With the advent of today’s technology, the use of Internet is becoming more of an income-generator than just a lifestyle. This is the very reason why the so-called “E-business” is growing remarkably.
Electronic business (e-business) is defined as the business which is conducted through the Internet. It involves not only the marketing, buying and selling of certain products but also servicing the customers and collaborating with various business partners (Alexandrou, 2002 para. 1). IBM is one of the internationally known companies who has mastered the use of this method and has found it to be very effective. From online marketing and promoting of the products (thereby gaining access to a wider array of customers), to selling (which also involves invoicing), that are all plays a significant part of the e-business processes prove that e-business is indeed becoming a trend nowadays making all transactions available on-line.
This report highlights the feasibility of one established and continuously growing company to combine online marketing and selling with their normal retailing operation. Specifically, this tackles:
- The concept of e-business and e-commerce.
- The advantages and disadvantages of going into e-business.
- The best possible online selling and invoicing system that the company can adopt.
- The security and credibility issues that the company must address.
The Business through Electronic
Electronic commerce has paved the way for the more generic electronic business. According to the Economic Cooperation and Development (OECD), e-commerce can be defined as the business that occurs over networks and uses non-proprietary protocols established through open standard setting process (with which the best example is the Internet) (OECD, 1999). Meanwhile, the Department of Communications, Information Technology and the Arts (DOCITA) defined e-commerce as a type of business transaction wherein the participants operate or transact business or conduct their trade electronically. These transactions may include activities make use of the telephone or fax as well as the Internet (DOCITA 2000).
The above definitions show one common denominator, and that is the process of gathering information, communicating and trading with customers and suppliers electronically.
More and more companies now believe that if a company fails to take chance in e-business means nothing less than going out of business altogether. This is because company owners are now aware of the fact that consumers are willing to spend on e-commerce as much as $1.3trillion (as predicted by the International Data Corporation). More so, it has been estimated that the business-to-business market for products and services online rose from $131billion in 2000 to $1.5trillion in 2003 (Shipside, 2000).
Aside from IBM, other noted companies who have been successful in their e-business approach are:
- Linux and its pay-per-use approach of application service providers or ASPs. The company has opted to have their online products (the soft wares) available for rentals. The growth of ASPs is considered to have provided a great impact in business computing (Shipside, 2000).
- The Amazon.com, one of the largest sellers of books that now offers books thru online (Shipside, 2000). They also facilitate shipment of books to international buyers.
- Ebay.com who has been known as one of the major ‘marketplace’ that is able to sell many types of items. This company has found to have been earning an average of $9b per annum (Bricklin, 1999 para. 4)
- AOL.com has had a very good stock valuation because of its over 53 million online visitors a month (Shipside, 2000).
- Expedia and other travel websites. Many passengers and airline officials can attest that travel web sites are becoming a powerful force in airline ticketing and hotel reservations (Bricklin, 1999 para. 5).
Advantages and Disadvantages
E-business offers numerous advantages. First of which is the potential reduction or elimination of costs associated with doing business (e.g., investments in real estate and facilities or even a reduction in certain administrative costs such as overhead costs, paper works, time and errors). Second, going on-line enhances availability and market reach because electronic media is available 24/7 to and from any location around the globe. Third, e-business augments buyer and seller relationship because buyers will be assured of a customized service. E-business also offers wide rooms for improvement of marketing capabilities and brand equity because buyers’ information is more readily Lastly, going into e-business will ensure that the company meets the price of entry because it has been noted that companies in many supply chains and in many industries are now being ‘forced’ to do business electronically just to be considered as ‘viable partners’ (Advantages of E-business, 2001 para. 2)
The possible disadvantage of going electronically is Internet hype. Because many people are now aware that Internet is one of the most powerful means of reaching larger number of people, there have been lots of marketing propaganda and unsolicited mails being passed over the net (Advantages of E-business, 2001 para. 2). This somehow creates instability on people’s trust over Internet and on businesses connected with the Internet.
Moreover, moving into e-business (online selling), if not planned and properly implemented, has also its ups and downs. The possible barriers to successful online selling include (Klimley, 2002):
- Absence of company infrastructure.
- Apprehensions about too much competition.
- Lack of expertise of the company personnel.
- Too costly for small businesses.
Online Selling and Invoicing Approaches
When moving to e-business the very first questions that the company must address are: how to go about it, how to sell online and how to produce the invoices for the customers, and of course, how to ensure that the customers are credible and are able to pay for the items.
There are several approaches that ‘experienced’ companies follow in order to maintain a smooth flow in their online selling and invoicing methods. These are:
Online Selling Methods
- Web-based solutions.
- Catalogue solutions.
- Integrated solutions.
Web-based online selling is just like an online shop with which the company maintains a website where the products are listed according to category. In this approach, everything is handled through the company’s web browser. Most companies pay the Application Service Providers with the annual subscription to cover hosting costs. This approach is very flexible and can be used by any operating system and can be accessed anywhere (“Why selling online makes sound business sense”, 2003 para. 3).
Catalogue e-business solutions, on the other hand, are software packages that are designed to run on company’s or warehouses’ main PC. It means that the manager of the company’s branch or warehouse can update information from their normal desktop PC. This ensures convenience and familiarity (“Why selling online makes sound business sense”, 2003 para. 5).
Online selling through integrated solutions for requires the business to have an internal accounts system where the online shop accesses to update stock or product pricing. This then guarantees that the company is effectively managing the online shop thereby promoting efficiency, control and reporting (“Why selling online makes sound business sense”, 2003 para. 6).
Online Payment and Invoicing
- Electronic Fund Transfer.
- Remittance Data via E-mail.
- Electronic Data Interchange (EDI) Invoice & Remittance.
- Credit cards.
One way of online payment and invoicing is through Electronic Funds Transfer (EFT). Other business with existing accounts with the company can automate their payments through this method. To initiate this, businesses just need to communicate with their banks regarding the payment (where, how much, and to whom a payment should be sent). The bank will then electronically send the payment to the company’s bank. This method offers a number of benefits including reduction of time consumption, reduction of check-processing costs and simplification of remittance and payment processing (“Manage Invoice and Payments”, 1995 para. 1).
Remittance Data via Email is a remittance system commonly used by small and medium-sized businesses. In this method, the buyers (or the small companies who have ordered the products) will email the remittance data to the company’s designated email address in a text or spreadsheet file containing the check number or electronic Transaction Control Number (TCN), code number of the product bought and the payment amount. The email may or may not also include special instructions such as if paying by Electronic Funds Transfer, or the check number if paying by check. This method assures a great reduction in implementation costs. More so, this does not require any programming and can be integrated with the company’s current spreadsheets used to processing payables (“Manage Invoice and Payments”, 1995 para. 2).
The benefits of using Electronic Data Interchange (EDI) are maximized by most large connected business with established accounts payables with the company. They integrate the seller’s invoice data via electronic methods. Large companies with multiple transactions can also enhance and simplify their invoicing process by using EDI. This method helps the buyers and the seller (the company) consolidates invoices for every transaction into a weekly or daily EDI invoice file. It also reduces paperwork and data entry work, check-processing costs and keying errors (“Manage Invoice and Payments”, 1995 para. 3).
Meanwhile, non-business buyers, with or without account with the company can purchase and pay with their credit cards. There are three possible ways a consumer can use his/her credit card. He/she can either bill the transaction directly to the credit card, or he/she can write your credit card number on the transaction number or use the credit card when he/she went personally with the company shop/warehouse (“Manage Invoice and Payments”, 1995 para. 4). There is a two-way benefit by using the credit card. The buyers can then maximize the benefits of their credit cards while the merchant is assured of the ability (thru the credit limit) of the buyer to pay for the item.
Other possible means that the company can send the invoice of online sales and the customer can pay is thru automatic debit from the customer’s bank account (wherein the customer will be arranging to the bank for the automatic debit of the customer’s invoices). Another possible mean is thru mail wherein the company can send the paper invoices to the customer’s address and in return the customer will send the checks via mail. The last method that a company can use is payment transaction via telephone. The customer can give the company permission over the phone to debit the payment to his/her bank account (“Manage Invoice and Payments”, 1995 para. 5).
All these online selling and invoicing methods are designed to help the company in managing invoice processing resulting to printing and storing invoices in a more convenient and timely manner.
Internet and Network Security
Internet and data security will always be the fear of any online shop/company owner and, of course, the shoppers. This is because going online is providing an area for security threats. Companies will always have to deal with potential information spills, security breaches and system compromises and even fighting the propensity of humans to do incredibly inconsiderate things (LeBlanc 2006 para 1).
Developing a secure online system takes extra hard work and commitment. This can be done by following several simple yet proven effective things. First is establishing an auto-update feature in all of the common operating systems. Second is giving the assigned users the most basic set of privileges needed to do their job this is to ensure that the ability of users to change any of the settings or install unnecessary programs is also limited. Third and the next major step is educating the users regarding the hazards of unsolicited email and unexpected attachments this is to provide the assigned users a clearer picture of what will happen to the entire system if they will open emails/attachments which they are not expecting (LeBlanc 2006 para 4).
With regards to security breaches, this can be addressed by limiting the number of people who know the exact know-how of the entire system. Security breaches are usually related to system compromises where intruders aspire to take ‘full control of a single machine or group of machines and use them to collect data of various types depending on their motives’ (such as corporate spying, financial data harvesting, or even up to the point of using the company resources to host their own activities. All these forms of security breaches can cause a serious damage to the company including its finances and reputation in the industry (LeBlanc 2006 para 6).
The best thing to address all of this internet and data security threats is making users understand the risks. Education and consistent enforcement regarding the system, the only programs allowed and the possible threats such as viruses and spams will be enough to keep the users updated of what shoul and should not be done in the network-related jobs. More so, keeping the programs and all the machines and computers updated especially on anti-virus, anti-spyware soft wares will also help minimize infections. Finally, protecting the network should be the responsibility of every users. Users and website administrator must see to it that all unused ports are closed, services and daemons that are not needed are disabled, and firewalls against unexpected inbound traffic are applied (LeBlanc 2006 para 8).
From the standpoints highlighted above, it can be concluded that the company will continuously have a very bright future if it will decide to go online. A fully equipped and easy to access website coupled with website administrators is a good way to start the online marketing and selling. Communicating with major credit cards companies and a number of stable banks is the second major step. This is to ensure that the company will have the right to check with them in terms of the accounts of any consumer who will decide to purchase online.
With the methods suggested above, the company’s online marketing and selling will surely flourish. At the same time, security of the company and of the buyers’ accounts will be maintained because everything will be checked and verified accordingly and in a very legal way.
- ‘Advantages of E-business’ 2001.
- Alexandrou, M 2002. ‘E-business definition’.
- Bricklin, D 1999. ‘What’s Been Successful in B2C?’. Web.
- Department of Communications, Information Technology and the Arts (DOCITA) 2000, E-Commerce Beyond 2000. AusInfo, Canberra.
- Kerrigan, R, Roegner, E. & Swinford, D 2002. ‘B2Basics’. The McKinsey. p.45.
- Klimley, A 2002, ‘Make the E-Commerce Connection’, Black Enterprise, vol. 32, no. 11, pp259-265.
- LeBlanc Linda 2006. “Creating a Culture of Security”.
- ‘Manage Invoice and Payments’ 1995, FedEx. Web.
- Organization for Economic Cooperation and Development (OECD) 1999. The Economic Social Impact of Electronic Commerce — Preliminary Findings and Research Agenda, Paris.
- Shipside, S 2000, ‘The Fight for Your E-Business’. New Statesman, vol. 129, no.4494.
- ‘Why selling online makes sound business sense’. 2003, Scottish Enterprise.