The Scope of E-commerce is categories into three areas as follows:
- Electronic Market
- EDI (Electronic Data Interchange)
- Internet Commerce
It is marketing where the exchange of the economic product is coordinated through the electronic exchange of data.
Electronic markets (or electronic marketplaces) are information systems (IS) that are used by multiple separate organizational entities within one or among multiple tiers in economic value chains. In analogy to the market concept which can be viewed from a macroeconomic (describing relationships among factors in an economic system, e.g. a monopoly) as well as from a microeconomic (describing different allocation mechanisms, e.g. public auctions of telephone frequencies) perspective, electronic markets denote networked forms of business with many possible configurations(ref: https://en.wikipedia.org/).
Electronic marketing are used for following reasons:
- Low Computing Cost
- Multiple Choice
- Minimize Delivery Cost
Delivery cost are minimize in two ways-
- The information in e- commence transaction is transmitted through the internet so paper-based information exchanged cost is eliminated.
- Each element of the industrial value chain is bypass so physical distribution links and related inventory carrying costs are eliminated.
2.EDI (Electronic Data Interchange)
EDI stands for Electronic Data Interchange. EDI is an electronic way of transferring business documents in an organization internally between its various department or externally with suppliers, customers, or any subsidiaries. In EDI, paper documents are replaced with electronic documents such as word documents, spread, sheets, etc.
Following are the few important document used in EDI are:
- Purchases order
- Shipping Requests
- Business Correspondence letters
- Financial information letters
Following are the steps in an EDI System.
- A program generates a file that contains the processed document.
- The document is converted into an agreed standard format.
- The file containing the document is sent electronically on the network.
- The trading partner receives the file.
- An acknowledgment document is generated and sent to the originating organization.
Advantages of an EDI System
- Reduction in data entry errors. − Chances of errors are much less while using a computer for data entry.
- Shorter processing life cycle − Orders can be processed as soon as they are entered into the system. It reduces the processing time of the transfer documents.
- Electronic form of data − It is quite easy to transfer or share the data, as it is present in electronic format.
- Reduction in paperwork − As a lot of paper documents are replaced with electronic documents, there is a huge reduction in paperwork.
- Cost Effective − As time is saved and orders are processed very effectively, EDI proves to be highly cost effective.
- Standard Means of communication − EDI enforces standards on the content of data and its format which leads to clearer communication.