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MODULE I – COMMERCE AND ITS TECHNOLOGICAL ASPECTS

Overview of developments in information Technology

Information technology is a new field combining information science, computing,
telecommunications and electronics. These century has been defined by application of and
advancement in information technology. Information technology has play an integral part in our
day today life.

Today Information technology has served as a big change agent in different aspect of business
and society. One of the best concept in information technology is the cloud computing. Clouding
computing is defined as utilization of computing services such as software as well as hardware
as a service over a network. Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and
Software as a Service (SaaS) are the three main services offered by clod computing.

Modern Technology has had one goal in mind, they provide professional quality work through
customer satisfaction. Predictive analytics and Social media analytics tool used to predict future
events based on current and historical information and to understand and accommodate
customer needs. Mobile application or mobile app has become a success since its introduction
in the past years.

Electronic Commerce (E-commerce)

Electronic commerce (e-commerce) refers to companies and individuals that buy and sell
goods and services over the internet. E-commerce operates in different types of market
segments and can be conducted over computers, tablets, smartphones, and other smart devices.
Nearly every imaginable product and service is available through e-commerce transactions,
including books, music, plane tickets, and financial services such as stock investing and online
banking.

Understanding E-commerce

As noted above, e-commerce is the process of buying and selling tangible products and
services online. It involves more than one party along with the exchange of data or currency to
process a transaction. E-commerce has helped businesses (especially those with a narrow

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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reach like small businesses) gain access to and establish a wider market presence by providing
cheaper and more efficient distribution channels for their products or services.

History of E-commerce

E-commerce actually goes back to the 1960s when companies used an electronic system called
the Electronic Data Interchange to facilitate the transfer of documents. It wasn't until 1994
that the very first transaction. took place. This involved the sale of a CD between friends
through an online retail website called NetMarket.

The industry has gone through so many changes since then, resulting in a great deal of
evolution. Traditional brick-and-mortar retailers were forced to embrace new technology in
order to stay afloat as companies like Alibaba, Amazon, eBay, and Etsy became household
names. These companies created a virtual marketplace for goods and services that consumers
can easily access.

Advantages and Disadvantages of E-commerce

Advantages
E-commerce offers consumers the following advantages:

• Convenience: E-commerce can occur 24 hours a day, seven days a week. Although
eCommerce may take a lot of work, it is still possible to generate sales as you sleep or
earn revenue while you are away from your store.
• Increased Selection: Many stores offer a wider array of products online than they
carry in their brick-and-mortar counterparts. And many stores that solely exist online
may offer consumers exclusive inventory that is unavailable elsewhere.
• Potentially Lower Start-up Cost: E-commerce companies may require a warehouse
or manufacturing site, but they usually don't need a physical storefront. The cost to
operate digitally is often less expensive than needing to pay rent, insurance, building
maintenance, and property taxes.
• International Sales: As long as an e-commerce store can ship to the customer, an e-
commerce company can sell to anyone in the world and isn't limited by physical
geography.

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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• Easier to Retarget Customers: As customers browse a digital storefront, it is easier

to entice their attention towards placed advertisements, directed marketing campaigns,
or pop-ups specifically aimed at a purpose.

Disadvantages
There are certain drawbacks that come with e-commerce sites, too. The disadvantages include:

• Limited Customer Service: If you shop online for a computer, you cannot simply ask
an employee to demonstrate a particular model's features in person. And although
some websites let you chat online with a staff member, this is not a typical practice.
• Lack of Instant Gratification: When you buy an item online, you must wait for it to
be shipped to your home or office. However, e-tailers like Amazon make the waiting
game a little bit less painful by offering same-day delivery as a premium option for
select products.
• Inability to Touch Products: Online images do not necessarily convey the whole
story about an item, and so e-commerce purchases can be unsatisfying when the
products received do not match consumer expectations. Case in point: an item of
clothing may be made from shoddier fabric than its online image indicates.
• Reliance on Technology: If your website crashes, garners an overwhelming amount
of traffic, or must be temporarily taken down for any reason, your business is
effectively closed until the e-commerce storefront is back.
• Higher Competition: Although the low barrier to entry regarding low cost is an
advantage, this means other competitors can easily enter the market. E-commerce
companies must have mindful marketing strategies and remain diligent on SEO
optimization to ensure they maintain a digital presence.

Types of E-commerce

Depending on the goods, services, and organization of an ecommerce company, the business
can opt to operate several different ways. Here are several of the popular business models.

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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Business-to-Consumer (B2C)
B2C e-commerce companies sell directly to the product end-user. Instead of distributing goods
to an intermediary, a B2C company performs transactions with the consumer that will
ultimately use the good.

Business-to-Business (B2B)
Similar to B2C, an e-commerce business can directly sell goods to a user. However, instead
of being a consumer, that user may be another company. B2B transactions often entail larger
quantities, greater specifications, and longer lead times.

Business-to-Government (B2G)
Some entities specialize as government contractors providing goods or services to agencies or
administrations. Similar to a B2B relationship, the business produces items of value and remits
those items to an entity.

Consumer-to-Consumer (C2C)
Established companies are the only entities that can sell things. E-commerce platforms such
as digital marketplaces connect consumers with other consumers who can list their own
products and execute their own sales.

Consumer-to-Business (C2B)
Modern platforms have allowed consumers to more easily engage with companies and offer
their services, especially related to short-term contracts, gigs, or freelance opportunities. For
example, consider listings on Upwork.

Consumer-to-Government (C2G)
Less of a traditional e-commerce relationship, consumers can interact with administrations,
agencies, or governments through C2G partnerships. These partnerships are often not in the
exchange of service but rather, the transaction of obligation.

Scope in E-Commerce

The potential for e-commerce development is enormous. Now a days one can buy products
online through some sites like Flipkart and Amazon. In the age of e-commerce everything from
gym equipment to laptops are available online. E-Commerce is a super set of business cases. It

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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includes E-trading, E-Franchising, E-Mailing, E-Engineering etc. Scope of e-commerce can be

enumerated as follows:

1. Exchange of digitized information: The digitized information exchange can represent

communications between two parties, coordination of the flow of goods and service, or
transmission of electronic orders. These exchange can be between organizations or individuals.

2.Technology-enabled: E-Commerce is about technology-enabled transactions. Web

browsers are perhaps the best Know of these technology-enabled customer interfaces.
However, other interfaces including automated teller machines (ATMs) also fall in the general
category of e-commerce. Business once managed transactions with customers and markets
strictly through human interaction; In e-commerce, such transitions can be managed using
technology.
3. Customers retention: E-Commerce enables organizations to get classified and customized
market information that helps in retaining customers through fast order fulfillment and
effective customers relationship management (CRM). End-to-End supply chain management
in e-commerce provides the opportunity the overall flow of demand and supply and results in
fruitful customers retention.

4. Accounting: Financial accounting, treasury management and asset management are best
possible in e-commerce because of integrated database. Financial planning and strategy
determination become more convenient in e-commerce.
5. Supplier integration: For lowering inventory-carrying costs and broader availability of
material and opportunities suppliers network can be integrated through EDI to implement just-
in-time (JIT) inventory management.

6. Support the exchange: E-Commerce includes intra and interorganizational activities that
support the exchange. The scope of e-commerce includes all electronically based intra and
interorganizational activities that directly or indirectly support marketplace exchange. In this
sense, we are talking about a phenomenon that affects both How business organizations relate
to external parties customers, suppliers, partners, competitors, and markets and how they
operate internally in managing activities, processes and systems.

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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Electronic Market

Electronic market is a website where companies can buy from and sell to each other using a
common technology platform. They are the commerce sites on the internet that allow a large
number of buyers and suppliers to meet and trade with each other. They are also known as
electronic marketplaces, online markets, e-hubs, or business-to-business markets.

Functions of E-Markets:-

E-markets serve three particular functions:

• They act as an exchange for business transactions-not only purchasing but also for
checking price and stock availability, invoicing and order chasing.

• They manage catalog content, converting product information into a common format
understood by all parties.

• They provide additional services to support the trading process such as shipping,
payment, tendering and determining a company’s financial status.

Indeed, e-commerce can leverage several types of platforms — such as websites, mobile
apples, and voice assistants — and can take on a variety of forms:

1. Retail: The sale of a product by a business directly to a customer without any

intermediary
2. Wholesale: The sale of products in bulk, often to a retailer that then sells them directly
to consumers
3. Dropshipping: The sale of a product that is manufactured and shipped to the consumer
by a third party
4. Crowdfunding: The collection of money from consumers before the product is
available in order to raise capital to bring it to market
5. Subscription: The automatic recurring purchase of a product or service on a regular
basis
6. Physical products: Any tangible good that requires inventory to be replenished and
orders to be physically shipped to customers

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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7. Digital products: Downloadable digital goods, templates, or media that must be

purchased for consumption
8. Services: A skill provided in exchange for compensation

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic interchange of business information using
a standardized format; a process which allows one company to send information to another
company electronically rather than with paper. Business entities conducting business
electronically are called trading partners.

Many business documents can be exchanged using EDI, but the two most common are purchase
orders and invoices. At a minimum, EDI replaces the mail preparation and handling associated
with traditional business communication. However, the real power of EDI is that it standardizes
the information communicated in business documents, which makes possible a "paperless"
exchange.

In EDI transactions, information flows straight from one organization’s computer application
to another’s computer program. The transaction entails the following:

• Data elements: These are distinct pieces of information such as firm name,
product code, quantity, and price. Each EDI standard comprises a specification
for each data element inside every transaction set, which determines the data type
(numeric, alphanumeric, date, time), minimum and maximum permissible length,
and any related ‘code values’ (e.g., currency exchange code component for
prices).
• Segments: This refers to logically related sets of data components such as order
number, volume, units, or price linked with a product inside a purchase order. A
segment is always preceded by a segment ID, which indicates the type of material
or information components comprising the segment.
• Envelopes: This encapsulates transaction sets for transmission. Each
transaction set is included in a separate message envelope, whereas a cluster of
transaction sets (such as a group of bills) is enclosed in a group envelope.

Types of EDI
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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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EDI can happen in various ways depending on the business use case and the parties exchanging
the information (usually financial data and related documents).

1. Direct EDI

Direct EDI, often called point-to-point EDI, creates a single link between two business
partners. In this methodology, users connect with every business partner individually. It offers
control to business associates and is utilized most frequently between big customers and
suppliers who conduct multiple daily transactions.

2. Value-added Network (VAN)-enabled EDI

An option to the direct EDI framework is the EDI network service provider, also known as a
value-added network (VAN), which was in operation even before the internet arrived.

This network approach is preferred by many businesses because it shields them from the
ongoing challenges of maintaining the diverse communication protocols demanded by various
business partners. VANs are private networks on which partners exchange electronic business
documents. The VAN provider manages the network while providing businesses with
mailboxes, enabling them to send and receive EDI documents.

3. Applicability Statement 2 (AS2)-enabled EDI

AS2 is a network communications protocol that permits the transmission of data over the
internet in a secure manner. It consists of two computers — a client and a server —
communicating point-to-point via the internet. AS2 generates an ‘envelope’ for EDI data,
enabling it to be transmitted securely over the internet employing digital certificates or
encryption. This EDI type is easily accessible to all.

4. Web EDI

Web EDI refers to the process of completing an EDI transaction using a web browser. It mimics
paper-based documents in a web form. Information-entry areas will be part of the form. After
all pertinent information has been supplied, the document is instantly transformed into an EDI
message and sent using secure internet protocols such as file transfer protocol secure
(FTPS), HyperText Transport Protocol Secure (HTTPS), or AS2.
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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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5. Mobile EDI (emerging)

Traditionally, users have accessed EDI through a network, such as a VAN or the internet, to
send and get EDI-related business documents. The adoption of mobile EDI applications has
been constrained, in part, due to security concerns and limitations in screen quality or device
size. Yet, a burgeoning sector is building EDI applications for mobile download. Oracle’s JD
Edwards EnterpriseOne, for example, offers mobile EDI applications.

6. Outsourced EDI

EDI outsourcing (EDI managed services) is a rapidly expanding solution that allows businesses
to use outsourced EDI environment management specialists. This is partly driven by the
requirement for businesses to interface with back-office business systems, such as enterprise
resource planning (ERP) systems. This is also beneficial as many businesses do not like to
devote internal capabilities to the continuing and repetitive tasks involved with EDI
transactions.

7. Indirect EDI

An indirect EDI transaction is the communication between an ERP and customers, vendors, or
third-party logistics service providers (3PL) through an EDI broker or value-added network.
Initially, the message, including all the data you want from your business partners, is sent from
the ERP to the broker or VAN. The broker then divides the message into additional forms —
based on the preferences of your consumers or vendors — and distributes them to respective
parties.

Applications of Electronic Data Interchange

1. Greater agility in manufacturing

EDI facilitates the efficient management of materials necessary to create a product. The
manufacturer’s inventory is continuously updated through EDI, and the supplier is advised of
material shortages. The supplier also reacts via EDI, and the stock is updated as soon as the
cargo is delivered. By improving supply and delivery, EDI supports maximum retail price
(MRP) compliance and just-in-time production.

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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2. Better demand-to-supply mapping in retail

EDI offers a structured method for maintaining and replenishing retail inventory. Stock is
continually updated at the point-of-sale (POS) terminal, and data is sent via EDI into the supply
chain management (SCM) module. The EDI software also monitors all logistics and refreshes
the original stock.

3. Digital process enablement in financial services

Via electronic systems, EDI simplifies payment collection, processing, and disbursement. It
facilitates the automatic transfer of funds between the checking accounts of business associates.

4. Increased automation of business processes

EDI renders human intervention redundant and allows process automation to be the present-
day reality. The advantages of automation include operations that operate nonstop and
document-relevant information that needs to be entered just once into the distribution channel.
This allows businesses to avoid duplicating tasks within the process flowchart.

5. Seamless vendor interactions in the high-tech industry

Supply-chain systems of technology companies are mostly quite complicated. Particularly

common in the high-tech industry is outsourced design and prototype functions. The ability of
EDI to rapidly share documents with minimum human interaction in such a dynamic, complex
environment significantly contributes to streamlining processes.

6. Smarter compliance adherence in the automotive industry

The purchase order is among the most commonly used papers in the automobile industry. This
document includes all items ordered in transactions and their respective amounts. Using EDI,
automotive companies can automate their systems to gain easy and rapid insights into orders,
order adjustments, and inventories.

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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7. Less waste for the ecommerce sector

In the years after the worldwide pandemic, several merchants and food service establishments
have gone on to improve their operations. Many have had to transition toward ecommerce.
With EDI, users can automate stock reordering and improve visibility into stock levels at any
time, from just about any location. Using EDI means more precise inventory inspections for
food service businesses, allowing them to purchase only what is necessary and spend less.

8. Improved outcomes in healthcare

EDI has had a massive impact on the healthcare industry. Every day, healthcare organizations
handle voluminous amounts of documentation, such as insurance claims, payment records, and
patient information. An EDI program that removes the necessity of paper reduces employee
manual effort. It improves the precision of the transmitted information, guarantees the security
of the data, and saves time and effort for all, including physicians, insurers, and pharmacy
employees.

9. Prevention of errors in the supply chain

EDI eliminates the need for businesses to manage separate lines of paperwork. This is a
tremendous advantage since these individual documents can be the source of countless errors
throughout the distribution system. EDI requires data to be put into the system only once,
allowing users to avoid the need to retype data from forms physically. EDI also enables
businesses to identify deviations from their typical patterns rapidly; for instance, an irregular
order quantity can trigger an automatic alert.

10. EDI in the internet of things (IoT)

EDI will be the primary document exchange function in emerging supply chains to
accommodate modern technologies such as the internet of things (IoT) and blockchain. For
instance, IoT sensors embedded into a shipment’s packaging and linked to periodical EDI 214
messages would improve the visibility of shipment status in near real-time. Integrated
blockchain technology with EDI data may provide a common and centralized representation of
the truth, which can swiftly settle or even prevent chargeback disputes.

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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Internet Commerce

Internet Commerce is the use of the Internet for all phases of creating and completing business
transactions. Various surveys suggest that the amount of business conducted online will
increase ten-fold over the next few years, from around $500 million in 1996 to over $6 billion
in 2000. However, this still represents less than 10 per cent of the business conducted by mail
order.

In our view too much focus of electronic commerce to date has been put on carrying out the
final transactional phases - the ordering and payment. While such a perspective is all right when
there are established supply chains for regular and routine purposes, this overlooks the wider
perspective. It is often said, that the formal placement of an order is preceded by as many as
30 previous information exchanges. Thus, in its broadest sense we view Internet Commerce as
also including:

• The full sales and marketing cycle - for example, by analysing online feedback to
ascertain customer's needs
• Identifying new markets - through exposure to a global audience through the World
Wide Web
• Developing ongoing customer relationships - achieving loyalty through ongoing
email interaction
• Assisting potential customers with their purchasing decision - for example by
guiding them through product choices in an intelligent way
• Providing round-the-clock points of sale - making it easy for buyers to order online,
irrespective of location
• Supply Chain Management - supporting those in the supply chain, such as dealers
and distributors, through online interaction
• Ongoing Customer Support - providing extensive after-sales support to customers by
online methods; thus increasing satisfaction, deepening the customer relationship and
closing the selling loop through repeat and onging purchases.

Opportunities and Benefits

Those who trade via the Internet cite the following benefits:

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
VI SEM B.COM NEP (REGULAR) E-COMMERCE

• Timeliness - Your Web site is accessible round the clock. Email queries can be handled
more expeditiously and completely than is often possible by mail or phone.
• Reduced Marketing Costs - Online catalogues are cheapre to produce and maintain
that paper catalogues.
• Better Targetting - Internet communities are self selecting. People with particular
interests tend to visit particaulr places in Cyberspace. Customers find you, rather than
vice versa.
• Greater Market Reach - Distance is no object. Sending information or exchanging
messages costs virtually the same as someone locally. You don't need to pay expensive
courier bills.
• Reduced communications costs - With electronic networking it cost virtually the same
to send a message to 100 people as to one.
• Improved After Sales Service - By providing online support, customers can serve
themselves for many of the common post-sales information needs.

Enabling Mechanisms
Several mechanisms are needed for there to be an effective electronic marketplace for a
particular product or service. In particular prospective buyers must be able to find your site.
Although traditional directories like Yahoo! have a role to play, trade directories (such
as TradenetUK) or shopping malls may fit the bill, but many are too general or localised to be
effective. There is a role and opportunity for specialised intermediaries. Or simply becoming
the best known in your field (c.f. Amazon.com for books).

Additionally, an individual supplier will need:

• World Wide Web site - with appropriate transaction and database software
• Payment facilities - to accept credit card information or online electronic cash
• Secure interfaces - to prevent unauthorised access to critical systems
• Redesigned Business Processes - to accomodate online interaction via email and online
transactions.

Above all they will need to develop the appropriate skills and strategies to adapt their marketing
and business to the new medium.

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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Successfull Strategies
Many commentators have focussed on ways of "making money on the Web". Their models
include advertising, subscription services, site sponsorship etc. Unless your business is
advertising, information services or Internet related, this should not be your strategic focus.
Your focus should be
"How can the Internet enhance my existing key market process cycles?"

Key processes to consider are:

• New product-to-market - e.g. by wider use of testers across the world; use of
interactive test panels
• Market awareness-to-buying decision - e.g. by better provision of information and
access to expertise
• Sales order-to-fulfilment - e.g. by simplifying the order process

Challenges

Those who have focussed on electronic transactions cite a number of issues. Some challenges
and potential solutions are:

• Bandwidth - There is concern that as usage of the Internet grows exponentially, that
there will be insufficent bandwidth and it will grind to a halt. However, various analysts
have shown that, in general, market forces will enable capacity to keep up with demand,
though it may be patchy in places. Solutions: Some suppliers are talking of multi-tiered
services with premium pricing guanteeing faster levels of service.

• Authentification - When orders are placed over a network the buyer needs reassurance
that it was an authorized transaction and actually comes from who it
purports. Solutions: Electronic signatures, trusted third party validation .

• Security - Both parties want assurance that their confidential transaction details have
not been intercepted. Solutions: Encryption, secure servers.

• Legislation Harmonisation - Under which jurisdiction does a transaction take place-

the location of buyer, seller or server? Issues like these are the subject of policy debate.

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MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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• Payment - How can someone set up simple, reliable and risk free mechanisms for
payment, in multiple currencies and without hefty bank charges? Solutions: Electronic
cash mechanisms, new Internet protocols such as SET (Secure Electronic
Transactions), virtual banks.

Advantages of e-commerce

1. Reduced overhead costs

Running an e-commerce store is a lot more cost-effective than running a physical store. You
don’t have to rent commercial real estate — instead, you can pay an affordable fee for web
hosting. You don’t have to invest in security for your commercial property, plus you don’t have
to worry about paying rent for a warehouse or hiring employees.
2. No need for a physical storefront
There are so many difficult aspects to running a physical storefront and using e-commerce
means you don’t have to face most of those obstacles. Renting a commercial property can be
expensive, especially if you’re in a big city. You also have to pay for electricity, water, and
internet to ensure your space is up to code and can handle your business.
3. Ability to reach a broader audience
Perhaps the biggest advantage of e-commerce is the fact that it allows you to reach a massive
audience. Your physical storefront can only get so many visitors in a day, especially if you live
in a smaller town or a rural area. With an e-commerce store, you can reach potential customers
all throughout the world and show them your products.
4. Scalability
Of the advantages and disadvantages of a business using e-commerce, scalability is one of the
most practical advantages for long-term growth. If you have a physical storefront, your
business can only grow so much before you have to move to a larger storefront.
5. Track logistics
Keeping track of logistics is an essential part of e-commerce and retail marketing, and it’s
significantly easier with e-commerce than it is with a physical storefront. You can outsource
fulfillment logistics so your customers can enjoy benefits like 2-day shipping and easy returns
processing.

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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Disadvantages of e-commerce

1. Potential security threats

When you’re doing business online, there’s always the potential for security threats. Poor
website security can allow unauthorized users to gain access to your website and look at
sensitive data. In rare cases, issues with payment processors may lead to data breaches that put
customers’ credit and debit card information at risk.
2. Competition
There’s a lot of competition in the world of e-commerce because it’s so easy for anybody to
create an online store. This is one of the biggest e-commerce disadvantages because it means
you have to work extra hard to make sure you’re promoting your store and driving traffic to
your website.
3. IT issues
There are no tech issues that can keep you from accepting cash at a physical store, but IT issues
can be a big problem for e-commerce websites. If your website suddenly crashes or you’re
having a problem with your payment processor, that downtime could potentially cost you
money and customers.
4. Shipping logistics
Running a physical storefront is simple because all you have to do is sell products to customers
when they come in to shop. If you want to sell products over the phone or through a catalog,
you can use a simple shipping service to send out a few packages each week. With an e-
commerce store, you have to figure out all of the shipping logistics because every purchase
will have to be shipped.
5. Limited connection with customers
You don’t get a chance to connect with customers on a personal level when you’re running an
e-commerce store. Some people may prefer that, but you can’t offer the same personal touch
when you make a sale online.

E-Commerce Framework

An e-commerce framework is made of the underlying architecture needed to develop and

maintain a system for selling products online. This system typically includes a digital
storefront, product information manager (PIM), order management system, shopping cart, and
SHYLAJA M, Assistant Professor
MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
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payment processing. The core functionality may seem simple, but creating modern e-commerce
frameworks is a more complicated process as today’s customers have come to demand
more than the simple ability to view and purchase products through an online storefront.

Evolution of E-Commerce Frameworks

Traditionally, e-commerce frameworks have been built on a client-server architecture. The

client is an application with a user interface like an e-commerce website that sends requests for
specific services, such as a PIM that stores product information. The server is the system that
fulfills the requests.

Two-tier framework- The client-server architecture originally followed a two-tier framework

where the user interface ran on the client and the database ran on the server. The client
processes provided the interface known as the presentation layer for customers to view data.
The server processes provided an interface known as the data layer for storing business data.
Both the user and business application logic could run on either the client or the server.

Three-tier framework- With the three-tier framework, the user interface and business
application logic are developed and maintained independently. This structure consists of a
client-side system, a service system, and a backend system.

E-commerce Architecture - To sell and buy the goods and services we have to develop a
system that helps the seller to connect with customers or customers can connect with multiple
sellers. For this, we developed different E-Commerce architectures that we see in this article,
components of E-Commerce architecture, and advantages of E-Commerce all these topics
will be covered in this article.

E-Commerce Architecture types

• Client-Server Architecture
• Two-Tier Architecture

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
VI SEM B.COM NEP (REGULAR) E-COMMERCE

• Three-Tier Architecture
Client-Server Architecture
In this architecture, the client(browser) sends the requests to the server, and the server
processes the request if a request is valid then it responds with the requested data to the client.
The client hosts the user interface(UI) while the server hosts the business logic and database.
Advantages:
• This architecture has a clean separation of concerns between the client and server.
• The server becomes overloaded with many client requests.
• It is easy to manage, and the data can be easily delivered to the client.
Disadvantages:
• Clients systems can get a virus or any malicious scripts if any are running on the server.
• Extra security must be added so that the data does not get spoofed in between the
transmission.
• The main problem can be server down. When the server is down, the client loses its
connection and will not access the data.
Two-Tier Architecture
The two-tier architecture have consist of mainly two components:
1. Client layer: It consists of the web browser, mobile application, or the other UI that
user interacts with.This front-end client makes requests to the server.
2. Server layer: It handels both the application logic and data storage/management.This
single back-end server acts as a both the application server and the database server.
Advantages:
• It is simple to develop and deploy
• The client only communicates with one backend system
• All data logic and validation is handled on the server
Disadvantages:
• The server has to handle client requests, business logic and data storage. This can result
in performance bottlenecks.
• Scalability is limited since it is not easy to scale client and data tiers independently.
• Less flexibility since presentation and data logic are coupled on the server side.
Three-Tier Architecture
The three-tier architecture is best architecture to develop a good E-commerce site. In three-
tier architecture we seprates database and server that eliminate the problems we found in two-
SHYLAJA M, Assistant Professor
MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
VI SEM B.COM NEP (REGULAR) E-COMMERCE

tier architecture. Three-tier architecture separates the presentation(UI), business logic and
data storage layer into three distinct tiers.
• Client tier: Client tier is frontend layer consisting of components like a web browser,
mobile application or other interfaces. This layer sends the users request and displays the
response of server.
• Middel tier: This application server layer handles all the business logic and
computational tasks. It receives requests from the client, communicates with the database
to get or update data,performs calculations and other application specific tasks, and passes
results back to the client.
• Data tier: This backend layer consists of the database servers that store and manage
data. It can be a relational database like Oracle or a NoSQL database like MongoDB. The
application server uses protocols like JDBC, ODBC to interact with this database tier.
Advantages:
• Separation of concerns between tiers makes application modular, flexible and easier to
maintain.
• Each tier can scale independently to handle increasing loads.
• Web server can connect to multiple app servers, which in turn can connect to multiple
database servers, allowing high scalability.
• Supports redundancy and failover capabilities for high availability.
Disadvantages:
• It can introduce complexity into a project. Managing three separate layers (presentation,
application, and data) can be challenging, especially for small-scale applications, and it
might lead to increased development and maintenance costs
• The additional layers can introduce performance overhead. Each request or transaction
has to pass through the different tiers, which can slow down the system, particularly if
there’s a lot of data to be transferred between layers
• Scaling can be more challenging in a three-tier architecture. While it’s possible to scale
each layer independently, it often requires significant effort and resources to ensure that
the system scales seamlessly
• Communication between layers can introduce latency in the system. When requests and
responses need to traverse multiple layers, it can result in slower response times

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
VI SEM B.COM NEP (REGULAR) E-COMMERCE

Web based Ecommerce Architecture

Web-based E-commerce is one of the fastest-growing segments of the technology that defines
the business strategy. Web-based E-commerce provides easy and better communication
between geographically separated buyers and sellers. E-commerce is a way of doing business
by enabling better interaction among customers, business partners and business relationship
managers using electronic tools.

Planning for Web-based E-commerce architecture:

The basic idea of designing and building of any architecture is not only to describe the
computational steps but also the description of task. To design the architecture of a Web-
based system, the following points must be kept in mind:

• Understanding the various roles and the kinds of users to ensure that the maximum
users can get the maximum advantages of the system to accomplish their aim
Understanding the functions of the different modules of the system and their interfaces,
i.e. how the different functions perform a special task by exchanging information and
how the functions are related to each other in a single unit

• Recording the links of the transaction details of the business in a database. The
transaction details contain information such as transition type, purchased item
information, i.e. price, item identification and stock information.

• Specifying the trust model for the system: Every system must have at least an implicit
trust model that helps maintain the security of the system by providing the details of
the relationships between the components.

Understanding the roles of buyers and sellers

As a Web-based E-commerce system is used by different users for different purposes, the roles
of the buyers and the sellers need to be considered. The roles consideration helps you to
recognize the various operations in designing and analysing the architecture of-a Web-based
Ecommerce system that satisfies all the requirements of the business.
SHYLAJA M, Assistant Professor
MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru
VI SEM B.COM NEP (REGULAR) E-COMMERCE

Analyzing the requirements of buyers and sellers:

The different requirements of buyers and sellers affect Web-based E-commerce applications.
.Web-based E-commerce systems include a client system, a merchant system, a transaction
system and a payment gateway. A client system is a computer system that is connected
directly or indirectly to the Internet and always used by buyers for browsing and purchasing
items. A merchant system is the computer system that contains the electronic catalogue of the
sellers of online goods or products.

Resolving the issues in Web-based E-commerce:

Before designing an Internet-based E-commerce application, a developer must consider the
various issues that will arise if the problems are not handled on time. Security is a very
important aspect of any Web application; therefore, if a developer does not consider points of
security, the application might fail to deliver the desired services to its full potential.

SHYLAJA M, Assistant Professor

MUKUND G, Assistant Professor
Department of Commerce and Management
Seshadripuram First Grade College, Bengaluru