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Emergence of internet over the past few years has changed the trends of business world at exponential rate. Now world has become a Global Village which means what used to be a single physical market place located in one geographical area has now become a border-less marketplace, attracting customers and businesses from all over the world. It provides businesses with many advantages for instance setting up an online business is less costly since it doesn’t require physical infrastructure for a shop, a business can operate 24 hours a day, 7 days a week and 365 days a year, these long working hours helps businesses generating more profits. It also offers businesses to try new product lines and marketing strategies in cost effective way. The biggest advantage of online business is that even small businesses can compete with international corporations since consumers cannot figure out the actual size of firm.
E-commerce can be defined in different ways:
“E-commerce refers to various online commercial activities focusing on commodity exchanges by electronic means, internet in particular”.
Zheng Qin (2009) , Introduction to e commerce, Page 7
E-COMMERCE refers to the paperless exchange of business information using electronic data interchange, electronic mail, electronic bulletin boards, electronic funds transfer, world wide web, and other network-based technologies.
E-COMMERCE, The Cutting Edge of Business , Second Edition (2005) by Kamlesh K Bajaj and Debjani Nag
“E-COMMERCE is the use of telecommunications and computers to facilitate the trade of goods and services”
E-commerce by S. Pankaj (2005) page 3
Types of E-commerce
There are Four Main Types Of E-commerce Model:
1) Business to Business (B2B)
B2B can be define as commerce transactions between businesses, such as transactions between a wholesaler and retailer.
2) Business to Consumer (B2C)
As discussed in class lecture, B2C refers to a commerce transaction between business and individual rather then a company or Businesses selling to the general public for example Dell computer which sells directly to general public through website.
3) Consumer to Business( C2B)
C2B is a reverse form of business to consumer, in C2B the commerce transaction take place between consumer and business, for instance Elance.com, which allow individuals to place their requirements on a website within hours companies review the project and make bids on a project then consumer review the bids and select the company with most suitable bid.
4) Consumer to Consumer (C2C)
C2C is simply a commerce transaction between consumer to consumer, manay auctions webistes allow consumers to interact with other consumers to buy and sell all sort of items for example Ebay.com, Amazon.com.
Above mentioned types of E-commerce clearly shows that electronic commerce is becoming the back bone of transactions at every level for both businesses and consumers. The impact of this emerging trend has changed the fundamentals of supply chain management by redefining the way in which consumers select, purchase and use products and services. E-commerce has also provided companies with opportunity to work more closer to customers what we call ‘consumers intimacy’ which allow companies to shape their innovation process with changing demand of consumers.
Classifications of Business-to-Consumer (B2C) E-Commerce:
As described by Deborah Morley & Charles S. Parker(2010) ” With the business to consumer model, businesses sell goods or services to individual consumers. The B2C model was one of the first major types of e-commerce business models to be defined and implemented using the Web. Some example of B2C businesses include Amazon.com, Walmart.com, Overstock.com, and BestBuy.com”.
There are two main types of B2C E-Commerce:
1) Direct Sellers
Direct Sellers are those companies which provide products or services directly to consumers. The important factors that contribute towards the success of B2C e-commerce are Direct Selling experience and consumers database. There is a limit to amount of information that can be communicated through catalogs but internet offers a powerful medium by which direct sellers can provide consumers with thousands of products with detailed description and high-quality visuals.
Example: Dell Computers
2) Online Intermediaries
Online intermediaries are companies that facilitate transactions between buyers and sellers and receive a percentage of the transaction’s value. For examples Internet Service Providers( ISP).
Supply Chain Management
An electronic alternative to the traditional paper chain, providing companies with a smarter, faster, more efficient way to get the right product to the right customer at the right time and price. Combines the power of the Internet with the latest technology, enabling participating suppliers to access up-to-date company information and enabling companies to better manage and track supply and demand
IMPACT OF E-COMMERCE ON AIRLINE INDUSTRY:
The blessings of Internet have been observed the most by Airline Industry and as a result of it Airline ticket sales now comprise of the largest portion of all product sales made online. This is because
e-ticketing is beneficial for both the airlines as well as the travelers. Traditionally the only options available to a passenger were either to buy tickets from a travel agency or from airport. But now with the advent of Internet, airlines have used tool like e-distribution system.
An airline’s costs can be divided into following two parts:
Direct Operating Costs- which includes aircraft, its fuel and salaries of the staff
Indirect Operating Costs- which is the distribution cost.
The direct operating cost will remain more or less fixed while there is room for saving on indirect cost. This is where e-commerce can play an important role by integrating all business units and efficiently managing logistics. The major components of indirect cost for airline industry includes Sales office, Reservation system ,Travel agent fees,Ticketing fees & Promotion and advertisements.
Previously, airlines payed commissions to travel agents for selling their tickets, in addition money was also spent on setting up of sales office and staff salaries. Extra capital was used for printing and issuing of tickets. To cut down the operating cost airlines had to turn to e-ticketing to limit their sales offices and reduce their dependency on sales agents. Every airline has now setup their own website offering online booking facility. This also allow Airlines to promote different marketing strategies through web site which gives them more chance to attract new customers.
Through the use of e-commerce and development of websites airlines has integrated all the parties involve in a business process for instance tourism business industry can link up with airline website using the integrated information system so that they can get the real time data through share database about the customers booking for their hotel along with the airline tickets.
Online sells has also extended the business hours for airlines since customers can do online bookings round the clock and thus throughout the year. While passengers have the luxury of scheduling their own flight in a matter of few clicks saving both time and money.
E-commerce has revolutionized the business models. Trading online enables businesses to reach much wider audience while cutting the costs of traditional retailing methods. It also provide businesses with long working hours and minimum human capital. E-commerce allows businesses to better understand and meet the demands of customers, working more closely with them by managing databases, resulting in better supply chain management activities and efficient logistics. E-commerce has also changed the way customers learn , select, purchase and use products and services, providing them with more personalized experience ever and by cutting the ‘middle man’ out businesses have provide consumers with fast processing and close interaction with company.
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