Ecommerce Unit - 1

E-Commerce Notes
Unit-1
Lecture-1
Introduction to Commerce
•      Commerce is basically an economic activity involving trading or the
buying and selling of goods.
For e.g. a customer enters a book shop, examines the books, select a
book and pays for it. To fulfill the customer requirement, the book shop
needs to carry out other commercial transactions and business functions
such as managing the supply chain, providing logistic support, handling
payments etc.
As we enter the electronic age, an obvious question is whether these
commercial transactions and business functions can be carried out
electronically.
In general, this means that no paperwork is involved, nor is any physical
contact necessary. This often referred to as electronic commerce (e-
commerce).
The earliest example of e-commerce is electronic funds transfer. This
allows financial institutions to transfer funds between one another in a
secure and efficient manner.
Later, electronic data interchange (EDI) was introduced to facilitate
inter-business transactions.
E-Commerce
•  “E-Commerce or Electronic Commerce, a subset of E-Business, is the
purchasing, selling and exchanging of goods and services over
computer networks (such as Internet) through which transactions are
performed”.
•      “E-Commerce can be defined as a modern business methodology that
addresses the needs of organizations, merchants and consumers to cut
costs while improving the quality of goods and services and increasing
the speed of service delivery by using Internet”.
•  E-Commerce takes place between companies, between companies and
their customers, or between companies and public administration.
FEW EXAMPLES OF E-Commerce are:
•      Amazon.com, an online bookstore started in 1995 grew its  revenue to
more than 600$ million in 1998.
•      Microsoft Expedia, an integrated online travel transaction site helps to
choose a flight, buy an airline ticket, book a hotel, rent a car etc. in only
a few minutes.
E-Commerce vs Traditional Commerce
•      E- Commerce is about the sale and purchase of goods or services by
electronic means, particularly over the internet. In a pure e-commerce
system, transactions take place via electronic means. In this case, you
will access a cyber bookstore and download a digital book from a server
computer.
•      In a physical or traditional commerce system, transactions take place via
contact between humans usually in a physical outlet such as a
bookstore.
For e.g. if you want to buy a book, you will go to a physical bookstore
and buy the physical book from a salesman.
•      E-Commerce is more suitable for standard goods, intangible goods;
whereas traditional commerce is more suitable for non standard goods,
perishable goods, and expensive goods.
•      Complex products such as cars are better served by integrating e-
commerce and physical commerce.
Difference between Traditional Commerce and  E-commerce
 E-Business
•      “E-Business is the conduct of business on the Internet, not only buying
and selling but also servicing customers and collaborating with business
partners”.
•      E-Business means connecting critical business systems directly to
customers, vendors and suppliers- via the Internet, Extranet and
Intranets.
•      Therefore it means using electronic information to boost performance
and create value by forming new relationships between and among
businesses and customers.
•      One of the first to use the term was IBM, in October 1997, when it
launched a campaign built around e-business.
E-Business enables organizations to accomplish the following
goals:-
•      Reach new markets.
•      Create new products or services.
•      Build customer loyalty
•      Make the best use of existing and emerging technologies.
•      Achieve market leadership and competitive advantage.
•      Enrich human capital.

Advantages of E-Commerce to Customers

•      Reduced Prices:- Costs of products are reduced since the stages along
the value chain are decreased. For instance, intermediaries can be
eliminated by the company directly selling to the customers instead of
distributing through a retail store.
•      24-Hour Access:- Online businesses never sleep as opposed to brick
and mortar businesses. E-Commerce allows people to carry out
businesses without the barriers of time.
•      Global Marketplace:- Consumers can stop anywhere in the world.
Currently according to World Trade Organization (WTO) there are no
custom duties put on products bought and traded globally electronically.
This also provides wide selection of products and services to
consumers.
•      More Choices:- Provides consumers with more choices. For e.g. before
making any purchase, customer can study about all the major brands
and features of any item. It also provides consumers with less expensive
products and services by allowing them to shop in many places.
Advantages of E-Commerce to Businesses
•      Increased potential market share:- The internet enables businesses to
have access to international markets thereby increasing their market
share. Companies can also achieve greater economies of scale.
•      Low cost Advertising:- Advertising on the internet costs less than
advertising on print or television depending on the extent of
advertisement.Advertising on the internet itself is less costly since there
is less cost   associated with it in terms of printing and limited television
spots.
•      Low barriers to Entries:- Anyone can start up a company on the
internet. Start-up costs are a lot lower for companies since there is less
need for money for capital.
•      Strategic Benefits:- The Strategic benefits of making a business e-
commerce enabled is that it helps reduce the delivery time, labour cost
and the cost incurred in document preparation, data entry, error
detection etc.
Disadvantages of E-Commerce
•      Hidden Costs:- Although buying online is convenient, the cost of this
convenience is not always clear at the front end. For e.g. on-line
purchases are often accompanied by high shipping and re-stocking fees,
a lack of warranty coverage and unacceptable delivery times. In fact, too
many e-commerce companies have developed a reputation of
overcharging for shipping and handling.
•      Lack of Security:- One of the main roadblocks to the wide acceptance
of e-commerce by businesses and consumers alike is the perceived lack
of adequate security for on-line transactions.
For e.g.  Consumers are growing increasingly worried about providing
credit card information over the Internet.
During the past few years, the press has been filled with reports about
hackers breaking into e-business and stealing credit card information.
•      Lack of Privacy:- Customers also worry about the privacy implications of
data gathered by organizations of all types and sizes. Even at the
simplest data level, sales information is stored in databases connected
 to web servers, thus exposing the information to cyber criminals.
Because data gathering on the web is so easy, databases routinely
contain information about customer purchasing habits, credit information
and so on. In many cases, companies sell customer database
information to marketing companies. In turn, the marketing companies
engage in massive e-mail campaigns to attract new customers. It doesn’t
take long for the customer’s email box to be filled with unwanted email
(also known as Spam).
•      Network Unreliability:- Although the Internet is designed to overcome
the single point of failure problem, there have been several well-
publicized incidents of network failures during the past few years.
Network reliability problems may be generated by such factors as:-
 Equipment failure in the network connection provider.
 Accidental problems caused by nature-such as lightning, floods,
earthquakes that affect communication lines.
 Long response time due to increased network traffic or inadequate
bandwidth.
•      Low Service Levels:- Another common complaint about doing business
online is the low level of customer service that online companies tend to
provide. Although technology has automated business transactions to a

 
large extent, there remains a real need for the human touch. Therefore
e-commerce websites must provide:-
 A pleasant and problem free pre-ordering and ordering experience. The
website design is an important interface.
 Readily available easily used feedback options.
 Quick complaint resolution.
 Timely and low-cost shipping delivery to customers.
Scope of E-Commerce
•      E-Commerce is a general concept covering any form of business
transaction or information exchange executed using information and
communication technologies ((ICT’s).
•      It includes electronic trading of goods, services and electronic material.
It takes place between companies, between companies and their
customers or between companies and public administrations.
•      Electronic Markets:-
 An electronic market is the use of information and communication
technology to present a range of offerings available in a market
segment  so that the purchaser can compare the prices of the offerings
and make a purchase decision
 e.g. Airline Booking System
•      Electronic Data Interchange:-
 It provides a standardized system for coding trade transactions so that
they can be communicated from one computer to another without the
need for printed orders and invoices & delays & errors in paper handling.
 It is used by organizations that make a large no. of regular transactions.
e.g. EDI is used in the large supermarket chains for transactions with
their suppliers.
•      Internet Commerce:-
 Information and communications technologies can be used to advertise &
make sales of wide range of goods & services.
 This application is both for business to business & business to consumer
transactions.
e.g. The purchase of goods that are then delivered by post or the
booking of tickets that can be picked up by the clients

E-Commerce Notes
Unit-1
Lecture-2
Types of E-Commerce/ E-Commerce Market Models
•      There are five types of E-Commerce:-
 Business To Business (B2B)
 Business To Consumer (B2C)
 Consumer To Business (C2B)
 Consumer To Consumer (C2C)
 Business To Government (B2G)
Business To Business (B2B):- Business to Business or B2B refers to
e-commerce activities between businesses. An E-Commerce company
can be dealing with suppliers or distributers or agents. These
transactions are usually carried out through Electronic Data Interchange
(EDI). EDI is an automated format of exchanging information between
businesses over private networks.
 For e.g. manufacturers and wholesalers are B2B Companies.
By processing payments electronically, companies are able to lower the
number of clerical errors and increase the speed of processing invoices,
which result in lowered transaction fees.
In general, B2Bs require higher security needs than B2Cs.
With the help of B2B E-commerce, companies are able to improve the
efficiency of several common business functions, including supplier
management, inventory management and payment management.
Business To Customer (B2C):- Business to Customer or B2C refers to
E-Commerce activities that are focused on consumers rather than on
businesses.
For instance, a book retailer would be a B2C company such as
Amazon.com. Other examples could also be purchasing services from
an insurance company, conducting on-line banking and employing travel
services.
Customer To Business (C2B):-
Customer to Business or C2B refers to E-Commerce activities which use
reverse pricing models where the customer determines the prices of the
product or services.
In this case, the focus shifts from selling to buying. There is an increased
emphasis on customer empowerment.
In this type of E-Commerce, consumers get a choice of a wide variety of
commodities and services, along with the opportunity to specify the
range of prices they can afford or are willing to pay for a particular item,
service or commodity.
Customer To Customer (C2C):-
Customer to Customer or C2C refers to E-commerce activities, which
use an auction style model. This model consists of a person-to-person
transaction that completely excludes businesses from the equation.
Customers are also a part of the business and C2C enables customers
to directly deal with each other.
An example of this is peer auction giant ebay.
Business To Government (B2G):- It is a new trend in E-Commerce.
This type of E-Commerce is used by the government departments to
directly reach to the citizens by setting up the websites.
These websites have government policies, rules and regulations related
to the respective departments.
 Any citizen may interact with these websites to know the various details.
This helps the people to know the facts without going to the respective
departments.
This also saves time of the employees as well as the citizens.
 History of E-Commerce
•      The history of Ecommerce seems rather short but its journey started over
40 years ago in hushed science labs
•      In the 1960s, very early on in the history of Ecommerce, its purpose was
to exchange long distance electronic data. In these early days of
Ecommerce, users consisted of only very large companies, such as
banks and military departments, who used it for command control
communication purposes. This was called EDI, and was used for
electronic data interchange.
•      Originally, electronic commerce was identified as the facilitation of
commercial transactions electronically, using technology such as
Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT).
These were both introduced in the late 1970s, allowing businesses to
send commercial documents like purchase orders or invoices
electronically.
•      The growth and acceptance of credit cards, automated teller machines
(ATM) and telephone banking in the 1980s were also forms of electronic
commerce
•      In 1982 Transmission Control Protocol and Internet Protocol known as
TCP & IP was developed. This was the first system to send information
in small packets along different routes using packet switching
technology, like today's Internet! As opposed to sending the information
streaming down one route
•      Beginning in the 1990s, electronic commerce would include enterprise
resource planning systems (ERP), data mining and data warehousing
•      In 1995, with the introduction of online payment methods, two companies
that we all know of today took their first steps into the world of
Ecommerce. Today Amazon and ebay are both amongst the most
successful companies on the Internet
 Functions of E-Commerce
•      Marketing:- One of the areas it impacts particularly is direct marketing.
In the past this was mainly door-to-door, home parties (like the
Tupperware parties) and mail orders using catalogues or leaflets. This
moved to telemarketing and TV selling with the advance in television
technology and finally developed into e-marketing.
•      Human Resource Management:- Issues of on-line recruiting, home
working and ‘entrepreneurs’ working on a project by project basis
replacing permanent employees.
•      Business law and ethics:- The different legal and ethical issues that
have arisen as a result of a global ‘virtual’ market. Issues such as
copyright laws, privacy of customer information etc.
•      Management Information System:- Analysis, design and
implementation of e-business systems within an organization ; issues of
integration of front-end and back-end systems.
•      Product Operations and Management:- The impact of on-line
processing has led to reduced cycle time. It takes seconds to deliver
digitized products and services electronically; similarly the time for
processing orders can be reduced by more than 90 percent from days to
minutes.
•      Finance and Accounting:- On-line banking ; issues of transaction
costs ; accounting and auditing implications where ‘intangible’ assets
and human capital must be tangibly valued in an increasing knowledge
based economy.
•      Economy:- The impact of E-commerce on local and global economies;
understanding the concepts of a digital and knowledge based economy
and how this fits into economic theory.

E-Commerce Applications
•      E-Marketing
•      E-Advertising
•      E-Banking
•      E-Learning
•      Mobile Commerce
•      Online Shopping
•      Entertainment

•      E-Marketing:-
 E-Marketing also known as Internet Marketing, Online Marketing, Web
Marketing.
 It is the marketing of products or services over the internet.
 It is consider to be broad in scope because not refers to marketing on the
internet but also done in Email and wireless media.
 E-Marketing ties together the creative and technical aspects of the
internet, including design development, advertising and sales.
 Internet marketing is associated with several business models i.e., B2C,
B2B, C2C.
 Internet marketing is inexpensive when examine the ratio of cost to the
reach of the target.

•      E-Advertising:-
 It is also known as online advertising it is a form of promotion that uses
internet and World Wide Web to deliver marketing messages to attracts
customers.
Example: Banner ads, Social network advertising, online classified
advertising etc.
 The growth of these particular media attracts the attention of advertisers
as a more productive source to bring in consumers.

•      E-Banking:-
 Means any user with a personal computer and browser can get
connected to his banks, website to perform any of the banking functions.
 In internet banking system the bank has a centralized data base i.e.,
web-enabled.
 Best example for E-Banking is ATM.
 An ATM is an electronic fund transfer terminal capable of handling cash
deposits, transfer, Balance enquiries, cash withdrawals, and pay bills.
•      SERVICES THROUGH E-BANKING:
 Bill Payment Service
 Fund Transfer
 Investing through Internet Banking
 Shopping

•      E-Learning:-
 E-Learning comprises all forms of electronically supported learning and
teaching.
 E-Learning applications and processes include web-based learning,
computer-based learning.
 Content is delivered via. The internet, intranet/extranet, audio, or video
tape, satellite TV.
 E-Learning is naturally suited to distance and flexible learning, but can
also be used conjunction with face-to-face teaching.
 E-Learning can also refer to the educational website such as those
offering learning scenarios worst and interactive exercises for children.
 A learning management system (LMS) is software used for delivering,
tracking, and managing training /education.

•      Mobile Commerce:-
 Mobile Commerce also known as M-Commerce, is the ability to conduct,
commerce as a mobile device, such as mobile phone.
 Banks and other financial institutions use mobile commerce to allow their
customers to access account information and make transactions, such
as purchasing, withdrawals etc.,
 Using a mobile browser customers can shop online without having to be
at their personal computer.
•      SERVICES ARE:
1. Mobile ticketing
2. Mobile contract purchase and delivery mainly consumes of the sale of
ring tones, wallpapers and games of mobile phones.
3. Local base services
•      Local discount offers
•      Local weather
4. Information services
•      News
•      Sports, Scores
 •      Online Shopping:-
 Online shopping is the process whereby consumers directly buy goods or
services from a sell in real time, without intermediary services over the
internet.
 An online shop, e-shop, e-store, internet shop web shop, web store,
online store, or virtual shop evokes the physical analogy of buying
products or services in a shopping center.
 In order to shop online, one must be able to have access to a computer,
a bank account and debit card.
 Online shoppers commonly use credit card to make payments , however
some systems enable users to create accounts and pay by alternative
means ,such as 
•       Cheque.
•       Debit cards.
•       Gift cards
 Online stores are usually available 24 hours a day

•      Entertainment:-
 The conventional media that have been used for entertainment are
1. Books/magazines.
2. Radio.
3. Television/films.
4. Video games.
Online books /newspapers, online radio, online television, online firms,
and online games are common place in internet where we can entertain.
  Online social networking websites are one of the biggest sources of E-
entertainment for today’s tech-savvy generation.