What are the components of a typical successful e-commerce transaction loop?
E-commerce does not refer merely to a firm putting up a Web site for the purpose of selling goods to buyers over the Internet. For e-commerce to be a competitive alternative to traditional commercial transactions and for a firm to maximize the benefits of e-commerce, a number of technical as well as enabling issues have to be considered. A typical e-commerce transaction loop involves the following major players and corresponding requisites:
The Seller should have the following components:
- A corporate Web site with e-commerce capabilities (e.g., a secure transaction server);- A corporate intranet so that orders are processed in an efficient manner; and
- IT-literate employees to manage the information flows and maintain the e-commerce system.Transaction partners include:
- Banking institutions that offer transaction clearing services (e.g., processing credit
card payments and electronic fund transfers);
- National and international freight companies to enable the movement of physical
goods within, around and out of the country. For business-to-consumer
transactions, the system must offer a means for cost-efficient transport of small
packages (such that purchasing books over the Internet, for example, is not
prohibitively more expensive than buying from a local store); and
- Authentication authority that serves as a trusted third party to ensure the integrity and security of transactions.
Consumers who:
- Form a critical mass of the population with access to the Internet and disposable income enabling widespread use of credit cards; and- Possess a mindset for purchasing goods over the Internet rather than by physically inspecting items.
Government, to establish:
- A legal framework governing e-commerce transactions (including electronic documents, signatures, and the like); and- Legal institutions that would enforce the legal framework (i.e., laws and regulations) and protect consumers and businesses from fraud, among others.
Internet, the successful use of which depends on the following:
- A robust and reliable Internet infrastructure; and - A pricing structure that doesn’t penalize consumers for spending time on and buying goods over the Internet (e.g., a flat monthly charge for both ISP access and local phone calls).
