Model for E-commerce transaction


E-commerce transactions can be defined or modeled by identifying the business partners directly involved in the transaction. This is the most convenient and useful way of building models for e-commerce transactions.Some significant models are : 1.) Business-to-Business e-Commerce (B2B) 2.) Business to consumer (B2C) 3.) Business-to-Government (B2G) 4.) Consumer-to-Consumer (C2C) 5.) Consumer-to-Government (C2G) 6.) Consumer-to-Business (C2B)

Business-to-Business e-Commerce (B2B)

It is defined as two different companies buying or selling products to each other by some means of digital process or we can say online (through internet).  B2B commerce includes a very large range of intercompany transactions, including wholesale trade as well as company purchases of services, resources, technology, manufactured parts and components, and capital equipment. It also includes some types of financial transactions between companies, such as insurance, commercial credit, bonds, securities and other financial assets. The popular phrase B2B e-commerce refers to the substitution of computer data processing and Internet communications for labor services in the production of economic transactions. Many companies engaged in B2B ecommerce are intermediaries between other companies that buy and sell goods and services. Examples:

-> Dell or other company purchasing microprocessor from Intell.

-> McD. purchasing Ketchup saus from Heinz.

Expectations about productivity gains from B2B e-commerce can be usefully divided into f our areas: possible efficiencies from automation of transactions, potential economic advantages of new market intermediaries, consolidation of demand and supply through organized exchanges, and changes in the extent of vertical integration of companies.

Cost Efficiencies from Automation of Transactions

During the transaction, e-commerce can reduce the cost of communicating with counter parts in other companies regarding transaction details. Transactions over computer networks avoid many of the associated costs of inter personal economic exchange, including the costs of travel, time spent on communication, physical space for meetings, and processing paper documents. After the transaction, electronic commerce allows companies to lower costs of communication, to monitor contractual performance, or to confirm delivery.

Economic Efficiency Gains from Intermediation in B2B E-Commerce

Intermediaries can reduce transaction costs relative to direct exchange, by reducing the costs of search, certifying product quality, mitigating communication costs, and providing guarantees for buyer or seller commitments. Many business-to-business companies hope to create additional intermediation services. Many B2B companies propose to design innovative procurement transactions between a company and its many suppliers. Other firms are setting up markets that can provide novel types of transactions that aggregate supply and demand.

NOTE :

->  Direct selling and support to business (as in the case of Cisco where customer companies can buy and also get technical support, downloads, patches online).

-> E-procurement (also known as industry portals) where a purchasing agent can shop for supplies from vendors, request proposals, and, in some cases, bid to make a purchase at a desired price. For example the auto-parts wholesaler (reliableautomotive.com); and the chemical B-to-B exchange (chemconnect.com).

-> Information sites provide information about a particular industry for its companies and their employees. These include specialised search sites and trade and industry standards organisation sites. E.g. newmarketmakers.com is a leading portal for B-to-B news.

Business-to-consumer (B-to-C)

It is defined as the exchange of products, information or services between business and consumers in a retailing relationship. Some of the first examples of B-to-C e-commerce were amazon.com and dell.com in the USA and lastminute.com in the UK. In this case, the ‘C’ represents either consumer or customer. The B2C model involves transactions between business organizations and consumers. It applies to any business organization that sells its products or services to consumers over the Internet. These sites display product information in an online catalog and store it in a database. The B2C model also includes services online banking, travel services, and health information.

It involves customers gathering information; purchasing physical goods (i.e., tangibles such as books or consumer products) or information goods (or goods of electronic material or digitized content, such as software, or e-books); and, for information goods, receiving products over an electronic network.

The major benefits of B2C are as follows:


1.) B2C e-commerce reduces transactions costs.

2.) Model the cost of the product is reduced as we can eliminate the middle men.

3.) Major thing in B2c model is customer care.

Pre-Cautions of B2C E-commerce:

1.) Check for digital certificates of the site and it hacker free.

2.) Check for shipping price.

3.) See the previous service going through the reviews of the old customers

4.) Purchasing with the appropriate cards.

Business-to-Government (B-to-G)

It is the exchange of information, services and products between business organisations and government agencies on-line. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations.

This may include:
->
E-procurement services, in which businesses learn about the purchasing needs of agencies and provide services.

-> A virtual workplace in which a business and a government agency could coordinate the work on a contracted project by collaborating on-line to coordinate on-line meetings, review plans and manage progress.

-> Rental of on-line applications and databases designed especially for use by government agencies.

This kind of e-commerce has two features: first, the public sector assumes a pilot/leading role in
establishing e-commerce; and second, it is assumed that the public sector has the greatest need for making its procurement system more effective. Web-based purchasing policies increase the transparency of the procurement process and reduce the risk of irregularities. To date, however, the size of the B2G ecommerce market as a component of total e-commerce is insignificant, as government e-procurement systems remain undeveloped.

Consumer-to-Consumer (C-to-C)

In this category consumers interact directly with other consumers. C2C is simply commerce between private individuals or consumers.They exchange information such as:

-> Expert knowledge where one person asks a question about anything and gets an e-mail reply from the community of other individuals, as in the case of the New York Times-affiliated abuzz.com website.

-> Opinions about companies and products, for example epinions.com.

There is also an exchange of goods between people both with consumer auction sites such as e-bay and with more novel bartering sites such as swapitshop.com, where individuals swap goods with each other without the exchange of money. This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions, particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers.

Consumer-to-Government (C2G)

In this model, an individual consumer interacts with the government. For example, a consumer can pay his income tax or house tax online. The transactions involved in this case are C2G transactions. Examples where consumers provide services to government have yet to be implemented. It is not that popular approach and is quite rare. A possible example could be when a hacker is offering his services to the government for defence against cyber terrorism.

Consumer-to-Business (C-to-B)

This is the exchange of products, information or services from individuals to business. A classic example of this would be individuals selling their services to businesses. Consumer-to-business (C2B) transactions involve reverse auctions, which empower the consumer to drive transactions. An example is when an expert is contracted or hired for a short span by a corporation for some special services like when Sabeer Bhatia of India sold his hotmail to Microsoft Corporation Private Limited. He became a billionaire overnight with that contract.

This kind of economic relationship is qualified as an inverted business model. The advent of the C2B scheme is due to major changes:

Connecting a large group of people to a bidirectional network has made this sort of commercial relationship possible. The large traditional media outlets are one direction relationship whereas the internet is bidirectional one.

Decreased cost of technology: Individuals now have access to technologies that were once only available to large companies (digital printing and acquisition technology, high performance computer, powerful software).

Online Advertising sites like Google Adsense, affiliation platforms like Commission Junction and affiliation programs like Amazon are the best examples of C2B schemes. Individuals can display advertising banners, contextual text ads or any other promotional items on their personal websites. Individuals are directly commissioned to provide an advertising/selling service to companies.   

Online surveys (GozingSurveys, Surveyscout, and Survey Monkey) are also typical C2B models. Individuals offer the service to reply to the company’s survey and companies pay individual for this service. Blogs have paved the way for news C2B and C2C applications by giving the opportunity and tools to anyone to express themselves easily and to communicate inexpensively.