E-Commerce in Pakistan


When the Graham bell invented the telephone, perhaps he himself was unaware of the potential of the telephonic. A tiny desire of talking to each other through a distance has now grown up to a whole New World of doing complete business and transacting with each other all over the globe. The power of these interconnected telephone lines is the major reason for what we say the world is a global village.

Now the a whole new virtual world is in front of us that is perhaps so much the daily part of our life that it is becoming really difficult to draw the line between the virtual world and the real one. Imagine of a shop that welcomes about 625million views every day and the shop is only one not even having any of its branches. It looks more imaginary that the shop even does not have any bricks and mortar existence, but it does exists in the real world with the name of Yahoo. Com which is most visited site every day. Imagine the power of technology giant on the information super high way, when you just receive a video clip of your beloved one in the very next movement. Although you are in Pakistan and other is sitting in his or her room in any part of earth with a laptop not connected to any wire.

Reason to select the topic

E-commerce is the one world that really matters and can really pave the path of a country’s future. Its a trillion-dollar market today and is mushrooming up every day. No one can deny the potential that the world of e-commerce has got today weather you are a customer, business man or just a loyal subject of your nation. Its scope starts from the speedy communication to cost containment, gaining and maintaining competitive advantage to earning bucks that can change your life and ultimately the economic out look of your country.


Defining e-commerce

Now I like to define e-commerce in its real true sense. There are many definitions that have been associated with this world before but here are some of them.

Microsoft Encarta Computer Dictionary defines e-commerce as following.

“Commercial activity that takes place by means of connected computers. Electronic commerce can occur between a user and a vendor through an online information service on the Internet, or a BBS, or between vendor and customer computers through electronic data interchange (EDI).”

The KPMG research group defines and explains e-commerce as following

“Electronic Commerce is a generic term for applications of information technology (IT).

These enable new ways of conducting business between and across organizations. Electronic Commerce includes smart cards, Intranets, GroupWare, workflow and Internet information access. Smart cards are like credit or payment cards but replace the magnetic strip with a microchip, which can hold information, for instance about the user, and can also, operate as electronic purses. Intranets provide a means of establishing Internet-style communication within a closed user group, such as within an organization. GroupWare enables personnel to work together in teams through the computerized sharing of information. Workflow is an electronic means of mapping business processes to track the movement of work between people.

E -commerce can also be defined in the following manner

“E-commerce is the buying and selling of the goods and services on the Internet, especially World Wide Web.”

We can also define it in the following way

“E-Commerce is online shopping via the Internet.”

“Commerce is any commercial activity conducted electronically, particularly via private or open networks, such as

The Internet.”

The simple and widely accepted definition is

“E-commerce is doing online transaction on the Internet.”

Under the e-commerce we can see that following are the main activities that are being performed over the Internet. These business operations include all the business to business and business to consumer activities.

Ø Information exchange

Ø Goods and services trading

Ø Online digital content delivery

Ø Electronic funds transfer and transaction processing

Ø Electronic share trading

Ø Collaborative work orientation

Ø Manufacturing management

Ø Accounts settlement

Ø Online Sourcing

Types of E-Commerce

Here we are going to define the types of e-commerce. These are not exactly the types in their true sense but are like constituents to the e-commerce. E-commerce includes all the following things but it does not mean that every one of them is exactly the e-commerce itself. In order to is an e-commerce activity, one of them or the group of them join together to form an e-commerce activity.

Basically there are only two major types of e-commerce that includes following.

Ø B2B (Business to Business e-commerce )

Ø B2C (Business to Consumer e-commerce )

Under these two major types there are subtypes that can be included under the both main types of e-commerce. These subtypes include following.


Ø G2B and G2C


Ø E- Tailing

Ø E-mail

Ø Fax, Internet telephony

Ø M-Commerce (Mobile commerce)

Ø C-Commerce (Collaborative Commerce)

Now we are going to explain all these main types and the subtypes in detail.

B2B commerce

B2B or businesses to business systems are designed for businesses to collaborate or sell goods and services to each other. B2B commerce is in fact the major portion of e-commerce that is going on Internet this time. Almost 60% of the e-commerce activity on the Internet are between the businesses. The big giants like Intel, Sony, and alibaba. Com is earning their major share on the Internet through b2b transactions.

Electronic Data Interchange (EDI)

EDI (Electronic Data Interchange) is a standard format for exchanging business data on the Internet. We can define EDI as follows.

“Computer to Computer Exchange of structured Business documents while using industry defined standards.”

It can also be described as

Electronic data interchange (EDI) is a form of electronic communication that allows businesses to exchange transaction data and documents in structured formats that can be processed by computer applications software.

Electronic data interchange (EDI) is a form of electronic communication that allows businesses to exchange transaction data and documents in structured formats that can be processed by computer applications software. EDI is described by Monczka and Carter as the direct electronic transmission, computer to computer, of standard business forms between two organizations. EDI is not a technical solution. It is a complete business process in its implementation. It provides end to end seamless transfer of data between the trading partners, regardless of the respective computer envoirments.

Business to Consumer (E-tailing)

E-tailing (less frequently: e-tailing) is the selling of retail goods on the Internet. Short for “electronic retailing” and used in Internet discussions as early as 1995, the term seems an almost inevitable addition to e-mail, e-business, and e-commerce. E tailing is synonymous with business-to-consumer (B2C) transaction.

E tailing began to work for some major corporations and smaller entrepreneurs as early as 1997 when Dell Computer reported multimillion-dollar orders taken at its Web site. The success of Amazon.com hastened the arrival of Barnes and Noble’s e-tail site. Concerns about secure order taking receded. 1997 was also the year in which Auto-by-Tel reported that they had sold their millionth car over the Web, and Commerce Net/Nielsen Media reported that 10 million people had made purchases on the Web. Jupiter research predicted that e tailing would grow to $37 billion by 2002.

B2B2C systems

B2B2C systems are merely combinations of B2B and B2C systems designed to manage the whole supply chain from the consumer through to raw materials providers. They are design to process orders from consumers and then use this information to place orders with wholesalers and ultimately manufacturers.

G2B and G2C

G2B and G2C systems involve the government providing services to business and consumers. These services may range from the on-line provision of information through to electronic lodgment of forms or tax returns.

Fax, and Internet Telephony

E-commerce is also conducted through the more limited electronic forms of communication called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet. Most of this is business-to-business, with some companies attempting to use e-mail and fax for unsolicited ads (usually viewed as online junk mail or Spam) to consumers and other business prospects.


By definition we can define e – mail as following

“E-mail (electronic mail) is the exchange of computer-stored messages by telecommunication.”

“The use of computer systems to transfer messages between users.”

Messages are usually stored centrally until acknowledged by the recipient. Electronic mail facilities are provided by most large computer systems for their users, and are also available on a national and international basis.

E-mail messages are usually encoded in ASCII text. However, you can also send non-text files, such as graphic images and sound files, as attachments sent in binary streams. E-mail was one of the first uses of the Internet and is still the most popular use. A large percentage of the total traffic over the Internet is e-mail. E-mail can also be exchanged between online service users and in networks other than the Internet, both public and private.

Mobile Commerce

It is quite a new concept still now and many companies are currently working on it. Although it is being used and experimented in the developed countries. Mobile commerce is the used of cellular technologies such as mobile phones, pagers etc for the purpose of conducting electronic commerce. If you can buy a pizza by placing order on your mobile phone than it is going to be a mobile commerce.

In Pakistan it is quite at initial stage as there was no Internet connection was available for the mobile phones. Recently a week ago (October 1, 2000) Nokia has launched its new mobile phone with the Internet facilities in the market and it is gonna open the door of mobile commerce in Pakistan. MCB has also started the Mobile commerce in Pakistan. Mobile commerce will be a big part of e-commerce in the near future as one can foresee the amount of mobile phone users and the increased time saving concerns of the human kind.

Collaborative Commerce

Along with the mobile commerce a new concept of collaborative commerce is also immerging and infact being implemented on the Internet. Collaborative commerce is the fulfillment of consumer order not only by one company or one business but a group of businesses. In this Internet world one may be working with his or her competitor for the sake of an order fulfillment.

Suppose a customer wants a car that have an engine of Ferrari and has an executive out look of Mercedes. He can place this order on the Internet and both companies can join together to fulfill this order with the help of a third company that is actually present on the net and taking the order.

Internet to E-Commerce

The basic reason for which the Internet was formed by the ARPAnet was a part of defense strategy of US defense department. Then it leads to the use for the education and research purposes and ultimately it evolved into a new way of ding business. So now we see that how Internet was born and how a new branch of commerce formed called the e-commerce today.

Defining Internet

The Internet, in its broadest sense, can be defined as a collection or interconnection of any different networks of computer hosts, clients, and servers that collectively provide and use information and connection services.

"Network of computer networks"

This "network of computer networks" now includes a community that literally spans the globe and counts among its members nearly every country in the world.

It developed in the 1970s as an experimental network designed to support military research, and steadily grew to include federal, regional, campus, and other users. The majority of computers on the Internet are connected using standard telephone lines, while others use direct connections by way of a cable. This means that practically everyone can have access to the whole world with a local telephone call. A call goes from your computer to a computer nearby, which then handles the information to and from the Internet.

Computers with access to the Internet come in all sorts of makes and models and run a variety of operating systems and applications. Strictly speaking, computers connected to the Internet are those that use the Transport Control Protocol/Internet Protocol (TCP/IP) suite, which is a common, set of rules that, allow a variety of systems to communicate. Computers on non-TCP/IP networks, however, can access the Internet through gateways that perform the necessary protocol translations and allow appropriate communications.

The Internet uses client/server computing to control the sending and receiving of information across the Internet. Client/server computing can be explained like this: one computer (the server) has a supply of information; another computer (the client), wants to use that information, usually because a person has asked the computer to use it. The two computers are connected, in this case, through the Internet networks. The client requests something from the server, and the server sends back a response.

Scope of e-commerce

Businesses need to place electronic commerce within the context of broader uses of the Internet than the traditional commercial framework. As a market, electronic commerce impacts not only marketing but also production and consumption. Information collected through web stores is used to customize products, to forecast future demand, and to formulate business strategies. Consumers not only order and pay for products online, but also search for product information, reveal their preferences, negotiate with sellers, exchange information about products and firms, and use products online by filtering, processing, and linking them with other computer programs. Likewise, supply chain relationships among businesses and competitive strategies need to aim at increasing the overall market efficiency, not just transactional efficiency.

The size of the market, judged by the number of agents or domain names, is growing rapidly on the Internet. The growth rate in the number of Internet hosts is exponential; it grew from about 300,000 in 1990 to over 12 million by the end of 1996 most of these Internet sites are only potentially commercial. But the awareness of its commercial use among businesses is growing. According to the O'Reilly & Associates' Internet Survey (http://www.ora.com), almost half of all large companies with 1000 or more employees surveyed in 1995 have created an Internet presence through publicly accessible World Wide Web pages

Use as Alternative Market Channel

The Internet can certainly be used as an alternative marketing channel, selling existing products online, but the future of electronic commerce will be guided by innovative digital products and services that will emerge in the electronic marketplace. The core of digital commerce comes from selling digital products, but no one is certain how big the digital product market will become.

To get an idea, one only needs to list products that can be digitized:

All paper-based information products such as newspapers, magazines, books, journals, and databases

Ø Computer software

Ø Games

Ø Audio products, including music, and speeches; video and multimedia products, such as movies and television programs;

Ø Other information products, such as weather reports, stock quotes, government information, consumer information, and even personal information;

Ø Digital counterparts for existing products, such as room keys, digital currency, digital checks and other financial instruments, airline and concert tickets, and so on.

Factors Broadening the scope

The Web represents a marketplace embodying a number of unique elements that can help a business maintain or enhance its competitiveness and position its target markets: Following are some of the factors that not only broaden the scope of e-commerce for any organization but can dramatically effect the performance of any organization.

Ø Image enhancement

Ø New channel for delivery of products

Ø Improved customer services

Ø Expansive reach

Ø Qualified sales leads

Ø Communication (internal and external)

Ø Corporate logistics

Ø Leveling the playing field (globalization)

Ø Gaining and maintaining a competitive advantage

Ø Cost containment

Ø Collaboration and development

Ø Information retrieval and utilization

Ø Marketing and sales

Ø Transmission of data

Ø Creating a corporate presence

Image Enhancement

Corporate image is an important element of any business's marketing strategy. Web sites tailored to project a certain image to a certain clientele are becoming common. These sites may contain a wide spectrum of information related not only to the products and services they provide, but also to the unique qualities and capabilities that separates them from the competition. Some firms post additional information, such as `social causes in which they are involved, or their corporate mission, goals, and philosophies. Still other firms choose to cite core capabilities and past performance. A small, high-technology firm may develop a Web site that describes the variety of highly technical research and development contracts it has performed successfully, for example, complete with project abstracts that detail corporate capabilities.

New Channel for Delivery of Products

The Web quickly has moved from simply being a tool for public relations and enhancement of corporate image to a whole new means of delivering products and services. Many sites now offer the capability to order products online directly. Some products are available for immediate delivery online as well. Many software vendors, for example, now enable customers to purchase and download registered software. Other companies, such as market-research firms, can provide copies of marketing studies and services online to paying customers.

Improved Customer Services

What do customers want? In addition to low prices, customers demand quality service. Web technologies allow businesses to provide improved "human-in-the-loop" and autonomous services much more effectively. No longer are laborious phone calls required to find technical product information or the answers to many common technical questions. Customers now can find much of this information directly on a vendor's Web site--any time of day, any day of the year.

When a customer needs direct support, Web technologies such as e-mail, the Internet, and Intranet applications allow employees to handle and track far greater volumes of trouble and support calls than phone systems alone. Additionally, Web-based systems enable your company to record specific customer preferences and provide more individualized and personalized service.

Expansive Reach

The Web holds potential as a leveling technology and offers many advantages over traditional forms of advertising. Unlike many forms of print, radio, or television advertising, Web advertisements are not limited geographically. You have almost no boundaries on the audience you can reach. Even small companies, which historically had no way to attract business outside their immediate region, now can attract business outside their normal regions--even globally--in a cost-effective way.

Qualified Sales Leads

The Web offers a number of services, such as search engines, with which users can locate providers of products and services of interest. Someone interested in specialty products, such as handcrafted Scandinavian wood furniture, easily can perform a Net search to find out whether and where any vendors of such products exist. What does this mean to a business? Visitors to your Web site are coming there for a purpose: They are interested in what you have to offer. These visitors represent highly qualified sales leads and business opportunities. If even a small percentage of these leads results in direct sales, the cost of generating those sales is virtually nonexistent when compared to more traditional (and expensive) methods of sales, such as sending catalogs and direct mailings.

Internal and External Communication

E-mail is a low-cost method for maintaining local, regional, national, and international communication. Messages can be exchanged in minutes as opposed to days or even months using regular mail. E-mail is a utility for sharing information and is said to be one of the most important productivity packages around. Often, the primary and most frequent business use of Internet connectivity involves internal and external communications (Ellsworth and Ellsworth 1994). Use of the Internet lets a business be in touch with branches and work teams at many locations, and permits high-speed access to vendors and customers.

Improving communication with colleagues, government agencies, the academic community, researchers, and even competitors, can help improve the industry in general. The culture of the Internet is such that genuine exchanges on industry-wide questions and improvement are increasingly more common (Ellsworth and Ellsworth 1994).

Corporate Logistics

Logistical concerns that can dominate production planning can be eased through better contact via the Internet. The Internet is the "anytime/anywhere" network, so exchanges with markets across time zones can be facilitated by the use of e-mail and conferencing. Actual "real time" communication is also possible, through the use of Talk, MOOs, and Internet Relay Chat (IRC). Distance and time barriers are lessened by using the Internet for communication (Krol 1992).

In some cases, businesses have created a virtual company composed of individuals who work at a distance from one another. They may meet face-to-face only occasionally (Ellsworth and Ellsworth 1994).

Globalization and Leveling a Playing Field

Using the Internet, many organizations are able to bring a global edge to a homespun business. With the Internet, you are much less aware of national boundaries and distance. Individuals from Norway converse with others in Toronto, Taiwan and Austin, Texas, easily. This opportunity for rapid communications can increase a business's visibility from local to global overnight.

For many companies, the use of the Internet creates a level playing field. Small businesses can create an image on the network to compete with large businesses. It makes the pursuit of customers, vendors, and resources possible worldwide--allowing competition in a world market.

Competitive advantage can be increased due to access to state-of-the-art information on products, material, new ideas and even the status quo in a given industry. Many corporations use the Internet to engage in what some call "techno watch" --keeping a finger on the pulse of emerging and new technologies, and the market response to those technologies, both anecdotal and in terms of financial performance and the stock market (Ellsworth and Ellsworth 1994).

The public information and discussion groups available on the Internet provide insight and feedback that is hard to get in any other manner. Here, workers at all levels of industry, researchers, and the public exchange of information on marketing, research, technological developments, internal processes such as accounting and personnel, and external activities such as purchasing and public relations. These discussion groups are useful both for the information presented in them and for the pointers they provide to important sites, contacts, and databases. Having the most up-to-date information about your markets and the state-of-the-art in your industry allows you to keep or increase your competitive edge.

In some cases, the Internet is a tool for solving problems by accessing information, documents, and experts. Many companies cannot afford in-house experts on every process or activity, and use the Internet to locate and network with experts, through mailing lists or e-mail (Vine 1995).

Cost Containment

Many businesses are using the Internet to contain long distance telephone and mailing costs. Recent studies have shown that businesses can save thousands of dollars using e-mail, in lieu of some long distance phone calls and postal deliveries (Vine 1995).

With first class letters costing $ .32 each, a mailing of 1,000 pieces to customers would cost $320 for postage alone, whereas the same information sent by e-mail would cost 2 to 3 cents each--and the messages would arrive in seconds as opposed to days. Overnight mail (which typically costs $8-$12 for each delivery) cannot compete with e-mail for speed or cost.

Collaboration and Development

It is increasingly common for companies to form partnerships and collaborative development efforts--even IBM and Apple have done. The development team and project participants often use the Internet to keep in touch and to exchange data, programs, and working papers from far-flung locations. The Internet also allows several small businesses to band together much more easily for product development.

Information Retrieval and Utilization

Rich in resources, the Internet provides software, communications connections worldwide, and files of text, data, graphs, and images. The Internet provides access to databases, books, manuals, training information, experts in various fields, even sound and video clips.

And much of that information is free. With roughly 2.5 million machines connected to the Internet, with databases, Usenet, Gopher servers, FTP archives, and conferences, the amount of information available is astounding (Fraase 1994).

Scientific and research data is available in large quantities. There are electronic newsletters, searchable databases, and online experts--in some cases causing information overload. Some have compared using the Internet to drinking from a fire hose (Ellsworth and Ellsworth 1994).

Marketing and sales

As businesses use the Internet more, and Internet users become more accustomed to marketing activities, Internet marketing is becoming much more popular. Marketing on the Internet involves both research and active outflow of information.

Marketing research is common on the Internet, where attitudes are tested, conversations actively pursued, and opinions solicited from many groups (Ellsworth and Ellsworth 1994). Marketing plans are increasingly counting on Internet access for success.

One of the prime business uses of the Internet is in the area of customer support. Customers can reach a company on their own schedules--day or night--and obtain information from conferences, FTP, e-mail, and Gopher. The customer support information only has to be transferred to an archive once, and yet it may be accessed by thousands of customers and potential customers--a labor-efficient and cost-effective way of distributing information. In addition, a business with a presence on the Internet is perceived as modern, advanced, and sophisticated.

In these days of a highly competitive global marketplace, the company that can reach and satisfy customers will have an advantage--and the Internet can help in maintaining relationships with customers. The Internet is also a fast and efficient way of networking with vendors and suppliers. With its global reach, the Internet can assist businesses in locating new suppliers and keeping in better touch with them to aid, for example, zero inventory planning. A business might locate and coordinate with suppliers in Taiwan, Norway, and Austin, Texas; and the Internet system in some countries is often more stable than telephone service, which is often less reliable and less convenient.

Maintaining up-to-date postings of a company's product information and prices also allows vendors to have continuous access to the information that is needed in order to promote and sell your products. Small suppliers find that they can compete with larger industries by being easily available via the Internet (Ellsworth and Ellsworth 1994).

In a business where the concept of getting closer to the customer is prevalent, the Internet is becoming increasingly important. Internet-assisted sales, where customers are sought and served online through Gophers and a variety of virtual storefronts, are also becoming more popular. Customers are sought before the sale and supported after the sale.

Customer and product support and technical assistance by way of the Internet are time efficient. Many companies provide e-mail assistance, including both individual and automated replies to e-mail questions and requests for information (Hahn and Stout 1994). Technical sheets, specifications, and support are offered through Gophers and FTP. Relationships with vendors and outlets are maintained via the Internet.

In some cases, companies are doing actual product sales transactions on the Internet. In addition, if the product is amenable to Internet delivery, as with software and information, the actual product is delivered via the Internet. Some companies are arranging product delivery through the Internet, where companies can create and support actual distribution channels.

Transmission of Data

Many companies have been using the Internet for the transmission of data. The major financial institutions in the world use the Internet extensively for exchanging information and files. Publishers are using the Internet to receive manuscripts, and transmit files for printing over the Internet. Books are written and collaboratively edited using the Internet (Fraase 1994).

The Internet protocols allow the exchange of both ASCII and binary information. Binary information includes executable programs (software), program data files (word processing files, spreadsheets, databases, etc.), graphics (pictures, maps, digitized images, CAD/CAM files, etc.), and sound files. The network's backbone can send the equivalent of a 20-volume set of an encyclopedia in just seconds (Ellsworth and Ellsworth 1994).

Research and scientific organizations and educational institutions, the original inhabitants of the Internet, are using the Internet to transmit large quantities of data as well, but corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).

Corporate Presence on the Internet [1]

By creating a corporate presence on the Internet, businesses can participate in all the benefits of online marketing, publicity, and sales. They can use such tools as Gopher, FTP Telnet, e-mail, and Usenet to build a virtual storefront, create catalogs that can be browsed online, announce products, take orders, and get customer feedback. Yet the most interesting and comprehensive of resources available to businesses on the Internet is the World Wide Web. The Web provides businesses and their consumers with all of these tools, accessible through a graphics-based Web-browser. The available Web-browsers vary in name, but their functions are indistinguishable. Web-browsers provide consumers with the information they want at their fingertips, just a click away from a sale.

Starting Your Own E- Commerce

Now we move to the some detailed and technical discussion that how e-commerce is actually being done and managed. In the following chapter, we will be concentrating on the following main points.

Ø The very first decision to enter into the e-commerce field is to decide about your business. There can be two main options for this.

1- You are starting totally a new business right from the scratch. And every thing is to be decided about your product, customers, target market etc.

2- You are already running a business and e-commerce is used to support the existing business by offering the same product or another product or service that enhances the sale of your major product category. It is not necessary to even sell the product. Apart from increase in the marketing and sales, Internet can be used in various ways to support your business as it has already been discussed under the scope of e-commerce (chapter #2).

Ø The next step includes deciding about your 4Ps in detail. Here it is continuation of the first step. In this we define every thing operationally that how it will be done. What type of resources will be required and what technology will be used. Decision about resources may not be very clear till this step as it varies to a great extent with the technical specification.

Ø Third step is to decide about the type of web site you need. There are different types and category of Web sites that suit to any particular business. It will be discuss in detail in this chapter later.

Ø Next step is to make your shop or web site. Here following types of decision come under discussion.

1- technological decisions

2- Decisions about software to be used

3- Decisions about hardware

4- Decisions about technical human resource necessary to run the operations for ongoing basis.

5- The money you will be requiring to make your shop. It includes fixed and variable cost decisions.

Ø Next steps lead to the management of the web site. What business strategies will be used and how to get competitive advantage on the Internet. So finally we have to develop complete e-commerce strategy that will be used to run our business on the Internet.

So over all we can say that a new dot-com business can be divided into following steps.

1) What is your strategic vision for the dot-com operations?

2) How will your govern those dot-com operations.

3) How will you allocate key resources to those dot-com operations?

4) What will be your operating infrastructure for those dot-com operations?

5) Is you and your management teams are aligned with the dot-com agenda and the dot-com strategy that your have designed for your business.

Your Dot–COM Agenda [2]


1- Building your dot-com Vision

When one is going to enter in a dot-com business. There are two major options. The strategy is to be decided when one of these options are choose.[3]

Primary Objective of a Web site [4]

1- Are you going to build strategy on your current business models?

2- Are you going to create a new business model?


Current Business Model Strategy

If you are already running a business, then the new strategy is definitely to be aligned with the old one. The already ready running business may be possibly running on the following strategy.

1- Cost Leadership

2- Enhancing services

Many companies are pursuing the same business strategies in the dot-com world. Merrill Lynch, Dell Computers, Sony are the example of it. I n the same way some companies are going to use Internet for the purpose of enhancing services and hence creating a differentiation strategy. American Air lines is selling plane tickets on line. Toyota is planning to sell cars with the help of Internet. Cellular phone companies are getting feedback about the best tone that there customer like on their mobile phone.

Creating a New Business

The benefits that buyers in electronic markets receive from lower prices and search costs are in many instances more than enough to offset the potential additional risk, distribution and market costs. This is apparent from the continued growth of the sports trading card e-market that was studied. Sellers benefit from potential new sources for revenue in the e-market. The impact of e-markets on other organizations that support commercial transactions is more mixed. They reduce the need for certain types of intermediaries, such as wholesalers and retail stores, while increasing consumer demand for new intermediaries, ISP’s, online better business bureaus, and so forth. They also have potential implications for state and federal government tax revenue collection.

Our overall there are economic incentives, both from reduction of costs and from creation of new revenue sources, for electronic markets. It is not just a fad that will go away. Electronic markets are a new institution of capitalism and they are useful because there are instances when they economize on transaction costs when compared with other available transaction governance mechanisms such as traditional markets.

Running totally a new Business Model

The second option is that you are going to start a totally new business on the Internet. It is starting from the scratch. It requires quite more decision making than adding a dot-com world into your previous business. The great example of this is Internet portals, yahoo.com etc. Selling music for listening on the Internet is quite a new idea that has gained momentum these days and its going to be quite a new business market that never existed before. The financial industry has also found quite new uses of Internet. They are using this medium for lots of service enhancement.

The caution point is to keep an eye on the cannibalization. Your new business strategy should not be a threat to your already currently running business.

Governing your dot-com Business

The next step is to decide that how you’re new business will be governed. The major categories of decisions that leads to governing your dot-com business includes following.

Ø Operational decisions that include production, marketing, human resources.

Ø Financial decisions that includes your investment logic, finding and resources.

Ø How you balance the trade off between your operational and financial decisions.

Allocating Resources

The next step is to allocate resources to your dot-com world. There are four different types of approaches that help you to allocate resources for your dot-com world.[5]

1. Placing strategic bets

2. Leveraging your alliances

3. Outsourcing your dot-com operations.

4. Operational maintenance

Approaches to deploy your dot-com resources
Alliance Resources
Internal resources


Placing strategic bet means that company commits internal resources to differentiate its dot-com operations form those of competitors. These resources may be financial, technological or the human resources. Many companies have given their brains to the web startups, for example a former wal mart officer now controls the logistics of the amazom.com

You can also have differentiation and capabilities by alliances and partnerships in the dot-com world. Alliances are a rapid growing trend in the dot-com world. Micro soft never puts its hands on the hardware development. It makes software and then asks IBM and its other alliances to make hardware that will run the software of Microsoft in a better way.

Outsourcing is also a big tool for managing your resources. One can easily get web-hosting facility, back end processing and other related operational facilities from any of other e business that are in this field already. You can have a free domain name with the .com extension on the Internet by going to namedemo.com and hence you have saved $75 for your first year. If you are a new comer and is just posting your resume than this may be a significant amount for you. Some of the companies that are providing outsourcing facilities includes IBM, HP, oracle, Microsoft, EDS, And AT&T.

Operating Infrastructure

Finally we have to decide about our operational infrastructure. That is the technical requirements to say that we are wired and we are enabled. In the future your may not be wired and may be enabled as WAP is making its way to a whole New World of wireless communication.

Operational Decisions are based on the following building blocks.

Ø Attaining Superior Funciotanlity

Ø Offering personalize Interactions

Ø Streamlining transactions

Ø Ensuring Privacy

Ø Superior functionality results in the easy use of web site for the customer. It is done with the help of better quality images, sound effects and 3D options.

Ø Personalize transaction results into the site loyalty. MY yahoo is the best example of it. In Future one will have a totally customized web that will satisfy all the needs that one has without spamming and undesired data.

Ø The back end operations decisions also require simplicity and efficiency. Handling a terabyte or a penta-byte data is not an easy task but this data is the only asset of an e organization.

Ø Finally keeping privacy is one the most important and most difficult operational decision. Spamming, data theft, viruses, firewall, hacking, all aspects are to be properly handled and are needed to be operationalized.

Management and Team Aligning

A dot-com requires totally a new style of management and a new style of teamwork. Its management should result in a relaxed and care free environment that leads to creativity. Management should not only encourage creativity but the experimentation is the only survival of a dot-com.

Now we have see that how a dot-com looks like and after these few steps that we have discussed above, we are ready to work on our e business a out of just our thinking process.

Deciding 4Ps for e commerce

When you are going to start your e commerce business. Than the primary decision making also includes the decision about the product, price, placing and promotion.

Product Decisions

To have a clearer understanding of the issues surrounding the impact of product characteristics on the successful use of the Internet, a discussion on product classifications is warranted. When looking at product classifications, marketers divide products and services based on the types of consumers that use them – consumer products and business to business products. The products are classified into convenience, shopping, specialty and unsought products. Convenience goods are those that are purchased frequently with little planning or shopping effort. They are usually at low prices and widely available. Shopping goods are those, which are, purchased less frequently, such as furniture and major appliances, and which are compared on the bases of suitability, quality, price and style. Specialty goods enjoy strong brand preference and loyalty. Consumers of these goods are willing to make a special purchase effort, do little brand comparisons and have low price sensitivity. Both producers and sellers of these products use carefully targeted promotion. Unsought products are consumer goods that the consumer either does not know about or knows about but does not normally think of buying; for example, Red Cross blood donations (Kotler, 1998).

Based on the above information, it is logical to infer that Internet commerce would be especially suited to the promotion of specialty goods, as they require a more targeted promotional effort. This notion is supported by Peterson et al. (1997), who state that the Internet seems to be especially suited to reach niche markets and sell products which are specialized or unique.

It is also possible to classify products and services as being either experience or search goods. Experience goods are those whose features can only be evaluated by trying or inspecting the product, while the features of search goods can be evaluated based on externally available information. Based on this classification, search goods can be objectively assessed based on the information available on the Internet and a transaction is more likely to take place (e.g. a music CD). However, in the case of an experience good, the information available might not be good enough for the customer to evaluate the product (e.g. a pair of shoes). In this sort of situation, Internet commerce is a poor substitute for more traditional retail channels. However, a customer might use a traditional channel to experience the product and revert back to an Internet-based transaction. It is also possible that a customer might use the Internet to acquire a frequently purchased experience.

E- Product Development

Now first of all we are going to see that how we can decided that what will be our product that we are going to offer on the Internet. The product decisions for e commerce are similar to the product decisions taken for ordinary commerce. Still some major differences can also be seen.

The major product decisions include following.

1. What we can sell on the Internet and what can not be sold on the Internet.

2. Decision about major product or service category that you are entering to.

3. The product development phase with the decisions about the target market.

4. Informational product decisions are different than the tangible product development decisions. They are to be taken separately.

What we can sell on Internet [6]

We can sell everything that we want on the Internet. There are some products that are suitable t be sold on the Internet and some are not. These decisions are based on the following three factors.

(1) Cost and frequency of purchase;

(2) Value proposition; and

(3) Degree of differentiation.

Goods vary along the first dimension from low-cost, frequently purchased goods (e.g. consumable products such as milk) to high-cost, infrequently purchased goods (e.g. durable products such as stereo systems). In general, when purchase fulfillment requires physical delivery, the more frequent the purchase and the smaller the cost (e.g. milk), the less likely there is to be a good “fit” between a product or service and the Internet-based marketing.

Goods vary along the second dimension according to their value proposition, that is, if they are tangible and physical or intangible and service related. Internet-related marketing is particularly well suited to certain types of intangible or service-related goods (i.e. those based on digital assets). To the extent that the value proposition is intangible, the greater the frequency of purchase or use of a good, the greater the advantage of the Internet as a transaction and distribution medium.

The third dimension reflects the degree to which a product or service is differentiable. In particular, it reflects the extent to which a seller is able to create a sustainable competitive advantage through product and service differentiation. Internet-related marketing can result in extreme price competition when products or services are incapable of significant differentiation. However, when products or services are capable of significant differentiation, the Internet can serve as an effective segmentation mechanism for guiding buyers to their ideal product or service.

E-product development Process

One of the most successful product category that is being sold over the Internet is the intangible services and the informational products. It includes e mails, news, financial services, order bookings, etc.

For e commerce we have to modify our traditional product development process. There are two major product development approaches.[7]

Ø Traditional approach

Ø Flexible approach for product development

Well the Internet uses the flexible approach for the product development that is quite different than the traditional approach. Here we can see the difference between the both approaches.

The Traditional Approach


Market introduction

Concept Freeze

Project Start

The Flexible Approach

In the traditional product development process, initially the product is developed in the in the laboratory when the concept of the product is has been decided finally. Once the product concept is finalized than it is given to the R&D to shape that concept in the form of product and finally it is introduced in the market. But in the case of Internet world, we start product development along with its concept development. Our concept development phase overlaps the implementation phase here.

The flexible process is not essential for each of the company that is going on the Internet. But if the concept is quite new and innovative than it needs to be refined with the help of flexible product development process.

Development of Netscape browser is the best example of the flexible product development process. Netscape introduced its browser in the market by January 1996. Then it saw the response of the people and researched on the further technical possibilities. So it kept on developing its navigator. In the next nine months there were 7 updates in the market and that last update was very different than the first one while the new concepts were added in the browser.

The flexible product development requires a deep sensing of the market. It leads to know that what market needs and want. When u sense the market than you can finally go for the technical solutions of that product. Then these technical solutions are again tested in the market and hence the product development keeps on going. There is very less chance that a product is existing in the field of Internet and it is not being developed at that time. Through out the product life cycle and product is being developed in the Internet world.

Successful Products

According to a survey held in Singapore, Following products are suited best for the sale on the Internet and there sales are comparatively much higher than the sales of other products on the Internet.[8]

These products include following main categories.

1- Flowers and Gifts

2- Paid Subscriptions

3- Financial Information

4- Online Video/ Music

5- Software

6- Consultancy Services

7- Loans and Insurance

Small firms should realize Internet commerce demands a holistic approach. Product characteristics alone cannot determine Internet commerce benefit. Small firms may need to seek advice from experienced marketers specializing in online marketing to determine a marketing strategy based on other factors in addition to product characteristics.[9]

Ø It has been a tenet of the online believer’s faith that the Internet allows small businesses the same access to markets as the giant multinational. Indeed, we have seen how larger businesses have focused more on internal communications and their existing supply chain than on promotion and selling.

Ø E-commerce has succeeded best where the products and services are technical and/or technological. More techies use the Internet so, it seems to us, they are more likely to use the medium to buy.

Ø The Internet is primarily an information source rather than a “virtual marketplace”. Despite the hype, most people use the Internet to find things out rather than to engage in transactions.

In general, consumers will have access to a wide array of new services via the Internet, some, of which we can't even conceive of now. On a less lofty level, almost everyone has something to sell, a service, a product or a skill, and through the Internet they now have a worldwide market free from the convention economics of mass distribution. Recreation: Customized entertainment taking advantage of the multi-media capabilities. Products and Services that will do extremely well In the Next Phase of the Development of the Internet as a Marketplace includes following.[10]

Shopping/mail order:

Consumers will be able to find the best prices, quality and products with advanced search tools. If you do not have a presence on the worldwide Web you will not be able to participate in this marketplace.

Business to Business Commerce:

The Internet greatly facilitates the process of looking for products and services; receiving information and evaluating the product; contracting; delivering; and post-delivery support of the product/service.

Education/Corporate Training:

Virtual seminars will become commonplace. Content providers will no longer be able to command thousands of dollars for training videotape, but can greatly increase profits with significantly increased volume and reduced marketing and distribution costs.


You can visually experience many portions of the trip before committing to the purchase, expanding the travel market and reducing transaction costs.

Health Care

An area where people will pay for information.

Financial Services

Investing and managing your money will never be the same again.

Pricing Decisions

Price setting of the product or service totally depends on the product or service that you are going to perform on the Internet. People may think that you are giving your product for free but in fact you may be earning with advertising on Internet.

There is not much data available for the price decisions on the Internet. There are very different pricing strategies that are practiced on the Internet. But none of them can be taken for granted. Your price decisions also depend on the business strategy. If Company is doing business on the bases of cost leadership than Internet can help the company make its cost further decrease due to cheap communication facilities. Pricing decisions also depends upon the target market for which you are selling your product.

What is ever is the pricing strategy but he basic pricing decisions is your desired profit above the cost that you are going pay for your facility. People are buying some times those products from the Internet that may be available cheaper without the use of Internet but this ratio is very low.

You can charge premium by providing time Vs cost trade off to your

Customer and hence the customer is ready to pay you premium for this time saving. Pricing also depends upon the you total input cost for starting your business that includes your fixed cost that is also to be retrieved back. Pricing also depends upon the amount of creativity you are presenting with your product. If product is individualized and customized than traditional practice of charging more stays the same. But one thing is to be kept is mind that product life cycle is the e commerce world is very less than the product life cycle of traditional business world. So you have to recover all of the cost as early as possible. The moment you present your product on the net. That moment automatically gives birth to your competitors and different alternatives that will be on the net much earlier than you are expecting. So pricing decisions are to be taken very carefully. But it does not mean that you start a skimming strategy and keep very high strategy in the beginning. It is to be kept is mind that you have to promote and tell the people that you have got a product on the net and you are to attract them and low pricing or free product is also the part of it.

Payment Systems on the Internet

The payment mechanisms make the pricing P totally different than the traditional pricing decisions we take for our normal commerce. Here now I am going to discuss some of the payment procedures that are being used on the Internet.

It is to be kept in mind that security and safety are one of the most important aspects in e commerce. They are directly with the payment procedures and will be discussed after discussing these 4 Ps in e commerce.

There are different payment systems on the Internet. Some of them are following.[11]

1- Use of credit cards

2- Paying net cash

3- Point earning method

4- Digital coins method

5- Payment through e cash

6- Use of Millicent

Use of credit cards [12]

The credit card is one of the most widely payment procedure that is being used for Internet transactions. The credit card requires a further third party verification apart from the bank and the payee. It has also the disadvantage of credit card theft.

In Pakistan credit cards are in the primary phase. Although State Bank of Pakistan has allowed banks to open merchant account for this purpose but still no progress have been made so far. City bank and ANZ Grindlays are providing limited services in this field.

Digital Coins Payments

Due to the increasing importance of electronic commerce via the Internet the importance of digital money increases. Representing "real" money in an electronic world means that properties and functionalities like anonymity, authenticity, as well as availability of Pico-payments are considered. Like "real" money, digital coins have an inherent value.

Depending on the way digital money is implemented there exist different cryptographic methods and organizational precautions to avoid the usage of forged money. Basically, there are two different types of digital coin-based money:

Ø Using specific cryptographic method the anonymity of digital money may be achieved. Then, neither the financial institution nor the dealer may build up a connection between the customer and coins used by him. The financial institution only knows to which customer the coins are transferred initially

Ø Coins with customer identifying characteristics allow the financial institution to identify the customer and to follow up on payments where the coin has been used in.

Ø Also, the payment process may be classified into online and offline transactions.

Ø If an online payment takes place the coins will be checked immediately for authenticity. This implies that a digital coin is used only once. The financial institution needs to check the authenticity by using a list of all coins that have been issued or a list of all coins that have been sent in for credit.

Ø In case of offline payments the coins may be used more than once. To avoid double spending it is necessary to store information about the user or the users on the coin in order to be able to perform checks later. Anonymity may be guaranteed by so-called secret sharing. Then, the financial institution only gets information in case of double spending.

Payment through E-Cash [13]

E-Cash is anonymous digital money whose validity is checked online by the corresponding financial institution. E-Cash is developed by Digi Cash and is offered by Mark Twain Bank, St. Louis since 1995. Deutsche Bank AG, Frankfurt (Main) offers e-cash as a pilot project to its customers since October 1997.

The customer withdraws digital money from his equate-account using the so-called blinding method and stores it on its hard disk. The blinding method works as follows. The client encodes a serial number and sends it to the financial institution. The financial institution certifies the coin and transfers it back to the customer. The customer then decodes the serial number. Hence, the serial number is not known to the financial institution, which guarantees anonymity. In order to avoid double spending the financial institution has to record the serial numbers of all incoming coins. At each purchase via the Internet the customer gives digital coins to the dealer. The dealer immediately transfers the coins to his bank in order to check for validity. The dealer's bank registers the numbers of the coins issued without tracing them back to the customer. Finally, the dealer is credited and delivers products and services ordered

Figure: Payment process with e cash [14]


Digital coins may be used only once. E-Cash may be considered to be a currency of its own. Financial institutions have to use special accounts. They also guarantee conversion into "real" money. As a consequence central banks like the Bundes bank or the Federal Reserve Bank have difficulties in controlling money supply (financial institutions may create additional money and thereby increase the amount of money supplied; this is well-known in the case of so-called check book or deposit money

E-Cash security is achieved by using an asymmetric cryptographic algorithm. Account access may be protected additionally by using personal passwords. The storage of a coin's serial numbers does prevent double spending. There may be a problem with scalability, however. The costs of checking for authenticity of coins are relatively high because the check has to be done online. This means that the suitability for micro- and Pico-payments has to be evaluated carefully. Each person who has an ECash-account may accept ECash coins. The blinding method, as was already indicated, guarantees anonymity.

Payment through Netcash

The nutcase method is developed at the University of Southern California. One important goal of this project is the use of already existing accounting systems and procedures in financial institutions. This reduces initial investment costs. In contrast to ECash, this method is based on a decentralized approach. Consequently, problems associated with a large number of coins and participants may be solved more easily. Therefore, reduced anonymity is accepted and the cooperation of all participating financial institutions is required.

The system is based on independent` distributed currency servers. Currency servers are locations to exchange anonymous into non-anonymous money. Each currency server possesses an account on an accounting server. The currency server does clearing. It is necessary that the integrity of the servers is certified and that currency servers accept coins from other currency servers. Netcash-coins have a face value and a serial number. Also, the address of the issuing server and an expiry date is stored.

Figure: Payment process using Netcash [15]


Figure shows the payment process using Netcash. The customer gets Netcash-coins from a currency server. These coins are encoded with a publicly and send to the dealer. Anonymity of the customer may be guaranteed by using a new session key for each message. The dealer transfers the coins received immediately to his currency server. From the currency server he either receives new coins or the corresponding value will be credited to his account. The currency server does final clearing.

The serial numbers of all coins that are not send back and are not yet expired are stored on the currency server in order to avoid double spending. This means reduced anonymity. Exchanging the coins at another server may increase anonymity. Security is reached by means of a hybrid cryptographic algorithm. Like ECash we have a method that requires a lot of communication. The usage for micro-payments, however, should be more efficient. Each person may accept Netcash-coins because the system allows free exchange of coins.

Payment through Millicent

The Millicent method is developed by Digital Equipment Corporation (DEC) to manage small and smallest payments (e.g. payment for getting information from the Internet about news and stock quotations or payment for small programs like Java-applets)

The customer buys broker scrip with a defined value by using his credit card or by debiting a suitable bank or broker account. Such scrip is like a telephone card. At the time of purchase the customer exchanges parts of the scrip into a dealer's scrip. This scrip is then send to the dealer. The dealer collects all Scripps and exchanges them into "real" money.  Figure shows the payment prosecuting Millicent.

Figure: Payment process using Millicent [16]

To guarantee the security of this method one-way-hash-functions that may be evaluated quickly are used. Furthermore, the costs of illegally decoding scrip (this means finding the inverse of the hash-function used) are much higher than the scrip's value. A large number of transactions are possible at low costs compared to the other two methods discussed. In principle, each person may be registered at a broker and may then accept digital payments. There is no anonymity but there is the possibility to buy Scripps from different brokers. Then, no comprehensive user profile may be built.

Logistics Decisions For E commerce

The logistic section is given a bit less importance in the field of Internet, but it is one of the most important aspect that one company should look into. With Internet it does not mean that we so not need a proper full-equipped logistics department.

The increasing popularity of the Internet has generated significant interest in the development of electronic retail commerce. The Internet has the potential to evolve into an interconnected marketplace, facilitating the exchange of a wide variety of products and services. The development of this electronic marketplace implies that there will be significant changes in the economics of marketing channels and the organizational structure of distribution, which will lead to a redefinition of industry value systems. When a company starts an e- commerce business than it is involved in two types of main logistics.

1- Distribution of Intangible Products

2- Distribution of Tangible Products

Distribution of Intangible products

The Intangible section on the Internet includes following.

Ø When the company is in the business of informational products.

Ø When the company has some business that does not includes any physical asset.

Many companies have been using the Internet for the transmission of data. The major financial institutions in the world use the Internet extensively for exchanging information and files. Publishers are using the Internet to receive manuscripts, and transmit files for printing over the Internet. Books are written and collaboratively edited using the Internet (Fraase 1994).

Research and scientific organizations and educational institutions, the original inhabitants of the Internet, are using the Internet to transmit large quantities of data as well, but corporate users now transfer the largest portion of data (Ellsworth and Ellsworth 1994).

Logistics of Tangible Products

When you are selling some tangible product on the Internet then the task of managing logistics becomes much more difficult then it is taken. Selling a physical product on the Internet requires a complete logistics department at the back end .It requires organized form of order processing. It requires much more mount of inventory management and warehousing.

The importance of logistics can be valued from the fact that today amazon.com has so big warehouse at its back end that are equal to a big wal mart. It requires same amount of management and expertise as it is required to run a sears store or ant big retail store in the your country. It requires same amount of warehousing and logistics as we have amount of inventory processing for PACE in Lahore.

Cybermediaries in E-commerce

"Cybermediaries, " are organizations that perform the mediating tasks in the world of electronic commerce.

The intermediaries in an e-commerce world that bridge the gap between the both ends are called cybermerdiaries. It is generally a notion that as the Internet grows and e-commerce takes on its momentum, it will result into the elimination of the middleman from the distributions system. Well this is not the case. Still there is much more types of intermediaries (called Cybermediaries[17] in this case) are emerging.

The advent of nearly ubiquitous information infrastructures has led many to predict that one effect of electronic markets will be the bypassing of intermediaries in electronic markets. The ability of electronic networks to reduce transaction costs is the theoretical cause of this supposed trend.

Functions of Electronic Middleman

There are new functions that are performed by an electronic intermediary. They are not just sorting and assorting goods and services as in the case of traditional marketing. They are performing Following Functions.

Search and Evaluation

A consumer choosing a specialty store over a department store implicitly chooses between two alternative search and evaluation criteria. In either case the consumer is delegating some of the product search process to the retail intermediary. Intermediaries also provide quality control and product evaluation. Importantly, this may not mean providing a high level of quality, but rather providing an appropriate level and definition of quality. Thus, the quality of the goods expected at a flea market, a discount store, and a specialty-clothing boutique is significantly different. Specialized intermediaries, such as Consumer Reports and Better Business Bureau can also provide product evaluations. However, retail intermediaries design the type of the search and evaluation services that will be offered to consumers by choosing the product mix and focus.

Needs Assessment and Product Matching.

In many cases it is not reasonable to assume that individual consumers possess the knowledge needed to assess their needs reliably and identify the products which will efficiently meet those needs. Therefore, intermediaries can provide a valuable service by helping customers determine their needs. For example, many hardware stores explicitly present themselves as providers of "helpful hardware people" who help customers determine which products they need. By providing information, not just about the product, but also about the usefulness of the product, and even explicit expert assistance for identifying consumers' needs, intermediaries provide consumers with needs assessment and product matching services.

Customer Risk Management [18]

Consumers do not always have perfect information, and hence they may purchase products that do not meet their needs. Consequently, in any retail transaction the consumer faces a certain amount of risk. This risk may be the result of either consumer need uncertainty, communication failure regarding the characteristics of the product, or the intentional or accidental failure of the producer to provide an adequate product. Another service that many intermediaries provide is related to the management of this risk. By providing consumers with the option to return faulty products or providing additional warranties, intermediaries reduce the consumers' exposure to the risk associated with producer error. If the consumer has the option to return products for any reason, the intermediary further reduces the customer's exposure to the risk associated with customer failure to assess needs accurately and match them to the characteristics of the product. Thus, by choosing an intermediary that provides these services, customers are implicitly purchasing insurance from the intermediary.

Product Distribution

Many intermediaries play an important role in the production, packaging, and distribution of goods. Distribution is a critical factor in determining the value of many consumer goods. For example, the value of a gallon of gasoline one hundred miles from a consumer's home and the value of a gallon of gasoline one mile from the consumer's home are significantly different, primarily because of the distribution services provided. Distribution service firms, such as Federal Express, are a prime example of how information technology has begun to make it economical to provide services independently that historically have been provided by integrated retail intermediaries.

Product Information Dissemination [19]

One class of producer services provided by intermediaries relates to informing consumers about the existence and characteristics of products. Producers rely on a variety of intermediaries, including traditional retail stores, catalog and mail-order houses, advertising agencies, and media outlets to inform consumers. In some cases, such as traditional retail intermediaries, these information services are tightly tied to other services, such as distribution, and in other cases independent intermediaries may provide the information services and distribution.

Purchase Influence

Ultimately producers are not interested only in providing information for consumers; they are interested in selling products. Thus, in addition to information services, producers also value services related to influencing consumer purchase choices. There are many ways that intermediaries can influence consumers' purchasing behavior. Product placement by intermediaries can influence product choice, as can explicit advice from sales agents. Commission compensation schemes, shelf space payments, and special discounts are all ways that producers purchase influence services from intermediaries.

Provision of Customer Information

In addition to information and influence services, intermediaries also provide valuable information about customers. Increased use of IT in the retail industry has contributed to an increase in the importance of retailers and credit companies as sources of consumer information. Producers to evaluate new products and plan production of existing products use this information, which is also collected by specialized intermediaries, such as market research firms. Even in cases where producers do not receive explicit consumer information, retail intermediaries implicitly provide information-processing services by aggregating demand information from a variety of local markets.

Producer Risk Management

Like consumers, producers face risks when engaging in commercial transactions. Intermediaries provide services that enable producers to manage their exposure to such risks as consumer fraud and theft. This risk, which has received a great deal of attention in recent discussions of Internet commerce, is a problem that traditionally has been managed by retail and credit intermediaries. In the past, these intermediaries have provided systems and policies for limiting this risk. When it could not be eliminated, it was the intermediaries that managed direct exposure to that risk.

Integration of Consumer and Producer Needs

Intermediaries must deal with problems that arise when consumer needs conflict with the needs of producers. In a competitive environment a successful integrated intermediary must provide a bundle of services that balances the needs of consumers and producers and is acceptable to both. For example, a producer may wish to inform consumers about the existence of a good while consumers would rather it were filtered out as part of the product search and evaluation process.

Types of Cybermediaries [20]


Directory service intermediaries help consumers find producers by categorizing Web sites and providing structured menus to facilitate navigation. At present these are usually free services to consumers, but in the future may extract fees. There are three types of directory services.

1-General directories (e.g. Yahoo and EINet Galaxy) provide a general index of a large variety of different sites. There is typically some scheme for organizing (and choosing) the sites that will be included. These site often support browsing as well as keyword searches of the index.

2-Commercial directories (e.g., The All-Internet Shopping Directory) focus on providing indices of commercial sites on the Web. These sites do not provide infrastructure or development services for producers, but simply acts as a directory of externally existing commercial sites. Commercial directories may also provide information about a specific commercial area; often listing firms that do not even have Web sites (e.g. The Embroidery Directory). These intermediaries are equivalent to publishers of paper-based industry guides.

3-specialized directories

For Example Jeff Frohwein's ISDN Technical Page) are topic oriented, often even as simple as a single page created by an individual interested in a topic. These pages may play a role in supporting commercial exchanges by providing a consumer with technical and evaluative information about a good or a particular producer, in additional to simple search support.

Search Services

In contrast to the directories, search sites (e.g. Lycos and Infoseek) provide users with the capabilities for conducting keyword searches of extensive databases of Web sites/pages. Typically, search sites do not allow browsing of the database directly, and they are rarely topic specific. Because there is an attempt at completeness they may allow individuals to explicitly add entries to the database.


The term virtual mall or Internet mall is often used to refer to any site that have more than two commercial sites linked to it. Hence, many of the commercial directories described above are actually called "malls". However, Here it is to be distinguished between a directory service, which indexes external commercial sites, from an intermediary, that, like traditional physical malls, provides infrastructure for the producer/retailer in return for a fee (perhaps rent or percentage of sales). Often these malls have a geographic focus (e.g., The Aloha Mall or The Alaskan Mall). They may target a particular type of producer/retailer (e.g., The Asian American Mall). Or they may be composed of variety of "stores", selling a variety of products (e.g., The Pinnacle Mall or Cyber superstores). Malls often will provide links to stores other than the stores that are explicitly part of the mall. However, a key difference between a mall and a directory is the source of their income. A mall derives its income from its "renters;" a directory does not have renters and so will typically have some type of advertising for sale.


Publisher Web sites is "traffic generators" that offers content of interest to consumers (e.g. Information Week or Wired Magazine). They may appear more or less to be online newspapers or magazines. Currently the largest traffic generators are the directories and search sites described above. The high traffic generators that are content providers are often pre existing publishers. Publishers become intermediaries when they offer links to producers through advertising or product listings related to their content. An example of a primarily electronic content provider with very strategically placed ads is GNN. They may only charge flat fees for advertising, or may extract a transaction fee for sales.

Virtual Resellers

The malls described above provide cyber-infrastructure, but they do not own inventory or sell products directly. In contrast, virtual resellers do. These are intermediaries that exist to sell to consumers. Often these resellers are product-focused (e.g., The Christmas Shop, International Shopping Club, and America's Shirt and Tie). They are able to obtain products directly from manufacturers, who may hesitate to go directly to consumers for fear of alienating retailers upon which they depend. It thus represents a good of example of where the NII permits lower priced goods to be offered to consumers, but through efficient intermediaries rather than producer-to-consumer direct links.

Web Site Evaluators

Consumers may be directed to a producer's site via a new type of site that offers some form of evaluation, which may help to reduce some of the risk to consumers (e.g., Point Communications (Top 5% of the Web) and GNN). Sometimes the evaluations are based on frequency of access, while other times they are an explicit review of the sites. They may extract value by charging a fee to producers to be evaluated, or may charge consumers for their service. Also some of the directories and search sites described above are beginning to provide evaluations of sites.


Auditors are not direct intermediaries, but serve the same functions as audience measurement services in traditional media. We mention them only to point out that Internet commerce requires many of the same supplementary services that facilitate traditional commercial activity. Advertisers require information on the usage rates associated with Web advertising vehicles, as well as credible information on audience characteristics. Nielsen, a firm that dominates audience measurement services in other media, is quickly moving to capture a preeminent position in Web measurement as well through their Nielsen Interactive Services subsidiary. Another player is The Internet Audit Bureau.

Forums, Fan Clubs, and User Groups

Sites such as these are also not necessarily direct intermediaries, but can play a large role in facilitating customer-producer feedback and supporting market research. The best examples of these groups are product-related discussion groups and lists. They may be created specifically to connect the producer with consumers (as is the case for many of the user forums on the commercial on-line services) or they may be created by users to communicate with each other (as is the case for most of the discussion lists and newsgroups on the Internet).

Financial Intermediaries

Any form of electronic commerce will require some means of making or authorizing payments from buyer to seller. Payment systems will take many forms including credit authorization by major credit card companies such as Visa or MasterCard, electronic equivalents to writing checks (Checkfree), paying in cash (Digicash), and sending secure electronic mail authorizing a payment (First Virtual). In an electronic commerce environment, these financial intermediaries may extract per transaction fees in order to absorb some of the risk associated with money flows.

Spot Market Makers and Barter Networks

Given the speed, with which electronic networks can inform buyers about products for sale, as well as those with goods to sell about buyers looking for particular products, it is likely that spot markets will emerge. When people exchange one good or service for another, instead of paying with money, it is a barter network. A new set of intermediaries, similar to auction houses, flea market owners, and commodities exchanges may arise to capitalize on this network opportunity. Some thriving examples of where the network helps create a spot market are the news groups that act as markets for various products. Often, on college campuses or local Freenets there are local market groups. There are also specialized groups (computer equipment, trading cards, etc.), and those that deal with used goods. In addition to the newsgroup-based facilities there are also many Web based services, including Barter Net and netTrader .

Intelligent Agents

Intelligent agents are often discussed as the answer to user problems with navigation in the chaos of the Internet. Agents are software programs that begin with some preliminary search criteria from users, but that also learn from past user behavior to help optimize searches. They may appear as a new intermediary service that buyers "hire" when in need of a particular good or service. One intelligent agent site known as BargainFinder has been created by Andersen Consulting for research purposes, although it is not yet particularly powerful, and is actually more of a focused search tool.

In addition to providing services for consumers, intermediaries also provide a variety of services for producers. In choosing marketing channels, producers choose the bundle of services provided by the intermediaries involved. Several functions of intermediaries purchased by producers are briefly highlighted below.

Promotion Decisions for E-commerce

Perhaps promotion is the most beneficial part of marketing with the introduction of e-commerce. A Company that uses Internet can have much wider, cheaper and effective promotion than a company that is not in the e-commerce field. There are many new ways of promoting your business and promoting your product with the advent of Internet. Here are some of the promotional tools and strategies that are being used in the world of e-commerce.

Promotional Tools

There are many tools that are being used on the Internet for promotional purposes. Here is the list of some of them. Every day there is a new way coming that becomes a new promotional tool in the world of e-commerce. So it is very difficult to find all of them and list them all. Here are few of them that are being used excessively and effectively.

Ø An online classified ad is a very effective tool for your e-business promotion. You can run an ad on those sites that have much high customer terrific than yours and hence they can come to your site as they see your add.

Ø Affiliate/reseller/associate programs are also very effective in your web site promotion. You can become an affiliate to some well run business on the Internet and then have an easy takeoff. It is an easy startup for the new web based businesses.

Ø Newsgroup promotions are one of direct way of reaching to the customers. Your news groups continuously deliver information about your web site and about your business that results into attracting customers to your web site.

Ø Promotions through discussion lists and newsletters are one of the most widely used methods of your business promotion. Newsletters sent to e-mail of the individualize can be customized for each individual and is an easy way of reading as customer can know about you any time he likes.

Ø Autoresponders are also being used to respond to the needs of customers. When some one clicks any of your web site add or banner. Auto responder can keep that person on track by responding automatically on that adds by opening a new add of your web site for him.

Ø Bulletin boards are used where a group of people having common ideas and common problems can exchange views and post them for further discussion and further reading. Here you can cater to those bulletin boards that come to your target market.

Ø Ranking at the top of search engines is a very effective way to promote yourself in the wired world of business and you can increase your web terrific many times in just weeks by listing your web site for some mostly used search engines.

Ø Sales strategies as they are being used in traditional and non-electronic businesses are also very effective in the electronic world. Sales strategy is your basic strategy that is going to be used in every aspect of web promotion.

Ø Banner ads (tips and tricks) that includes banner exchange programs is like barter trade that helps both the web sites to promote them selves quickly.

Use of Search Engines for Promotion

Search Engines are index web pages based on content. Each engine works differently. They base the search results on Meta Tags, page content, title, or a combination of these.

A lot of a web site's traffic is generated by search engines and directories,
so it's obvious that web masters will do anything to ensure their site is listed at the top. There are different search engines, and here are brief details of their types.

1- Directories categorize the WWW based on input submitted by a human being, an example is Yahoo. When someone searches for a keyword, this is referenced against a database of sites that contain a title and description for a particular site.

2- A search engine to index the web uses spiders. They all capture specific information about a page. Some capture the title and the first 1,000 characters of content. Some capture the title and "description" Meta Tag. Some look only for the "keyword" Meta tags. Some use a combination of all of these.

Promoting Your E-Business Presence

In The Internet Business Book, Ellsworth and Ellsworth (1994) present the four models for creating a business presence on the Internet that are most common. As companies become familiar with the Internet, they may expand beyond these four basic models, and allocate more resources to market on the Internet.

Billboard Model [21]

The Billboard model is concerned with the posting of information for others to read and take action on. These are visible, without being too obtrusive. The object is to place a small bit of your information in view without coming on too strong. Usually these notices are for telling others where more complete information is available. The Billboard approach works best for those just starting to use the Internet for business. It is a relatively low-cost strategy that can place your business information in the hands of Internet users. This approach is suitable for those with businesses that are traditionally outside of the Internet, and does not involve offering actual products or services over the network. People usually put notices in the following places:

Ø plan.txt, .plan, or .profile files

Ø Signature blocks

Ø E-mail headers or footers

Yellow Pages Approach [22]

The Yellow Pages approach is concerned with providing directory information similar to the telephone yellow pages. Essentially, you create a menu, with each item on the menu pointing toward other sources and providing small bits of information. By providing directory information and a useful service, businesses are "giving back to the Net." This is a middle ground approach. The Yellow Pages approach requires heavier investments of time and money, but it creates a higher profile for the business. This requires some Internet experience, and is for products and services that are ready for Internet promotion, and those with steady Internet access. Common Yellow Pages models are:

Ø Gopher servers


Ø Usenet News

Ø World Wide Web Pages


Brochure Approach [23]

The Brochure approach features the provision of information sheets, brochures, and other informational items. The emphasis here is on the information itself, with only a small amount of promotional material. This is similar to the Yellow Pages approach, but with the added requirement that you maintain a good-sized inventory of useful information pieces. Some of the vehicles for brochures include:

Ø FTP archives

Ø Gopher servers


Ø Usenet News


Ø World Wide Web Pages

Ø E-mail, particularly automated reply

Virtual storefront Approach

The Virtual Storefront is a full information service designed to include the marketing of your services and products, and in some cases, to allow online purchasing, customer support, and more. The Virtual Storefront should be approached cautiously. It requires a fairly heavy investment of time and effort. A Storefront can be extremely costly if a business maintains its own dedicated line and site, but it can also be maintained on a rental basis with a full-service Internet provider. The Storefront is particularly suited to businesses that are information-based. It combines some of the activities from all of the other models, but in a more coordinated approach.

Ø Created on Gopher or the World Wide Web, using your own or rented "space" from an Internet provider

Ø Supported by e-mail, FTP, Usenet News, and other tools already mentioned.

Developing an e-commerce website

Till now we have discussed many aspects that are not very technical in the nature, but this part of my thesis deals with a brief over look on how practically we can make an e commerce web site. Here is a checklist of some steps while we develop our own web site.

Ø First of all we make an over all plan that what our web site should consist of. It includes following things.

1. What are your web site contents and what is the volume of those contents

2. What is over all theme in which you are going to run your aver all Web site

3. What is your target market and who will be visiting your web site.

Ø What will be the major functions that will be performed by your web site. By major functions of a web site, I mean following

1. Is your web site is static information dissemination based that is updated periodically. For example you can have different carpet designs on your web site. And customer can mail you about his order. All the rest transaction is done manually with out Internet.

2. Is your web site is interactive in nature that allows customer to find his customized information by interacting with him. These sites are based on active server pages and are continuously updated with each person who is accessing it. These web sites are also taking your customer data in different form, processing them at the back and then contact the customer again.

3. Finally a full fledge e-commerce site includes all transaction based mechanism in it. A person can place order, can pay on the net and receive its good and service on the net. Delivery is physical only if the product is tangible.

Ø The next step is to find that what amount of expertise you need to develop your web site. How much time is required. How many different technical personals are required for building the web site. From where you are going to hire them.

Ø Next step is decided about the software’s that will be used to develop front end and the back end of your web site.

Ø Then we move on to development of web pages and your database. Development of Your Home page is altogether a different task as it is face of your web site.

Ø Next step is to use ODBC (Object Database Connectivity) for interconnecting your database and your web pages.

Ø Then we move on to selecting your domain name also called your web site name and getting your domain name registered.

Ø Setting your hardware and assigning duties to your staff is the next step as your web site is uploaded.

Ø Testing your web site for debugging and load balancing is a move ahead.

Ø At the same time, getting your merchant account and making it operational is one of the most difficult and important tasks for an e -commerce web site.

Ø Then we move on to developing different safety measure that results into your merchant account safety, customer's credit card safety, hacking etc.

Ø Finally we re check all the system and remove all the weaknesses from our web site.

The above mentioned checklist is not exhaustive, there are many steps that are in between and are left behind. There a number of things those are to be done and are not listed and are a very important part of your web site development.

Software Decisions

Deciding about software that will be used to make your web site is Primary importance. Following type of software is to be used.

1. Simple web page Development requires Microsoft Front page, Macro Media Dream Weaver etc.

2. Use of Macromedia products that include Flash for including animations in your web site.

3. Use of Different Image editors like Ulead image editor, Corel Draw, etc for enhancing your web site out look by adding different kinds of images

4. Use of different sound processing and sound editing software’s for adding different kinds of sounds in your web site.

5. Use of Oracle and MS Access for developing your database at the back end of your web site.

For all of these purposes different program languages are to be used in order to make a difference in your web site that includes JAVA, C++, Oracle and Visual Basic etc.


Major databases Used

Major Software’s Used

Ø MS FrontPage

Ø Macromedia Dreamweaver

Ø Macromedia Fireworks

Ø Macromedia Flash

Ø Macromedia Director

Ø Ulead Image Editor

Ø Corel Draw

Ø Macromedia Shockwave

Strategies for an E-commerce Site

Building Competitive Advantage

Now we have made a web site and we are doing business on the Internet. It is just beginning of the problems. Because you will find a competitor emerging every day in your e world. So the main task is to say that how our web site will survive in this electronic world. Our web site has to do something different that is not provided by the other web sites. It is the same traditional concept of building competitive advantage for your web site. There are many ways and many strategies that help you to differentiate your web site from others. Here are some strategies and some small tricks by which one build competitive advantage for his web site to be competitive in the wired world.

Competing on Reach, Richness & Affiliation

On the Internet the old ideas of competitive advantages of cost of quality are changing. Now if a company have to compete on the Internet. It can build its competitive advantage on following three bases.[24]

1-Competing on Reach.

Its all about access and connection. Reach means that to how many customers a business can contact and how many products it can offer. The more customers a business can grab on the Internet. More competitive the business is.

For example the largest bookstore in US offers about 200000 books. But amazon.com alone offers more than 4.5 million books. So there is a big difference between the reach of traditional and electronic business.

Previously a business reach was limited to some location but now the reach has no boundaries. Previously the large business had more reach than the small ones. But now on the Internet

2-Competing on Richness [25]

The second competitive advantage a business on Internet can have is on the basis of richness. Richness is the depth and detail of the information that a business can give to customers on the Internet. The more information you provide on the Internet. The better you are on the wires.

A business can be providing richness in the following fields.

Rich Customer Information

Previously retailers were the big source of collecting information about the customer. Now a company can directly now about its customers and can collect information about them. The better a company uses this information. The more competitive it becomes.

CDNOW.Com is best example of it. Here the Detailed information about the music liking and disliking of the customer is collected and then the same type of CDs are offered to him for sale.

Rich Product Information

The manufacturer has the best competitive advantage on the Internet on this base. They know maximum about their products. For example SONY knows best about its products. So this can be a competitive base for it while doing business on the Internet. It is more effective when the products are more complex and more technical.

Competing on the basis of Brands [26]

There are two types of brands.

1. Brands on the basis of beliefs e.g. SONY

2. Brands on the basis of experience e.g. Barbie

The products that have brands on the basis on experience will have more competitive advantage on Internet than the products that have brands on the basis of beliefs.

3- Competing on the Basis of Affiliation

The third base of competitive advantage on the Internet is affiliation. Affiliation means that whose interest a business represents on the Internet. A business can affiliate it self to consumer or to supplier. There will be a trade of between the both that whether a business should earn from the supplier side or the business should earn from the buyer side.

For example the amazon.com have to decide that if it does not show the ad of a new book. Will it hurt its own sales or the sales of the company that published the book.

Shaping your Strategy

At end the type of business will determine that what competitive base it should adopt. For example the product manufacturer should compete on the basis of richness. The retailers should build their strategy on the basis of consumer affiliation while the navigators should build their competitive edge on the basis of fast richness and close affiliation to the customer.[27]

Strategy for a Pure Navigator [28]

Ø Never take your Business Definition for granted. You must compete with other navigators on richness and reach domain whose boundaries are constantly moving.

Ø Recognize that close affiliation with consumer is a major competitive advantage. It is part of web directory. Do not compromise on consumer interests over your short-term gain.

Ø Build richness very fast. It the most probable area where the new comer will attack.

Strategy for electronic Retailer

Ø Define your business in tern of consumer search domain, not in a physical category.

Ø Be very exclusive with the product suppliers. The sacrifice of reach and consumer affiliation is likely to cost you more in competitive advantage than the gain in margin is worth.

Ø Beware of category killer physical retailers, they often have better consumer information and better logistics. They’re only handicap on inability to think differently that they could change.

Strategy for Product Manufacturer [29]

Ø Adding richness especially product specific richness is the most powerful way to compete. Concentrate on enhancing brand as experience.

Ø Mentally deconstruct your own business. Look at its informational components. Develop independent strategies for them. Take an organization that takes those strategies seriously.

Ø Reach is a two edged sword for manufacturer. It might enable you to escape stranglehold of your retailer . But it exposes you to new navigators whose potential reach ma is far more than you reach.

Ø Look seriously towards the alliances in order to have more reach and affiliation. Alliances are the most effective in the e world to run your business.

Types of web Sites

Now we are going to discuss the major types of web sites that a company should make in order to have a competitive advantage. There are two major paths in order to build a web site.

1. The first path is to move from information to transaction. In beginning your web site just provides information then you start doing transactions at the later stage. This type is adopted by the MNCs or companies who are already doing business and are very my much in known. They get promoted with information very easily. 3M is the best suited example who started giving information about all of its products over the Internet and keeps on telling of its new innovative products on the Internet. Now it has also selling its products on the Internet.

Evolutionary Path of a Web site [30]




The second type of web site moves from transaction to information phase. It is inverse of the first web site type. This type of web site is suited for Internet start-ups. Firm that are starting their business on the Internet should first start transacting and then should promote their name and information about their site at the late stage when their product is already in the market. CD Now is the best example of this. Nullsoft is also a good example of people who started giving music to people over the Internet and now they are promoting that who was the company that made this business software.

Evolutionary Path of a Web site [31]


Internet Start-ups

Drivers of Internet Business Model

Many companies are doing business on the Internet with different types of sites and with different types of business models. Here is a model that describes why a firm goes for e- commerce.[32]

Primary Business Impact

Cost Reduction

Revenue Generation



Customer Focus



Use of Internet for conducting transactions for better customer service

Product Information

Use of Internet for Promotions, database management, market research and transactions


The first quadrant includes companies using web primary as a communicational tool to engage in one way or two-way communication. The communication is between outside audiences e.g. intermediaries, supplier’s etc. Software developers are the best example of it. Apple Web site provides technical and legal support to their customers and releases to Macintosh users.

Ø The companies in the second quadrant are also internally focused but also offer transactions over the Internet. e.g. CD Now is offering music to worldwide consumers that is less then the other companies prices.

Ø The third quadrants have those companies that use web for its international customers. Service is more valuable to all the customers here. An e.g. Sun Micro system provides global support, product information and software updates worldwide.

Ø Fourth Quadrant includes those sites that offer transactions to their customers worldwide. These transactions involve matching of the buyers and sellers. These companies make profit by making commission from the both buyers and the sellers. Ali Baba dot COM is the best example of it.

Categories of Web Site

There are different categories of web sites and they can be categories on different bases. Here is their Categorization on the bases of focus and content.[33]




Worldworth Books

Mr. Upgrade

CD Now

Lightning Instruments



Business Models for E-commerce [34]

In actuality, five distinct e-commerce business models form the basic structure for the wide variety of web sites today. The five categories are called vanity, information, advertising, subscriptions, and storefront sites.

While not all of the models derive revenue directly, they all incur costs. In addition, many sites combine several of the five identified business models. Each of the five models has unique characteristics that differentiate them from the other types. So it's important to understand their differences.

Vanity Sites

Many web sites started as vanity sites. Individuals as an outlet of self-expression, to share a hobby, promote a cause, or find others with similar interests often create these sites.

The sites are created with no intention of deriving revenue, and no illusions of grandeur. It could be as simple as a one-page family site or a complex forum on a specific topic. The costs are borne either by the individual or by some altruistic enterprise such as universities, libraries, communities, associations, and even businesses. Nevertheless, the costs are real on these "free" sites.

Information Sites

Information sites (also called brochure or billboard sites) are designed to derive economic benefit through indirect means from referred sales, reduced cost, or both. Revenue comes from creating awareness of its products or services via the web with the actual purchase transaction occurring offline.

Just like a billboard on a highway, success is measured on viewership as 'net citizens "surf" by and are influenced to purchase product. Most corporate sites today put up these electronic brochures to provide information about their products, employment opportunities, investor relations, or customer service. Economic benefit is created through the indirect purchase of the goods or services from existing physical outlets and cost savings through the elimination of infrastructure or inefficiency.

Some businesses feel this is the best way to avoid channel conflict -- a potential pricing disparity between different supply chains.

Advertising Sites [35]

Network television, radio, and many periodicals follow the advertising model. All programming and content is funded by advertising dollars with consumer viewership being the measurement of value. Agencies conduct sophisticated surveys to measure the value and establish the pricing. For e-commerce, advertising can be in the form of banners, sponsorships, ezine ads, and other promotion methods.

This is much ballyhooed but still largely unproven model on the web. While there are a few sites that are entirely supported by advertising dollars, the lack of web-savvy viewership statistics hinders mass adoption by advertisers. As the knowledge of consumer behavior is further understood, experts will prepare purchase pattern analyses providing advertisers with empirical data to support their promotion campaigns.

Subscription Sites [36]

In other media, the subscription models are well established -- accepted by subscribers and nurtured by publishers. On the web, subscriptions are not yet widely accepted by consumers. Of those that are accepted, the subscription model caters to sites targeted to particular niches of individuals who have specific needs. These sites are often specialized with expert content and timely information. The subscription revenues fund the development and maintenance of the site.

Subscriptions can be paid on a weekly, monthly, or annual basis. Payment through a credit card account is a common payment scheme for subscription sites because of the ability to periodically process the purchase transaction electronically.

Storefront Sites

To some people, a products-offered site is narrowly defined as a "true" e-commerce site. A web site that offers products for sale is the electronic version of a catalog. These virtual storefronts are built to describe the offering with pictures and words, offer promotions, provide a "shopping cart," and complete the purchase transaction.

Once the product is purchased, the cyber enterprise arranges for product fulfillment including shipping and handling. The fulfillment is sometimes completed by the web site enterprise or directly from the manufacturer in a drop shipping arrangement. Some manufacturers are now passing up the intermediary wholesalers and retailers by offering their products directly to consumers. This collapsing of the supply chain is called disintermediation.

Although the vast majority of these sites offer tangible products, they can work for service products, too. The primary characteristic of these types of sites is the ability to make a one-time purchase with no future obligations.

While it is impossible to predict the future in this fast-moving media, it is obvious that all five-business models will remain viable for the near-term. Each model will continue to mature both in its acceptance and sophistication. Consumers will increasingly look to the web for physical commerce alternatives because of the limitlessness of the media both in

terms of geography and shopping hours.

For 'net entrepreneurs, each model should be examined carefully to understand which model provides the maximum benefit. With the understanding of the business models, financial projections can be easily created, and business plans finalized. With the business plan in hand, you will realize even in cyberspace, there is no such thing as a free lunch.

The Stages of Maturity‘ Model [37]

In the following model we distinguish between three stages in the


implementation of Electronic Commerce. Stage 1 represents experimentation. Stage 2 represents ad hoc implementation. Stage 3 represents integration: an organization-wide, Board-led initiative to integrate Electronic Commerce with existing business processes and re-engineer them where necessary. The majority of companies participating in this survey are at Stages 1 or 2 Neither Stage requires Board-level approval or sponsorship. But moving from Stage 2 to Stage 3 does, both in terms of budget availability and encouragement to re-engineer. Companies at Stages 1 or 2 do not need to have assembled a business case for Electronic Commerce. But in order to justify process change and move into Stage 3, a business case is essential.

Qualities of A Successful Web site

Here are some of the factors that are important contributors to the success of your web site. Without giving proper attention to these factors, it is not easy to promote and excel your e business. Following figure lists these factors very clearly.

Here we can see that design of the web site is most important factor that contributes to the success of your web site. While pricing lies at the end although price leadership is very successful factor in traditional businesses. [38]


Reasons for Best Site

According to research conducted by KPMG Group in England. The design of the site was considered the best factor for successful web site. Information and web site contents were next that were given importance. Here is the detail list of different factors that are rated by users in order to select a best site.[39]

The Five Laws of Web Marketing

Five Laws of web marketing is the advice by Dr. Ralf,[40] here is the detail of those laws.

1-The Law of the Dead End Street

“Setting up a web site is like building a storefront on a dead-end street. If you want any shoppers, you must give them a reason to come.”

The most wonderful site in the world is wasted unless people stop by to admire and purchase. It's the same reason that most great craftsmen aren't millionaires; they've learned to make a great product, but don't have a clue about marketing.

So the first question you need to ask yourself, even before you build your company's site, is: How will we get people to visit? Perhaps your marketing plan will look like this:

Ø Banner ads for two months to boost name recognition.

Ø Search engine positioning on HotBot and Excite in the first quarter, to include Infoseek, Lycos, and AltaVista in the second quarter.

Ø Reciprocal links with our industry organization and a paid listing in their directory.

Ø A newsworthy contest in the third quarter, for which we'll try to get full media coverage through press releases and calls from a PR agency.

Ø A company newsletter that carries industry news rather than just company drivel, to begin in the fourth quarter (though you should start collecting e-mail addresses now).

Then decide which of these activities to carry out in-house and which to outsource, attach a dollar value to each, and provide for them in your marketing budget. Your marketing plan may look much different than this, but you must give visitors a reason to come.

Many sites I visit are pretty slim. Yes, they give information about the company and its services, but nothing you'd want to bookmark. What compelling content can you put on your site that will make someone want to return? Content is primary.

With excellent content, when you ask for a reciprocal link, you don't have to plead, "Link to us because we're the greatest." You can say, "Link to us because we offer everything a buyer needs to know to select the right lighting fixture." When you offer a public service, you suddenly become newsworthy. Trade journals and magazines begin to mention you, and traffic follows. Give visitors a reason to come, and they will.

2. The Law of Giving and Selling

An important element of Web culture is "free stuff." The Law of Giving and Selling says:

Attract visitors to your site by giving away something free, and then try to sell something additional to those who visit. “

Here's how we used this strategy. In mid-1995 Wilson Internet Services launched our web site design business with a goal of attracting business nationally via the Web. At that time even local web site designers were considered oddities.

Here's the simple strategy:

Ø Attract people to your site by giving away lots of free information. Then

Ø let people know about your products and services. Learn this rhythm of giving something away, and selling something. The strategy works. But to sell, you need to master a third law.

3. The Law of Trust [41]

Assuming your products or services are priced competitively and are of good quality, your most significant sales barrier is trust.

Trust is the essential lubricant of Web business; without trust, business grinds to a halt.”

An established store brand name comes from hundreds of positive impressions built by expensive advertising campaigns. These ads purchase brand trust. But if you're a small business you can't afford such advertising. Nevertheless, you can build trust by means of your web site in multiple ways. First, anchor your business in time and spaces by giving a full address and phone number. If you have an office or brick-and-mortar store, show a photograph. Better yet, show photos of yourself or your staff. Now your customers view you as real people rather than some faceless entity who-knows-where.

You build trust by selling well-known brand name products, by displaying clear shipping and return policies, by joining nationally respected organizations, and by offering guarantees. You build trust with a customer-friendly navigation system and intuitive interface, and an SSL secure server for credit card transactions. You gain credibility by having a professionally designed site, rather than something your teenage son cooked up on the weekends.

Once you've established trust, sales result. You also build trust by repeated contact with your visitors. We describe this in a fourth law.

4. The Law of Pull and Push

The Fourth Mutable Law of Web marketing is: [42]

Pull people to your site by your attractive content, then push quality information to them regularly via e-mail.”

Web sites, by their very nature are passive creatures, like fireside dogs. They just lie there wagging their tail listlessly and smiling wanly until someone enters the door. (Then the best web site dogs come alive and propels you to the desired destination and action.)

E-mail messages, on the other hand, are active animals like St. Bernard Rescue Dogs, always ready to go where you send them and deliver a refreshing cask of information, and an invitation to return to your web site to see the newest thing you have to offer.

A web site tries to attract you by pulling you in with the promise of content, while e-mail pushes its message into your previous visitors' mailboxes. Most businesses can't survive on one-time sales only. The cost of customer acquisition is too high for just a single sale. They need to draw satisfied customers back again and again for repeat sales. The Law of Pull and Push accomplishes this vital task.

Getting an invitation to send e-mail to your visitors is key to this strategy. Include a form that will collect their e-mail address. To convince your visitor to give you his e-mail address, however, you need to promise two things:

2. You'll e-mail him something of value

3. You won't sell or rent his address to another company, hence the need for a clear privacy policy. But once the visitor has given you permission to e-mail additional information, you have wonderful marketing leverage.

This law, too, has its own rhythm. Pull the customer to your web site by attractive power, then push good content and offers to the customer via e-mail to draw them back to your site.

5. The Law of the Niche [43]

The Law of the Niche is last but not least. Let me state it this way: Big businesses like Amazon.com and Wal-Mart have the money and clout to "own" whole segments of the marketplace

“Small businesses succeed by finding niches that are either unfilled or only partially filled, and filling them with excellence.

For example, JustBalls.com (http://www.justballs.com) saw an unfilled niche in selling sports equipment. Instead of trying to bite off more than they could chew selling the whole range of sports equipment, they looked for a single slice -- balls -- and set up "The Biggest Ball Store on the Net." They sell sports balls, fitness balls, toy balls, and ball stuff. You'll find baseballs, softballs, footballs, and volleyballs. If it's a ball they have it. When you think "balls," they want you to remember them, "JustBalls.com" and come to their site. They also own the URLs for Justbaseball, Justfootball, Justbasketball, Justlacrosse -- 27 different sports in all -- in case they want to expand their marketing by sport by sport.

Unique Selling Proposition

The key to this kind of savvy niche marketing is to carefully write a business plan that defines your Unique Selling Proposition (USP). It defines what makes your business unique from every other competitor in your field. It spells out the precise niche you seek to fill, and how you aim to fill it.

Ways to promote your Site

Here are different ways and different strategies that can help us to promote our web site. [44]

Write a Page Title.

Write a descriptive title for each page of 5 to 8 words. Remove as many "filler" words from the title, such as "the," "and," etc. This page title appears on the Web search engines when your page is found.

List Keywords.

To get your juices flowing, sit down with some associates and brainstorm a list of 50 to 100 keywords or keyphrases -- the kind of words or phrases someone might search on to find a business or site like yours. Then refine the list to the most important. Make sure that you don't repeat any word more than three times so you're not penalized for "keyword spamming.".

Write a Page Description.

Select the most important 20 keywords, and write a careful 200 to 250 character (including spaces) sentence or two. You don't need to repeat any words used in the page title. Keep this readable but tight. Eliminate as many "filler" or "throwaway" words as you can (such as: and, the, a, an, company, etc.) to make room for the important words, the keywords which do the actual work for you. Place those words at the top of the Web page, between the <HEADER></HEADER> tags, in a META tag.

Submit Page to Search Engines.

Next, submit your page to the important Web search engines and directories. To do this, consider using a submission service such as Submit-It http://submitit.linkexchange.com/ or All4one Submission Machine http://www.all4one.com/all4submit/ The most important search engines that robotically "spider" or index your site are: AltaVista, Excite, HotBot, Lycos, Infoseek, WebCrawler, and Northern Light.

Submit Page to Yahoo.[45]

Yahoo is the most important listing of all -- though it's technically a directory, rather than a search engine. It uses real humans to read (and too often, pare down) your 200 character sentences, so be very careful, and follow their instructions.

Submit Page to Other Directories.

You've probably seen offers to submit your pages to 300 different search engines. These don't help much, except to increase the perceived "popularity" of your site by some of the major search engines. The most important 25 directories are probably enough, unless you find some specific to your industry. Most of the rest aren't really search engines at all, just an excuse to solicit you for "upgraded listings." These marginal directories come and go very quickly, making it hard to keep up.

Request Links on Industry Sites.

You probably belong to various trade associations that feature member sites. Ask for a link. Even if you have to pay something for a link, it may bring you the kind of targeted traffic you crave.

Include URL on Stationery, Cards, and Literature.

Make sure that all reprints of cards, stationery, brochures, and literature contain your company's URL. And see that your printer gets the URL syntax correct. In print, I recommend leaving off the http:// part and including only the www.domain.com portion.

Promote using traditional media.

Don't discontinue print advertising you've found effective. But be sure to include your URL in any display or classified ads you purchase in trade journals, newspapers, etc. View your web site as an information adjunct to the ad. Catch readers' attention with the ad, and then refer them to a Web page where they can obtain more information or perhaps place an order. Sometimes these ads are more targeted, more effective, and less expensive than online advertising. Consider other traditional media to drive people to your site, such as direct mail, classifieds, post cards, etc. Since SuperBowl 1999 we've seen TV used extensively to promote sites, since the Web is now considered a mass medium, though it is probably too broad for all but the most general portal sites.

Develop a Free Service.[46]

It's one thing to say, "Come to our site and learn about our business." It's quite another to say "Use the free kitchen remodeling calculator available exclusively on our site."

Request Reciprocal Links.

Find complementary web sites and request a reciprocal link to your site (especially to your free service, if you offer one). Develop an out-of-the way page where you put links to other sites -- so you don't send people out the back door as fast as you bring them in the front door.

Issue News Releases.

Find newsworthy events (such as launching your free service), and send news releases to print and Web periodicals in your industry.

Request Links from Business Link Sites.

Especially if you offer a free service, you can request links from many of the small business linking pages on the Web. When you have something free to offer, many doors open to you. Surf the net looking for places that might link to your site. Then e-mail the site owner or webmaster with your site name, URL, and a brief 200-word description of what you offer there.

Capture Visitor E-mail Addresses [47]

On your web site's response form, include a checkbox where the visitor can give you permission to e-mail updates about products or services. Now your e-mails to visitors are not "spam." You're responding to their request for more information.

Publish an e-mail Newsletter.

While it's a big commitment in time, publishing a weekly, monthly, or quarterly newsletter is one of the very best ways to keep in touch with your prospects, generate trust, develop brand awareness, and build future business. You can distribute your newsletter using your e-mail program, or have people subscribe on your web site directly to a list server program (such as Majordomo) offered by your Internet Service Provider.

Install a "Signature" in your e-mail Program.

Most e-mail programs such as Eudora, Netscape, or Outlook allow you to designate a "signature" to appear at the end of each message you send. Limit it to 6 to 8 lines: Company name, address, phone number, URL, e-mail address, and a one-phrase description of your unique business offerings. Look for examples on e-mail messages sent to you.

Promote Your Site in Mailing Lists and News Groups.

The Internet offers thousands of very targeted mailing lists and news groups made up of people with very specialized interests. Use DejaNews http://www.dejanews.com to find appropriate sources. Don't bother with news groups constituted of pure "spam." Instead, find groups where a dialog is taking place. Don't use aggressive marketing and overtly plug your product or service, even if you see some jerks doing so. Rather, add to the discussion in a helpful way and let the "signature" at the end of your e-mail message do your marketing for you. People will gradually get to know and trust you, visit your site, and do business with you.

Announce a Contest [48]

People like getting something free. If you publicize a contest or drawing available on your site, you'll generate more traffic than normal.

Join a Banner Exchange Program.

Of the many banner exchange programs, LinkExchange is the biggest. http://www.linkexchange.com Essentially, you agree to show a rotating banner on your site for other LinkExchange members, and they do the same for you, and there's a possibility you'll earn something through paid banner ads, too.

Purchase Banner Ads on Appropriate Sites

You may need to spend money to boost traffic by purchasing banner advertising. Choose sites that seem to attract the kinds of people who would be good prospects for your business or product. Expect to pay $10 to $40 per thousand people who see your ad, and achieve a click-through rate of 0.5% to 1%. You can find media brokers who can help you find appropriate and cost-effective places to advertise, especially if you have a significant advertising budget for branding purposes.

Buy a Text Ad in an e-mail Newsletter [49]

Businesses are finding that some of the best advertising buys are for small 4 to 12 line ads in established e-mail newsletters. Ads can both inform and motivate readers to click on the URL, and tend to bring much more targeted visitors.

Employ search engine positioning.

Registering your site with the search engines is the first step. But with tens of millions of WebPages, your site may hardly be visible. These days you may need to construct a series of gateway pages, each tuned for a particular search phrase and search engine. Then fine-tune these gateway pages to rank high using a program such as Web Position Gold (http://www.webposition.com). Many small businesses outsource search engine positioning because of the considerable time investment it requires.

Begin an Affiliate Program. [50]

Essentially, a retailer's affiliate program pays a commission to other sites whose links to the retailer result in an actual sale. The goal is to build a network of affiliates who have a financial stake in promoting your site. If you're a merchant you need to (1) determine the commission you are willing to pay (consider it your advertising cost), (2) select a company to set up the technical details of your program, and (3) promote your program to get the right kind of affiliates who will link to your site.

Devise Viral Marketing Promotion Techniques.

Viral marketing uses the communication networks (and preferably the resources) of your site visitors or customers to spread the word about your site exponentially. Word-of-mouth, PR, and network marketing are offline models. The classic example is the free e-mail service hotmail.com that includes a tagline about their service at the end of every message sent out.

Attracting New Customers [51]

One of the difficult thing in e-commerce is reaching to new customers as they are not in front of you. Attracting someone who is not in front of you is quite difficult than someone who is physically present for you. Here are some ways to attract new customers for your e-business.

Give Away An Electronic Information Product

The product could be a simple report posted on your Web site or autoresponder to a downloadable e-book. The information product should relate to your target audience. Just place your advertisement somewhere on the product. Allow other people to give away the information product to attract even more customers.

Offer Free Consulting Via E-mail

Allow potential customers to ask you specific questions relating to the subject of your business. Giving away free advice can show your prospects your expertise and give you instant credibility. Another benefit is when you e-mail them back the free advice or information include your signature file to get free advertising.

Hold A Free Chat Room Seminar

People go to seminars to learn about a particular subject. With chat rooms you don't need to fear public speaking or spend money to rent out a seminar room. You can use your own chat room or hold the seminar in someone else. Holding a chat room seminar is an incredible way to get free publicity. Just send a press release to the media announcing your free seminar.

Start A Free-To-Join Club [52]

Having people join your club is a creative way to attract new customers. People want to belong to something, why not your online club. The club should be related to your product or service. You could give away a free e-mail newsletter for club members only . Have a member’s only
message board, e-mail discussion group or chat room. Post your advertisements on all the club information.

Provide Your Product Or Service For Almost Free

Tell potential customers you'll accept barter deals for your products or services. You may not be getting money but they will become your customers. If they are satisfied they might pay money the next time they make a purchase. Barter for things to improve your business or your own personal life.

E-commerce in Pakistan

Now we come to our core topic with detail discussion on Internet and se-commerce in Pakistan. In Pakistan e-commerce is quite at initial stage. In fact e-commerce is not yet started in Pakistan. But Internet is growing like mushroom in Pakistan. The primary requisite for e-commerce requires following things in Pakistan that are yet to be done.

Ø It requires increased awareness level of the people towards accepting the fact that e-commerce can earn you more than traditional commerce.

Ø It requires a proper infrastructure for doing e-commerce in the country.

Ø It required developing e-commerce minds that know how to do business on the Internet and how to teach it to others.

Ø It requires transaction facility over the Internet world wide that is still not available in Pakistan.

E-Commerce Objectives for Pakistan

Ø Diversification of exports: New markets, new products, and new businesses.

Ø Greater role of SMEs in exports as e-commerce provides low cost accessibility to markets and services which was not available before.

Ø Survival in the emerging global electronic economy, greater transparency, better monitoring and supervision

Ø Facilitate international trade through an e-commerce infrastructure whose presence is becoming a prerequisite for participation in global trade and economy

Ø Increased efficiency of business transactions, logistics and increased competitiveness

Ø Electronic documentation of economy.

Ø Use of E-Commerce in government for procurement, promotion of trade, provision of information and trade related services

Ø To revitalize the economy by exploring the new potential of Electronic Commerce in B2B and B2C trade and services, worldwide.

Ø Simplifying citizens’ access to government while providing choices and options for interaction with government financial Impact of Full Scale Implementation

The present initiative of launching IT Policy and Action Plan by the Ministry of Science and Technology (MoST) has revived serious interest in developing the IT industry and e-commerce in Pakistan. Impressed by the commitment, sincerity and responsiveness of the present Government towards the sector, stakeholders in Pakistan and abroad have responded enthusiastically to helping the Government implement a proper and adequate package of reforms and incentives geared toward achieving accelerated growth in the IT industry.

To promote Electronic Commerce in Pakistan, the State Bank of Pakistan (SBP) has agreed to allow the opening of Internet Merchant Accounts within Pakistan, and notification in this regard would be issued shortly. This was a major hindrance in start of E-commerce activities in the country. To facilitate the software export industry, SBP has agreed to allow banks to accept the Contracts as collateral for the software exporters to qualify them for export refinance scheme. Previously this was only permitted against letter of credits, which do not exist in the software export business. SBP has also agreed to allow software-exporting companies to retain 25% of their export earnings in foreign exchange accounts. Hitherto, the software exporters did not have any such facility. The State Bank of Pakistan would issue notifications to these effects shortly.

Internet Growth in Pakistan

Internet entered in Pakistan in 1997 actually when people started knowing about the Internet. it got real boom in year 2000 when govt. started giving a proper and intensive attention to e economy.

Here is the trend of Internet subscribers in Pakistan.[53]


Growth Rate in Pakistan 30%

Some initiatives have already been undertaken in the key areas to stimulate the growth. The cost of Internet bandwidth of PTCL was reduced up to 53% which has led to reduction in Internet end user prices and improvement in quality of service for the Internet users. Free Internet connections are being extended to public sector Universities under an agreement with the private sector ISPs and PTCL.

To facilitate the private sector, IT and telecom industry and to enhance the investor’s confidence in the Government, processing period for license applications in the deregulated sector by the PTA has been reduced to 7 days from several months. In order to deliver efficient IT infrastructure, PTCL would now provide international bandwidth and Internet connectivity to the ISPs and other corporate customers within 4 to 8 weeks. Previously this connectivity used to take 4 to 12 months. Training of thousands of blue collar IT workers for data entry and transcription services is being initiated and would be completed within 6 months.

PAK E-commerce Sites

Although Pakistan is far behind in the filed of e commerce than the rest of the world. There are many reasons for this slow progress. The main problem

Ø JaalBazaar.com - Create your own gift and send it to your loved ones in Pakistan. All Specials are under $20. FREE SHIPPING to Pakistan in 48 Hrs for methais, flowers and cakes. Gifts for all occasions. New (URL: http://www.jaalbazaar.com )

Ø 5 Star` Movies - Online movie store in Pakistan with online movies catalog, movie previews, new releases and secure ordering online (URL: http://www.5starmovies.com.pk )

Ø A Gift Shop - Send Flowers, Cakes, Mithai and more to PAKISTAN, UAE, USA, INDIA AND UK (URL: http://www.giftshop.com.pk )

Ø Darbaar.com - Largest Collection of Arts & Crafts, Books, Music, Video, Groceries and Travel from Pakistan (URL: http://www.darbaar.com )

Ø Desi Albums Shop - The largest variety of both Indian and Pakistani music on the Net. The on-line store sells CDs, Cassettes, DVDs, Video CDs and Video Cassettes with over 5,000 items to choose from! (URL: http://www.desialbums.com/)

Ø Desimall Online Store :- Online sale of sweaters, clothing’s, food items, spices, henna, tea and other Desi stuff. (URL: http://www.desimall.com.pk )

Ø eBizGoods.com - Best prices of Pashmina on & off the web. Also buy Rugs & Carpet, Leather Products, Cushion Covers, & Antiques (URL: http://ebizgoods.com )

Ø ePakistan.Com - ePakistan is a cyber-enterprise with one mission --- To provide quality services to the Expatriate Pakistani Community Worldwide. (URL: http://www.ePakistan.com/ )

Ø eTaza.com-Buy Mithai, Choorian, Gifts, Flowers, Cards... (www.etaza.com )

Ø Gandhara Sculptures (URL: http:// www. pakmart. com/gandhara /index.html)

Ø Gift Dukan - Send gifts, flowers, cakes, mithai with your custom message to your dear ones in Pakistan. Gift dukan - the most popular E-commerce Site for Pakistani's on the Internet. (URL: http://giftdukan.com/ )

Ø Gift Express - Send gifts to your loved ones to more than 93 cities and towns in Pakistan from within the country as well as from U.A.E, Saudi Arabia, Kuwait, U.K. and U.S.A. (URL: http://www.giftexpress.net.pk/ Hits:)

Ø HamaraPakistan Selling Pakistani paintings worldwide. (www.hamarapakistan.com/ )

Ø Indus Valley Arts & Crafts - The Indus Valley On-line Store Front (URL: http://www.it-warehouse.com/indus/)

Ø International Foods (URL: http://www.intlfoods.com/ Hits:)

Ø Libas for Us - We have large veriety of Ladies Pakistani Suits, for all occasions, at great prices. (URL: http://www.libas4us.com )

Ø Lucky Deals - An online resource for sellers and buyers of bulk merchandise where you can find lucky deals on every item. (URL: http://luckydeals.com.pk/)

Ø Net2Profit - Net2profit deals in gift items, online shopping mall, dinnerset, lamps, glass house, handicraft, hangons, wallplates, photo frames, plaster of Paris, cielings (URL: http://www.net2profit.com.pk )

Ø Online CD Store (URL: http://www.cdstore.com.pk/ )

Ø Paigham.Com - You can send Cards, flowers, cakes, Mithai and fruit baskets to your loved ones in Pakistan. (URL: http://www.paigham.com/)

Ø Pak Gift Mall - Free delivery, best prices on-line and delivery system of over 50 cities through out Pakistan (URL: http://www.pakgiftmall.com )

Ø Pak store - Books, Cakes & Sweets, Candies/Stuff Toys, Clothing, Computer, Electronics, Flowers/Bouquets, Handicrafts, Leather Goods, Music, Perfumes, Shoes, .. (URL: http://www.pakstore.com/ )

Ø Pakistan Duty Free Shops - first online duty free shops outlet at Karachi airport, replacing former site of Karachi duty free (URL: http://www.pakistandutyfree.com )

Ø Pakistan Gift House - Send great gifts, flowers, cakes, mithai, and more to your loved ones in Pakistan. Gift delivery to over 150 cities. Secure Server. Free delivery. Also has good information about Pakistan history, Jinnah, landmarks, monuments, National Anthem etc. (URL: http://www.pakistangifthouse.com )

Ø Pakistan Handiwork’s - First Online Store of Pakistani Handmade Products. (URL: http://www.handiworks.com.pk)

E-commerce Implications for Pakistan [54]


Impact of e-commerce on Pak markets [55]

Reasons to Use Internet in Pakistan [56]


Prospects for Pakistan [57]


Current IT Policy [58]

The Vision

“To harness the potential of Information Technology as a key contributor to development of Pakistan.

The Mission

Rapidly develop the infrastructure in synchrony with the creation of excellently trained individuals and teams. Direct these at transforming our society into a prosperous and dynamic one—one that values and benefits from the creation and free flow of information and knowledge. Encourage and assist the entrepreneurial spirit, and make the fruits of this technology available to every citizen.

To realize the vision behind the IT policy, the following goals have been set:

Ø Make the Government a facilitator and an enabler to provide maximum opportunities to the private sector to lead the thrust in development of IT in Pakistan.

Ø Develop an extensive pool of trained IT manpower at all levels to meet local and export requirements.

Ø Provide business incentives for both local and foreign investors to ensure the development of Pakistan’s IT sector (including the software, hardware, and service industries) and the use of its products

Goal [59]

Develop an enabling legislative and regulatory framework for IT related issues.

Ø Revitalize, emphasis, and support the country’s dormant manufacturing and research and development (R&D) potential.

Ø Establish an efficient and cost-effective infrastructure that provides equitable access to national and international networks and markets.

Ø Set up national databases that are reliable, secure, upto-date and easily accessible. These would be open databases.

Ø Promote widespread use of IT applications in government organizations and departments for efficiency improvement and transparency in functioning and service provision, and to organize and facilitate access to public information.

Ø Promote extensive use of IT applications in trade, industry, homes, agriculture, education, health, and other sectors with widespread use of Internet.

Ø Encourage and promote the development of quality software that can capture export markets.

Ø Develop a tradition of electronic commerce for both national and international transactions.

Ø Encourage expatriate IT professionals to return to Pakistan and establish software houses or extend assistance to the local industry in the form of assignments from abroad.

IT Policy Strategies [60]

Human Resource Development [61]

A major human resource issue in Pakistan is quality education and training, nurturing, and retention of technically skilled manpower. This problem is more severe in IT where technology changes are rapid and there is a large loss of critical trained manpower due to emigration.

Ø Manpower development is imperative for the local IT industry to take root on a large scale in Pakistan, and for the country to achieve and maintain the position of an important player in the international IT market. A large pool of skilled manpower is required for all components of the IT industry, and it has to be geared to meet both local and export needs.

Ø Whereas, a brief working document has been prepared by the IT Steering committee on Education, HRD and Training, a more comprehensive plan for education and human resource development in IT shall be drawn up to meet the present and future needs of manpower. Also, a working group on the same lines shall be established to advise on current and emerging education and training needs.

Ø This following section briefly covers IT education and IT training. IT awareness, a related issue, is addressed separately.

Ø IT education includes degree programs, while IT training comprises short courses that provide focused hands-on skills in specific IT areas where manpower is needed urgently. Such training could be provided to fresh graduates as well as underemployed youth.

Ø The object of this Policy is to attract the most able students and develop faculty for IT, in order to ensure quality, quantity, affordability, and market relevance of all IT education and training.

Ø A comprehensive plan for education and human resource development in IT shall be drawn up to meet the present and future needs of manpower.

Ø Facilitate and encourage the training and hiring of women in the IT sector to help reduce unemployment and to utilize this largely untapped human resource. Women can be hired and can become effective players in large numbers in all sectors of the software and telecommunications industry.

Ø Facilitate and encourage the use of IT by people of special needs to be able to make them more effective in society.


Education determines, more than anything else, a country's prospects for human development and competitiveness. Fortunately, the information revolution offers some extraordinary opportunities in education. The following measures shall be adopted to avail these opportunities:

Ø The education sector is responsible for delivering a work force skilled in the use of information systems and a technical corps able to produce and maintain information products and services -create appropriate policies and incentives for this to occur.

Ø Make participation by rural and poor segments of society in IT education a strategic priority for both social and economic development.

Ø Launch a scheme for providing low-priced computers and Internet connectivity to universities, colleges and schools through a public-private sector initiative.

Ø Network all universities, engineering and medical colleges, and institutions of higher learning in the country for improved quality of education.

Ø Set up electronic libraries to ensure economical and equitable access to world information.

Ø Encourage educational facilities to computerize their registration, examinations, accounting, and other activities.

Ø Encourage educational facilities to adopt computer assisted learning and other IT tools to aid in the teaching process.

Ø Establish virtual classroom education programs, using online, and Internet and/or video facilities, to provide distance learning to a large number of individuals.

Ø The Private sector and the Government shall jointly make efforts to meet the growing IT education needs. Specific policy recommendations are:

Ø Include a compulsory, modern and upto date Computer Literacy module in the matriculation curriculum for high schools. Revise the computer science curriculum at Intermediate level to make it modern and up-to-date and to offer it at all science colleges. Make training in the use of IT applications compulsory for all degree courses within the next 3 years.

Ø Develop world-class bachelors, masters, and Ph.D. programs in computer science (CS) and related areas of IT. Develop standardized curricula and teaching materials in co-operation with public and private educational institutions, using international benchmarks for reference.

Ø To address the critical shortage of qualified IT faculty, establish Faculty Chairs by attracting foreign and expatriate faculty and arrange faculty development programs.

Ø Establish a national educational Intranet (linked to the Internet) to enable sharing, among educational institutions, of electronic libraries of teaching and research materials and faculty (through distance learning and video conferencing).

Ø Attract the best students by establishing a scholarship fund for IT education and training.

Ø Establish Accreditation Council to ensure quality IT education and training. The Council will be responsible for collecting data on educational institutions, rating the institutions, and disseminating information about the institutions. The Council will also establish curricula, testing guidelines and services for IT education and training. The council will consist of leading academics and IT experts and will be linked to provincial IT Boards through representation on the

Ø Establish an HRD fund (HRDF) to be by the IT Division. This fund will be utilized to expand and improve the quality of IT education, strengthen existing IT educational institutions, upgrade IT infrastructure (including laboratories, connectivity, and teaching resources), develop faculty, attract visiting faculty of international repute, provide student scholarships, share pooled resources through distance learning programs, and develop linkages with foreign universities and global IT firms. Apart from the government, the Cell will mobilize financing through expatriate Pakistani community, international agencies and global IT firms.

Ø Assign provincial IT Boards the task of working closely with IT Division to ensure quality IT education, strengthen IT educational institutions, develop databases, and establish linkages with industry for jobs and internships.

Ø Allow administrative and financial autonomy to IT departments in public universities and colleges to enable them to attract and retain qualified faculty and respond quickly to changing requirements of the IT industry.

Ø Promote the setting up of IT universities and institutes of international standards. Encourage and catalyze collaboration between the government and the private sector, and elicit the assistance of various foundations, multinational companies, foreign universities, and other social and welfare organizations. Strengthen existing institutions to establish a number of centers of excellence.

Ø Provide foreign and local universities incentives to set up distance learning or resident programs in Pakistan.

Ø Ensure that existing UGC and University rules and procedures regarding affiliation of private IT institution are clearly defined and transparent in order to expedite the affiliation process and setting up of quality institutes.

Ø Work Visas for foreign I.T faculty shall be simplified and expedited.


Investments in IT training are expected to yield quick results. Policy recommendations include:

Ø Ensure high-quality training by assigning the Accreditation Council for IT Education the task of collecting data on training institutions, rating the institutions, and disseminating information on the institutions.

Ø Through the Institutional Development Cell, take steps to strengthen existing IT training institutions and encourage the setting up of new IT training institutes, update curricula, introduce new technologies through linkages with global IT firms, develop strong local faculties, and provide student scholarships. Organize teacher training on a top-priority basis to meet the growing demand for qualified teachers in IT and for upgrading their skills regularly. To rapidly increase the annual production of IT manpower, launch crash-training programs. Use the HRDF to support IT training activities.

Ø The IT industry would be bound to offer a certain number of internships to fresh IT graduates each year. This activity to be monitored by ITC and Institutional development cell for compliance.

Ø To ensure maximum utilization of existing facilities, encourage public universities and colleges to collaborate with the private sector in conducting training programs during vacations and at other times when the facilities are not in use.

Ø Introduce mandatory IT Literacy courses for all levels of civil and military personnel. Make IT literacy a prerequisite for induction into gazetted positions.

Ø Make a special effort to train and induct women in the IT sector.

Ø Make extra efforts to educate and train people with special needs in order to give them equal opportunity in the society.

Infrastructure Development

In order to grow, the local IT industry will need a suitable support infrastructure, i.e., telecommunications and information data banks. Development of the telecommunications sector will entail deregulation, liberalization, privatization, and the creation of a competitive market.

Ø Establish IT parks and incubators, equipped with the most modern facilities and matchless incentives, to provide a one-stop shop for prospective investors in the IT industry.

Ø The recommendations presented below will facilitate establishment of such an infrastructure.


A Telecom Policy is under preparation and shall be a detailed blueprint based on the basic precepts of this IT policy.

Ø A close relationship between the government and the private sector is critical for the development of the telecommunications sector. The following telecom policy strategies are based on government-private sector synergy: the two sectors will need to work together to create a modern, sophisticated, efficient, and productive telecommunications sector that provides services to every segment of society at a reasonable cost. Though a large part of the sector is already deregulated, in case the PTCL cannot be privatized in a short time frame, an earlier total deregulation may be considered.

Ø It is however felt that The Telecom industry shall be deregulated at the earliest point to be able to at least provide affordable, competitively priced Internet connectivity – low and high bandwidth -- for a larger community of users. Special measures are being taken to separate the provisioning of Bandwidth and Access for Education, Software needs, Data and Internet from restrictions, which are being caused by the current regime.

Ø Increase telephone line penetration rate by expanding the existing telecommunications network and providing new ones employing modern technologies—this will minimize the capital cost of expansion. The government will permit private telecom operators for supply of basic infrastructure and services, either as independent licenses or under the umbrella of the PTCL exclusivity if needed.

Ø Barriers to the induction of new technologies (e.g. Wireless Local Loop [WLL]) by the Private Sector will be removed to ensure the spread of communications to under-served and UN-served areas of Pakistan. Using International technologies, standards and agreements as a basis, open up the 3, 4, 5 and 20-40 GHz bands for growth if the WLL for Internet, Cable and voice communications.

Ø Develop an integrated, flexible, robust, and reliable transmission network that covers the entire nation and is capable of voice, video, and data transmittal.

Ø Revise PTCL rates and tariffs for all telecommunications services down from time to time, so that the cost is reasonable and consistent with the economic realities of the country. Establish the tariff at par with or below the charges prevalent in the regional and international markets to remain competitive. In the competitive environment, the market forces would determine the pricing of these services. Regulation and intervention in this case will take place only if absolutely necessary.

Ø The bandwidth rates both domestic and International will be brought down dramatically to encourage the rapid launch of new Internet and software related services as well as new and needed services like distance learning, Telemedicine, video conferencing, etc. This will also provide a competitive edge to local companies trying to break into established International markets.

Ø To ensure the Pakistan Telecommunication Authority (PTA) between operators and the customers make Service Level Agreements Quality of Service, mandatory.

Ø Encourage telecommunication companies and carrier network service providers to upgrade rural telecommunications facilities. In this equitable Interconnect agreements, which protect the investments of all operators (private-public) will be put in place to restore confidence of the industry in due process.

Ø Encourage competitiveness in the telecommunications sector. Ensure that full competitiveness is achieved in all telecommunications services and infrastructure provision and companies to ensure full competitiveness like data, voice, and international connectivity are operational by 31 December 2002. (or earlier in case of earlier deregulation). The necessary regulatory mechanism needed for such a purpose should fall in place very soon.

Ø Invite private sector participation on very attractive terms in joint telecommunications development work of the PTCL. This will ensure that the PTCL is adequately equipped for the post deregulation competition phase.

Ø Encourage local companies to enter the telecommunication fields that are closely associated with the infrastructure needed for an information rich society.

Ø Create an environment in which the government, telecom operators, and regulators work together to ensure that access to advanced IT enabling telecommunications services is available to all citizens including commercial consumers, educational institutions, hospitals, libraries, and government functionaries - regardless of their location and at a reasonable cost.

Ø For all projects of the Government, the private sector will be encouraged to participate and will compete on equal terms with the government organizations (e.g. NTC or the PTCL).

Ø Expand connectivity with other countries, using existing and new regional and global satellite and Optical Fibre links.

Ø Take appropriate actions to launch Pakistan’s own satellite at the earliest. The neglect and mistakes of yesteryears have been very expensive in terms of loosing slots and strategic and financial opportunities.

Databases and Platforms

Databases provide quick and easy access to information, which greatly facilitates the work and increases the productivity of businesses and institutions. Access to national databases is essential for coordinated and informed decision-making and for efficient planning. National databases are thus an important part of the IT infrastructure.

Ø Both the government and the private sector should be encouraged to participate in the development of national databases. Two pilot sector projects have been identified and will be initiated shortly. The main recommendations for policy for this area are:

Ø Encourage and accelerate government-private partnership in establishing comprehensive databases.

Ø Through the IT Division and Computer Society of Pakistan, set standards to ensure that national databases are developed based on open standards especially in the government sector.

Ø Ensure open and equitable access to databases. The databases to be used in the Government will be open and shall provide the utmost flexibility to integrate into the existing environment and should ensure that the systems and software caters for future needs. This is also necessary in order to ensure that the country is not exposed to the threat of a restriction of export from a single vendor.

Ø Access to databases shall be based on open Internet standards

Technology Parks

Technology Parks are needed to develop both the hardware as well as the software industry. These Technology parks (TPs) would be set up to provide one-window services to domestic and foreign companies that seek to engage in IT business in Pakistan. The TPs should provide workspace, utilities, telecom, and other infrastructure facilities of international standard at low costs. Efficiently functioning TPs will attract local as well as foreign and multinational entrepreneurs.

Ø Encourage the private sector to set up such parks on BOT/BOO basis and do the same for IT Incubation centers.

Ø In order to expedite the setting up of TP’s, the facilities/incentives being offered by Export Processing Zone Authority (EPZA) & other Industrial zones in the country be fully utilized. IT Division will co-ordinate with EPZA in further facilitating interested IT companies for setting up TP’s and IT projects.

Ø Charge the lower utility and infrastructure rates for bulk consumers to TP users.

Ø Expedite TP projects in Karachi and Lahore and Islamabad.

Ø Software exporting companies having a minimum export obligation verifiable through the State Bank of Pakistan in locations other than TPs should be declared as EPUs (Export Processing Units) to avail the incentives equivalent to that of TPs. IT hardware manufacturing units having a minimum import substitution capability, should be treated similarly.

Ø The existing software companies shall be provided land on lease at commercial rates to build their campuses.

Software Industry Development

Software development is a high growth industry and forms a major segment of the vast information technology market and will continue to do so in the future. A developed software industry with a focus on exports (in addition to the local market) would mean better employment opportunities, reduced ‘brain drain’, foreign exchange earnings, improvement in per capita income, and higher standards of living leading to a better quality of life.

Development of Local Software Industry

A developed local software industry will not only meet Pakistan’s own needs, but will also serve as a training ground for capturing export markets. Key policy recommendations for developing the local industry are:

Ø Initiate Private- Public sector partnership programs with a view to access to the export market. Address the software with high value and maximum demand e.g. ERP, ERM, and CRM, e-business and e-commerce.

Ø Outsource Government software projects including mass Data entry, Digitization and GIS projects to the Private sector. Preference will be given to local software companies in awarding such projects.

Ø Devise a phased plan for the private sector to take over a major part of the government’s software development needs.

Ø Give preference to the private sector to develop software for government and non-classified Defense projects.

Ø In order to make this a reality, entry barriers and hurdles for local Software houses to bid for sizeable government IT projects shall be reduced or removed. These shall be in the form of earnest money, bid bonds, holdbacks, etc. These shall be reviewed and all Government departments to be advised of the new Policy. Secondly, a fair rate (software development rate) and equitable progressive payment methodology has to be ensured for sustainable software development and investment in R&D.

Ø For software work requiring expertise that is not locally available, engage foreign companies only if a local partner is involved to the extent where 15% added value is provided by the local company to ensure the transfer of technology.

Urdu and Regional Software Development

In order to bring IT to a large number of people as possible and to reduce the deep and emerging divide of the IT ‘haves’ and ‘have-nots’ it is important that the issue of standardization of the Urdu Code Plate and key board is immediately resolved. A focused effort to standardize the Urdu code plate will be done in the next few weeks and a concerted plan to encourage the development of open source and licensable Urdu software is being launched. This will enable plug-ins for popular office and e-mail packages to be made available. This initiative is expected to drive the development of other Urdu and Regional software packages for word processing and data base applications.

Ø Recognize that Pakistan has to leverage its knowledge base of an English literate population and the goal will be to keep on driving towards exploiting this asset. The development of the Urdu word processor, spreadsheet, database and presentation interface will in no way detract from encouraging the people to learn the English elements of the Office environment and Software use. In fact the government will actively encourage the use of Linux as a free operating system and a very low cost or free English language Office software for normal operations.

Ø The intent of this initiative is to encourage people to develop skills in working and writing core software for applications and developing tools, which will go beyond the development of the local languages. The application programs for translation, speech to text conversion, databases, Asp’s for popular packages will need to be written in currently and newly evolving software.

Promotion of Software Export

Rising costs in developed countries have significantly increased software development outsourcing. This has enabled other countries, especially those in Asia, to tap offshore software development business. So far, Pakistan has not been able to secure any significant share of the global software market.

The following policy actions are recommended to promote software exports, private sector investments, and attract foreign direct investment (FDI):

Ø A Software Development Fund should be established by the Government to support the promotion, expansion, and improvement of the software industry.

Ø In all countries where Pakistan can address this software development potential, following actions will be taken:

Ø Incubator centers run by professionals will be set up, based on the established systems and principles available in the USA. These will provide a point of presence for software companies in Pakistan. This is imperative, since no company in the US (or other projected export market) will give contracts to overseas software houses unless a local contact and follow-up point is available.

Ø Pakistan must make it easy for foreign-based incubators to sponsor and fund Pakistani portfolio companies. The legal, accounting and regulatory structure must support this effort. This will make it easier for high net-worth Pakistani expatriates to invest in Pakistani start-ups. This will also be easier in the short-term to find US limited partners that would invest in an incubator with a US-based general partner and management team

Ø Appoint IT specialists at Pakistani embassies, commercial consulates, and Export Promotion Bureau (EPB) offices. The IT specialists should be responsible for promoting Pakistani IT products. For some large markets, e.g., the USA and EU markets, hire consultants to manage the effort, with the IT specialist doing the co-ordination work. These IT specialists will help find niche markets, provide market intelligence, and develop guidelines regarding target markets.

Ø The IT Division shall promote and facilitate the local industry rather than get involved in competitive activities itself.

Ø Encourage software export projects in IT service areas that require minimum time and can be started with currently available skills. These include operational activities for banks and airlines, medical and legal transcription, data entry, data conversion, , and call centers. Each of the above has potential to show short-term results.

Ø Facilitate and encourage the training and hiring of women in the IT sector to help reduce unemployment and to utilize this largely untapped human resource. Women can be hired and can become effective players in large numbers in all sectors of the software and telecommunications industry.

Ø IT Division to hire competent local and foreign consultants in key markets to conduct two types of studies: (a) marketing assets highlighting the competitive advantage of offshore software development in Pakistan. (b) ‘How To’ guides for business development for Pakistani exporters in those markets. These consultants will work with the IT Support Councils being set up by expatriate Pakistani IT experts and professionals in Europe, UK, USA and the Far East. In the same token, hire consultants of international repute shall be hired to develop a plan for Pakistan's software industry and make recommendations on how to access the world markets.

Ø Simplify all governmental procedures related to software exports and recording of revenue for exports with the State Bank of Pakistan (SBP). Review rules, regulations, SRO and modify those that create obstacles for software exporters. Remove restrictions on foreign remittances and flow of funds.

Ø Encourage expatriate IT professionals to return to Pakistan and establish software houses or extend assistance to the local industry in the form of assignments from abroad.

Ø Encourage equity participation of banks in software projects by setting up venture capital funds. Set up venture capital funds at the federal and provincial levels to encourage private local and foreign funds to establish privately managed venture capital funds. The necessary changes in legislation are being carried out by the SECP (Securities and Exchange Commission of Pakistan).

Ø Encourage the setting up of a ‘content industry’, comprising intellectual property such as encyclopedias, compositions, photographs, and other information of international interest.

Ø Fix yearly targets for software export and equip PASHA to perform its role effectively in export marketing. PASHA shall be the focal point for all software related export activities and it will work closely with IT Division and other departments to ensure that export-marketing activities have a synergetic effect. Earmark adequate funds and provide infrastructure to promote software exports.

Ø Encourage local business to invest in software industry. Conduct awareness campaigns to highlight the immense potential and high returns from this industry.

Ø Encourage major multinationals operating in Pakistan to set up software facilities and bring international business through their established channels.

Ø Establish an Export Market Development Fund to create a favorable market image of Pakistan’s software industry. These funds should be used for participation in software and other IT related fairs, single country exhibitions, and investment seminars. IT Division/Export Promotion Bureau and PASHA will jointly manage this.

Ø IT Division in consultation with PASHA to prepare effective marketing materials using multimedia to highlight Pakistani software expertise, government initiatives, incentives, and necessary statistics. This will enable direct contact with target markets and will create a good image of Pakistan’s software industry. Extensive use of the Internet and Web will be made.

Ø Assist entrepreneurs locally and abroad in obtaining visas and work permits. Major diplomatic efforts should be made where required.

Ø All Software companies (local or for export) will need to be registered with the IT division in order for them to be able to obtain the benefits give under this Policy.

Hardware Industry Development

In the context of Information Technology, the hardware industry can be defined as “design, development, manufacturing and maintenance of all products, modules and components that form the building blocks of an IT infrastructure”.

Ø The policy recommendations for this area do not seek to initiate aggressive competition with developed countries. Rather, they focus on developing the areas that are within Pakistan’s reach, in terms of technology and resources, and in which the country could have a comparative advantage. It is recommended that the concessions incorporated in policy for the software industry be extended to the hardware industry, General recommendations for this industry are provided below, divided into two important categories: manufacturing and R&D.

Ø Most of the value of the “hardware” development revolves around software development. However, the hardware needs to be in place for this to happen.

Ø The focus will be on niche markets with a large value added content. Products that are of a high volume, rapidly changing variety (for example PCs) will not be encouraged.

Ø A thriving hardware industry is pivotal to the growth of IT infrastructure and services. Development of this industry will make Pakistan self-reliant, competitive and a net exporter of technology.

Ø The concessions incorporated in policy for the software industry shall be extended to the hardware industry. General recommendations for this industry are provided below, divided into two main categories: manufacturing and R&D.

Ø The EPB initiatives for ISO 9000/1 implementation will be effectively deployed in these industries.


Establish a Hardware Development Fund (HDF) to finance IT hardware related R&D and manufacturing activities. IT Division would supervise the HDF's operation.

Ø As far as possible, duties and taxes for hardware products shall be brought in line with WTO’s Information Technology Agreement (ITA).

Ø For procurement of IT hardware (of a contract value above a certain limit) from international sources, the customer in the public/private sector shall ensure local value addition.

Ø Encourage and reward enhancements in the depth of production achieved by local manufacturers, which result in increased local value addition and competitiveness.

Ø Transfer management control of existing manufacturing concerns in the public sector to the private sector through equity participation or long-term lease.

Ø In order to accelerate the pace of business, IT manufacturers shall be offered the facility of having their premises declared as document-based bonded units enabling them to have UN-hindered and tax-free access to materials/services and global infrastructure for the industry.

Ø A consistent duty/tax/regulatory structure shall be ensured to enable local and foreign investors to make long-term investments in this industry.

Ø Provide special incentives that are directed towards reducing the cost of inputs.

Technology Transfer and R&D

Identify key technology areas and provide fiscal support and incentives to encourage local technology development.

Ø Encourage and fund R&D in universities and engineering colleges. Make it attractive for industries to set up R&D centers at university level, through faculty chairs, matching grants and focused joint projects.

Ø Encourage expatriate IT experts and educationalists to spend their annual vacations in Pakistan to transfer their knowledge and share their experiences with local universities. Fund such visits using the HDF.

Ø Setup an Information Resource Center with on-line linkages to reputed scientific information repositories, accessible from all major cities of Pakistan

Ø Initiate “Innovative Ideas” competitions, on countrywide basis, covering all levels (from schools to premier R&D Centers), to instill the spirit to innovate in our young professional.

Ø Establish a premier think-tank institute based on public and private sector partnership. It is suggested that this institute work in close collaboration with a similar set-up outside Pakistan and is close to a nucleus of R&D activity in this field.


The Internet is likely to continue to revolutionize the way people communicate and access information. Because it represents such a powerful communication tool, the environment in which the Internet operates must be understood and regulated differently from traditional communication media. Three general principles should be adopted if the Internet is to grow in Pakistan: existing regulatory structures should not be forced on it, competition in Internet growth should be encouraged and unnecessary regulations should be avoided.

Ø To expand provision and use of the Internet in Pakistan, it is necessary to provide low-cost and reliable access to the international bandwidth, reliable local bandwidth connectivity, low-cost access to network equipment, widespread public access to networked computers, a base of educated and trained users and providers, and support for the development of national Internet content.

Ø The Pakistan Internet Society is being formed to ensure the optimal inductions of Intent and Intranet based services into Pakistan. It will comprise of a Chairperson, an Engineering chair and a Social Internet chair.

Ø The aspects that need to be considered in this regard are discussed below.

Internet Market Development

Although the Internet industry is not easily classified into tidy segments, three main categories of Internet service providers can be distinguished in Pakistan:

Ø Backbone Service providers

Ø Internet access and service providers,

Ø Content providers and other value-added service providers.

To ensure that the Internet market develops:

Ø Create a regulatory environment that allows for as much competition as possible. Ideally, this should extend as far as the provision of physical network infrastructure.

Ø Encourage PTCL and new carriers in the private sector to develop into backbone providers. If such telecommunications operators function as Internet access providers and/or content providers, they should do so through a subsidiary company. Moreover, income derived from other services of the carriers should not be used to cross-subsidize their Internet services. The Internet services thus provided by such subsidiary companies should be cost based to enable fair competition. This will ensure transparency and fair competition.

Ø Permit and encourage existing and future ISPs to provide Backbone and Peering services. Encourage them to set up different nation-wide physical delivery and access mechanisms via IP Radio, Fibre, Laser and Microwave.

Ø Make the licensing procedure as simple as possible, low-priced, and free of high royalty structures, as these costs are ultimately passed on to consumers and restrict growth

Ø Establish robust and reliable Network Access and Peering Points both by the PTCL as well as the Private sector in order to locally route in-country traffic on the Internet as well as provide multiple, reliable and zero failure Pakistan Internet homing to NAPs in Europe, USA and the Far East.

IP Delivery Mechanisms

The rapid roll-out of new telecommunications infrastructure is critical to the rapid growth of the Internet in Pakistan. It is, therefore, important that any telecommunications framework encourages the development of ‘alternative physical delivery mechanisms’. This strategy is expected to effect a major improvement in the penetration of the basic infrastructure and Internet accessibility. Some of the alternative delivery mechanisms that must be explored are:

Wireless/Laser Technologies

Wireless/Laser technologies are a particularly important way of addressing local loop capability because of their rapid roll-out, greater reliability, and lower maintenance cost. To this end, specific frequency bands will be released for Packet Radio for the higher Spread Spectrum bands (since the 2.4 GHz is already choked) as well as the 20-40 GHz LMDS operations. Wherever Fiber can be deployed, it will be encouraged.

Electricity Supply Grid

The use of an electricity grid should be investigated since the penetration of electricity in Pakistan is much greater than telecommunications, especially for rural areas.

Satellite Operations

A number of international satellite operators have already begun to provide high-speed Internet access. These services should be encouraged to overcome bandwidth limitations, not only in urban areas but also in the rural and suburban areas, for basic Internet connectivity.

Cable TV

Convergence of voice, data, and video transmittal has opened up new opportunities for quick access of users and operators. Cable TV is expanding very fast and infrastructure for it is being laid. Regulations are to be put in place to allow cable operators to offer Internet services in collaboration with licensed ISPs. The LMDS and MMDS operations would be permitted after clearance from the FAB.


The government will need to invest in various fiscal and non-fiscal incentives to nurture, develop, and promote the use of information technology in organizations, to increase their efficiency and productivity. Most of the non-fiscal incentives have been discussed earlier. This section discusses the broad fiscal and some additional non-fiscal incentives required for IT awareness and promotion. A detailed list of these incentives is also annexed. These recommendations will become operative after the necessary consents have been obtained from the relevant authorities e.g. State Bank of Pakistan, CBR, Banks, NIT, SECP, Export Promotion Bureau, Ministry of Finance, Customs Department, etc.

Fiscal Incentives

Declare information technology as ‘Infrastructure Facility’. ‘IT industry’ to be redefined as a core business function to the level of production and to include provision of hardware, software, training / Consultancy / education, telecommunications equipment, and allied products.

Extend existing incentives given to specific sectors of the IT Industry to the entire IT Industry; selective application will only encourage corruption, and time consuming procedures will discourage the intended beneficiaries.

At the center of development of the IT sector is the venture capital industry. The willingness of venture capital funds to incubate IT companies has been crucial for the IT industry. Frame proper regulations and incentives for encouraging venture capital investments and setting up private funds. This could be monitored and regulated through the establishment of an institutionalized venture capital industry association. A vibrant venture capital sector can leverage innovation, promote technology, and harness the ongoing knowledge explosion.

Ø Encourage equity participation of banks in software projects by setting up venture capital funds at the federal and provincial levels. Necessary changes in legislation are being carried out by the SECP (Securities and Exchange Commission of Pakistan).

Ø Encourage banks, DFIs, and SMEDA to recognize software development as a priority industry. Major banks should have IT financing cells for smooth and transparent processing of loans and funding based on cash flows, future earnings, working capital financing, etc.

Ø Set up Venture Capital Funds[62] for low-interest loans and investment in equity for companies set up by enterprising and qualified people in software, hardware design, and human resource development. Additionally, give the Venture Capital companies income tax concessions by allowing them to set off losses in one invested company against profits in another company during a particular year, tax breaks, and allowance to redeem all their paid-up capital.

Ø To attract US accounting and legal firms to provide familiar transparency to US investors and lower the perceived risk for these investors. Also, create the kind of enterprise-friendly regulatory environment that would attract leading US investment banks to set up local offices with the specific aim of taking successful Pakistani start-ups public in the US and other stock markets. This will provide the liquidity potential without which venture capital firms will not invest.

Ø Encourage investments in all phases of IT businesses, like idea generation, start-up, growth ramp-up, and exit process.

Ø Create a foreign investment friendly environment, especially to fund large infrastructure investments, which, will most likely not return the investors' capital in the short-term. A clear example of such an investment area might be carrier infrastructure. The only realistic way to fund this infrastructure is through existing large global carriers. These carriers will invest only if (a) they anticipate stability in the regulatory and economic environment, (b) they can license key assets through long-term contracts (e.g., rights-of-way, spectrum, etc.) and (c) they expect strong growth in bandwidth demand in the future. A properly prioritized, funded and implemented national IT plan would attract such investors, especially if the government can institute a convincing regulatory environment and ensure continuity.

Ø Allow the nationalized banks, other banks, and investment funds to create an underwriting fund so that the public offer of IT companies can arrange for a portion of their capital to be underwritten.

Ø Encourage public sector non-banking and investment financial institutions, such as NIT, to put up at least 20 percent of the public offers of telecommunications, software, and other IT related companies.

Ø Frame special listing procedures through the Securities and Exchange Commission of Pakistan (SECP) to attract IT companies to be listed on stock exchanges of Pakistan. The procedures may include removing minimum public offer percentage, profit track record, and age of company. Frame special guidelines for the establishment of Over the Counter (OTC) exchanges at the stock exchange to help list small capital companies with high volatility.

Ø Assist and give incentives to private companies for acquiring ISO/SEI and other certification for quality standards for the IT industry (for e.g. subsidize 50% cost of such activities).

Ø Give commercial and investment banks special tax concessions on earnings from investments in IT ventures. Establish a special pool of debt for IT companies.

Ø Give special incentives to foreign universities and companies for setting up development and educational centers in Pakistan by venture capital funding.

Ø Establish an Export Market Development Fund, managed by IT Division/EPB, to provide marketing support to IT exporting companies, with matching grants from the government.

Ø Enhance the limits for export refinance facility for software exports based on previous years’ performance, to help finance established software companies.

Ø Redefine ‘IT industry’ to include provision of hardware, software, training/Consultancy/education, telecommunications equipment, and allied products.

Ø To facilitate the capital accumulation required for international marketing, give IT exporters a seven-year tax holiday.

Ø For duty and tariff purposes of the IT industry, treat IT hardware, software, and related equipment (e.g., radio modems, routers, auto-teller machines [ATM], electronic components and consumables, power generators, air-conditioners, test equipment) as one category and exempt them from all duties, taxes, surcharges, octroi, etc.

Ø Make the re-import and re-export of IT equipment requiring repairs, or re-import of recorded or packaged software easy and transparent, simplifying documentation procedures.

Ø Ensure that all equipment/software tools being imported for IT exports are swiftly cleared.

Ø To retain qualified faculty within the country, IT faculty at universities and institutions shall be exempted from Income Tax.

Ø Allow local businesses to treat expenditure on software & hardware as tax deductible, e.g. leasing is treated currently as a tax-deductible expense for purposes of corporate income tax calculation.

Ø Allow 100% depreciation for hardware, software, and other equipment in the first year of its use in the IT industry.

Ø IT companies must register with the IT Division to qualify for the above-mentioned exemption/concessions..

IT Promotion & Awareness [63]

A massive IT promotion and awareness campaign should be undertaken. A national strategy should be worked out and the structure for its implementation put in place. This will include:

Ø Provision of continued support and funds by EPB for the participation in world IT/computer trade fairs, which is vital for the IT industry.

Ø Presence of IT specialists in embassies, commercial consulates, and EPB offices in countries with software export potential. Consultants may be hired for larger markets, like the United States.

Ø Review of government policy to ensure that service providers can compete in the provision of telecommunications services to rural areas, where appropriate.

Ø Extensive usage of the electronic media to aid in the awareness drive. The drive would be aimed at enabling the citizens to utilize available data on official networks.

Ø Promotion of IT use by the Head of the Government, ministers, and all other key figures who can influence public opinion at all public and private forums. Ministers of concerned ministries can be made to ensure that the departments under their control automate their work on a priority basis.

Ø Declaration of the next fiscal year as 'IT Year'.

Ø Organization of special events during this year, such as a National IT Conference cum computer exhibition in major cities, mobile computer exhibitions, international conferences and exhibitions, IT competitions at various levels, and special programs on electronic media.

IT in Government [64]

To embark on an aggressive program to improve efficiency and provide quality services to the citizens of Pakistan, information technology must be inducted at all levels of government. This induction and its effective utilization will also help in motivating others to follow suit, since the government has a large bearing on all segments of the society.

Ø One or two projects are being identified to provide for a practical model for other departments. For example, the operations of the S&T ministry (and departments associated with it) will be hosted on the Web so as to provide transparency of transactions for all to see.

Ø The main features of such a program could include the following:

Ø On the pattern of the IT Division, each provincial government shall create an IT Department/Board to plan, co-ordinate, and implement government IT projects. The Departments shall be staffed with IT professionals. Special pay scales/contracts shall be introduced for IT professionals.

Ø A minimum of 2% of the budget shall be allocated for IT Services and provincial as well as federal IT departments will be allocated a substantial sum annually for developing IT infrastructure and conducting training at all levels in the government.

Ø Working Groups shall be formed to create awareness in all Government organizations about the utility of computers and IT. For recommendation of these items, consent of the Establishment Division at the Federal level and S&GAD departments of the Provincial Governments will be obtained.

Ø IT literacy shall be made mandatory for all future government employment, and a column shall be introduced in the ACR form for assessment of IT knowledge and utilization by government employees.

Ø The Internet and Intranet e-mail shall be utilized for inter-office communication (necessary security, digital authentication and legal cover shall be provided to secure the validity of such communications) and the establishment should replace physical file system to computer base file system.

Ø The IT departments shall pre-qualify private firms to provide IT Consultancy services, software development and products to the government. Computer and office automation training for all management and secretarial staff shall be taken up on a priority basis and should be outsource to the private sector. Selection of networking operators for government projects will be done on a competitive basis and will not be restricted to PTCL/NTC only.

Ø National databases of economic activities shall be prepared to provide facts for different policies framed by the government. These databases shall be made accessible to the public through the Internet, in accordance with the Laws of Pakistan. This will lead to transparency in Government transactions and various bidding processes.

Ø Representation from the private sector and the provincial governments shall continue in the IT Commission for generating new concepts, solving IT related problems, and ensuring due participation of all stakeholders in ongoing as well as future efforts towards IT implementation. The IT Commission will provide inputs on a continuous basis. The existing composition of the IT Commission shall be expanded and the groups formed for formulation of the IT Policy shall continue to work as associate members of the IT Commission.

IT in PAK Economy: E-Commerce [65]

In the new economy, information is a critical resource and the basis for competition. Old ways of doing business are being attacked and sometimes defeated. At the social level, a corresponding change has set in. Society's information capabilities are pervasive, making it substantially different from an industrial society. It is much more competitive, more democratic, less centralized, less stable, more capable of addressing individual needs, and friendlier to the environment.

These changes dictate a major agenda of structural adjustment. Advanced countries are aggressively pursuing their version of the agenda, and developing countries like Pakistan must follow suit or risk falling further behind. The information adjustment required must achieve macroeconomic and political balance while the economy struggles with uncontrolled information flows and global competition, trade, and investment.

Broad policy recommendations for the sector

Ø Effect systemic improvements in the functioning and competitiveness of key sectors of the economy through strategic information policies and systems. Typical among the strategic systems are sector-wide information systems for education, health, public sector management and transportation, electronic payments, university and science networks, trade facilitation, property and business registries, disaster prevention and management, and national statistics.

Ø Develop new ways to use information technology to help solve the most pressing problems of human and economic development—education, health, poverty alleviation, rural development, and care for the environment.

Ø Where the private sector can provide investment and services, the government acts as a catalyst for the formation of markets. In information projects, where market failures are more frequent, provide government financing and incentives. When the private sector requires initial assistance to adjust to a highly competitive information economy, provide assistance and incentives to empower private firms, which comprise the main engine for growth.

Ø The private sector is pre-eminent in deployment of the information infrastructure through the provision of goods and services on a competitive basis. Allow the private sector to satisfy market demands and, occasionally, give it an initial boost.

Ø Communities and non-governmental organizations often have the best local connections for efficient and appropriate development efforts. Encourage alliances that work through these agents.

Ø To provide safeguards for the privacy of individuals and the confidentiality of transactions against all possible misuse, including that by the State, within the legal framework.

Ø Greater role of SMEs in exports through e-commerce by providing low cost accessibility to markets and services, which were not available before.

Ø Simplify citizens’ access to government while providing choices and options for interaction with government. IT is now being used effectively in Land Management, Water Management, Yield Assessment, Livestock management etc. Pakistan being a predominantly agricultural country, shall explore avenues for using IT for increasing efficiencies in agricultural sector. A high-powered Working Group shall be formed to recommend use of IT in Agriculture. The working group shall also explore the possibility of inducting "Basic IT Officers" (BIT) to help the farmers in the use of IT.

Ø Establish high profile Electronic Commerce Council of Pakistan (ECCP), to govern all the electronic commerce (e-commerce) affairs in Pakistan.

Ø Establish specialized work groups for planning and implementing different aspects of electronic commerce, such as awareness, promotion, education and training; EC infrastructure implementation; EDI; the Internet and other emerging technologies for EC services; and laws, regulations, and standards for EC. The groups should work in consultation with the government, businesses and EC organizations.

Ø To encourage computerization all registered organizations shall be given tax incentives for computerization.

Ø All trade transaction like L/C, bills of lading, etc. shall be encouraged to be made through electronic means.

Ø As a tool to enforce transparency and ensure documentation in the economy all business transactions such as import / export activities shall be given a timetable to use electronic means.

Ø Manufacturers and suppliers shall be encouraged to show bar codes on every item sold in the country.

Ø Facilitate international trade through an e-commerce infrastructure

Ø To encourage use of E-Commerce in government for procurement, promotion of trade, provision of information and trade related services.

Legislation and Regulations [66]

To provide protection and enhance confidence of users, providers, and facilitators of information services, the Ministry of Law should frame legislation based on the recommendations of the steering group comprising IT and legal experts. The UNCITRAL model laws should be kept in mind while drafting laws.

Ø Actions in the following areas should be considered on a priority basis:

Ø Digital Signature Act - Laws should be enacted and/or amended to recognize digital IDs, signature certificates, and electronic authentication and verification.

Ø Computer Crimes Act

Ø Tele-Medicine Development Act - This should cover the legal issues involved in professional services provided electronically by practitioners in another country. Adequate provision should be made for covering liabilities associated with directly accessed information and services such as medical information or advice.

Ø Tele-Education Act

Ø Intellectual Property/Copyright Act and the Consumer Protection Act - The copy right laws should be strictly enforced to protect intellectual property rights of software developers and IT service providers while at the same time protecting the rights of the consumers

Ø Multimedia Convergence Act

Ø Electronic Government Act

Ø Electronic Commerce Act

Ø Protection of privacy, security, and confidentiality.

Ø Admissibility of copies of electronic records in an administrative or court proceeding.

Ø Review of existing laws to remove any contradictions that may hinder the implementation of IT Policy.

Ø The government should seek legislative approval of changes to statutes that will encourage electronic commerce, and revise statutes that mandate a paper-based or manual process.


Ø A regulatory framework is essential to avoid violating policy goals and direction, incorporate social and consumer concerns in the deployment of new products and services, and safeguard precious national resources. It shall be ensured that excessive regulations do not stifle industry investment and growth.

Ø In devising a useful regulatory framework, the following measures shall be taken:

Ø Focus on creating a fair and competitive environment, based on the principles of free market and open access.

Ø Make optimum use of existing investments in networks. Remove restrictions on voice transmittal, video telephony through Internet, intranet, or other data communication links.

Ø Give network operators the freedom to build their own backbone and local access. Encourage combined and collaborative efforts in this regard.

Ø Facilitate rapid deployment of infrastructure for promotion of IT services.

Ø Review government management and procurement policies to encourage competition among telecommunication services providers in technical service standards, prices, and development of broadband services.

Ø Through the PTA, ensure that the Authorized Service Providers meet network standards.

Ø To enable a free society to function, minimum amount of intrusion will be permitted in terms of Monitoring and filtering on all kinds of communication.

Standards [67]

The government should consider standards on an ongoing basis as part of a continuing IT planning process. To determine where to standardize, the process should consider costs and benefits. Benefits may include:

Easier sharing of data,

Easier sharing of skills,

Economic usage of resources, and

Improved product quality.

The relevant steering group will study, review, and recommend standards to be adopted in the use of It by the government and the private sector.

The government shall carefully consider the costs and benefits of standardization in technologies where there are many reasonable standardization alternatives and/or no clearly dominant standard exists. These considerations shall be settled through an open, visible process with broad participation from relevant government representatives and public and private sector organizations.

Standards should be published on a regular basis. The publications can be used as guidelines by government, and public and private sector organizations throughout the country. Where specific standards are identified as critical to the development and deployment of a countrywide infrastructure, compliance with these should be made mandatory.

Apart from participation in international standardization activities, the government shall recommend standards and guidelines for the following:

Two-way electronic business transactions,

Countrywide electronic mail exchange,

Non-refutable electronic signatures,

Classification of information,

Videoconferencing systems, and

Minimum encryption standards for data requiring various levels of security.

Major E-commerce Problems

Despite the very best and most careful planning and all the help you can get, there are certain common things that people seem to trip up on. Here are several items about taking your story on line and electronic commerce that are often forgotten until they sneak up behind you and bite you.

Still Got to Ship It [68]

This one gets retail stores more than it does catalogers. That's because most retail stores aren't set up to actually ship things except as an occasional convenience for a customer.

If you move your store onto the web or do any e-commerce at all, you're going to be doing fulfillment and shipping. The time to make arrangements for that is before you start doing electronic commerce, not after.

If you're using a web-site to support a physical retail store, then the amount of shipping you're likely to do will be relatively small. You can probably handle it by making sure there's a shipping area in the back and that one of your staff is assigned to handle shipments.

In many types of specialty retail environments, we've found that a significant number of customers (by gut-level guess is about 1/3) like to actually pick up their order at the store. That will mean that in addition to shipping, you have to arrange for some form of will-call or pick-up system.

If you're looking at setting up an actual web store as part of strategy, then your shipping challenges are likely to be quite a bit larger. In this case you should be looking for a fulfillment house, special shipping department, and special rates with carriers.

UPS, Federal Express, RPS and other package and courier companies are generally willing to negotiate with you for special rates depending on your volume.

If a significant number of your deliveries are going to be local, then consider special arrangements with local-based carriers whose rates are usually much better within the local trading area.

Internet Credit Card Accounts [69]

For a while merchant credit card accounts were very easy to get. Then banks and credit card companies made it a lot tougher because they had been burned. They were especially wary of any kinds of transactions that do not carry a physical signature and a paper record.

Years ago that meant that they were wariest of mail order and catalog sales. Mail order and catalog companies had a much harder time getting merchant accounts and wound up with special provisions. Now, that same unease (magnified) applies to internet accounts.

Even if you have a merchant account now, you will probably need a special account or special provisions for dealing with your internet sales. It's getting easier and easier to do this but it's still a bit of a nightmare.

Pricing Issues [70]

In most retail sales, there are two general tiers of pricing. National catalog prices are generally the lowest around because of the volume that the catalog folks do. Local retail prices are generally quite a bit higher. If your strategy calls for internet sales outside your geographical territory, then you have some hard decisions to make about pricing.

The three options are to go with the internet pricing, with local pricing, or with separate pricing for different types of sales.

Internet pricing makes you competitive with other internet sites and can often be justified on the basis of lower overhead and transaction costs. The problem is that if you go with internet pricing across the board, you're cutting the margin on your local store sales. The numbers here can be astounding, so be sure to do the kind of homework and analysis that lets you know what the impact is likely to be.

If you go with local retail store pricing, you maintain good margins. The problem here is that you may not be competitive with other internet sites. That can make you vulnerable to erosion of overall sales and to the "handle here/order there" phenomenon that some retail stores are already seeing.

What about split pricing? We don't have enough experience with this yet to offer a definitive answer but most of my experience with customers over the years is that split pricing can have two strongly negative effects. First, it can simply be confusing. And confusion leads to lost sales.

Second, split pricing can give some customers the feeling that they are not being treated fairly. That's even worse than a few lost sales. That can cost you major business and your reputation.

So what's the answer? There really isn't one across the board. Instead, break out those spreadsheets and start doing some analysis. Then make your best guess about how things will work out for your particular situation. Once you've made that decision, commit to living with it for at least a year.

Underestimating the Task of Data Conversion [71]

This is a slightly different problem for retailers and catalogers. In both cases, though, it's almost certain that the form your data will need to be in for effective web commerce is not the form it's in when you start your project.

Catalogers, who are often good at putting together paper catalogs, generally have pictures in one place, descriptions in another, and pricing information somewhere else. Those have to be brought together in a single, structured database in order to be effective for web commerce.

For retailers, the problem often has to do both with not having a comprehensive database and with having multiple schemes for organization.

Inventory organization [72]

Most retail stores operate with multiple levels of organization and sometimes even multiple systems of organizations of the things that they sell. When you plug into an e-commerce system, even the most sophisticated only go to about two levels. Overall, that's not a problem. Your development team should be able to design and prepare special web pages that make the users experience what you want.

There's still a problem, though. The problem is that you'll need to put your parts into the e-commerce database and so you have to make a judgment about how easy it will be to move your system into their system.


Many retail stores bundle different part numbers as a set or a kit. This kind of thing often presents problems for an e-commerce package.

In general, your e-commerce system will work best if there is a separate line item. That means that a kit would have a particular order. It means that a red guitar would have a different part number from a green guitar. Some systems can handle this on a limited basis, but no major system out there can handle all of the varieties of kitting, colors, sets, and combinations in even the simplest retail store. Take a look at what this means for you in terms of set-up and especially in terms of your own staff work.

Discounted Orders

Many e-commerce systems have problems with automatic discounting schemes. For example, if you have a scheme where you discount for customers who purchase above a particular dollar amount, or on a particular day of the week, then you need to make sure your system can handle that or that your developers can devise a way to get the same effects.

Matrix Displays [73]

If you sell a number of consumable type items, such as reeds for clarinets, you'll probably be displaying matrices of the products. Very often your system and the e-commerce system do not have an easy way to do this. Take a look at what you've got, what the alternatives are, and difficulties of creating the matrices you need.


Many e-commerce packages give you two choices -- ship complete or backorder complete. Make sure you've thought through how you will handle backorders (and attendant shipping cost) with any e-commerce package you are considering.

Shipping Charges

If you've got a very simple system for shipping charges, you probably won't have any issues here. But, if you've got multiple systems based on order size, or weight, or other things, then make sure that your e-commerce system can handle it or that your developers can devise a way to deal with it at a price that works for you.


Tax is always an issue. It will always be an issue. Make sure your system can handle the type of tax you need to collect and provide information to you that allows timely and accurate filing of returns.

Drop Shipping [74]

Many retailers have certain items drop-shipped from other locations or from suppliers or distributors. If that's you, make sure that your system can handle this or that bridging programs can be written at a reasonable cost.

Affiliates, Commissions, Rebate Programs.

If you're considering a system of affiliates, similar to the Amazon affiliates program, make sure that you pick an e-commerce system that can handle affiliates.

The same is true for any scheme where a person or group gets credit for a sale, whether it's commissioned sales people, a rebate program that goes to community groups, or any similar program.

List of Problems &Constraints [75]

Now we have discussed different problems and constraints in detail. Here is the list of all the problems and constraints that may be a hurdle in growth of e-commerce in Pakistan. Here is their list. (their details are already mentioned in previous chapters.)

1st Level Problems

Awareness & Initiative

Ø Lack Of Knowledge

Ø Think Its Ahead Of Time

Ø Limited Knowledge Among Respondents Of Internet

Ø Don't Have Previous Experience To Use Net

Ø Hesitate Because Of Security Problems

Ø Internal Level Of Organizational Expertise Is Limited

Infrastructure Issues

Ø Poor Telecommunication Infrastructure

Ø Cost Of Logging On

Ø Costly Hardware

Ø Slowness/ Speed Of Down Loading

Ø Finding Your Way Around

Ø High Cost Of Internet Subscription

Ø Internet Access/ Concentration In Urban Area

Ø Weak Political And Democratic Institutions

Ø Lack Of Law Protection To Online Commerce

Ø Lack Of An Appropriate Policy

Ø Govt. Role

Ø Education & Technical Know How

Ø Technical Know How

Ø Institutes

Ø Availability Of Technical Staff

Ø Testing Technical Solutions

Ø Cost Considerations For Getting Know How

2nd Level Problems

Investment Level And Problems For Startups

Ø Opportunity Recognition

Ø Financing

Ø Human Resource

Ø Govt. Help

Ø Software Related Issues

Ø Hardware Related Issues

Web Site Related Issues

Ø Problems In Web Site Making

Ø Identifying Suitable Products

Ø Strong Branding

Ø Regular Changes

Ø Competitive Pricing

Ø Deciding About Web Site Quality

Ø Easy To Use Good Layout

Ø Graphics

Ø Good To Look At

Ø Interactive

Ø Fun

Ø Links To Other Sites

#3rd Level Problems

Marketing Problems

Ø Direct Consumer Marketing

Ø Customer Related Issues

Ø Confidence Level Of Customer

Ø Understand Customer Needs

Ø Sensing The Market

Ø Integrating Customer Needs With Technical Solutions

Ø Post Sales Service

Ø Product Selection

Ø Pricing Policy

Ø Defining Payment System

Ø Inventory Management

Ø Deciding Customers

Ø Setting Rules

Ø Promotional Method Being Used

Ø Handling Databases

Ø Database Management Problems

Ø Database Updating Problems

Ø Handling Electronic Funds Transfers

Ø Online Transaction Handling

Ø Credit Cards Handling

Ø Decisions About Payment Procedures

Ø Keeping Accounts Updates

Competition Handling

Ø New Entrants

Ø Complexity Of Doing Business

Ø Company Shake Outs

Ø Increased Competition

Ø Decline In Profits Due To High Competition

Ø Accounts Settlement

Ø Online Sourcing

Ø Electronic Ordering/ Payment

Security & Safety Issues

Ø Spamming

Ø Misuse Of Info

Ø Loss Of Money

Ø Unauthorized Access

Ø Watching The Transaction

Ø Forgery

Ø Blocking Your Services

Ø Ransom Payments

Ø Revenue Loss

Ø Privacy Issues

Ø Authenticate

Ø Prevent Forgery

Ø Prevent Ease Dropping

Integration In Previous Business

Ø Study How It Can Integrate Into Operations

Ø Develop Strategy Into Business And Marketing Plans

Ø Monitor Competitors And Suppliers

Next Chapter will move to research Methodology and questionnaire design. The above mentioned factors will used to design the questionnaire and hence it will lead to further research.

[1] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com

[2] N Venkatraaman “five steps to dot-com strategy” Slown Management Review, Spring 2000

[3] N Venkatraaman “five steps to dot-com strategy” Slown Management Review, Spring 2000

[4] The NEWS, May 21, 20000

[5] N Venkatraaman “five steps to dot-com strategy” Slown Management Review, Spring 2000

Ø [6] “ Factors Influencing the types of Products.” by Ian Phau, www. E-library.com

Ø [7] Marco & Alan “ Developing Product on Internet Time” Harvard Business Review Sep -Oct 1999, p 108-p117

[8] “ Factors Influencing the types of Products.” by Ian Phau, www. E-library.com

[9] Simpson poon “Product characteristics and Internet commerce benefit among small businesses” www. E library .com

Ø [10] “ Marketing your Products and Services on Internet” http:// www.anacom.com/articles /market.htm

[11]Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

[12] Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

[13] Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

[14] Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

[15] Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

[16] Juergen Seitz and Eberhard Stickel “Internet Banking - An Overview” www.jbc.com

Ø [17] Sarkar & Butler, “ Intermediaries and Cybermediaries ; A Continuing Role for Mediating Players in the Electronic Marketplace” http:// jcmc.huji.ac.ii/vol1/issue3/sarkar.html

Ø [18] Sarkar & Butler, “ Intermediaries and Cybermediaries ; A Continuing Role for Mediating Players in the Electronic Marketplace” http:// jcmc.huji.ac.ii/vol1/issue3/sarkar.html

Ø [19] Sarkar & Butler, “ Intermediaries and Cybermediaries ; A Continuing Role for Mediating Players in the Electronic Marketplace” http:// jcmc.huji.ac.ii/vol1/issue3/sarkar.html

Ø [20] Sarkar & Butler, “ Intermediaries and Cybermediaries ; A Continuing Role for Mediating Players in the Electronic Marketplace” http:// jcmc.huji.ac.ii/vol1/issue3/sarkar.html

Ø [21] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com

Ø [22] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com

Ø [23] Michelle Lynn Butler1995, Marketing and the Internet, www.altavista.com

Ø [24] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

Ø [25] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

Ø [26] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

[27] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

[28] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

[29] Philip Evans & Thomas S. Wurster, “ Getting Real About Virtual Commerce” Harvard Business Review Nov- Dec 199 p85-p94

Ø [30] Quelch & Klein, “ The internet & International Marketing” Sloan Management Review / Spring 1996

Ø [31] Quelch & Klein, “ The internet & International Marketing” Sloan Management Review / Spring 1996

[32] Quelch & Klein, “ The internet & International Marketing” Sloan Management Review / Spring 1996

Ø [33] Quelch & Klein, “ The internet & International Marketing” Sloan Management Review / Spring 1996

[34] www.clikz.com ‘The Five Business Models of E-Commerce.htm”

[35] www.clikz.com ‘The Five Business Models of E-Commerce.htm”

[36] www.clikz.com ‘The Five Business Models of E-Commerce.htm”

[37] Marketing Research Report 1997, KPMG Group, WWW.KPMG.co.uk

[38] Marketing Research Report , KPMG Group, WWW.KPMG.co.uk

[39] Marketing Research Report , KPMG Group, WWW.KPMG.co.uk

Ø [40] Dr. Ralph F. Wilson, “ The Five Mutable Laws of Web Marketing” Web Marketing Today , Issue 55, April 1, 1999

Ø [41] Dr. Ralph F. Wilson, “ The Five Mutable Laws of Web Marketing” Web Marketing Today , Issue 55, April 1, 1999

Ø [42] Dr. Ralph F. Wilson, “ The Five Mutable Laws of Web Marketing” Web Marketing Today , Issue 55, April 1, 1999

Ø [43] Dr. Ralph F. Wilson, “ The Five Mutable Laws of Web Marketing” Web Marketing Today , Issue 55, April 1, 1999

[44] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[45] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[46] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[47] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[48] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[49] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[50] Dr. Ralph F. Wilson, E-Commerce Consultant Web Marketing Today, Issue 57, June 1, 1999

[51] Internet Marketing Power Tips Copyright 1999 by Larry Dotson Published and Designed by: BookLocker.com

[52] Internet Marketing Power Tips Copyright 1999 by Larry Dotson Published and Designed by: BookLocker.com

[53] DAWN Tuesday, January 23,2001

[54] Research findings of IBA report “Pakistan May Do well to join the E- commerce” Dawn, may 09,2000

[55] Massachusetts Institute on Technology 1990, “ On Line Shopping “ Marketing Review Jan- March 1999 p08 – p21

[56] Massachusetts Institute on Technology 1990, “ On Line Shopping “ Marketing Review Jan- March 1999 p08 – p21

[57] “Prospects for Pak IT Industry” NEWS, May 06,2000

[58] Ministry Of Science & technology, “IT Policy and Action Plan” Govt. of Pakistan, August 2000. www. Pakpowerpage.com

[59] Ministry Of Science & technology, “IT Policy and Action Plan” Govt. of Pakistan, August 2000. www. Pakpowerpage.com

[60] The Term “IT Division” in this document denotes the IT and Telecommunications Division and its associated departments and organizations.


[62] A proposed draft notification for Venture Capital companies has been prepared and sent to the SECP

[63] Ministry Of Science & technology, “IT Policy and Action Plan” Govt. of Pakistan, August 2000. www. Pakpowerpage.com

[64] Ministry Of Science & technology, “IT Policy and Action Plan” Govt. of Pakistan, August 2000. www. Pakpowerpage.com

[65] Ministry Of Science & technology, “IT Policy and Action Plan” The NEWS, May 6, 2000

[66] [66] Ministry Of Science & technology, “IT Policy and Action Plan” The NEWS, May 6, 2000

[67] [67] Ministry Of Science & technology, “IT Policy and Action Plan” The NEWS, May 6, 2000

[68] Common Hidden Problems in Planning Retail E-Commerce Projects http://www.bockinfo.com/rethid.htm

[69] Common Hidden Problems in Planning Retail E-Commerce Projects http://www.bockinfo.com/rethid.htm

[70] Critical Considerations in Retail E-Commerce Projects http://www.ambergriscaye.com/BzLibrary/trust126.html REPORT #126 Nov 1999

[71] Common Hidden Problems in Planning Retail E-Commerce Projects http://www.bockinfo.com/rethid.htm

[72] Common Problem Areas for Retail E-Commerce Systems http://www.bockinfo.com/retskills.htm

[73] Common Problem Areas for Retail E-Commerce Systems http://www.bockinfo.com/retskills.htm

[74] Common Problem Areas for Retail E-Commerce Systems http://www.bockinfo.com/retskills.htm

[75] Common Problem Areas for Retail E-Commerce Systems http://www.bockinfo.com/retskills.htm


  1. really who ever you are u have done an excellent JOB.

  2. hats off to u sir u nailed it (Y)