What is E-Commerce??


Ecommerce, or prolonged from Electronic Commerce is one of the fastest growing technologies in the internet world. The use of E-Commerce system, so usually abbreviated Ecom, can actually benefit many parties, both the consumer, as well as the manufacturers and sellers (retailers). In Indonesia, the Ecommerce system is less popular, as many internet users are still doubting the security of this system, and their lack of knowledge about what E-Commerce really is.

For the consumer, using E-Com can make shopping time to be short. No more lingering around shopping centers to find the desired item. In addition, the price of goods sold through E-Commerce is usually cheaper than the price in the store, because the distribution channel from the producer of goods to the seller is shorter than the conventional store.

Online shopping provides many conveniences and advantages when compared to conventional shopping. In addition to being faster, on the internet has been available almost all kinds of goods that are usually sold in full. In addition, usually information about the sale of goods is available in full, so even if we do not buy on-line, we can get a lot of important information needed to choose a product to be purchased.


Fatedy Abdul Aziz

Understanding E-Commerce

Definition of E-Commerce according Laudon & Laudon (1998), E-Commerce is a process of buying and selling products electronically by consumers and from company to company with computer as an intermediary of business transactions.

E-Commerce or Ecom or Emmerce or EC is a routine business exchange using Electronic Data Interchange (EDI) transmission, email, electronic bulletin boards, facsimile machines, and Electronic Funds Transfer with respect to shopping transactions in Internet shopping,

Online stocks and bonds, downloads and sales of software, documents, graphics, music and more, as well as Business to Business (B2B) transactions. (Wahana Komputer Semarang 2002).

While the definition of E-Commerce according to David Baum (1999, pp. 36-34), namely: E-Commerce is a dynamic set of technologies, applications, and bussines process that link enterprises, consumers, and communities through electronics transactions and the electronic exchange of goods, services, and informations.

Translated by Onno. W. Purbo: E-Commerce is a dynamic set of technologies, applications, and business processes that connect specific companies, consumers, and communities through electronic transactions and trade in goods, pelavanan, and information made electronically.

The definition of E-Commerce by Kalakota and Whinston (1997) can be reviewed in the following 3 perspectives:

  1. From a communication perspective, E-Commerce is the delivery of goods, services, information, or payments through computer networks or through other electronic equipment.

  2. From a business process perspective, E-Commerce is an application of that technology toward the automation of business transactions and workflows.

  3. From a service perspective, E-Commerce is a tool that meets corporate, consumer and management needs to cut service costs when improving the quality of goods and improve the speed of delivery services.

  4. From an online perspective, E-Commerce provides the ability to buy and sell goods or information via the internet and other online means.

E-Commerce Mechanism


Buyers who want to buy purchases can use 'shopping cart' to store data about goods that have been selected and will be paid. The concept of 'shopping cart' is imitating the shopping cart that people usually use to shop at the supermarket. 'Shopping cart' is usually a form on the web, and is created with a combination of CGI, database and HTML. Goods that have been entered into the shopping cart can still be canceled, if the buyer intends to cancel the purchase of the item.

If the buyer wants to pay for the goods he has chosen, he must fill out the transaction form. Usually this form asks the buyer's identity as well as credit card numbers. Because this information can be misused if it falls into the wrong hands, the e-commerce service provider has made the effort to send the data safely, using certain security standards.

Once the buyer entered into a transaction, the retailer will deliver the goods ordered via the postal service directly to the buyer's home. Some cybershop provide facilities for buyers to check the status of goods that have been sent via the internet.

Advantages of E-commerce

Benefits that can be taken from the implementation of e-commerce can be seen from 3 main parties involved in it are: organization, consumers, and society.

  1. 1. For organizations / companies
    1. International markets
      With the implementation of e-commerce a company can have an international market. Business can be run without having to collide on the state border with the existence of digital technology. The company can meet with partners and clients from all over the world. This creates a virtual multinational agency.

    2. Operational cost savings
      Operational costs can be saved. The cost of creating, processing, distributing, storing and retrieving information can also be suppressed.

    3. Mass customization
      E-commerce has revolutionized the way consumers buy goods and services. Products of goods and services may be modified in accordance with the customer's wishes. For example, in the past when Ford companies began to market their production cars, buyers could only buy black motors because the ones made were just those colors. But now buyers can configure a car according to their specifications in just a few minutes, for example determining the color of the car they want for the car they will buy, just by visiting the Ford website on the internet.

    4. Reduced innovation constraints
      The meaning is with e-commerce, a company can save resources because they do not mess around with the difficulty of making new discoveries for their product modifications. For example, companies such as Motorola (mobile phone) and Dell (computer) can gather their customers who order a product. Consumers can create a list of new product specifications they want and send them to the company on-line. Then the company can plan production of a product based on customer specifications and send the results within a few days.

    5. Biaya telekomunikasi yang lebih rendah
      Internet lebih murah dari sebuah jaringan tambahan yang hanya digunakan untuk telepon. Adalah lebih murah untuk mengirimkan sebuah fax atau e-mail via internet daripada melakukan dial telepon secara langsung.

    6. Digitalisasi proses dan produk
      Contohnya pada kasus produk software dan audio video, produk digital tersebut dapat diunduh atau dikirim lewat e-mail secara langsung ke konsumen melalui internet dalam format digital. Hal ini tentu saja menghemat waktu dan biaya pengiriman produk.

    7. Batasan waktu kerja dapat diatasi
      Bisnis dapat dijalankan tanpa mengenal batas waktu karena dijalankan secara on-line melalui internet yang selalu beroperasi tiap hari.
  2. For consumers
    1. Full access 24 hours / 7 days
      Consumers can shop or process other transactions within 24 hours throughout the day, throughout the year in most locations. For example checking your balance, making payments, and getting more information.

    2. More choices
      Consumers not only have a set of products to choose from, but also a list of international suppliers so that consumers have more product choices.

    3. Price comparison
      Consumers can shop around the world and compare their prices by visiting different sites or by visiting a single website that displays the prices of different providers.

    4. Innovative product delivery process
      With e-commerce product delivery process becomes easier. For example in the case of electronic products such as software or audio-visual files in which the consumer can obtain the product simply by downloading it via the internet.
  3. For the community
    1. More flexible work practices
      E-commerce allows people to be more flexible in determining where to work, for example they can work from their own home without competing to go to the office.

    2. Connecting communities with other communities
      People in developing countries can access and enjoy products, services, and information that they may find difficult in their area.

    3. Easy access to public facilities
      People can easily take advantage of public services, such as health care and consultation and prescription purchases by visiting the internet.

Disadvantages of E-commerce

Although the existence of e-commerce provides many advantages, there are still berbegai shortcomings of e-commerce include:

  1. For organizations / companies
    1. System security is vulnerable to attack
      There are a number of reports about hacked websites and databases, and various security vulnerabilities in the software. This is experienced by a number of large companies such as Microsoft and banking institutions. This security problem becomes very pnting because if other parties who are not authorized to penetrate the system then it can destroy the business that has been running.

    2. Unfair competition
      Under pressure to innovate and build a business to take advantage of opportunities, it can lead to illegal acts of ideas and price wars.

    3. Old technology compatibility issues with newer ones
      With the development and innovation that gave birth to new technology, there is often a problem that the old business system can not communicate with web-based infrastructure and the internet. This forces the company to run two independent systems that can not be shared, this can lead to cost swelling.
  2. For consumers
    1. The need for computer skills
      Without mastering computer skills, it is impossible for consumers to participate in e-commerce. Basic computer knowledge is required, including knowledge of the internet and the web.

    2. Additional charge for accessing internet
      To participate in e-commerce requires an internet connection which of course adds expenditure items for consumers.

    3. Cost of computer equipment
      A computer is required to access the internet, of course it costs money to get it. The development of computers that very rapidly advise consumers to also update the equipment if you do not want to miss the technology.

    4. Risk of leakage of privacy and personal data
      Everything may happen when the consumer mangakses the internet to run ¬ ecommerce, including the risk of leaking personal data due to the actions of others who want to break into the system.

    5. Reduced time to interact directly with others
      On-line e-commerce transactions have reduced the time for consumers to make social processes with others. This is not good because it is feared will be able to reduce the sense of concern for the surrounding environment.

    6. Decreased sense of trust as consumers interact only with computers.
  3. For the community
    1. Reduced interaction between humans
      Because people more often interact electronically, it is possible to reduce the social and personal ability of human beings to socialize with others directly.

    2. Social gap
      There is a potential danger because there can be social disparities between people who have technical skills in e-commerce with those who do not, who have higher paid skills than those who do not.

    3. The existence of wasted resources
      The emergence of new technology will make the old technology is not utilized anymore. For example with old computer model or old model software that is not relevant to use.

    4. The difficulty of managing the internet
      A number of criminals have occurred on the internet and many are undetected. Due to the growing number of networks growing and the growing number of users, it often makes the authorities difficult to make rules for the internet.

Types of E-Commerce

E-Commerce activities include many things, to distinguish E-Commerce divided into 2 based on its characteristics:

  1. Business to Business, its characteristics:
    • Trading partners who already know each other and between them have established a relationship that lasts long enough.

    • Data exchange is done repeatedly and periodically with the data format has been agreed upon.

    • One principal does not have to wait for other colleagues to transmit data.

    • The commonly used model is peer to peer, where processing intelligence can be distributed across both businesses.
  2. Business to Consumer, its characteristics:
    • Open to the public, where information is widely disseminated.

    • The service used is also general, so that it can be used by many people.

    • Services used on request.

    • A client-server approach is often used

Purpose of Using E-Commerce in the Business World

The purpose of a company using E-Commerce system is to use E-Commerce then the company can be more efficient and effective in increasing profits.

Benefits in using E-Commerce in a company as a transaction system are

  1. Can increase market exposure (market share).
    On-line transactions that enable people around the world to order and purchase products sold only through computer media and unlimited distance and time.

  2. Reduce operating costs.
    E-Commerce transactions are transactions that are mostly operational in the computer so that costs such as showrooms, excessive bebangaji, and others do not need to happen.

  3. Expanding reach (global reach).
    On-line transactions accessible to everyone in the world are unlimited places and times because everyone can access them only by using a computer broker medium.

  4. Increase customer loyalty
    This is because the E-Commerce transaction system provides complete information and the information can be accessed any time other than that in terms of purchase can also be done at any time even the consumer can choose his own product he wants.

  5. Improve supply management.
    E-Commerce transactions lead to the efficiency of operating costs in the company, especially on the number of employees and the amount of stock of goods available so as to further refine the cost efficiency of the good supply management system should be improved.

  6. Shorten production time.
    In a company consisting of various divisions or a distributor in which in ordering raw materials or products to be sold when running out of goods can order them every time because it is on-line and will be faster and regular as everything is directly programmed in the computer.

Threats Using E-Commerce (Threats)

There are several possible forms of threats:

  • System Penetration
    People who are not entitled to access the computer system can and are allowed to do everything according to their wishes.

  • Authorization Violation
    Violation or abuse of the legal authority possessed by a person entitled to access a system.

  • Planting
    Putting something into a system that is considered legal but not necessarily legal in the future.

  • Communications Monitoring
    One can monitor all confidential information by performing simple communication monitoring at a place on the communication network.

  • Communications Tampering
    Anything that jeopardizes the confidentiality of a person's information without penetration, such as changing the transaction information in the middle of the road or creating a fake server system that can deceive many people to provide their confidential information voluntarily.

  • Denial of service
    Prevents a person from accessing information, resources, and other facilities.

  • Repudiation
    Rejection of a transaction activity or a communication either intentionally or unintentionally.

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