What are the components of a typical successful e-commerce transaction loop?

E-commerce does not refer merely to a firm putting up a Web site for the purpose of
selling goods to buyers over the Internet. For e-commerce to be a competitive alternative
to traditional commercial transactions and for a firm to maximize the benefits
of e-commerce, a number of technical as well as enabling issues have to be considered.
A typical e-commerce transaction loop involves the following major players and
corresponding requisites:
The Seller should have the following components:
● A corporate Web site with e-commerce capabilities (e.g., a secure transaction
server);
● A corporate intranet so that orders are processed in an efficient manner; and
● IT-literate employees to manage the information flows and maintain the e-commerce
system.

Transaction partners include:
● Banking institutions that offer transaction clearing services (e.g., processing credit
card payments and electronic fund transfers);
● National and international freight companies to enable the movement of physical
goods within, around and out of the country. For business-to-consumer
transactions, the system must offer a means for cost-efficient transport of small
packages (such that purchasing books over the Internet, for example, is not
prohibitively more expensive than buying from a local store); and
● Authentication authority that serves as a trusted third party to ensure the integrity
and security of transactions.

Consumers (in a business-to-consumer transaction) who:
● Form a critical mass of the population with access to the Internet and disposable
income enabling widespread use of credit cards; and
● Possess a mindset for purchasing goods over the Internet rather than by physically
inspecting items.

Firms/Businesses (in a business-to-business transaction) that together form a
critical mass of companies (especially within supply chains) with Internet access
and the capability to place and take orders over the Internet.

Government, to establish:
● A legal framework governing e-commerce transactions (including electronic documents,
signatures, and the like); and
● Legal institutions that would enforce the legal framework (i.e., laws and regulations)
and protect consumers and businesses from fraud, among others.
And finally, the Internet, the successful use of which depends on the following:
● A robust and reliable Internet infrastructure; and
● A pricing structure that doesn’t penalize consumers for spending time on and
buying goods over the Internet (e.g., a flat monthly charge for both ISP access
and local phone calls).

For e-commerce to grow, the above requisites and factors have to be in place. The
least developed factor is an impediment to the increased uptake of e-commerce as
a whole. For instance, a country with an excellent Internet infrastructure will not
have high e-commerce figures if banks do not offer support and fulfillment services
to e-commerce transactions. In countries that have significant e-commerce figures,
a positive feedback loop reinforces each of these factors