CHAPTER 1

Electronic Commerce Systems

INTRODUCTION
 Topics
• I n t ro d u c ti o n to E - C o m m e r c e : E v ol ut i o n o f E -
commerce, Types of E-commerce, E-commerce vs. E-
B u s i n e s s , Ad v a n t a ge s a n d D i s a d v a n t ag e s o f E -
commerce, Electronic Commerce Framework.

• E-organization: Introduction, Electronic Payment

Systems, Electronic Cash, Smart Cards and Credit
Cards based- Online banking, E-banking, E-wallet, Risks
in Online banking, E-banking, E-wallet, E-shopping.

• Brief on Advance Technologies in E-Commerce:

Internet of Things, M-commerce, Digital wallet, Voice
shopping, Drones and Droids, AR and VR, Blockchain.
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Electronic Commerce (E-Commerce)
• Commerce refers to all the activities the purchase
and sales of goods or services.
– Marketing, sales, payment, fulfillment, customer service

• Electronic commerce is doing commerce with the

use of computers, networks and commerce-
enabled software (more than just online shopping)

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 Brief History
• 1970s: Electronic Funds Transfer (EFT)
– Used by the banking industry to exchange account information
over secured networks
• Late 1970s and early 1980s: Electronic Data Interchange
(EDI) for e-commerce within companies
– Used by businesses to transmit data from one business to
another
• 1990s: the World Wide Web on the Internet provides easy-
to-use technology for information publishing and
dissemination
– Cheaper to do business (economies of scale)
– Enable diverse business activities (economies of scope)

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 E-commerce applications
• Supply chain management
• Video on demand
• Remote banking
• Procurement and purchasing
• Online marketing and advertisement
• Home shopping
• Auctions

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 Ecommerce infrastructure
• Information superhighway infrastructure
– Internet, LAN, WAN, routers, etc.
– telecom, cable TV, wireless, etc.
• Messaging and information distribution
infrastructure
– HTML, XML, e-mail, HTTP, etc.
• Common business infrastructure
– Security, authentication, electronic payment, directories,
catalogs, etc.

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 Types of E-commerce
• Consumer shopping on the Web, called B2C
(business to consumer)
• Transactions conducted between businesses on
the Web, call B2B (business to business)
• Transactions and business processes that support
selling and purchasing activities on the Web
– Supplier, inventory, distribution, payment management
– Financial management, purchasing products and
information

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Advantages of Electronic Commerce

• Increased sales
– Reach narrow market segments in geographically
dispersed locations
– Create virtual communities
• Decreased costs
– Handling of sales inquiries
– Providing price quotes
– Determining product availability
• Being in the space

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Disadvantages of Electronic Commerce

• Loss of ability to inspect products from remote

locations
• Rapid developing pace of underlying technologies
• Difficult to calculate return on investment
• Cultural and legal impediments

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 The process of e-commerce
1. Attract customers
– Advertising, marketing
2. Interact with customers
– Catalog, negotiation
3. Handle and manage orders
– Order capture
– Payment
– Transaction
– Fulfillment (physical good, service good, digital good)
4. React to customer inquiries
– Customer service
– Order tracking

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 Web-based E-commerce Architecture

Tier 1 Tier 2 Tier 3 Tier N

DMS

Client
Web Server Application Database
Server Server

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 E-commerce Technologies
• Internet • Access security
• Mobile technologies • Cryptographic security
• Web architecture • Watermarking
• Component programming • Payment systems
• Data exchange
• Multimedia
• Search engines
• Data mining
• Intelligent agents

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 Infrastructure for E-commerce

• The Internet
– system of interconnected networks that spans the globe
– routers, TCP/IP, firewalls, network infrastructure,
network protocols
• The World Wide Web (WWW)
– part of the Internet and allows users to share
information with an easy-to-use interface
– Web browsers, web servers, HTTP, HTML
• Web architecture
– Client/server model
– N-tier architecture; e.g., web servers, application servers,
database servers, scalability

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 E-COMMERCE FRAMEWORK
• The term e-commerce framework is related to software
frameworks for e-commerce applications.
• They offer an environment for building e-commerce
applications quickly.
• Examples of e-commerce frameworks are
•  Aimeos (Laravel, Symfony, TYPO3, SlimPHP, Flow)- It
allowing developers to build complex online stores and
B2B applications using their preferred framework
foundation while leveraging Aimeos' robust e-commerce
functionalities
•  Spryker (Symfony only)-enable developers to organize
code efficiently, enhancing maintainability and scalability.
•  Sylius (Symfony only)- providing a developer-friendly
environment for creating any shopping experience14for
B2C and B2B eCommerce.
 E-Commerce Software
• Content Transport
– pull, push, web-caching (is a process that stores copies of data,
like web pages, in a temporary storage location called a cache),
MIME (Ii is an email mime viewer/reader tool used for opening
email messages in the mime format.)
• Server Components
– CGI (computer-generated imagery software used to create
highly realistic and detailed product visuals, often including 3D
models and animations), server-side scripting (it manage and
manipulate databases to store and retrieve user information. )
• Programming Clients
• Sessions and Cookies
• Object Technology
– CORBA, COM, Java Beans/RMI
• Technology of Fulfillment of Digital Goods 15
– Secure and fail-safe delivery, rights management
PUSH-PULL MARKETING

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 Architecture
• Successful implementation of any ecommerce
business is dependent on implementing or adopting
these seven key steps:
•  Planning for eCommerce Business
•  Technology Selection/Website Audit & Analysis
•  Customer Acquisition
•  Customer Engagement
•  Customer Retention
•  Optimizing Key Metrics, and
•  Business Analysis & Customer Insights

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 E-organization: Introduction
• A term used to describe the way electronic
trans form ation o f or ganiza tions in tod ay' s
Internet era, is conducted, so as to render various
virtual experiences of organizational activities
instead of the physical encounter of the same.

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• Global: A characteristic of online commerce that is
easily apparent but typically goes unconsidered from an
organisational perspective is that it essentially has no
national boundaries.
• A global E-Commerce Organisational unit is needed to
control and coordinate online business in the interests
of the company as a whole.
• Dedicated: In many companies, online busines s
accounts for a smaller share than brick-and-mortar
business, at least initially. Companies tend to approach
the online segment as an additional business area that
can be accommodated for with the existing
organisational structure and resources.
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 E-Payment System
• It’s a payment mechanism which enables
individuals, businesses, government and non profit
organisations to make cashless payments for goods
and services through cards, mobile phones over
the internet.
• Examples : payment through debit card, credit
card, smart card, net banking etc

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 Cash Payment System
• Electronic Funds Transfer (EFT): this is an electronic
system used to transfer money from one bank account to
another without any cash exchange by hand.
• Direct debit, that is a financial transaction in which the
account holder instructs the bank to collect a specific
amount of money from his account electronically for
payment of goods or services.
• E-Check, a digital version of an old paper check. It’s an
electronic transfer of money from a bank account, usually
checking account without the use of the paper check.
• Electronic billing: this is another form of electronic
funds transfer used by companies or businesses to
collect payments from customers over electronic method.
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 Credit Payment System
• Credit Card: this is another form of the e-payment
system which required the use of the card issued by a
financial institute to the cardholder for making
payments online or through an electronic device without
the use of cash.
• E-Wallet: it is a form of prepaid account that stored
use r’ s f i nanc i al d ata l ike de b it an d c re d it c ard
information to make an online transaction easier.
• Smart card: this use a plastic card embedded with the
microprocessor that can be loaded with funds to make
transactions and instant payment of bills. It is also
known as a chip card.
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 Credit Cards
• Credit is small plastic card with a unique number
linked with an account. It has magnetic strip or chip
embedded in it which is used to read by credit card
reader.
Parties involved in credit card payment :
•A cardholder obtains a credit or debit card from an
issuing bank, uses the account to pay for goods or
services.
•A merchant is any type of business that accepts card
payments in exchange for goods or services.
•A merchant bank establishes and maintains merchant
accounts. Merchant banks allow merchants to accept
deposits from credit and debit card payments. 25
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• Payment processors are companies that process credit
and debit card transactions. Payment processors
connect merchants, merchant banks, card networks and
others to make card payments possible.
•Issuing banks are the banks, credit unions and other
financial institutions that issue debit and credit cards to
cardholders through the card associations.
•Card associations include Visa, Mastercard, Discover and
American Express. The card associations set interchange
rates and qualification guidelines, and act as the arbiter
between issuing banks and acquiring banks among other
vital functions

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 Smart Cards
• A smart card is capable of storing and processing
the data securely in a network of computers. The
scope of smart cards is increasing day by day in
diverse applications like banking, telephone services,
and medical records systems etc.
• Smart-Card is a secure portable storage device which
is used in various applications requiring controlled
access to sensitive information. It is in the size of a
credit/ debit card, incorporated with one or more
integrated circuit chips.

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• It functions as a microprocessor, memory and
provides an input-output interface. The
International Organization for Standardization
(ISO) specifies certain voluntary international
standards in many scientific and technological
fields.

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 Online Banking
• Online banking allows a user to conduct financial
transactions via the Internet. Online banking is
also known as Internet banking or web banking.
• It offers customers almost every service
traditionally available through a local branch
including deposits, transfers, and online bill
payments.
• It requires a secure login (username, password,
OTP, or biometrics).

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 E-Banking (Electronic Banking)

• A broader term that includes online banking, mobile

banking, ATMs, and digital financial services.

• Facilitates electronic transactions via mobile apps,

internet banking, and automated systems.

• Enhances convenience, speed, and accessibility for

users.

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 E-Wallet
• A digital wallet that stores payment information for
online and in-store purchases.

• Examples: PayPal, Google Pay, Apple Pay, and Paytm.

• Can be linked to bank accounts, credit/debit cards, or

prepaid balances.

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 Risks in Online Banking
• Cybersecurity Threats: Phishing, hacking, malware,
and identity theft.
• Fraudulent Transactions: Unauthorized access, card
fraud, and scams.
• Data Privacy Concerns: Personal and financial data
breaches.
• Technical Issues: System failures, app crashes, and
poor internet connectivity.
• Fake E-Shopping Platforms: Risk of buying from
fraudulent websites with counterfeit products.

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Advance Technologies in E-Commerce

• Internet of Things
• M-commerce
• Digital wallet
• Voice shopping
• Drones and Droids
• AR and VR
• Blockchain

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 Internet of Things
• The Internet of Things (IoT) refers to a network
of smart devices connected to the internet that
collect, share, and analyze data.

• These devices include RFID sensors, smart

assistants, cameras, GPS trackers, and more
that communicate with each other without human
intervention.

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 How IoT Works in E-Commerce
• IoT technology enhances e-commerce by automating
processes, personalizing shopping experiences, and
optimizing supply chains. Key elements of IoT in e-
commerce include:
• Smart Sensors – Used in inventory management to
track stock levels.
• Connected Devices – Smartphones, smart home
assistants (Alexa, Google Home) help customers
shop.
• Real-Time Data Processing – Businesses analyze
d at a f r om I o T d e vi c e s t o i m p r o v e c u s t o m e r
experience and logistics.
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 Applications
• 🔹 Smart Inventory Management – IoT sensors
monitor stock levels and send alerts for restocking.
• 🔹 Personalized Shopping – Smart devices collect
data to offer customized product recommendations.
• 🔹Automated Supply Chain – GPS and IoT sensors
track shipments and ensure timely delivery.
• 🔹 Seamless Checkout & Payment – IoT enables
cashier-less stores and contactless payments.
• 🔹Enhanced Customer Support – Chatbots and AI-
driven IoT devices assist in shopping and queries.

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 M-commerce
• M-Commerce (Mobile Commerce) refers to the
buying and selling of goods and services through
mobile devices such as smartphones and tablets.

• It is a subset of e-commerce that focuses on

mobile-based transactions, mobile apps, and
wireless technology.

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 Applications
• 🔹 Mo bi le S h o pp i ng – C us to m e r s br o ws e a n d
purchase products via mobile apps and websites.
• 🔹 Mob i le Bank ing – U s e r s ma nage a cc ou nts ,
transfer money, and pay bills using mobile banking
apps.
• 🔹Mobile Payments – Contactless payments through
NFC-enabled smartphones and e-wallets.
• 🔹Location-Based Services – GPS-enabled offers
and advertisements tailored to user locations.

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 Voice shopping
• Consumers can search for their desired products
using voice or even images. AI-Virtual assistants
such as Alexa, Bixby, and Siri are intelligent
technologies that are increasingly widespread in
today's technological environment.
• Just simply speaking out the product description to
an AI-Virtual assistant would yield a highly accurate
result.
• The AI-powered assistant searches for products,
suggests options, and confirms the order.
• Payment is processed using stored credentials, and
the order is placed.
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 Key Technologies Used in Voice
Shopping
• 🔹 Natural Language Processing (NLP) – Helps
devices understand and process spoken commands.
• 🔹 Artificial Intelligence (AI) – Enables
personalized recommendations based on purchase
history.
• 🔹 Smart Assistants – Devices like Alexa, Google
Home, and Siri execute voice-based orders.
• 🔹 Voice Recognition – Ensures secure
transactions by verifying users' voices.

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 Drones and Droids
• Drones are unmanned aerial vehicles (UAVs) used to
transport goods quickly and efficiently. Companies
like Amazon, Walmart, and UPS have tested drone
deliveries to provide faster service, especially in
urban and remote areas.
Examples:
• Amazon Prime Air – Uses drones to deliver packages
within 30 minutes.
• Wing (by Alphabet/Google) – Conducts autonomous
deliveries of food, medicine, and other essentials.
• UPS Flight Forward – Uses drones to transport
medical supplies in healthcare facilities.
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• Droids are autonomous robots designed to perform
specific tasks. In e-commerce, droids are widely
used in warehouse automation and last-mile delivery.

Applications in E-commerce:

• Warehouse Automation: Droids can move goods

around warehouses, pick and pack products, and
manage inventory. This increases efficiency and
reduces human labor.
• Last-Mile Delivery: Ground-based delivery droids can
autonomously navigate streets to deliver packages
directly to customers' doors.
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• Starship Technologies: Their small, self-driving delivery
droids are already delivering food and small parcels in
various cities.
• Amazon Robotics (Kiva Systems): Droids move shelves
of products to human workers in Amazon fulfillment
centers, speeding up the picking process.
Impact on E-commerce:
• Faster Deliveries: Both drones and droids are
revolutionizing delivery times.
• Reduced Costs: Automating delivery and warehouse
processes can significantly cut costs.
• Enhanced Customer Experience: With quick deliveries
and efficient service, customers are more satisfied.
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 AR and VR
(Augmented Reality And Virtual Reality)

• Both AR and VR apply similar technology, but many

confuse the two. Virtual reality builds an entirely
new artificial reality while augmented adds only
some virtual elements into the real world.
• For example, you could virtually try on a dress,
feel the fabric, and see how it suits you. Banana
Flame, a British clothing e-store, has already
incorporated AR, as it allows shoppers to use their
web cameras as interactive mirrors.

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• Com pani es li ke Ike a and Audi h av e utiliz ed

augmented reality glasses so that users can design
their own kitchens and check out cars.
• Huge investments have been made in AR by Google,
Apple, Facebook. As well, companies like Alibaba,
Microsoft, and HTC are working on their AR
technology in-house.
• TechCrunch indicates that the value of the VR &
AR m ar ket accounts f or $108 billion. AR is
becoming dominant and is being driven by its
increased usage on mobile devices.

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 Blockchain
• The concept of digital asset transactions
eliminates the requirement for a third party.
Furthermore, these transactions are speedier,
with lower fees for both sellers and buyers.
• Every piece of information entered into a
blockchain is preserved and recorded permanently.
This means that the entire transaction history of
a product is preserved regardless of how many
times it is traded or repurchased.
• This has the potential to significantly reduce
fraud and increase transparency.

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• As a real-life example, Amazon has policies for its
listed retailers. They reduce contact with their
customers, as they can just send one follow-up
email. Amazon employs its own customer support
that is not acquainted with the .
• Drones & Droids - Next-level Delivery System
merchants` products. As a consequence, this
reduces the credibility of the retailers and
results in a higher cost to the customer.

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THANK YOU

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