10. E-Commerce

E-commerce is the use of computer networks to allow people to buy and sell goods.

 

The program on Glasgow Airport showed how people can now book and pay for their seats on an aircraft using an online booking system.

The British Airways booking system not only lets people book and pay for their seats, but even enables them to check-in at the airport by themselves.

 

E-Commerce includes such things as:-

1. On-line banking.
2. Shopping and buying items on the internet.
3. Paying for items in shops using credit or debit cards.

 

1. On-Line Banking

Many banks allow customers manage their accounts and finances on-line or over the internet.

Advantages

a. For the Bank

• Don't have to pay for expensive buildings on the high street.
• Don't have to handle any cash as all business is now electronic.
• Need fewer staff and save on staff costs.

b. For Customers

• Don't have to travel to the branch.
• Are more convenient for the customer in that they are available 24hrs a day.

 

2. Shopping on the Internet

While the following highlights some of the advantages of booking and paying for tickets on-line to airlines, these are mostly true for buying almost anything on the internet.

a. For Customers or Passengers

• Convenience: For example, passengers can enquire about seat availability and then book their seats without having to leave the house and visit a travel agent.

b. For the Airline

• they can cut out the travel agencies, keeping costs and prices to a minimum
• by offering this service across the internet they can contact passengers all around the world
• by enabling people to pay online using bank and credit cards they save the cost of having staff process cheques or cash.

 

3. Electronic Funds Transfer at Point of Sale (EFT)

Electronic funds transfer Electronic funds transfer (EFT) transfers money directly between bank accounts using computer systems. When people use their bank debit card they are using EFT.

In the Airport, EFT is used!

• In the airport shops people use EFT to pay for goods.
• In the car park people can use EFT to pay for the rather expensive parking charges.
• People can use EFT to pay for airline tickets.

 

How EFT Works

When a customer uses EFT to pay for something,

1. the debit card is passed through a reader. This authenticates the card and then,
2. contacts the customer’s bank computer to find out if there are funds available.
3. If there are funds available, the transaction is carried out, a receipt is printed and the funds are transferred electronically to the account of the shop, car park company or airline.

 

Advantages of Electronic Funds Transfer (EFT)

a. To Customers

Customers can pay for goods and services such as airline tickets and parking charges without having to carry large amounts of cash or use cheque books.

b. For Companies

Companies such as British Airways get the payments for their products transferred straight into their bank accounts. This also cuts down on costs since they do not have to pay staff to count the cash and then bank it.

 

Point of Sale Terminal (POS)

Shops use point of sale (POS) terminals to enter data about the goods being purchased by customers.

he POS terminal reads in the data using bar codes. It then totals the cost before printing the receipt.

The information about purchases is sent to the stock control system that monitors stock levels and automatically generates orders to keep stock levels topped up.

 

 

a. Advantages to Customers of POS

Businesses benefit from using POS terminals linked to computer systems because:

• stock control is carried out by the computer system saving staff time and cutting costs
• customer bills are calculated accurately making accounting easier
• using bar codes with the POS system means customers’ purchases are processed quicker, enabling greater business throughput
• prices can be adjusted using the computer system
• the shelves should always be well stocked.

 

b. Advantages to Businesses

For customers, their bills are accurate, their transactions should take less time and the shelves should always be stocked with the goods they want.

 

Costs of CDP

The costs of setting up and maintaining the computer systems in the airport involve spending enormous sums of money.

 

Initial Costs	Running Costs
These costs involve:	These are the day-to-day costs of keeping the computer systems running efficiently by paying for:
buying the equipment, such as computer systems, the monitors, the printers and the large display units around the airport, etc. installing all the cables that connect the computers employing the systems analysts, the programmers, etc. training courses.	the wages of the ICT staff members whose job it is to make changes to the software, maintain the hardware and install new equipment the consumables, such as printer toner and paper, writable CDs, DVD's and backup tapes the power and telecommunications bills.

 

Mass Markets

 

Businesses invest in Information Technology because it increases productivity - can do more in less time. They are keen to get involved in internet on-line shopping because it gives them easy access to mass markets or millions of potential customers from one place.

 

Customer Lists

CDP Systems are very expensive.

To get some money back, some companies sell on their Customer Lists to other companies. Other companies buy them, because it give them access to customers who might buy their products.

This is why we get junk mail.

 

Customer Lists and the Law.

The Advertising Standard Authority has strict rules on the sale and transfer of customer lists between companies. Since 1992,

1. The person must be told when their data is collected that it might be used for direct mail.
2. People must given the choice and the right to stop their name being used in this way.
3. If businesses are asked by the person involved to remove their name from the list, then the business must do so.

 

 

 

What you have to do!

Either in a new Word Document or in your Brain. Under a Sub Heading Electronic - Commerce complete the following tasks.

1. What are the advantages of having an online system for booking and paying for seats to:
   1. the airlines
   2. the passengers.
2. Where in the airport is EFT used?
3. How does using EFT benefit both
   1. airlines and
   2. passengers?
4. How does using POS benefit both
   1. businesses and
   2. customers?
5. The initial costs and running costs involved in setting up computer systems like those in the airport are very high. Why is it worth all the expense?

 

 

What you should now be able to do!

• Explain what is meant by the term E-Commerce.

• Be able to give advantages and disadvantages both to customers and businesses of E-Commerce.

• Explain what is meant by the term EFT, and;

• Describe how it works.

• Explain what is meant by the term POS.

• List the advantages and disadvantages to customers and businesses of using EFT.

• Explain the relationship between Customer Lists and the Law.

• Describe what is meant by Junk Mail.

 

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