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August 25, 1998


Fundamentals of electronic commerce

Priya Ganapati in New Delhi

Email this story to a friend. Back to IIW coverage index. For the first conferences of the biggest Internet jamboree in the country, the expectations ran high.

Senior executives crowded into the 350-seat hall with 12-inch thick soundproof walls and waited for pearls of wisdom to be dropped.

Srinivas Kulkarni, manager, Tata Consultancy Services, gave an hour-and-a-half presentation on the fundamentals of e-commerce. He dealt with issues that ranged from the very fundamentals of the concept to where the new way of doing business in heading.

At the end of it all, the verdict ranged from "ok" to "good" to outright "pathetic". A senior executive from the audience said, "It was very good for people like us who do not know anything about e-commerce. But for those working on it, the talk was very generic. It was all information you could get if you surfed the Net."

Kulkarni is confident that the proliferation of the Internet and the technologies that support it will make e-commerce ubiquitous.

"Commerce has always been about buying goods and services. Any mode that does this faster and more efficiently is very good," he gushed.

The Web has emerged as the answer to the nightmares of all the marketing and advertising executives, he explained.

"It is very easy to identify and track users on the Web. You can identify their preferences in terms of geographical preferences and still better regional preferences. It is also very easy to customise and deliver different content. One of the most powerful capabilities of this medium is that you can store and build customer profiles. This helps to have focussed niche marketing," he said.

For the nearly 300 IT managers listening attentively this must have sounded like all they ever wanted to hear.

Sensing the excitement running through the hall, Kulkarni used an analogy that could be understood by all.

"Think of a visit to a supermarket where you can choose what you want to buy. Typically, when I am shopping there I carry a shopping cart. I am free to change my mind at any point of time and do not have to necessarily buy all the items in the cart. Only at the checkout point do I have to pay for my purchases. The same metaphor works in e-commerce too," he said.

E-commerce can be broadly categorised into business-to-business and business-to-customer kinds. There are two scenarios proposed as business models for traders involved in e-commerce.

One is the direct selling model that involves interaction with customers. This scenario could be applied in the retail, banking, advertising and even in an auction. Sony, Dell and Barnes and Noble are examples of this model.

The business-to-business or otherwise termed as the corporate scenario model would call for a certain degree of trust between the companies involved for transactions to be done via e-commerce.

Here Kulkarni projected the MS Market application from Microsoft as the complete package. "He is just doing PR work for Microsoft," sniggered one of the delegates.

So the next logical question was why shift to e-commerce at all? The answer would be the low cost of reaching and servicing the market. "In order to reach a global market I don't have to be geographically present in multiple locations. I also have access to the markets 24 hours of the day, seven days a week, 365 days a year," elaborated Kulkarni.

E-commerce would give merchants round-the-clock access to global markets. "In a shop once the customer walks out you lose him. But in e-commerce we can keep a track of him. We can preserve his shopping cart and give it back to him when he comes again. This gives us a powerful follow-up tool," he elaborated.

"We are looking at the rise of the self service customer" was his tip of the day. Just to drive home the message to the transfixed audience Kulkarni spelled out examples where e-commerce could be successfully used.

"Financial institutions like banks, stockbroking houses can offer branded products targeted at the niche client," he said.

Kulkarni then proceeded to give a quick analysis of the opportunities and challenges in the business. "You can do business online which reduces cost and increases revenue. You can also streamline business and customer services so that you can offer the best possible service," he explained.

A murmur went up among the audience. "It is easy to talk about these things but a company has to think about costs too," an executive whispered.

Kulkarni was quick to settle doubts.

"The cost of deployment of a full-fledged e-commerce site would be around $15,000," he announced.

The murmurs then made way for a hundred questions from all over the room.

"Of course, I am discounting the cost of the hardware and servers etc as these are coming down and do not cost much anyway," he shot back.

A study conducted eight months ago revealed that $ 8 billion worth of transactions are being conducted on the Internet.

This figure is expected to touch the $200 billion by 2001 and cross $ 300 billion one year later.

However most of the statistics quoted were from studies conducted in the US and Europe. But would these figures have any relevance in the Indian Scenario? Kulkarni admits the figures are just indicative of market trends. "Most of the business is happening in the US. Nearly 75 per cent of the transactions are happening from there. The current trends are indicative of business-to-business transactions," he said.

And as for the primary challenge that this medium would present, it would be to streamline partner transactions and create customer relationships.

Back to IIW coverage index. The e-commerce cycle that emerged towards the end is a three-step process: 'engage, transact and service".

Kulkarni summed up the lecture by saying, "Shopping is just a click away now."

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