Unit – 1

E-Commerce/E-Business
Introduction
1. E-Commerce/E-Business
a. Meaning
b. Nature
c. Concepts
d. Advantages & Disadvantages
e. Categories
f. Framework
2. Concept of I-way E-Commerce Process Models

By: Charul Verma

Definition
E-business or Online business means business transactions that take place online with the
help of the internet. The term e-business came into existence in the year 1996. E-business is
an abbreviation for electronic business. Therefore, the buyer and the seller do not meet
personally.
E-business refers to all online business transactions including selling directly to consumers,
dealing with manufactures and suppliers, and conducting interactions with partners.
 E-business includes e-commerce but also covers internal processes such as
production, inventory management, product development, risk management, finance,
knowledge management and human resources.
 E-business strategy is more complex, more focused on internal processes, and aimed
at cost savings and improvements in efficiency, productivity.
 E-Commerce has a narrower definition and only involves buying and selling goods
and services over the Internet.
Nature of e-business:
 Greater choice and potentially lower prices for buyers.
 Lower inventory cost for vendors.
 Ability to easily enter in new market.
 Buyer and seller do not meet face-to-face to enter into a transaction.
 While browsing the website, the buyer gets the payment options.
 The Product is delivered through courier/post.
 Confidentiality and security of Customer information.
Some of the features of Online Business are as follows:
 It is easy to set up
 There are no geographical boundaries
 Much cheaper than traditional business
 Flexible business hours
 Less Cost for Marketing strategies
 Online business receives subsidies from the government
 Buyer and seller don’t meet
 Delivery of products takes time
 There is a transaction risk
 Anyone can buy anything from anywhere at anytime
 The transaction risk is higher than traditional business.
Scope of E-Business

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E-business in boarder in scope
 As information sharing is the major part of the corporate industries, networking has
given boost to E-Business. This change in viewpoint has opened door for new
opportunities.
 Selling can be focused to the global customer
 Pre-sales, subcontracts, supply
 Financing and insurance
 Commercial transactions: ordering, delivery, payment
 Product service and maintenance
 Co-operative product development
 Distributed co-operative working
 Use of public and private services
 Business-to-administrations (e.g. customs, etc)
 Transport and logistics
 Public procurement
 Automatic trading of digital goods
 Accounting
 Dispute resolution
Difference between E-Commerce & E-Business
Particulars E-commerce E-business
Meaning It refers to performing online It refers to performing every type
commercial transactions and of business activity through the
activities over the internet. internet.
Scope It is a narrow concept and is a subset It is a broad concept and is a
of e-business. superset of e-commerce.
Transactions Commercial transactions are carried Business transactions are carried
out in e-commerce. out in e-business.
Limitation E-commerce transactions are limited. E-business transactions are not
limited.
Activities It includes selling and buying It includes customer education,
products, making monetary procurement of raw materials,
transactions, etc., over the internet. supply activities, making
monetary transactions, etc., over
the internet.
Operation It mainly requires the use of only a It requires using multiple
website. websites, ERPs and CRMs, that
connect different business
processes.
Resources It involves mandatory use of the It consists of the use of the
internet. internet, extranet or intranet.

By: Charul Verma

 Business E-commerce is appropriate in a E-business is appropriate in a
models Business to Customer (B2C) context. Business to Business (B2B)
context.
Coverage E-commerce covers external/outward E-business covers internal and
business processes. external business
processes/activities.

Advantages of E-Business:

 Save More: The whole point of doing business online is to get things done more
quickly, cheaply, and efficiently. The aim is to accomplish more with less. As a
consequence, you will conserve time, money, and effort as a result. E-business also
offers the benefit of reducing the amount of paper needed for forms and streamlining
the customer experience.
 Real-time updates: Many individuals think that communication is the key to
surviving in the complex and quick-paced commercial world. However, the speed
with which information can be communicated is one of the essential advantages of
online business that many people need to be aware of. In today's fast-paced market,
making decisions quickly is frequently essential to staying competitive. Electronic
communication is critical to e-business, enabling more rapid information transmission
and timely decision-making.

 Virtual office: Today's office is more than just a desk. These days, offices might be
virtual or located anywhere in the world. The fast-paced climate of today, when
choices must be taken instantly, necessitates using e-business. It enables businesses to
effectively connect by utilizing technology like email and the internet while
leveraging the Cloud for storage.
 Better marketing: Businesses have significantly benefited as online marketing
becomes more common. Getting their marketing for less is one of these advantages.
As a result, buyers can pay lesser prices, which increases sales. More control over
their brand is another advantage of online marketing. Through social media,
businesses can manage how their brand is presented on numerous platforms, which
has increased the number of favorable customer evaluations and word-of-mouth
recommendations for their products.
 E-business offers several revenue streams. Many people have been successful in
generating income using the Internet. Affiliate marketing is typically the simplest
method of earning money online. Creating an account and promoting goods that can

By: Charul Verma

 aid in driving traffic to your website are good ways to get started. You will be
compensated with a commission if customers purchase your product through your
website.

 More open and unrestricted: The flexibility of e-business is the ability to launch
your own company whenever you want, from anywhere, in the comfort of your home.
Get a domain name and website hosting, and begin adding your artwork. The online
e-commerce platform is also available to you. Additionally, e-Business is the current
mode of conducting business. It has wrought a great deal of change yet has much to
offer. E-business is currently the most affordable and quickly expanding type of
business. Even as a replacement for conventional advertising strategies, it has been
considered.

Greater Reach than physical stores:

 E-businesses can have many different forms, including those of small and large
businesses. Because large organizations can reach a vast audience through the
Internet, it is growing in popularity with enterprises of all sizes. These businesses are
easily found by customers online, and the Internet has made it possible for these firms
to interact with a more extensive clientele. Companies that have websites not only
have the same access to consumers as physical businesses have, thanks to e-business
but also have more control over their operations.

 Simple to Set Up: It's easy to launch an online business. If you have the hardware,
software, and internet connectivity, you can launch an online business while relaxing
at home.

By: Charul Verma

  Cheaper than Traditional Business: Traditional business is significantly more
expensive than online company. On average, an e-enterprise requires far more money
to start than a conventional firm. Additionally, the transaction cost is lower.

No Geographical Restrictions:

 E-business is not geographically constrained. Anyone can place an order at anytime

from anywhere. One advantage of doing business online is this.

Disadvantages of E-Business

 No Personal Touch: Small business owner suffers significantly from the immediacy
of online connection. Online research is quick for customers, but it takes a lot of effort
to replace in-person connections. No one is there to assist you when you are looking
for the perfect product, for instance-whether it be the right size, color, or type.
Additionally, you cannot see or hear what others say about your goods. If a customer
has a problem with their item, they could have to wait days for a response rather than
just returning it and speaking with management.

 Delivery or product/service is not fast: Customers who wish to view a product or

receive assistance from an e-Business may have to wait a long time because these
businesses might need to be more active. This is a significant issue when it comes to
buying. Customers might want to avoid hanging around and becoming impatient with
inaction. Additionally, lengthy product delivery delays are a huge deterrent.
 Privacy violations and security issues: The security dangers that e-business presents
are its most significant negative. For instance, businesses are increasingly concerned
about the problem of cybercrime. Cybercriminals lure naïve victims using a range of
tactics One of their tactics is to produce a phony website that looks identical to the
actual one. They'll offer a free trial or some other ploy to get consumers to click on it,
and once they do, they'll hijack your account or steal your data.
 Not accessible to all: Since there are few obstacles to entry, operating your business
in this manner has many benefits. In addition, we live in the Age of Information, when
we may quickly and easily obtain any information. The drawback of e-businesses is
that only some can access them. Some people might require assistance to take
advantage of e-businesses because of the high cost of resources like Internet

By: Charul Verma

 connections, computer hardware and software, broadband internet service providers,
and even cell phones.
 Nobody can make a Purchase when a Website is Down: The most significant
disadvantage of online purchasing is that nobody can access your store if your website
is down. As a result, be sure the platform hosting your website is appropriate.
 Innovation Pressure: When you use an e-business strategy, you are exposed to a
fiercely competitive global market where thousands of other brands are likely to
overshadow yours. Due to this situation, innovation is constantly under pressure. You
need to be creative if you want to draw and keep customers; otherwise, the
competition will outshine you. It would be advantageous if you innovated your supply
chain to meet the demands of your customers.
 Handling Returns: Product descriptions displayed on the screen are limited in
length. Because of this, if the finished product is different from what the buyer
anticipated, they will return it Do you have the means to manage these returned goods
in your company? Can you handle all incoming requests for money back? These are
things to consider when starting an online business, especially if you plan to offer
physical goods.

 Shipping Times Can Be Lengthy: According to customers, one of the significant

problems with online purchasing is the shipment periods. When purchasing anything
in person, the customer can take it home immediately. However, most online shoppers
receive their items within a week.
 Security Concerns and Privacy Violations: One of the e-mail business's drawbacks
is, without a doubt, the security concerns that it introduces. For instance, companies
are increasingly worried about the problem of cybercrime. Cybercriminals use several
tactics to seduce naïve victims. One of their tactics is to build a phony website that
looks identical to the real one. Fraudsters may use a free trial offer or another trick to
entice customers to click on it, and once they do, they take over your account or steal
your personal information.

Categories of E-Commerce:

There are 6 basic types of e-commerce:

1. Business-to-Business (B2B)
2. Business-to-Consumer (B2C)

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3. Consumer-to-Consumer (C2C)
4. Consumer-to-Business (C2B).
5. Business-to-Government (B2G)
6. Government-to-Business (G2B)
7. Government-to-Consumer (G2C)

 Business-to-Business (B2B): Business-to-Business (B2B) e-commerce encompasses

all electronic transactions of goods or services conducted between companies.
Producers and traditional commerce wholesalers typically operate with this type of
electronic commerce.

 Business-to-Consumer (B2C): The Business-to-Consumer type of e-commerce is

distinguished by the establishment of electronic business relationships between
businesses and final consumers. It corresponds to the retail section of e-commerce,
where traditional retail trade normally operates. These types of relationships can be
easier and more dynamic, but also more sporadic or discontinued. This type of
commerce has developed greatly, due to the advent of the web, and there are already
many virtual stores and malls on the Internet, which sell all kinds of consumer goods,
such as computers, software, books, shoes, cars, food, financial products, digital
publications, etc. When compared to buying retail in traditional commerce, the
consumer usually has more information available in terms of informative content and
there is also a widespread idea that you’ll be buying cheaper, without jeopardizing an
equally personalized customer service, as well as ensuring quick processing and
delivery of your order.

 Consumer-to-Consumer (C2C): Consumer-to-Consumer (C2C) type e-commerce

encompasses all electronic transactions of goods or services conducted between
consumers. Generally, these transactions are conducted through a third party, which
provides the online platform where the transactions are actually carried out.

 Consumer-to-Business (C2B): In C2B there is a complete reversal of the traditional

sense of exchanging goods. This type of e-commerce is very common in
crowdsourcing-based projects. A large number of individuals make their services or
products available for purchase for companies seeking precisely these types of
services or products. Examples of such practices are the sites where designers present
several proposals for a company logo and where only one of them is selected and
effectively purchased. Another platform that is very common in this type of
commerce are the markets that sell royalty-free photographs, images, media and
design elements, such as iStockphoto.

 Business-to- Government (B2G): Business-to-Government (B2G) e-commerce

refers to the process of businesses selling products or services to government agencies

By: Charul Verma

 through the internet. In a B2G transaction, the business is the seller and the
government agency is the buyer. B2G e-commerce is a common way for government
agencies to purchase the goods and services they need to operate. For example, a
government agency might purchase office supplies or equipment from a business, or
contract with a business to provide services such as consulting or IT support. B2G e-
commerce offers several advantages for businesses. One of the main benefits is the
opportunity to sell to a large and stable customer base. Government agencies typically
have a high demand for a wide range of products and services, and they are often
willing to pay a premium for high-quality goods and services.

 Government-to-Business (G2B): G2B e-commerce (Government-to-Business e-

commerce) refers to online transactions between government entities and businesses.
Here are some examples of G2B e-commerce:
 Government procurement portals: Many governments around the world have
online procurement portals where businesses can bid on government contracts and
procurements.
 Business registration portals: Many governments have online portals where
businesses can register and file for necessary licenses and permits.
 Tax filing and payment portals: Many governments have online portals where
businesses can file their taxes and make payments.
 Intellectual property registration portals: Governments have online portals
where businesses can register and protect their intellectual property, such as
trademarks and patents.
 Export and import portals: Some governments have online portals where
businesses can obtain necessary permits and licenses for importing and exporting
goods.
 Job portals: Some governments have online portals where businesses can post
job openings and search for potential candidates.
These are just a few examples of G2B e-commerce, which can help streamline
business operations and improve efficiency by providing a centralized platform for
government-business transactions.

 Government-to-Consumer (G2C): Government-to-Consumer (G2C) e-commerce

refers to the process of government agencies providing products or services directly to
consumers through the internet. In a G2C transaction, the government agency is the
seller and the consumer is the buyer. G2C e-commerce is a way for government
agencies to provide goods or services directly to consumers. For example, a
government agency might provide healthcare or education services to the general
public, or sell licenses or permits to individuals and Government sell products in
auction which you can buy at low rate.

Framework of E-Commerce

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The term e-commerce framework is related to software frameworks for e-commerce
applications. They offer an environment for building e-commerce applications quickly.

E-Commerce frameworks are flexible enough to adapt them to your specific

requirements. As result, they are suitable for building virtually all kinds of online shops
and e-commerce related (web) applications like the Aimeos e-commerce framework does.

Successful implementation of any ecommerce business is dependent on implementing or

adopting these seven key steps:
• Planning for E-Commerce Business
• Technology Selection/Website Audit & Analysis
• Customer Acquisition
• Customer Engagement
• Customer Retention
• Optimizing Key Metrics, and
• Business Analysis & Customer Insights

Each of these steps has a positive and cascading effect on the other steps and hence
implementing each of them in the right priority and in a phased manner is of utmost
importance.

For an E-commerce business to get the maximum ROI on their investment, it is the
execution of these 7 steps around the 4 core pillars that will be your mantra for success!

 Strategic business planning and roadmaps – Strategy is about making the right
choices that will help reach the stated business objectives.
There should to be a clear-cut vision, mission and objective about what will be
achieved, in how much time, within what budget, identification of the right resources
for and constraints in the face of execution of the strategy mentioned in the business
plan, and what elements will be considered for roadmap.
Knowledge and deep understanding of the digital marketing tools and techniques that
will help in reaching and acquiring customers is required. Your business must reach
out to customers who are online across multiple dimensions and devices.
So, the assumptions considered in preparing the strategic business plan should be in
alignment with the ecommerce industry’s norms and trends.

 Technology selection/ website audit and analysis – In order to provide the

maximum benefit to the end customer, your chosen ecommerce technology should be
fully capable of being customizable, and be able to complement the business model,
and adhere to the existing best practices in offline retail.
If you’re a retailer taking the first-time plunge into ecommerce, various functionalities
on the e-commerce website should be carefully thought over based on the industry,
audience being targeted, various customer segments who may be buying the offered
products and services.

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 With respect to retailers who have implemented an ecommerce strategy and have not
yet received the rewards of the complete capability of the ecommerce technologies,
there needs be a complete assessment of how the website can perform better by
examining the store front and customer flow, analysis of competing websites,
identification and implementation of solutions based on the gap analysis carried out
(‘as-is’ and ‘to-be’). It is equally important to measure and monitor the process that
was made because of the implementation of the suggested changes.
 Customer acquisition – Online or popular digital marketing encompasses multiple
tools for reaching out to the new generation of customers, who are actively engaged in
using multiple devices, through search engine optimization, search engine marketing
(paid advertisement that includes both cost per click and cost per thousand
impressions), social media marketing (that includes both cost per click and cost per
thousand impressions), email campaigns, display advertisements using various ad
networks, referral programs and re-targeting campaigns.
Going by the sales principles of AIDA (awareness, interest, desire and action), it’s
important to note that the cost of customer acquisition will be very high for brands
and retailers that are newly establishing their product offerings exclusively online.
However, for brands that are well established offline and are pursuing ecommerce
strategy, the cost of customer acquisition is lesser compared to the new entrants.

 Customer engagement – Customers these days are actively seeking to engage with
brands to understand the core benefits and unique value proposition that the brand
offers, discount and offers during special seasons, a robust support mechanism for
queries/clarifications regarding the products displayed and interaction with customer
support executives to know more about policies on returns and exchange, etc.
Engaging customers through various social media channels also instills superior trust
in the minds of customers.

 Customer retention - With the advent of sophisticated e-commerce technologies,

new age retailers will be able to leverage an almost one-to-one customer experience
and that’s the best a customer can really expect.
However, it should be noted that to fully leverage best-in-class technology, there
needs to be a constant effort to look out for features and functionalities that will
enhance the customer experience.

 Optimization based on key metrics – Some of the key metrics to measure the health
of an ecommerce venture are the total revenue generated, cost of customer
acquisition, % of customers converted, and % of customers entering the website
through various channels.
However, these metrics may vary significantly based on the business objectives and
so every business needs a fully customized approach for defining the key metrics and
further analysis.

By: Charul Verma

 Once these are defined and there are a substantial number of customers visiting the
website, a deeper level of optimization is needed at 2 levels – on the technology and
the business front.
1. Technology – This generally includes optimizing the page load speed,
shopping cart, check-out and other web pages, a/b and multivariate testing,
etc. Creating unique and well-researched blog content, refining the titles &
headings in the content, and using engaging meta descriptions are other ways
to attract organic traffic to your website. Learn more about Search Engine
Optimization here.
2. Business – Optimization here includes analysis of the total revenues
generated, total spends for running the e-commerce operations, optimizing the
gross net margins, conversion rates from each of the various channels,
customer loyalty and retention rates, rate of repeat purchase, frequency of
repeat customers (across multiple dimensions), % of carts abandoned, etc.
There are a lot of features and functionalities to helping online retailers
improve these numbers. There is a lot of research evidence supporting the
incorporation of features like reviews and ratings, and display of the right
products either through up-selling or cross-selling.
Based on the statistics, 47% of shoppers read product reviews prior to their
online purchases and 63% are more likely to buy from websites with online
reviews or ratings. Similarly, online companies that leverage a
recommendation system can increase sales by 8-10%.
 Business analysis and customer insights – The final step in the entire process is
about fine-tuning and understanding the product categories that have performed well
compared to other products displayed in the webstore. Assessing this is crucial since
each of these categories and products within those categories occupy the prime real
estate in the online world – the web store.
It also should consist of understanding the customer segments, demographics,
profitable customers, source of channels through which the profitable customers came
to the web store, % of revenue each profitable customer contributes to and the
marketing spends that has gone into acquiring these customers.
These metrics are only a small representation of a larger list that can be optimized
further. These metrics vary based on the business needs and require a customized
approach for defining, monitoring and optimization.

Concept of I-way

Introduced by Al Gore, 1994 “Information Superhighway will allow us to share

information, to connect, and to communicate as a global community

A physical network, an infrastructure of modern high-speed links  links everyone at

home or office to everything else in practicality it is identical to internet provided -
connections are broadband -they are continuously running as internet develops into I-
way, changes will take place in infrastructure not in internet Information Superhighway is

By: Charul Verma

 a high-speed global communications network that can carry data, voice, video and other
services around the world using technology such as the satellite, optical fibre and cellular
telecommunications.

Components of the I-way

It consists or various components which can be broadly categorized as;

1. Network access equipment
2. Local on Ramps
3. Global information distribution networks

1. Network access equipment: - which is at the consumer end and enables the consumer
to access the network. It consists of the hardware such as computers, modems, routers,

2. Local on Ramps: - it provides the communication backbone for the transmission of

data and information. The access providers may be differentiating into four categories:
telecom based, cable TV based, wireless based or computer based on-line systems.

The access roads are the way in which the consumer homes and work places are linked
with the backbone of the network infrastructure for e-commerce. These can be
categorized into four major types;

 Telecom based
 Cable TV based
 Wireless based
 Commercial online

Each of these access media has its own benefits and limitations and is faced with a number of
challenges in this fast growing world e-commerce.

 Telecom based: The telecom industry provides both long distance and local telephone
services for e-commerce applications. The telecom companies provide a high speed
pipeline capable for carrying high volumes of interactive voice, data and video to
homes and businesses connect these to the global information distribution networks,
the backbone of the i-way.
The telecom networks has become the primary foundation for the I-way mainly for
two reasons:
o It is capable of handling millions of simultaneous calls.
o It provides accurate usage tracking and billing.

However they have two limitations:

o Lack of digital transmission capability

o Uneven capacity distribution

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  Cable TV based: The cable TV network provides a popular media for pushing high
speed data to homes. Statistics have shown that cable runs through 90 percent of the
US homes today and still has a lot of unutilized capacity. The cable TV based
networks may be wired or wireless.

 Wireless based: The wireless operators are typically radio based i.e. cellular, paper
and specialized mobile radio (SMR) based. The wireless based systems have
revolutionized the ways of thinking about information delivery.

Technology is the most important factor. The rapid growth in technology has impacted the
wireless industry in a number of ways:

o Apart from the voice calls, the cellular technology today has also facilitated short
messaging services (SMS) using alphanumeric display and the multimedia
services.
o Internet connectivity using the cellular networks has been made possible.
o The cellular networks using the analog technology are now upgrading to digital
networks to provide greater capacity at lower costs as well as increase the quality
and functionality of the cellular network.
o Applications have been developed to facilitate mobile workers to exchange
messages and data from their offices while on the road.

 Commercial online infrastructure (Internet, Intranet and Extranet Based): The

internet forms a well-known component of the global information distribution
network. It targets a wide range of e-commerce applications such as video on demand,
home shopping, e-mail, information publishing, information retrieval, video
conferencing and many more.
3. Global information distribution networks: - providing the infrastructure for connecting
across the countries and continents. They include such networks as the long-distance
telephone lines, the satellite networks and internet.

The global information distribution networks consist of the infrastructure crossing the
countries and continents. They include the long-distance telephone lines, satellite networks,
and the internet.

 Long distance networks: Long distance telephone connectivity is provided through

cable by the inter-exchange carriers. Long distance cellular networks are using the
wireless technologies to connect the consumers worldwide.

 Satellite networks: It plays a vital role in the communication industry. They have
advantages over the terrestrial networks in that:
a. They are accessible from any point of the globe.
b. They can provide broad band digital services to many points without the cost of
acquiring wire/cable installation.

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c. They can add receiving and sending sites without significant additional costs.

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