Chapter – 2 Modes of Electronic Commerce

Modes of Electronic Commerce

1) What are the Open issues of e-commerce?

Ans:i) Taxation: – When merchants collect sales tax, which rate should the customer be charged. The rate for the state in which customer placed the order or for the state which customer lives.

ii) Customs: – ability to purchase & import certain types of information goods might be subject to customs regulations, as there are restrictions on exporting cryptography technology.

iii) Regulation: – Government bodies & regulators may enforce restrictions which invade privacy or security

iv) Fraud: – charging card holders in case of fraud.

v) security : – Authentication, accountability all are handled differently.

2) What EDI? Explain EDI process or sellers or buyers with neat diagram

Ans: – EID is defined as the Inter-organization exchange of documents in a standardized electronic form directly between computer applications.

  • In basic terms, EDI can be thought of as the replacement of paper – based purchase orders with electronic equivalents.
  • Hence, EdI’s goal is to enable easy and inexpensive communication of structural information throughout till-6 corporate community

The key aspects of EDI are as follows :

  • The utilization of an electronic transmission medium (normally a VAN) rather than the transfer of physical storage media such as paper, magnetic tapes, and disks. – Use of structured, formatted messages based upon agreed standards (such that messages can be translated, interpreted and checked for compliance with an explicit set of rules).
  • Relatively fast delivery of electronic documents from sender to receiver (generally implying receipt within hours or minutes).
  • Direct communication between applications.
  • Below diagram illustrates process involved in typical sellers & buyers transactions – Pre- purchasing activity is supported by white/yellow pages, supplier directories online pricelist, and offer details.
  • Post- purchasing activity is cheque writing & dispatch process.

3) Explain Benefits of EDI.

Ans: – i) EDI is a replacement for paper-based purchased order. ii) It enables easy in-expensive communication iii) It is secured in inventory, transport, administration & cash management. iv) Faster handling of truncations results in increase cash flows. v) Elimination of Re-keying the data.

vi) Key punching error is avoided and the accuracy of the data increases. vii) EDI is likely to contribute to relocate of functions between business patterns.

4) Explain Status of EDI.

Ans: – The cost factors for implementing EDI include the following are:

  • Reaching a legal agreement between the parties regarding responsibilities and dispute settlement (this phase may involve expensive lawyers).
  • Building and installing the EDI system.
  • Modifying and interfacing with the existing computer system.
  • Obtaining network services.
  • Testing & installations.
  • Training

System Approach

There are a number of ways in which computers can be set up to support EDI. A single dedicated PC can be used as the company’s link to the outside world.

  • Application Software : – Using P.C with dialog we can start EDI.
  • Message translator : – software is available that provides all necessary functions, such as communication protocol & message translator.
  • Routing Manager : – Used to establish communication links, whenever data exchange is required.
  • Communication handler : – It is possible to print the messages, so that information can be a handler.

5) Explain the Opportunities of e-commerce. Ans: – Online web selling

  • Virtual malls
  • Advertising
  • Home banking & financial services
  • Catalogue publishing
  • Interactive ordering
  • Searching engines
  • Direct marketing

6) Explain about Migration to open EDI.

Ans: – Migration to open EDI:

  • The open EDI concept is initiated with the intention to reduce the setup and rollout cost of EDI.
  • The open nature of the Internet means that along with the development of EDI standard EDI software should drop in price.

Approach: The development of open EDI enables several types of rollout strategies. Generally, users can be classified into two groups.

  • The first group is composed of users (individuals or companies) who are not currently EDI users.
  • This presents three migration paths to users.

(i).A non-user becoming a private network/ VAN user. This is the most common migration when companies are considering the additional use of EDI.

(ii).A current EDI user who wishes to make a transition to open EDI.

(iii) A non- EDI user who can make a direct transition to open EDI.

The factors driving migration are as follow:

i) The cost of using EDI services. ii) The demands of customers. iii)The opening up of market opportunities

7) Explain about Migration from Non-EDI to EDI operation.

Ans: – Migration from non-EDI to EDI:

  • The operation is generally driven by the demands of dominant organizations. Eg. Sub contractors to major industrial establishments using EDI are at times forced to adopt the technology in order to continue doing business.
  • Migration from EDI to open EDI may also take place because firms wish to take advantage of lower costs on the assumption that, because of the economies of scale (large number of users),
  • The Internet remains considerably less expensive than the use of VANs. Migration from EDI to open EDI for many firms is due to cost factor.

8) Explain Internet and WWW tools.

Ans: – The Internet is simply a network, that is set of interconnected routers. It is set of local & international links. It in itself has no content. Organizations that connect their servers to the internet & allow accessing them provide the content.

Tools are :

i) File Transfer protocol (FTP) :

  • FTP can provide an inexpensive method to deliver information to customers, particularly for long technical materials such as manuals, specifications, Frequently Asked Questions.
  • FTP is the way most Internet users get files from another Internet host (servers). FTP allows a user to log on to a remote host (server) but restricts the user to a limited set of commands

ii) Telnet :

  • Telnet is a utility allows users a log into a remote system just as though they were logging into a local system.
  • Once logged in, the users have the same access to the system as though they logged in from a terminal attached directly to the system.
  • This method requires computer skills. Also, the logged – in party tends to get access to a lot of the system capabilities, including OS access

iii) WAIS : WAIS is an acronym for ‘Wide Area Information Service’. Though world wide web is a user – friendly interface for browsing data, it has somewhat limited search capabilities.

  • WAIS allows users to search for specific data they are interested in WAIS searches the documents in a list of servers for one or more keywords.
  • WAIS is often used in conjunction with WWW servers as the companion search engine. Refer chapter 8 for more information on WAIS.

iii) Gopher : Gopher is one of the information search and retrieval tools that preceded the widespread use of WWW. Gopher’s use is now commonly integrated with the most sophisticated browser interfaces.

– The important aspect of Gopher is, it can be easily implemented. It can be described as document delivery tool.

iv) World Wide Web: The world wide web is the most user – friendly information service on the Internet.

  • WWW has the ability to incorporate FTP, WAIS, Gopher, e-mail and FTP applications through one user interface.
  • WWW applications are available since the early 1990s before that, a user would need an FTP client to connect to an FTP archive, a WAIS client to search a WAIS server, and a Gopher client to get to a Gopher server.