Delivery systems for e-commerce purchases

Delivery systems for e-commerce purchases

Delivery in the goods: Internet EC allows the user to order what they want, when they want, but then they have to wait until the post man arrives. That can be okay in ordinary circumstances but if the requirement is an urgent, it will not fulfill the need of the e-customer.

            The delivery system for EC purchases has to depend upon the product size, nature, emergency and the distance the product has to travel.

I.            Post: The post is relatively cheap, reasonably rapid and is useful for small packets of non-perishable products, books and CD’s are the ideal products for posting. It has been said that you can sell anything online provided it will fir through a letter box.

II.            Packet: Call these packets or parcels, there are a variety of organizations that provide a home delivery parcel service. Packet delivery services, are not that cheap and the next day delivery is requires, then there is a premium rate to pay.

III.            Local delivery: The idea that all e-commerce can be conducted from a central warehouse with minimum overheads starts to breakdown when it comes to perishable goods. A second issue with local delivery is cost. There is no real savings to an                e-commerce retailer if his business is small or restricted to a geographical area.

IV.            Collect your own: On alternative to the local delivery is for the   *         customer to collect there own goods. The product is ordered electronically paid for online and backed by the vendor, but the customer fixed it from a local store.

Electronic delivery:

            The one way to not only order, what you want, when you want, but also get it when you want. That type of delivery is called as electronic delivery.

Ex: Downloading of music videos etc, but the copy right of the downloaded product is not in your name.

No delivery:

            The final category is for those intangible products where there is no need for delivery. Ex: air tickets booked online.

            Overall the issue of delivery of electronically purchased goods is somewhat problematic. Inter organizational systems transfer’s tasks to the customers and can achieve savings for the order and payment stages of the trade cycle.

INTERNET BANKING

            There are types when the bank customer wants to know their bank balance or make an urgent payment without visiting a bank or at a non conventional time. This is highly impossible for the customers without the use of internet banking. In other words internet banking can solve the above mentioned problems. Internet banking reduces the cost of processing cash transactions and has the potential to reduce the overhead of the branch networks. Online banking allows customers to check their balances at any time of the day or night. The services offered by online banking are as follows:

ü  Online balance statements giving up to the minute information.

ü  Credit transfers i.e. bills can be paid on time.

ü  Maintenance of standing orders and direct debits.

Even after providing internet banking still to get cash, the account holder has to leave home and visit an ATM or a branch bank. There are security problems included in online banking such as hacking a password etc and it also needs special software downloads into your computer to access internet banking. The supply chain banking, using e-banking, reduces usage of the branch networks.

SUPPLY CHAIN MANAGAMENT

SCM means having a series of rights as mentioned below

RIGHT product

RIGHT price

RIGHT time

RIGHT type

RIGHT condition

            All the above right things are the part of B to B commerce framework. The approach of SCM transforms the way in which companies deal with their suppliers, partners and customers. The goal of SCM of to improve efficiency and profitability by providing new opportunities for exchanging information.

            SCM is a powerful tool to exchange information so as to improve customer service by fulfilling the orders quickly and minimizing excess volume of inventory. In SCM the following are the essential ingredients:

ü  Collaboration among various business partners.

ü  Co-ordination for logistics for timely delivery of goods.

ü  Co-operating suppliers and business parties.

ü  Connectivity through network to speed up the response time.

Michael Porter’s Value Chain Model:

            Micheal porter introduced this model in 1985 concerned with internal activities of the company mentioned below.

1.      In bound logistics: It involves handling of goods that are bought into the company and storing them to make available in the time of operations as required.

2.      Operations: Production process that can be represented on a detailed value chain analysis.

3.      Outbound logistics: It involves taking the products of the company and storing them if need arises and distributing these products to the customers in a timely manner.

4.      Marketing and sales: To find out the requirements of the potential customers and making them know the products and services that can be offered.

5.      Service: Requirement for installation and after sale service after the transaction is completed.

The above are the primary functions; to support these primary functions there should be supporting activities mentioned as under.

A.    Firm’s infrastructure: This is the bachelor of the business unit. It includes various activities like business management, accounting, finance, planning and other activities.

B.     Human resources: This is another major activity to match the right people for the right job. It includes recruitment, career development, training and development of workers.

C.     Technology development: Organization needs to improve the production process for being competitive. This activity contributes to the quality of the product, integrity and reliability.

D.    Procurement: This activity focuses on the supplier of the materials whether the supply of quality material is regular. It involves negotiating quality supply at a reasonable place within a reasonable time.

The genuine value chain is the beginning point for constructing a specific value chain for a company. After properly identifying the component activities and linkages there-in, each element can be analyzed there-in, each element can be analyzed in terms of cost and value so as to establish the overall efficiency of value chain.

Internet advertising: The following are the important reasons for the development of internet advertising.

1.      The television viewers migrated to the internet. The medial follows, acknowledging that the goal of any advertiser is to reach its target audience effectively and efficiently.

2.      Ad’s can be updated any time with a minimal cost. Therefore, they are always timely.

3.      Ad’s can reach very large number of potential buyers globally.

4.      Online ad’s are sometimes cheaper in comparison to newspapers, TV or radio. The later are expensive since they are determined by the space occupied how many days they are shown and many national and local television stations and newspapers they are posted.

5.      Web ad’s can effectively use the convenience of text, audio, graphics and animation.

6.      The use of internal itself is growing rapidly.

7.      Web ad’s can be interactive and targeted to special interested groups or individuals.

Advantages of internet advertising:

a)      Internet advertisements are accessed on demand 24hrs a day, 365 days in a year and costs are the same regardless of audience.

b)      Accessed primarily because of interest in the context, market segmentation.

c)      Opportunity to create one-to-one direct marketing relationship with consumer.

d)     Multimedia will increasingly create more attractive and competing ad’s.

e)      Distribution costs are low, millions of consumers, can be reached at the same time.

f)       Advertising and content can be updated supplemented or changed at any time and therefore always it is updated. Response and results of advertising are immediately measurable.

g)      Ease of logical navigation- you click where you want and spend as much time as desired there.

Disadvantages of internet advertising:

a)      No clear standards or language of measurement.

b)      Immature measurement tools.

c)      It makes viewers comparison difficult for media buyers.

d)     Difficult to measure the size of market, therefore difficult to estimate rating, share or reach and frequency.

e)      Audiences are still small in number.

Various internet advertising methods

I.         Banner: It is the most commonly used form of advertising on the internet. As you surf your way through the information super highway, banners are everywhere. The file size of the image should be about 7kb to 10kb. The smaller the file size the quicker it loads. Designer of the banner pay a lot of attention to the size of the image because long downloading times may cause the viewer to become impatient, and move on before the banner is fully displayed.

II.         Splash screens: It is an initial website page used to capture the user’s attention for a short time as a promotion to tell the user what kind of browser and other software they need to view the site. The advantage of this method over others is that one can create innovative multimedia effects or provide sufficient information for a delivery in one visit.

III.         E-Mails: Another way to advertize on the internet is to purchase e-mail addresses and the company information to those on the list. Advantage of this approach is its low cost and the ability to reach a wide variety of targeted audience.

IV.         Chat rooms: There are hundreds thousands websites having millions of chat rooms to exchange messages in the real time for participants.

A vendor frequently sponsors chat rooms. Chat capabilities can be added for free by letting software, chat vendors, post your session on their site.

 SOFTWARE AGENTS

                        Software agents are computer programs that help the user to conduct routine tasks, search and retrieve information, support decision making, and act as domain experts. Agents sense the environment and act autonomously without human intervention. This results in a significant saving of time to users. There are various types of agents, ranging from those with no software agents to learning agents, which exhibits some intelligent behavior.

            Agents are used to support many tasks in EC. One of the primary reasons for using such agents is to overcome the tremendous amount of information overload. In going through the purchasing decision process described earlier, for ex: A customer must examine large numbers of alternatives, each of which is surrounded by considerable amount of information.

            A search engine is a computer program that can automatically contact other network resources on the internet, search of specific information or keywords, and reports the results.

Unlike search engines, an software agent can do more than just “search and match”.

Software agent for information search and filtering:

Software agents can help to determine what to buy to satisfy a specific name and where to buy it. An agent that helps consumers decide what product best fit their requirements by narrowing down selection through a filtering process. Consumer specifies requirements and constraints and the system returns a list of products that best needs their desire.

Software agents for products and vendor finding:

                        Software agent helps consumer decide where to buy comparing merchant offers. A pioneering software agent for online price comparison was bargain finder. This agent was only used in online cd shopping. The agent quires the price of specific cd from a number of online vendors and returns a list of prices.

Software agent for customer services:

                        Several software agents enhance computer service by helping search as was shown earlier and by providing help to shoppers.

Learning agents:

                        A learning agent is capable of learning individual preferences and making suggestions. An example is memory agent , developed by IBM. Memory agent uses a neural network technique called associative memory, which learns by creating a knowledge base of attributes of cases.    

Computer In Banking

Other related areas:

EDI: Electronic data interchange

SET: Secure electronic transactions

Companies discovered that EC is where the business is, but getting there require careful planning differentiating a web site from competitors, attracting customers by offering added service and managing the systems and of all E-Business called for special skills.

Portal: It offers user powerful web access tools as well as integrated package of contents and services as e-mail, calendars, shopping and more all in one place.

E-Tailor: On-line retail stores often called e-tailor. Customers can log on to internet and check the inventory of the vendor to place an order.

Content provider: They distribute information contents such as digital news, photos, video etc over the web.

Transaction broker: Sites that process transactions for consumers normally by phone or mail are transaction brokers. Ex: Financial services, bank services, job placement services etc.

Various electronic payment systems:

I.            Digital cash: Digital cash was one of the first forms of alternative payment systems developed for e-commerce. The name digital cash is infact something of a misnames. Recall our original definition of cash; legal trader created by national authorities i.e. instantly convertible to other forms of value without the intermediation of any third party. Instead of this digital cash is taking some interesting form of value storage and value exchange that have limited convertibility into the other forms of value and that too require intermediaries to convert.

Process of using digital cash:

1. Customer has to establish an account at a bank that was using the digital cash system.
2. Then customers should download digital wallet software on to his or her computer hardware and request a transfer of digital cash.
3. Once digital wallet had cash, the consumer could spend that cash at merchants who are willing to accept it.
4. The software would deduct the cash at digital wallet and transfer the cash back to the bank to confirm that it has not been spent again, or double spent.
5. The bank would then control the cancel the coins and credit the merchant accounts at the bank.

II.            Credit cards: It is a small plastic card which has the name and account number of the holder embossed on it. Generally a bank enters into an agreement with its customer and issues the customer a credit card. A card holder is also given the list of shops and establishment in cash city where the cards will be accepted in line of cash, there was a limit for the usage of customer against cash.

      The most common way of paying for electronic commerce transactions is with a credit card. The customer types the card number, expiry date and tilling address on the order form and the vendor can verify the details and be confident of payment credit card used in a conventional retail application are recorded on the transaction slip and verified by the use of a signature. In addition to this banks also allow customers CNP transaction (Customer Not Present).

      Processing a credit card invoice involves some expenses and they are also charges levied on the vendor by the banks. So through credit card small amount of transactions do not make any sense. If a credit card is being provided by a bank, also allows withdrawals of cash and charges service fee ranging from 24% to 36% per annum.

III.            Debit cards: Debit cards or cash cards can be used for e-commerce transactions in much the same way as a credit card. Very few sites offer the facility to use the debit cards, and it is also not appropriate for very small transaction and does not effort anonymity.

IV.            Stored value cards: This is the most common forms of electronic payments, the most wide spread of this technology is making it as a popular payment system in EC.

Ex: Telephone cards, exchange coupons etc.

      On a more general scale, there has been a number of scheme s to promote the stored value cards as a replacement for cash.

V.            E-Cash: The online equivalent of a stored value card is e-cash or network money. The system operates by the user transferring money from a credit card or through account into e-cash account. E-cash can then be used to make payment for EC transactions. The advantage of this system is that it can be operated cheaply as the whole operation of the system is on the net.

VI.            Delayed payments: The final option is to pay off-line. A number of sites seeking to re-assure customers, who are uncertain about the security of on-line payments, will accept credit card details by phone or fax or cheques through post. It causes extra work for the e-vendor and delay for the customer.

VII.            E-Shops: E-Shops come in all shapes and sizes. They range from, at the simplest end of the spectrum, a few simple web pages to highly complex sites offering a range of products and services including on-line ordering and payment. The full services is store needs an extensive range of facilities such as follows:

ü  Company information.

ü  Customer registration.

ü  Product data bases.

ü  Site indexes.

ü  Online order and payment systems.

ü  Sophisticated security production after sale service

ü  Feedback system.

Online Information:

            *  is an issue on the internet and it is not likely to go away. One element of such issues is knowing that an EC site is a bonafide trader and not just a scam. Further elements are:

             

1.      A site that gives a professional image.

2.      Inclusion of company information on web-site. Company information lets the optional on-line shopper know what sort of outfit the e-shop is.

Customer registration:

            E-commerce customers have to give the suppliers details about themselves, if goods are to be delivered.

Site navigation:

            Large complex websites can be slow to download and difficult to navigate. Good site design and initiative sites navigation is vital. Site navigation is aided by.

ü  Site index

ü  Site search engine

ü  Logical sequencing of facilities with clear links to the next stage in any process.

An e-commerce site must aim to appeal to the experienced user and to readily accessible to the *. 

Product data base:

            E-commerce sites sell a variety of products and the layout of products and the layout and technical design can be similarly varied. At its simplest an EC catalogue can be hard coded in HTML. The web site contains a series of product descriptions, prices and possibly a picture of product.

            Many e-commerce applications require a more sophisticated provision in the fixed format HTML page. The need for something difficult arises when there is a rapid change to product details, there is a perceived to be a need to use common data source for the e-store in the back-office function and for services that are specifies in response to customer demands.

Online orders:

            The most commonly used analog in a website is a shopping basket, which makes the customers to hours round the shop, select goods and put them in basket. Once customer satisfies with the value of goods, the customer proceeds to the check out.

E-Commerce Implementation:

            Once the strategy devised then needs to be implemented. The strategy devised implementation into two aspects namely technical implementation and business implementation. 

I.         Technical implementation:The approach to technical implementation of an e-commerce system depends upon the business objectives, business requirements and technology to be selected. It is noted that many technology to be selected. Ii is noted that many                   e-commerce systems are patched roughly together rather than designed and that is often apparent. It is important that the process of designing should consider the following:

a)      The ease of use of the system by the intended end user; it is an important factor in system design that the end users or consumers are the members of the public with limited computer literacy, and the option to switch to another website is always there if it is not satisfied.

b)      The back office systems-customers of online service quite reasonably expect a rapid response, so that the back offices systems need to be able t meet this requirement.

The design of an e-commerce system would be sensible be based on a proto typing life cycle, as the design of the user interface is crucial to the overall success of project.

II.            Business implementation:Business implementation as well as building its e-shop, the organization needs to have the following.

ü  Put in the business infrastructure to support the new EC facility.

ü  Market the new EC facility to the intended users.

Initial implementation may have limited functionality and to limited audiences. Full implementation of EC can have a considerable effect on the shape of the business and the way it does the business.

Electronic data interchange (EDI):

            The development of business through use of computer systems has essentially taken place over the last 30yrs. Initially the use of computers was limited, but with the development of technology allowed every small and medium sized entrepreneur to use their business on computers.

            The marriage of computers and telecommunication has enabled organizations to network their computers. Right now offices which are using computers depend on LAN or WAN based on their area of operations or geographical area in which they are operating. Many organizations use these networks to integrate there business processes with common customer files, interfaces to the accounting system and the like. It can be simply done by interfacing transactions but it can also involve the set-up of corporate data base for network client systems or servers. The integration of systems has been a factor in improving customer service and customer care, it has also given birth to new products and services, particularly in the new financial industry.

            However, this integration of computer systems stopped at the company’s front and back doors. Inside the company the order processing system formulated the replenishment demand, updated the stock file and make a posting to the accounting system and the print the order of paper, then post the order of the supplier with the inventible quota of delays, transcription errors and offer stained documents.

            The answer to these difficulties and insufficiencies is the Inter Organization Systems (IOS). The prime technology of IOS is EDI, development of these systems has changed the inter organization business practices in much the same way as the evolution of IT & IS           (information science). These developments of business information system can be represented in three categories or three generations.

            Development of internet enabled system is the next age in the evolution. The overall impact and implication of the development of the internet on corporate systems is still to be evaluated.

EFT IN INDIAN CONTEXT / BANK NET

EFT IN INDIAN CONTEXT / BANK NET

            EFT concept implemented in India with the help of BANKNET. Bank net is the 1^stnational level network in India which is commissioned in February 1991. It is a communication network established by RBI on the basis of recommendations of the committee appointed by RBI under the chairmanship of T.A.N. Iyer. It is in the implementation stage. Initially, it will provide communication among 7 centers i.e. Bombay, Chennai, Kolkata, Delhi, Nagpur, Bangalore, Hyderabad. RBI, 26 public sector banks, Indian banks association and discount and finance house of India have joined the network.

Application of Bank Net:

  EFT, Customers can draw cash against there deposits at any branch of the bank, remit funds immediately to any branch in the network.

  Inter bank funds transfer can be quickly settled.

  Automated clearing services provide faster credit to the customers.

  Database of the common interest can be maintained.

  Sales or purchase of foreign currency and related matters can be quickly settled.

  Data transmission between RBI and Commercial Bank.

  It provides across the SWIFT international network from different centers in the country.

  It includes electronic mail system.

Hardware of Bank Net:

            The required hardware includes personal computers, mini computers and main frames are connected in the network. The communication is through Catalyx-25 packets switching network. Other equipment used includes communication controls, Packet Assembler-Disassembler (PAD) and modems.

            One of the key elements of the system is telephone lines between various posts. The actual data is converted from digital signals to analog signals through a modem. The analog signals are transmitted on telephone lines. At the receiving end, a corresponding modem          reconverts the analog signals to digital, which can be understood by the computer.

PROCESS OF MANUAL CLEARING

            The Rangarajan committee 1984 has pointed out that the main function of a banking industry as a financial intermediary is implemented largely through cheques and such other instruments drawn on the banks. Clearing of cheques has become an extremely important are. Reduction in clearing time results in improving customers satisfactions. If the clearance of cheque is delayed, it may provide to cause troubles to marketing company and individual. If the entire work of clearing is handed manually, the cheques would be credited after a delay of 3-6 weeks. This means the funds are not available to the company during this period and it may in term, have to borrow the same money from the banks to keep its operations running. Effectively the company is paying interest to huge money which belongs to it in the first place.

Process of manual clearing:

a)      For local cheques:

Stage 1: outward clearing collecting bank

·            Cheque deposited by an account holder in bank branch.

·      Sorting of all the cheques and their listing and preparing bank wise packets and consolidation of amounts.

·      Transfer of packets with delivery statements to local main clearing branch of bank.

·      Branch wise deliveries verify and bank wise packets and delivery statements prepared.

·      Transfer to clearing house.

Stage 2: At the clearing house

·      Exchange of instruments and delivered by banks at the clearing house.

·      Generation of listing of bank wise deliveries and amounts to be received.

·      Working a bank by the bank position of payable and receivable.

·      Working out bank wise net payables/receivables and settlement.

Stage 3: Inward clearing ( At paying Bank )

·      Receipt of instruments delivered by banks at the clearing house.

·      Verification branch wise sorting, consolidation in balancing and summarizing.

·      Transfer of instruments to respective branches.

·      Verification of instruments received and passing the entries.

·      Recording of entries in the books of accounts.

·       Returning of unpayable cheques through step1 in stage 1

b)      For the outstation cheques:

The following steps are involved in clearing of outstation cheques in the manual process.

·      Deposit of the cheque by the customer.

·      Bank wise and centre wise sorting.

·      Dispatch of cheques to the regional collection centers or local main clearing branches in the respective centers.

·      Adjustment of transaction through debit/credit on inter-branch accounts.

·      Presentation of the cheques at the local clearing house.

·      Sending advice to the originating branches on realization or non-realization of cheques and adjustment of the entries through credit/debit on inter-branch accounts. 

·      Crediting the proceeds to the customer’s accounts or returning the non-realized cheques to the customers.

MICR (Magnetic Ink Character Recognizer)

            MICR is essentially a technology cheque processing mechanism. For this purpose the cheques should be standardized in size and it has to meet the following characteristics, then only it can be considered as MICR cheques.

Characteristics:

1.      Standard size: Two standard sizes are used for MICR cheques i.e. for savings and current a/c’s respectively.

a)      Size 1:For saving bank a/c the size of cheque should be 6.5” * 2.75”.

b)     Size 2:For current a/c, cash credit a/c’s, demand drafts the common size of MICR cheque should be 8” * 3.75”.

Size 1 cheques are applicable even for gift cheques and traveler cheques.

2.      Clear band: Each MICR cheque has a clear band width of 5/8” across the lower edges of the cheque. Certain numbers are pre coded on the bottom using special ink that contains magnetizable particles of iron oxide. This pre-coding is done with the help of an instrument called the encoder. The various codes are as below:

Field 1 {6 Digits}: Cheque serial number.

Field 2 {9 Digits} {Sort Code Field}:which uniquely describes city, bank and branch on which the cheque is drawn.

Area 2(a) {3 digits}: This code describes the city on which the cheque is drawn. For ex: 400 represent Mumbai, 700 Kolkata, and 110 Delhi etc.

Area 2(b) {3 digits}: This code represents or denotes on which bank the cheque has been drawn. For ex: 012 for BOB etc.

Area 2(c) {3 digits}: This code indicates the branch on which the cheque has been drawn. Each branch of the bank in any MICR center is given a unique code.

Field 3 {6 Digits} – A/c Number:At present, this field blank neither                         

Coding of this field would be necessary once                      of the country process is taken up for computerization is taken up for computerization is done. When this done, the paying bank branch would be able to directly debit the customers a/c from the MICR data, without having to perform any further inputs

Field 4 {2 Digits}: This represents transaction which denotes the type of instrument such as savings bank cheques, current a/c cheque, bankers cheque, DD etc.

Field 5 {3 Digits} – Amount:This is encoded by the collecting branch with the help of encoder.

Special symbols: Notice certain symbols used as the above cheque before and after area 1 and area 2. These symbols convey instructions to the equipment called reader sorter. For ex: The symbols before and after the area 1 indicate on us.

TECHNOLOGY OF MICR: Two specialized machines are used for the fast clearing of cheques which are explained in detail as below

1.      Encoder:It is a small machine which will perform the following transactions

·            To encode the amount in special ink which can be read by the reader sorter.

·            To print the interest of all instruments that has been encoded along with the totals.

·            To place a clearing and endorsement stamp at the back side of the instrument.

2.      Reader sorter: After encoding the cheques are accumulated into batches and placed in the input            of a reader sorter unit. As they enter the reading unit, the cheques pass through a magnetic field which causes the particles in the ink being magnetized.

Reader heads                 characters as they pass through the reading unit. The data read be entered directly into CPU, or they can be transferred to the magnetic tape for later processing.

Benefits of MICR technology:

  It takes less time to clearance of cheques, which results in tremendous satisfaction for the customers.

  Chances of errors are minimized because the instruments are read by the machines.

  The transfer settlement of funds between the banks is fast and easy.

  Reduces the burden on bank staff members.

  The work of clearing becomes easy.

Precautions to be observed in MICR technology:

  MICR instruments must not be folded.

  Nothing should be written on the band of codes.

  No rubber stamp should be fixed on the band line.

  Pins, stapler and gum must be avoided.

     OPTICAL CHARACTER READER (OCR)

                        This is a electronic system that permits the direct reading of any printed character. Introduction of this system enables an organization to eliminate or reduce input key difficulty. These devices are designed to recognize and interpret the hand made marks and characters, machine printed characters and special bar codes. Most of the OCR’s scan the printed matter with a photo electronic device called a scanner that recognizes the characters by the absorption or reflection of the light on document.

                        Optical readers can also recognize the data coded in the form of dark and light bars. Bar codes are commonly used to identify merchandise in retail stores. The primary advantage of OCR is that it eliminates some of the duplicates of the human effort required to get data into the computer.

Advantages:

ü  It permits the direct reading if any printed character.