Posing New Challenges

The shift of commerce from the physical
world to the virtual world will force companies to get in sync with
ecommerce or left behind by tomorrow’s business.

Electronic commerce

There are several components of internet EC systems, all of which
must inter-operate in a secure and reliable manner. For the buyer,
the principle component is a web browser and a connection to the

For the seller, the major components
include the following:

  • A storefront system that presents
    to the buyer the seller’s marketing materials and product catalog,
    an ordering mechanism and customer service.
  • A set of back-office systems that
    accept, process and record transactions originating in the storefront
    system. The back office consists of software systems from third-party
    vendors for functions such as inventory management, customer management,
    order processing and accounting, plus other plug-in modules for
    credit or credit-card authorization, tax calculation or shipping
  • A payment gateway that validates
    and obtains credit-card authorization and ultimately processes
    the settlement.

To achieve efficiency, and eventually
profitability, it is mandatory that EC enterprises achieve a high
level of integration between the web storefront and the back-office
systems and applications. Integration allows traditional retailers
and catalog merchants to leverage their existing systems and infrastructure.

Commerce, or merchant, servers first
came to market in late 1995 from IBM, Netscape and Open Market.
However, many sites at that time were custom-built to meet unique
needs and to provide functionality not available elsewhere, such
as integration with existing back-office systems. Since then, these
servers have advanced significantly.

Before selecting software for an EC
website, companies should establish decision criteria that address
specific business objectives– for example, to streamline operations
or establish a lower-cost distribution channel–and compare a potential
vendor’s ability to achieve them. Although most EC software vendors
can address both the consumer and business markets, they differentiate
themselves by emphasizing expertise within a specific market segment–business-to-consumer
or business-to-business–or a specific sell-side capability–transaction
management, ecatalog or storefront creation, personalization services,
and so on. In addition, vendor offerings vary widely in the extent
to which they provide a ready-made solution, with products that
range between a tools-oriented approach that provides a programming,
transaction and database management environment and more ‘out-of-the-box’
solutions that simplify the creation of a storefront or ecatalog
by using design templates or wizards.

Functions of commerce
server software
Commerce servers can be
applied both to the business-to-business and business-to-consumer
markets, depending on how they are used.

Although catalog servers use different
underlying technologies, such as the Common Object Model (COM) in
Microsoft’s Site Server Commerce Edition or the Java object model
in Netscape’s Merchant Server, they basically address the same business

  • Product information:
    This function provides the information on a merchant’s products.
    The merchant must create detailed product information and locate
    that data inside a database that can be queried from the merchant
  • Shopping cart:
    This dynamically generated HTML form allows shoppers to accumulate
    products they want to buy and to perform basic functions such
    as a total cost calculation. Using the shopping cart, buyers can
    continue adding items from a site; add, delete or change line
    items; and place a single order at the end of the shopping experience.
  • Merchant information:
    This feature provides the merchant’s policies on sales returns,
    and refunds and supplies basic ordering information.
  • Shopper information:
    This function gathers information about the buyer and, in the
    case of personalization technologies, the data needed to personalize
    the web page displayed for that shopper. For example, the merchant
    server may generate product information and pricing tailored to
    a particular corporate customer.
  • Order initialization
    and inventory check:
    making calls to a product inventory database, the merchant server
    determines if an order can be processed, prepares the order for
    fulfillment based on product availability and correctness of the
    configuration, and informs the shopper of the order status.
  • Order price adjustment:
    This is another part of
    the personalization process. At this stage, prices are set for
    a particular customer or according to business rules, such as
    specials and volume discounts.
  • Shipping:
    This function calculates the total shipping charge for the order.
    It often is tied into services provided by delivery companies
    and other back-end warehouse applications for order fulfillment.
  • Tax:
    Merchant servers commonly rely on integrated third-party tax calculation
    vendors such as Taxware to determine necessary local and notional
    taxes. These amounts are added to the total being calculated on
    the shopping cart.
  • Payment:
    This state handles payment details, whether it is via purchase
    order in a business-to-business setting or via credit-card payment
    by consumers. This aspect of the transaction often is tied into
    a payment processing service.
  • Receipt:
    This step lets the customer know a product has been ordered and
    provides a digital record of the purchase.

The shift of the realm of commerce from the physical world to the
virtual world is a paradigmatic one. This is a direct fallout of
ecommerce and it has vastly changed the very parameters of conducting
business. While it promises precision, accuracy and improved connectivity
among the various business processes, it also calls for equally
informed, precise and coherent management of those very processes.
In its sheer ability to trigger a complete revamping of the various
processes informing the business world, ecommerce poses new challenges
and even newer solutions.

Excerpted from
Technology Forecast 1999
Courtesy: PriceWaterhouseCoopers

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