioned types. Moreover, it is not necessary that these models are dedicatedly followed in all the online business types. It may be the case that a business is using all the models or only one of them or some of them as per its needs.


                         

The greatest and the most important advantage of e-commerce is that it enables a business concern or individual to reach the global market. It caters to the demands of both the national and the international market, as your business activities are no longer restricted by geographical boundaries. With the help of electronic commerce, even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses, as e-commerce empowers one to execute business transactions 24 hours a day and even on holidays and weekends. This in turn significantly increases sales and profit.

Electronic commerce gives the customers the opportunity to look for cheaper and quality products. With the help of e-commerce, consumers can easily research on a specific product and sometimes even find out the original manufacturer to purchase a product at a much cheaper price than that charged by the wholesaler. Shopping online is usually more convenient and time saving than conventional shopping. Besides these, people also come across reviews posted by other customers, about the products purchased from a particular e-commerce site, which can help make purchasing decisions.

For business concerns, e-commerce significantly cuts down the cost associated with marketing, customer care, processing, information storage and inventory management. It reduces the time period involved with business process re-engineering, customization of products to meet the demand of particular customers, increasing productivity and customer care services. Electronic commerce reduces the burden of infrastructure to conduct businesses and thereby raises the amount of funds available for profitable investment. It also enables efficient customer care center. On the other hand, It collects and manages information related to customer behavior, which in turn helps develop and adopt an efficient marketing and promotional strategy.

Disadvantages of Electronic Commerce

Electronic commerce is also characterized by some technological and inherent limitations which has restricted the number of people using this revolutionary system. One important disadvantage of e-commerce is that the Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction. Some people simply refuse to trust the authenticity of completely impersonal business transactions, as in the case of e-commerce. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Many times, the legitimacy and authenticity of different e-commerce sites have also been questioned.

Another limitation of e-commerce is that it is not suitable for perishable commodities like food items. People prefer to shop in the conventional way than to use e-commerce for purchasing food products. So e-commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e-commerce. A lot of phone calls and e-mails may be required till you get your desired products. However, returning the product and getting a refund can be even more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product.

Thus, on evaluating the various pros and cons of electronic commerce, we can say that the advantages of e-commerce have the potential to outweigh the disadvantages. A proper strategy to address the technical issues and to build up customers trust in the system, can change the present scenario and help e-commerce adapt to the changing needs of the world.

Concepts

The Internet has created a new economic ecosystem, the e-commerce marketplace, and it has become the virtual main street of the world. Providing a quick and convenient way of exchanging goods and services both regionally and globally, e-commerce has boonline.It has online transactions impacting industries from travel services to consumer electronics, from books and media distribution to sports & fitness. With more than 70% of America using the Internet on a daily basis for private and/or business use and the rest of the world also beginning to catch on, e-commerce's global growth curve is not likely to taper off anytime soon. However, the US recession has taken its toll on online sales. Online Sales to Climb Despite Struggling Economy, holiday sales showed the first decrease in the last 7 years. Research by ComScore shows sales declining by 1% for the first 49 days of the holiday season. There are four types of e-commerce:- 1.Business to business 2.Consumer to consumer 3.Business to consumer 4.Digital Middlemen In the last decade, many startup e-commerce companies have rapidly stolen market share from traditional retailers and service providers, pressuring these established traditional players to deploy their own commerce websites or to alter company strategy in retaliation. This effect is most pronounced in travel services and consumer electronics. As traditional brick and mortar firms continue to lose market share to e-commerce players, they will likely see continued declines in their revenues, operating margins, and profits. It is important to note that most e-commerce players are at a competitive advantage to retailers. They have lower operating expenses and better inventory management due to operating in a virtual commerce environment.Clearly, e-commerce vendors will have the most to gain if they successfully disrupt retail customer acquisition, disintermediate distributors/resellers, and under-price retail establishments. As a consequence of e-commerce vendor gains, financial transaction processors and parcel shipping companies are among ancillary vendors who will gain.