E-commerce: Types of E-commerce

The term “e-commerce” is most often used as a generic term used to cover a whole range of actually quite different approaches to selling on the Internet. It is very important for a company considering entering this world to clearly determine which of the 4 levels of  “e-commerce” best fits its needs

1. Showcase
2. E-catalogue
3. E-commerce
4. E-business

Showcase Site

Most websites fall in the first category. A Showcase site consists of a number of fixed pages which describe the company and its products. It is the most easily created type of site as it requires no database of products and customers and the only interactivity with the client is normally an e-mail link on a contacts page. All pages are created manually by a web page editor which is similar to a word processor but creates web pages instead of documents.

E-Catalogue

The E-catalogue site is similar to the Showcase site but here the pages are not necessarily fixed but may be created by a program which can generate product pages from, for example, the stock file of an accounting system. In addition it may contain simple forms allowing the customer to place requests for items or a simple shopping basket interface. Online credit card payments are possible and order confirmations are provided to the customer immediately. The order fulfilment service is not part of the site but is started manually on receipt of an e-mail from the Payment Gateway or from an administration web page which lists current orders

E-commerce

This site takes the E-catalogue forward by integrating the companies core product and order processing systems into web technology. The Internet is effectively just one more sales channel. The product catalogue is derived dynamically from the in-house order system and orders are processed automatically. More sophisticated customer interaction is possible as back-office accounting functions are utilised, for example a Sales Ledger (or Account Receivable Ledger) allows the system to take orders from customers who have credit accounts with your company instead of insisting on on-line payment. In a similar way personalised pricing and a Members area is possible.

Real time allocation of stock and despatch processing ensures that the customers order confirmation of delivery is “real” and that the customer is aware of the progress of his goods to him. An automated link to a fulfilment centre means that a high volume of orders can be processed with low error rates. This type of system is also more likely to allow effective Customer Relationship Management by holding buying pattern data.

E-business

This ultimate type of site adds to all the others by offering a non-browser type of interface to both customers and suppliers. This “non-browser” interface is designed to talk to another computer rather than to a web browser. It allows customer systems to be built to “ask” your system for quotations, stock levels or to place orders. It allows your system in turn to “ask” supplier systems for similar information. This type of Business-to-business (B2B) interface is seen as the key to reducing operating costs and increasing service levels by automating large chunks of the supply chain and day-to-day operations.

With any e-commerce option you must have a “Payment Gateway” to allow customers to pay for goods on-line. This is a company that can present personalised web payments screens, holds a bank account for you and can connect to the credit card network to make payments and receipts. The money collected in these accounts is transferred to your own bank account less their charges.

E-Commerce in Gibraltar

The first two classes of website are normally provided by normal Internet Service Providers ISPs). Gibraltar has two such ISPs both of which offer the Worldpay click and build system.

The third option is provided by an Application Service Provider (ASP) who has the expertise and resources to integrate all the elements required. Systech

Payment Gateways

There are both technical and commercial considerations when choosing a Payment Gateway. The commercial issues are things such as how easy it is to get the account and how high the charges are.  This section will concentrate on the technical issues which affect the look of your website.

Two types of Payment Gateway are available, Indirect and Direct.

The Indirect option is the easiest to implement, as it does not require any special capability by the web site. After selecting goods to buy customers are redirected to the Payment Gateway site where they receive a personalised payment page into which credit card details are input. This type of interface is very easy to set-up and also requires extra no implementation to ensure secure communications. Secure communications ensure that card details are extremely difficult to read by a third party on the Internet. It also provides the familiar padlock in the browser without which many customers simply will not buy.

The disadvantages of this system is that your site cannot request credit card details directly from the customer and the customer is effectively switched away from your site to a payment page which will have a similar but not the exact “look and feel” of your site. It also introduces another company name to the proceedings. Returning to your site is not guaranteed. Secondly you will not capture the customer’s credit card information directly into your database but will rely on the Payment Gateway administration page to get the card details for, for example, refunds.

The Direct option allows your site to capture card details directly on your own payment page and to validate the card behind the scenes. In this way all pages that the user sees are under your control with no redirection and credit card details are stored on your system allowing for easier customer support. However this type of Payment Gateway requires that the site support secure communications directly which is an additional charge. The Direct option is therefore technically more elegant but is more complex and the approval process for the account itself may take longer and more demanding.

In Gibraltar the most popular Indirect Payment Gateway is provided by Worldpay either directly or through the Natwest Bank. Approval normally takes less than a week. Barclays offer their BMS (or ePDQ) Direct Gateway. However this can take many months to obtain approval.

VAT and Import Duties

As it is a colony of the UK Gibraltar is within the EU for most purposes but outside in terms of the EU Customs Union. This means that Gibraltar has no VAT on locally supplied goods and services. Any goods shipped from a Fulfilment Centre in Gibraltar will be subject to the import duties or sales taxes of the country of delivery. This means that the delivery agent (courier or Post Office) will collect these taxes from the customer. For the UK, for example, it is as if the goods have come from a non-EU country such as the USA.

For more information on Tax Exempt companies in Gibraltar, please refer to the 'Financial Services' section on the 'Government of Gibraltar' website. Information on Gibraltar as an offshore centre can also be obtained from lowtax.net.