Consumer Oriented E-commerce

1) Explain Mercantile Process Models.

Ans : – Mercantile process models: (Mercantile – Having to do with trading or merchants):

The mercantile processes define the interaction between consumers and merchants for on-line commerce. This is necessary because, to buy and sell goods, a buyer, seller, and other parties must interact in ways that represent some standard business processes.
A well-established standard process for processing credit card purchases has contributed to the widespread usage of credit cards, but the cost of processing the online transactions is ever increasing.
Here, we need new mercantile processes to be designed and implemented for costeffective processing. Also, if each business firm follows different process model then consumers inconvenience will increase.

Mercantile Process Models from the consumers perspective:

The online buyers expect quality, convenience, value, low price, and control. To meet these expectations, a business process model from consumers’ perspective is framed.

It consists of seven activities that can be grouped into three phases: pre-purchase phase, purchase consummation and post-purchase interaction.

-Here is the diagram to illustrate these phases:

Now let us learn about each phase in detail :

i) Pre-purchase preparation : There is a common misconception among sellers that attractive WebPages would tempt buyers to go for purchase quickly, but there are many types of customers.

They are:

Impulsive buyers : Who purchase products quickly
Pattern buyers : Who purchase products often making some comparisons. (iii) Analytical buyers : Who do more research before making the decision to purchase products or services? Normally consumers search for product information at first and then a comparison of alternatives; also look for price negotiation and then finally decide to buy.

– The time taken to go through these steps is called purchase deliberation.

There are several types of purchasing are :

Specifically planned purchases: The need was recognized on entering the store and the shopper bought the exact item planned.
Generally planned purchases: The need was recognized, but the shopper decided in store on the actual manufacturers of the item to satisfy the need. iii) Reminder purchases: The shopper was reminded of the need by some store influence.

à Consumer search experience: It is necessary to understand the nature of search and discovery in the context of online shopping so that the motivation behind the various types of search is known. (e.g. impulsive purchasing, compulsive shopping, window shopping or browsing).

The online shopping experience can be categorized into two, they are :

Utilitarian : – This behaviour has been portrayed as task-related and rational, the i.e. product is purchased in a deliberate and efficient manner.
Hedonic: – This type of searching is fun and playfulness rather than task completion. Here the purchase of the product is incidental to the entire experience of shopping.

b) Mercantile Process using Digital Cash : In this scenario, a bank (or a consortium of banks) mints electronic currency also called e-cash.

Such currency is simply a series of bits that the issuing bank can verify to be valid.

This currency is kept secure by the use of cryptographic techniques.

The e-cash is similar to paper currency and has the benefits of being anonymous and easily transmitted electronically.

The following is the generic mercantile protocol based on the use of e-cash. (i) Buyer contacts seller to purchase products/services.

Seller states price
Buyer sends e-cash to the seller.
Banker shows ‘green signal’ to the seller.

2) Mercantile models from the merchant’s perspective:

An organization must frame a set of operating standards for service and productivity (more profit at less cost).

If the service standards are met with minimal expense, then the company is successful in the delivery of products.
This is possible if only when these three principles are maintained.
A company’s ability to take the position of the low-cost provider.
It’s stress on benchmarking service.
It’s emphasis on responsiveness as well as continuous improvement.

The following diagram illustrates the generic steps :

i) Order Planning and Order Generation : The order planning is the first step in the business process.

The workforce in the production department drafts a capacity plan that specifies how much money will be spent, how many people will be hired.
The sales force or marketing unit may have a different forecast. Sometimes, lack of internal communication can cause the final result to differ significantly from what is actually needed.

ii) Cost Estimation and Pricing : Pricing is the bridge between customer needs and company capabilities, but most companies do not understand how to execute order-based pricing in online markets.

– Order-based pricing is difficult to work but proper execution will fetch a greater profit. Often, battles erupt between engineers who do the estimation, accountants who tabulate costs, management that oversees pricing, and the sales force that actually quotes a price.

Order Receipt and Entry:– After an acceptable price quote, the customer enters the order receipt. This order is done by customer service.
Order Selection and Prioritization:– The customer service representatives are also responsible for choosing which orders accept & which to decline. – Companies can gain more money by the way they handle order prioritization that is which order they execute faster.

Order fulfilment and delivery : – During this phase, the actual provision of the product or service is made.
This is a most difficult phase to implement. E.g: different parts of an order mat be created in different manufacturing are merged at one site.
In service operations, it can mean sending individuals with different talents to the customer site.