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The Trade Cycle

A trade cycle is the series of exchanges, between a customer and supplier, that take place when a commercial exchange is executed. A general trade cycle consists of:

Pre-Sales:

Execution:

Settlement:

After-Sales.

Finding a supplier and agreeing the terms.

Selecting goods and taking delivery.

Invoice (if any) and payment.

Following up complaints or providing maintenance.

For business-to-business transactions the trade cycle typically involves the provision of credit with execution preceding settlement whereas in consumer-to-business these two steps are typically co-incident.

The nature of the trade cycle can indicate the e-Commerce technology most suited to the exchange.

Commercial transactions that are repeated on a regular basis, such as supermarkets replenishing their shelves, is one category of trade cycle. EDI is the e-Commerce technology appropriate to these exchanges.

Figure 1: Trade Cycle.

Consumer transactions tend to be once-off (or at least vary each time) and payment is made at the time of the order.internet e-Commerce is the technology for these exchanges, see Figure 2.

Figure 2 Consumer

The third generic trade cycle is the non-repeating commercial trade cycle and Internet e-Commerce or an electronic market is the appropriate e-technology.

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