Monday, December 3, 2001		Article

ELECTRONIC commerce is the buzzword of the town. The term is better abbreviated as e-commerce. Its discussion is no longer confined to board meetings and stock news; rather it is more talked about by aware consumers and learned citizens. Simply stated, electronic commerce is concerned with buying and selling of products over the Internet. In this sense, it can also be termed as Web-based commerce and the businesses engaged in the process are popularly called dotcoms. E-commerce, as the name suggests, involves the use of computer networks, e-mails, telephone lines and other related electronic infrastructure for carrying out business. E-commerce embeds technology into trading and other commercial activities.

In e-commerce, online retailing transactions are not manually handled. The businessman gives description of the products offered via Website. The visitor browses to fill in an online purchase order. The selling company electronically retrieves the purchase order and with the computer program, sale order is automatically generated. Information is then sent to draw goods from the warehouse. Goods are shipped by the seller to the buyer and the shipping date and quantities are recorded. The buyer receives goods and electronically transfers funds and the remittance advice. The selling company collects payments from the intermediary or the bank.

E-commerce requires strong technological infrastructure. WWW (World Wide Web), Internet and protocols that govern the Net provide technical base for electronic commerce. E-commerce is an outcome of media convergence, a phenomenon of various mediums coming together providing backbone to commercial and other online transactions. E- commerce uses electronic transmission mediums to carry out exchange of products and services moving digitally or physically from one location to another. Thus media, that is the telephone lines, computer networks and other related means have empowered electronic commerce with the capacity to ensure delivery of products or services, payments and information at a greater speed.

The Web-based commerce experienced boom in 1998 Christmas shopping season when US consumers spent $ 3 billion over the Internet going beyond all predictions. These developments forced the businesses and retailers of all kinds to consider e-commerce seriously. Attracted by the phenomenal growth not only the IT companies but all business houses around the world made plans to invest in IT infrastructure and electronic way of doing business. Not only multinationals but also Indian entrepreneurs made huge spending for the installation of IT-related infrastructure.

In 1998-1999, banking and finance sector took a lead and banks like Indian Overseas Bank, Union Bank of India, ICICI banking Corporation Ltd., ANZ Grindlays Bank and State Bank of India invested heavily for installing information technology related infrastructure with spending of Rs 30 crore, Rs. 20 crore, Rs .15 crore and Rs.5 crore, respectively. In automobile sector, Eicher Ltd. and Hero Honda Motors Ltd took the lead to spend Rs 10 crore and Rs. 9 crore, respectively for IT-related infrastructure.

Everything was fine till the end of last year when many e-commerce companies started experiencing the slowdown. The original forecasts of online retail sales in the USA were estimated at $ 36 billion for 2001 and $ 118 billion for 2005. Many executives, however, started questioning these projections. In view of the ongoing slowdown, these projections were re-estimated at $ 34 and $ 104 billion for 2001 and 2005, respectively.

Slowdown is predicted in online spending for this Christmas and New Year season.

The slowdown took its toll as more than 200 dotcom closed till March this year. Then started the unexpected phase of layoffs of dotcom workers. The result is that today there are not enough jobs even for H1-B visa seekers.

Not to talk of new job opportunity 4,15,000 layoffs took place in October 2001, the heaviest job cut in two decades. This news has demoralised IT professionals from India, as out of about 4,20,000 H1-B visa holders, 43 per cent were from India. Displaced Indian dotcom professionals had no option but to return or compete with IT professionals of non-dotcom companies.

The main reason for the slowdown in IT industry is unprecedented levels of investments made in year 2000 with which dotcom set up capacities and facilities to meet the forecast levels of customer demands. But due to the failing predictions dotcom world is left with excessive unutilised capacities and there are no takers for them. In view of the slowdown many companies are now making sharp decline in the IT spending. In developing economy like that of India, the scenario has an additional disadvantage. Not every one can afford online channels of buying as the Internet is not that cheap. Those who can afford have strong bias for offline channels, as Indians still prefer to visit places, physically verify the goods and purchase. It will take some time for Indian companies to attract online buyers and ensure that they will be provided with fine quality goods at competitive prices as claimed in their Websites.

Some experts, however, opine that the impact of slowdown on e-commerce has been unduly exaggerated. It is true that every downturn has its end. The IT industry has to stage smoother and quicker comeback. The positive point is that the IT giants stand firm on their commitments. A Web-based research firm reports that half of the big business houses surveyed are to invest 11 per cent more in IT in 2001 as compared to 2000. These spending, however, shall be for Web-based technologies, e-commerce projects and infrastructure development. In addition to this, security of electronic payments and online transactions needs to be ensured.

It requires participation of banking industry that is to provide credit facilities to the online buyers and collection and finance facilities to dotcom companies. Moreover elaborate cyber laws are required to deal with taxation issues and weed out the bad elements that have entered the Web with desire of making quick bucks by deceiving, as faith cannot be installed so long as there exists something called "The top 10 Web scams." Further, it is to be ensured that e-commerce is not treated as a fad. It is an innovative way of selling and buying, enjoying confidence of the masses. If the dotcom world is able to ensure these, they are likely to put an early end to the downturn.