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E- commerce and its technological aspects

MEANING OF E-COMMERCE

E-commerce, short for electronic commerce, refers to the buying and selling of goods or
services over the internet or other electronic systems. It involves the transfer of money and data
to execute these transactions. It is "doing business online".

The most well-known e-commerce example is online shopping, described as buying and selling
products over the internet on any device. Some of the best e-commerce companies in India
include e-commerce websites like Flipkart, Amazon, Paytm, Indiamart, etc.

Types of E-commerce

1. Business to Consumer (B2C)

2. Business to Business (B2B)

3. Business to Government (B2G)

4. Business to Business to Consumer (B2B2C)

5. Consumer to Consumer (C2C)

6. Consumer to Business (C2B)

1. Business to Consumer (B2C):

In a B2C model, businesses sell products or services directly to individual consumers. It is one
of the most common services that you may find on the web. For example, Amazon, and Flipkart,
sell products to customers. Usually, business owners sell products to the customers.

2. Business to Business (B2B):

B2B involves transactions between businesses, where a company sells goods or services to
another company. It might be raw material or produced material for use in the company itself or
for selling to the customers. Examples include raw materials, software for companies, or any
product that will be used for reselling to consumers afterward. Indiamart, Alibaba, etc. are
examples.

3. Business to Government (B2G):

In B2G businesses, the business entrepreneur provides goods or services to the government.
This deal may range from any type of services and goods or products that the government
needs. This also includes technological support as well. The process is highly through the
bidding system. There are a lot of examples where goods suppliers and service providers sell
their goods and services to the government.

4. Business to Business to Consumer (B2B2C):

The B2B2C model includes both B2B with B2C through e-commerce services. For example, a
manufacturer sells their products to the grocery shop as well as to the customers directly. At
the same time, grocery shops may also sell the same goods or products to consumers. This is
called B2B2C. It is a hybrid model e-commerce business.

5. Consumer to Business (C2B):

C2B is also a traditional business model, where consumers offer goods or services to the
business. The person as the crop producer sells their crops to the factory to produce different
types of food items. On the other hand, freelance platforms supply services from freelancers to
business people. 99designs, Upwork, etc. are examples.

6. Consumer to Consumer (C2C)

Consumer-to-consumer (C2C) is an e-commerce business model where individuals or

consumers sell their products to another consumer by using an e-commerce platform. Anybody
can also sell goods through eBay, amazon, Olx, etc.

The Importance of e-Commerce for Your Business:

1. E-Commerce Helps You Reduce Your Costs

E-commerce does not have any requirement to display all of your products in a physical location.
So, the cost of the rent of the stores, working people, electric cost, decoration and maintenance
cost. Here, only the delivery cost is involved. So, the cost of e-commerce platforms is very high
and they can sell goods and products at the lowest ever cost with higher profit.

2. E-Commerce Helps Businesses to Be Global

If your business follows all international criteria, you can run a business internationally. You can
sell your product or services internationally sitting in your local place, even sitting in your comfy
room. Just you have to keep the supply chain in an arranged format. So, the Importance of E-
Commerce is innumerable, and the people of India are gradually involved in creating e-
commerce platforms. They are also selling their goods via Amazon or similar other platforms
where businesses or individuals can sell goods internationally.

3. Less Burden less Investment

Compared to opening a brick-and-mortar store, starting an internet business might result in

much-reduced startup costs. The owner of an online business does not have to account for the
expensive costs of shop rental, hiring salespeople, decoration, security, or electric costs to win
over customers.
4. E-Commerce can Broaden Your Brand & Expand Your Business

E-commerce platforms remain open around the clock. So, customers can watch the product or
ask for service any time they require. The customer base may also expand from the native
country to the international market. Besides, you can easily include or exclude products from
the online marketplace.

5. Reach the target-Oriented Customers

When you have an e-commerce business in India, you can target some specific location and
customer base for promoting your products through e-commerce services. By implementing the
specific strategy of digital marketing on your e-commerce website, you can easily reach the
target audience of the target location where you can reach.

6. The Online Marketplace is Open 24/7

Every physical store has a limited opening and closing time with weekly off. However, the e-
commerce platform can remain open around the clock. There are a lot of customers who do not
have time to visit physical stores at the regular time as they are busy with their professional
work.

7. Wide Range of Products

If you own an online store or e-commerce store, you can add multiple types of products with a
lot of variety. You can add multiple products in the online store that yet not present in your
collection but have collaboration with the dealer or supplier. When a customer places an order,
you can immediately collect it and send it to the customer’s address. So, vast investment is not
a mandatory factor for increasing your business.

8. Growing Interest among New customers

Online sellers may hover from one shopping site to another shopping site. You can attract your
customers through greater visibility, presentation, display angle, zoom-in facility, clear
description of products or services, website UI (User Interface) UX (user experience)
enhancement, and so on.

9. Lower Business Risks

As said earlier, online e-commerce stores do not require a higher investment. According to the
demands of the customers, an e-commerce platform can easily enlist the goods that have
higher requirements in the online marketplace. You will get competitive prices to sell and higher
sales. So, the business risks will also be reduced from your brain.

10. Transparency in Business

With the increase of thousands of frauds for online cheating by the name of online shopping,
customers now look for a trustworthy shopping site. So, e-commerce sites can make the
application or web portal more trustworthy by implementing SSL certificates, proper addresses,
communication details, mobile or landline numbers, customer care support, and so on. If they
do not feel the site is authentic, they will not purchase from you, swipe cards, or even visit your
website.

11. Enhance e-commerce marketing using Technology

By using SEO service, PPC service, social media marketing service, and other digital marketing
tactics, you can increase your business faster than ever. You can also reach the top of the first
page of SERP (Search Engine Results Page). In this way, you can reach the target audience
irrespective of the location and demography, you can sell your product or service and earn
money.

Aims of E-Commerce

The aims of e-commerce revolve around facilitating efficient and accessible commercial
transactions in the digital realm. The convenience for everyone to shop anytime, anywhere
instead of visiting the shops in person is one of major motivations for the growth of e
commerce. Moreover, e-commerce endeavors to optimize operational efficiency, streamlining
processes such as inventory management, order fulfillment, and logistics. It aims to leverage
data-driven insights to personalize interactions, tailoring offerings and recommendations based
on customer preferences, thereby enhancing customer satisfaction and fostering long-term
relationships. Another critical aim involves fostering innovation and embracing technological
advancements to continually improve services, security, and user experiences. Ultimately, e-
commerce aims to drive business growth, increase sales, and profitability while prioritizing
customer-centric strategies that build trust, loyalty, and engagement within the digital
marketplace.

The various objectives that businesses typically strive to accomplish through e commerce are:

1. To provide online customers with quick delivery of products or services.

2. To gain access to a world wide market.

3. To increase sales in existing market and opening new market.

4. To develop business opportunities over the internet.

5. To improve productivity and competitiveness.

6. To improve customer experience & satisfaction.

7. To offer more customizable products.

8. To keep the virtual shop open 24x7.

9. To reduce costs associated with marketing, labor, transaction, communication, infrastructure
and inventory.

10. To improve marketing and branding.

11. To optimize operations.

12. To build partnerships and collaborations.

Working of E-Commerce

E-commerce works in the same way as any physical store. The only difference is that e-
commerce is powered by the internet and is also not limited to any geographical area or region.
Customers access an online store to browse through and place orders for products or services
via their own devices. Here's one example as shown in fig. 1.1 of how a sophisticated, fully
computerized e-commerce system might work.

1. A customer visits your online shop and browses your products. This is the first step where
customers place the order through the e-commerce platform (website or an online portal).

2. As the order is placed, the customer's web browser will communicate back and forth with the
web server hosting the e-commerce website.

3. The Web server sends customer order to the order manager. This is a central computer that
sees orders through every stage of processing from submission to dispatch.

4. The order manager or order management software queries a stock-database to find out
whether what the product is in stock.

5. The stock database confirms whether the item is in stock or suggests an estimated delivery
date when supplies will be received from the manufacturer.

6. Next it communicates with a merchant system (run by a credit-card processing firm or linked
to a bank) to take payment using the customer's credit or debit card number.

7. The payment processor, typically a bank computer, confirms the customer has enough cash
in the bank or enough credit on her card to complete the transaction.

8. The merchant system authorizes the transaction to go ahead, though funds will not be
completely transferred until several days later.

9. The order manager confirms that the transaction has been successfully processed and
notifies the Web server.

10. Web server displays a message notifying the customer that their order has been
successfully processed.
11. The order manager sends a request to the warehouse to dispatch the goods to the
customer.

12. The order manager sends order data to the warehouse or fulfillment department to dispatch
the product or service to the customer.

13. The order is dispatched from the warehouse and shipped. The customer will receive an
email that the product is out for delivery.

14. The order is delivered, and the transaction is complete.

Characteristics of E-Commerce

E-Commerce provides following features:

1. Ubiquitous-ness: Ubiquitous-ness in e-commerce refers to its per ers to its pervasive

presence across various devices and platforms, ensuring seamless access and consistent
experiences for users. It implies the ability to shop anytime, anywhere, via desktops, mobile
devices, apps, social media, and other digital channels, enhancing accessibility and convenience
for customers.

2. Worldwide Reach: It enables a business to easily reach across geographic boundaries. The
potential market size of e-commerce is approximately identical to the size of the online
population of the world. In spite of traditional cultural and national boundaries, it enables
worldwide access to the client.

3. Universal standards: Universal Standards are standards that are shared by all nations around
the world. Using the power of standard, ecommerce gives us all the ability to connect at the
same "level" and provide network externalities. The standards guide ecommerce technologies
to realize its full potential.

4. Business rich: The effects of e-commerce are already appearing in all areas of business, from
customer service to new product design. E-commerce can delive video, audio, animation, etc.
much better than other technologies. It facilitate modern types of business strategies for
reaching and interacting with customer such as online banking, online shopping, online
advertising and marketing, online order taking and on-line customer service etc.

5. Interactivity: Interactivity features in e-commerce include live chat suppor product reviews,
personalized recommendations, wish lists, user-generated content, social media integration,
and interactive product visualization (e.g., 360 degree views), fostering engagement, enhancing
user experiences, and facilitating informed purchasing decisions for customers on digital
platforms.

6. Information density: Information density in e-commerce refers to providing comprehensive

product details, high-quality images, reviews, specifications, and guides within product listings.
It aims to offer abundant, accurate, and relevant information, aiding customers in informed
purchase decisions, improving user trust, and reducing uncertainties while browsing or buying
products online.

7. Advertising and Marketing - E-Commerce helps in good marketing management of products

and services. It helps to increase the reach of advertising of products and services of
businesses.

8. Improvement in communication - E-commerce gives faster, efficient and reliable

communication with customers and partners.

9. Customization: Customization in e-commerce includes personalized product

recommendations, tailored marketing messages, user-specific content, and adjustable user
interfaces. Utilizing customer data and preferences, e-commerce platforms offer unique and
personalized experiences, enhancing user engagement, satisfaction, and the likelihood of
conversions.

10. Improved sales: E-Commerce gives a large improvement in existing sales volume. Using e-
commerce, we can generate orders and products from any time, anywhere, without any human
intervention.

11. Cashless Payment: E-Commerce allows the use of electronic payment. It allows the
transaction from credit cards, debit cards, electronic fund transfer via bank's website, and other
electronic payment methods.

12. Support: E-commerce provides various ways to provide pre-sales and post-sales assistance
to provide better services to customers.

13. Inventory Management: E-commerce automates inventory management. Reports get

generated instantly when required. Product inventory management becomes very efficient and
easy to maintain.

Scope of E-Commerce

The 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 exchanges can be between organizations or
individuals.

2. Technology-enabled: E-commerce technology leverages internet-based platforms, databases,

encryption, and online payment systems to facilitate buying and selling goods/services. It
includes website development, mobile apps, cyber-security measures, and innovative tools to
enhance online commerce experiences.
3. Customer's retention: E-commerce allows firms to obtain classified and tailored market
information, which aids in client retention through quick order fulfillment and effective customer
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 customer's
retention.

4. Product development: Specialized product development in e-commerce encompasses

catering to unique consumer demands by creating tailored goods/services. It involves market
analysis, customization, agile production, and leveraging technology to meet specific needs,
enhancing customer satisfaction, and gaining a competitive advantage in niche markets within
the online sphere.

5. Accounting: Digital transactions, tracking online sales, analyzing financial data, monitoring
revenue, expenses, and taxes are best possible in e-commerce because of integrated database.
Financial planning and strategy determination become more convenient in e-commerce.

6. Supplier integration: It involves seamless collaboration, linking suppliers directly to online

platforms. It streamlines inventory management, enhances communication, and ensures timely
fulfillment, fostering efficient and transparent supply chain operations for businesses.

7. Support the exchange: E-commerce encompasses intra- and inter-organizational operations

that facilitate the exchange of goods and services. E-commerce encompasses all intra- and
inter-organizational operations conducted electronically that directly or indirectly promote
marketplace transaction.

8. Technological Innovations: The evolution of technologies like mobile commerce, block-chain

for secure transactions, Al-driven chatbots, and augmented reality for immersive shopping
experiences continues to expand e-commerce capabilities, offering new avenues for growth and
engagement.

9. Marketplace Diversity: E-commerce thrives on diverse platforms like standalone websites,

marketplaces (Amazon, eBay), social media, and specialized niche platforms, catering to varied
consumer preferences and market segments.

10. Economic Impact: E-commerce contributes significantly to economic growth by fostering

entrepreneurship, creating job opportunities, and promoting trade on a global scale.

TRADITIONAL COMMERCE VS E-COMMERCE

Traditional Commerce and E-commerce: Difference

1. Traditional commerce is fully offline and conducted in person or face to face, whereas E-
Commerce is completely digital and electronic, with all communication conducted through
electronic means
2. Traditional commerce is limited to a specific geographical location, especially smaller, and
has less connectivity, but E-Commerce is accessible worldwide and has more interconnectivity

3. Information exchange in E-Commerce takes several forms, such as digital ads or emails

4. information exchange in Traditional Commerce takes the shape of hoardings, pamphlet

distribution, or any other physical medium of interaction

5. Traditional commerce can only have one-way marketing, while E-Commerce can have one-
way marketing

6. Traditional commerce can only accept cash payments in person, whereas E-Commerce can
accept online transactions, e-wallets, or cash on delivery

7. In E-commerce, things are delivered on the same day or any other day, depending on logistics
availability and other factors such as the consumers’ location

8. Still, in traditional commerce, goods are delivered quickly

9. Traditional commerce offers no or few discounts and no other options except to approach
different sellers, which takes time

10. On the other hand, E-commerce offers many discounts and at lower rates. In contrast,
traditional commerce offers no or few discounts and no other options except to approach
different sellers, which takes time

11. E-commerce offers excellent customer service in several forms, such as a chat option or a
direct call with a customer service representative, whereas traditional commerce does not

12. E-Commerce allows customers to return things within 7 to 15 days if they are not interested
or like them, depending on the seller

13. However, traditional commerce does not allow returns unless the object is defective

14. Traditional commerce has a restricted number of products with a particular seller because
of space constraints

15. However, E-Commerce has many products in breadth and a wide variety of products
regardless of brands or types of products

3- BENEFITS OF E-COMMERCE

1. Benefits of e-Commerce to Businesses:

1. It helps to reach Global: E-commerce enabled businesses now have access to people all around the
world. In effect all e-commerce businesses have become virtual multinational corporations. E-Commerce
expands the market place to national and international markets. Internet and web based E-Commerce
helps to reach a more geographically dispersed customer base and more business partners as compared
to the traditional business methods.

2. Cost effective: E-commerce is proved to be highly cost effective for business concerns as it cuts down
the cost of marketing, processing, inventory management, customer care etc. It also reduces the burden
of infrastructure required for conducting business.

3. New Customers With Search Engine Visibility: Physical retail is driven by branding and relationships. In
addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual
for customers to follow a link in search engine results and land up on an ecommerce website that they
have never heard of.

4. It Reduces the Paper Costs: E-Commerce decreases the cost of creating, processing. distributing,
storing and retrieving information through the use of FDI systems. This greatly cuts on the cost of paper
work in terms of the time taken and the man power required. Also the date is more secure from theft and
destruction.

5. Reduction in Inventories: A reduction in inventory is desirable to enable reduction in-storage, handling,

insurance and administrative costs. Internet E-Commerce can help firms to reduce inventories by
electronically linking the suppliers and buyers.

6. Mass Customization and Competitive advantage: The web based interactive E-Commerce enables the
customization of products/services as per the customer needs. This provides a great competitive
advantage to businesses.

7. No Middlemen: There is a direct contract with customers in e-commerce through internet without any
intermediation. Companies can now focus more on specific customers by adapting different one-to-one,
marketing strategy.

8. Reduced Production lead Time: The production cycle time is the time taken by a business to build a
product, beginning with the design phase and ending with the completed product. The internet based E-
Commerce enables the reduction of this cycle time by allowing the production teams to electronically
share design specifications and refinement processes.

9. Improved Customer relationship: Customer service can be enhanced using the internet based E-
Commerce by helping the customer to access information before, during and after a sale. Customers may
need to retrieve information on product specifications and pricing.

10. Lower Sale and Marketing Costs: The internet allows businesses to reach many customers globally
at lower costs. Thus by shifting the sale and marketing functions to the electronic processes, the
organizations can bring down greatly the marketing overheads.

11. Lower Telecommunication Costs: The Internet is much cheaper than value added networks (VANs)
which were based on leasing telephone lines for the sole use of the organization and its authorized
partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing before the coming
internet, only few organizations were using the private networks and VANs for their EDI.

12. New Found Business Partners: Internet based E-Commerce enables businesses to find new.
business partners globally on the web, thus not restricting themselves to a specific choice of suppliers
13. Increased supply chain efficiencies: E-commerce minimizes supply chain inefficiencies, reduces
inventories, reduces delivery delays, '

14. Digitization of Products and Processes: Particularly in the case of software and music/video
products, this can be downloaded or e-mailed directly to customers via the Internet in digital or electronic
format. The internet helps to expedite access to remote information, thus adding speed to transactions
and processes.

15. Information sharing: It takes only few seconds to share information over the internet. A firm can e-
mail its customers relating new products and new offers and can solve their product related quires and
welcome suggestions.

II. Benefits of e-Commerce to Consumers:

1. Gives freedom to make choices: It also gives customers an opportunity to look for cheaper and better
quality products. With e-commerce, consumers can search the specific product or service they require
and can even find the direct manufacturer from where they can purchase products at comparatively less
price.

2. Increase in variety of goods: As the market will expand the variety of goods available will also

expand. Wide variety of goods are available than ever before.

3. It gives more choice and alternatives: E-commerce provides more choice and alternatives to
customers that will increase the choice of vendors or products because they are no longer.
geographically constrained to reach a vendor or a product. A large number of vendors/ manufacturers are
marketing and selling their products/services on the internet.

4.Convenience of Shopping at Home: allows the consumers to shop went it is convenient for them and
not strictly during store hours. Also for handicapped or ill consumers, home shopping on the internet
provides a lot of opportunity and convenience

5.Ensure Secrecy: the various security measures that are in built are used in E-commerce transactions to
prevent any unathorised access to information on the internet for ensure secrecy they maintain encoding,
encryption and passwords

6. More Competitive Prices and Increased Price comparison capabilities: The large amount of
information available on the internet is giving more and more power to the consumers Consumers can
make comparison shopping.

7. Access to Greater Amounts of Informatión on Demand: Consumers can have access to large amount
of information online on products and services, their features and prices. This further translates into more
choice to customers in shopping and greater price comparison opportunities.

8. Time compression: Time is not a factor with Internet communication between firms and their
stakeholders. Online stores can be open 24/7; people can communicate as their schedules permit; times
zones disappear for managers collaborating with partners on other continents. managers collaborating

9. Quick Delivery of Digitized Products/Services: E-Commerce allows quick delivery in the case of
digitized products such as music, software etc.
10. Provide Comparison Shopping: "Ecommerce facilitates comparison shopping. There are several
online services that allow customers to browse multiple ecommerce merchants and find the best prices.

11. E-payment system: The electronic payment system on the interent is facilitated by payment gateways
or intermediary between the business firm and customers and between the business firms for assuring
the payments from the customers.

II. Benefits of e-Commerce to Society:

1. Enables More Flexible Working Practices: Which enhances the quality of life for a whole host of people
in society, enabling them to work from home. Not only is this more convenient and provides happier and
less stressful working environments.

2. Connects People: Enables people in developing countries and rural areas to enjoy and access products,
services, information and other people which otherwise would not be so easily available to them.

3. Facilitates Delivery of Public Services: The health services available over the Internet on-line
consultation with doctors or nurses, filing taxes over the Internet through the Inland Revenue website.

Limitations of E-Commerce
Lack of Security, Reliability and Privacy: There is a Lack of security, reliability and security in this
system. The standards of security and communication protocol owing to poor implementation
of e-commerce. The security risk in ecommerce can be client/server risk, data transfer and
transaction risk or virus risk.

2. Lack of Trust: The lack of trust is still one of the biggest concerns for Internet consumers.
Consumers are reluctant to purchase products through internet due to lack of trust. They fear to
operate in a paperless and faceless electronic world.

3. Lack of legal issues: It is also one of the problems facing by e-commerce. These issues arise
when the customer data is fall in the hands of strangers. The E-commerce industry carries out
its business via transactions and communications done through electronic records. It thus
becomes essential that such transactions be made legal.

4. Tax Issues: Another important issue in e-commerce is taxation. Due to the uniqueness of e-
commerce, taxation faces a number of problems. The e-commerce has changed fundamental
concepts of direct and indirect taxation. Governments all over the world are grappling with the
various issues of taxation raised by e-commerce.

5. Insufficient Communication Bandwidth: The serious problems in network may occur due to
traffic and insufficient communication bandwidth. The rapid increase of connected users
minimizes the communication bandwidth.

6. Technological limitations: The technological limitations of e-commerce have restricted a

large number of people from using this revolutionizing technique. Some protocol is not
standardized around the world.
7. Lack of knowledge: Lack of knowledge restricts large number of people from using the
internet and understanding online transactions. Some people refuse to trust the legitimacy of
online business and some are not comfortable about disclosing their personal and confidential
information online.

8. Lack of personal Touch: E-commerce lacks the personal touch. You can't touch or feel the
product you want to buy. For example, you can't touch the fabric of the garment or can't check
how the shoe feels on your feet. So it is difficult for the consumers to check the quality of a
product.

9. High Labour cost: The hosting of e-commerce web site is not expensive, but the costs of
setting up and maintaining an ecommerce site are expensive. Highly talented and technically
qualified workforces are required to develop and manage the websites of the organization.
Since internet provides a lot of job opportunities, business organizations have to incur a lot of
expenses to retain a talented pool of employees. Med Bichon f por la cu

10. Lack of In-Store Engagement with Customers: The ability to speak with a sales assistant
about your needs and issues is invaluable. Nothing can replace the personal experience that a
traditional store offers. Lack of In-Store Engagement with customers is another big issue in e-
commerce.

11. Huge technological cost: It is difficult to merge electronic business with traditional business.
Technological infrastructure may be expensive and huge cost has to be incurred to keep pace
with ever changing technology. It is necessary to allocate more funds for technological
advancement to remain competitive in the electronic world.

12. Many Goods Cannot Be Purchased Online: Despite its many benefits, there are certain
goods that you cannot purchase online. Most of these would be in the categories of "perishable"
or "odd-sized." For example, you cannot order an ice-cream. గు బ ం కూర

13. Lack of skilled personnel: There is still shortage of computer literate who have e-commerce
skills and the experience of dealing with Internet. There is difficulty in finding skilled web
developers and knowledgeable professionals to manage and a maintain customer on line.

E-COMMERCE TECHNOLOGIES

The Three e-commerce technologies are:

1. Electronic Market

2. Electronic Data Interchange (EDI)

3. Internet Commerce

1 Electronic Market
An electronic market, also known as an online marketplace or e-marketplace, is a virtual
platform where buying and selling of goods or services take place electronically. It facilitates
transactions between multiple buyers and sellers over the internet without the need for physical
interaction. Electronic markets utilize various technologies, such as websites, mobile apps, or
online platforms, to connect participants, streamline transactions, and facilitate communication.
These markets offer a convenient and accessible space for businesses and consumers to
conduct transactions, breaking geographical barriers and allowing global participation.

Functions of Electronic Market

The various functions of electronic market are:

1. Facilitation of Transactions: Provides a platform for buyers and sellers to engage buying and
selling activities.

2. Product/Service Showcasing: Allows sellers to showcase their offerings wis detailed

descriptions, images, and pricing.

3. Global Reach: Offers a borderless marketplace, enabling transactions on a glob scale without
geographical constraints.

4. Transaction Security: Ensures secure payment gateways and data encryption to safeguard
sensitive information.

5. Communication Hub: Facilitates interaction between buyers and sellers through messaging
systems or negotiation features.

6. Transaction Monitoring: Tracks and manages transactions, order processing, and delivery
status for both parties.

7. Feedback and Reviews: Allows customers to leave feedback and reviews, building trust and
credibility.

Purpose of Electronic Markets

1. Electronic markets are used due to the following reasons:

2. Cost Efficiency: Reduces expenses related to physical infrastructure, rental, utilities, and
staffing.

3. Trade-off: Limited face-to-face interaction, potentially impacting personalization and

immediate query resolution.

4. Choice Preference: Offers a vast array of products and services from diverse sources and
geographical locations.

5. Convenience: Provides 24/7 accessibility for both buyers and sellers, allowing transactions
from anywhere with internet access.

6. Price Comparison: Enables easy comparison of prices, features, and reviews, aiding informed
decision-making.

7. Global Reach: Expands market access beyond local boundaries, connecting businesses and
consumers worldwide.

8. Operational Efficiency: Streamlines processes such as inventory managemmt, order

processing, and payment systems, improving overall efficiency.

9. Transparency: Provides transparent access to product information, seller credibility, and

market trends, enhancing trust and informed choices.

Electronic Market Trade Cycle

This electronic market trade cycle involves a sequence of steps, from search and negotiation to
order placement, delivery, invoicing, and payment, enabling efficient and convenient
transactions between buyers and sellers within the online marketplace ecosystem.

A) Search

1) Buyer Search: The buyer navigates the electronic marketplace, using search filters and
categories to find desired products or services.

2) Seller Listing: Sellers present their offerings on the platform with detailed descriptions,
images, and pricing.

(b) Negotiate:

1. Communication: Buyers and sellers interact through messaging systems or negotiation

features on the platform to discuss terms, quantities, and pricing.

Offer and Counter-offer: Negotiations involve proposing offers and counter offers until both
parties agree on terms.

(c) Order:

1. Selection and Confirmation: The buyer finalizes their selection and confirms the purchase by
adding items to their cart or placing an order directly.

2. Order Acknowledgment: Sellers receive notifications of orders placed and acknowledge them
through the platform.

(d) Deliver.

1. Order Processing: Sellers prepare the purchased items for shipment or delivery, including
packaging and labeling.
2. Shipping Arrangement: Sellers dispatch the goods via selected shipping methods or arrange
for service delivery.

(e) Invoice:

1. Invoice Generation: After delivery, sellers generate an invoice detailing the purchased items,
prices, and payment terms.

2. Receipt by Buyer: Buyers receive the invoice electronically, confirming the details of the
transaction.

(f) Payment:

1. Payment Processing: Buyers use secure online payment gateways to process the payment
for the received goods or services.

2. Transaction Confirmation: Upon successful payment, sellers confirm and acknowledge the
receipt of payment, finalizing the transaction.

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business

documents between trading partners in standard data format using networks, such as VANs or
the Internet. It is the structured exchange of document exchange between companies by
electronic mean without any human intervention. Each company runs its own electronic
business system. These systems may not be directly compatible with each other. EDI permits
different systems to communicate and exchange data for business transactions.

Since EDI documents must be processed electronically, a standard format is used in EDI so that
the computer will be able to read and understand the documents. It replaces the paper-based
exchange of business documents. It is widely used by big companies for e-commerce purposes.
Business enjoy major benefits of EDI such as reduced cost, increased processing speed,
information security, reduced errors and improved relationships with business partners. With
EDI, any company can virtually interact with another organization anywhere in the world without
the hassle of waiting times and forecasting future procedures. When two businesses decide to
exchange EDI documents, they must agree on the specific EDI standard.

Functions of EDI

1. Data Translation: Converts business documents into standardized electronic formats for
seamless transmission.

2. Data Mapping: Matches data fields between different systems to ensure accurate
information exchange.

3. Document Routing: Directs documents to appropriate recipients or systems based on

predefined rules.

4. Transaction Control: Monitors and manages the flow of electronic documents, ensuring
timely and secure delivery.

5. Error Handling: Identifies and rectifies data discrepancies or transmission errors to maintain
data integrity.

6. Security Measures: Implements encryption, authentication, and access controls to safeguard

sensitive information.

7. Integration with Business Systems: Connects EDI processes with internal systems for
streamlined operations and data synchronization.

EDI Trade Cycle

The Electronic Data Interchange (EDI) trade cycle involving order processing, delivery, invoicing,
and payment follow a series of steps:

(a) Order Processing:

1. Purchase Order: The buyer generates an electronic Purchase Order detailing the products,
quantities, prices, and delivery terms, initiating the transaction.

2. Receipt and Acknowledgment: The seller receives the Purchase Order, verifies it for accuracy,
and sends an acknowledgment, confirming the receipt and acceptance of the order.

(b) Delivery:

1. Order Fulfillment: The seller prepares the ordered items for shipment or service delivery
based on the Purchase Order's terms and conditions.

2. Shipping and Delivery: Products are shipped or services are provided, often utilizing agreed-
upon carriers or methods outlined in the transaction.

(c) Invoicing:

1. Invoice Generation: After delivery, the seller generates an electronic Invoice detailing the
delivered items, prices, payment terms, and any additional charges.

2. Receipt and Validation: The buyer receives the Invoice, validates it against the original
Purchase Order, and prepares for payment processing.

(d) Payment:

1. Payment Processing: The buyer processes the payment electronically using agreed-upon
payment methods, transferring funds to the seller's account.
Benefits of EDI

EDI provides the following benefits:

1. Faster Transactions: Speeds up the exchange of business documents, leading to quicker

processing times and improved overall efficiency.

2. Efficiency: EDI (Electronic Data Interchange) streamlines business processes by replacing

manual data entry with automated electronic transmission of documents.

3. Cost Reduction: It minimizes the expenses associated with paper-based document handling,
printing, and mailing.

4. Accuracy: EDI reduces errors caused by manual data entry, ensuring accurate and reliable
information exchange between trading partners.

5. Enhanced Security: Offers secure data transmission methods, reducing the risk of data
breaches and unauthorized access.

6. Improved Compliance: Helps in adhering to industry standards and regulatory requirements

by maintaining accurate and auditable transaction records.

7. Better Partner Relationships: Facilitates smoother communication and collaboration between

trading partners, fostering stronger business relationships.

Internet Commerce

The term 'Internet commerce' refers to all commercial activity on the internet, including
searching, auctioning, placing orders, making payments, transferring funds, and collaborating
with trading partners. Internet commerce is a subset of e-commerce.

The rapid development of the internet has significantly revolutionized the day to day operations
of a business. The Internet has opened the various ways for companies to lower operational
costs and saving capital on production of goods or services. Companies have implemented the
business software's to track various business operations in each department which helps in
review the efficiency and effectiveness of each department. Information and communication
technologies (ICT) can also be used to advertise and make once-off sales of a wide range of
goods and services this type of e-commerce is typified by the commercial use of the internet.

Functions of Internet Commerce

Here are the key functions of internet commerce:

1. Transaction Facilitation: Enables buying and selling of goods, services, and digital products
online.

2. Global Market Reach: Provides access to a global audience without geographical limitations.
3. 24/7 Accessibility: Allows users to shop or conduct business transactions anytime, anywhere.

4. Payment Processing: Securely processes online payments through various methods.

5. Logistics and Delivery: Manages efficient shipping and delivery of purchased items.

6. Customer Engagement: Utilizes digital marketing strategies to attract and engage customers.

7. Data Management: Gathers and analyzes customer data for personalized experiences.

8. Security Measures: Implements measures to secure transactions and protect sensitive

information.

Internet Commerce Trade Cycle

Internet Commerce is the use of the Internet for all phases of creating and completing business
transactions. Thus, in its broadest sense we view that the Internet can be used for all phases of
the trade cycle.

1. During the first stage of trade cycle, the Internet assists potential customers in searching and
purchasing decision by guiding them through product choices in an intelligent way. It also helps
customers in locating sites offering and appropriate goods or services.

2. During execution and settlement stage of trade cycle, the Internet assist customers in placing
order online, irrespective of location. It provides round-the-clock points of sale. The delivery can
be done electronically or by some another mode depending on the nature of goods and service.

3. During the post-purchase stage of trade cycle, the Internet provide extensive after-sales
support to customers by online methods; thus increasing satisfaction, deepening the customer
relationship and closing the selling loop through repeat and ongoing purchases.

Benefits of Internet Commerce

Here are the benefits of e-commerce:

1. Global Reach: Provides access to a worldwide market, breaking geographical barriers.

2. Convenience: Enables customers to shop anytime, anywhere, fostering a seamless shopping

experience.

3. Cost Efficiency: Reduces operational costs associated with physical stores, inventory, and
personnel.

4. Increased Sales: Expands customer reach, potentially leading to higher sales and revenue.

5. Data Insights: Gathers and analyzes customer data for targeted marketing and personalized
experiences.
6. Accessibility: Allows small and medium-sized businesses to compete alongside larger
enterprises.

7. Enhanced Customer Experience: Offers personalized services, easy transactions, and diverse
product choices.

8. Environmental Impact: Reduces the environmental footprint associated with traditional retail
practices.

ARCHITECTURAL FRAMEWORK OF E-COMMERCE

The basic framework of e-commerce means the synthesizing of resources to enable doing
business online. The framework consists of a comprehensive The basic framewdr pattern of all
the essential elements starting with the based technology layer to the general service layer.
These basic elements are data repdif software languages, software agera based transactions,
and communication protocols facilitate the integration of data and software for better
applications.

1. The first layer : Network Infrastructure

A network infrastructure is the foundation layer of ecommerce framework which provides the
optimized linkage between the customer and the supplier. It is also known as the "Information
Superhighway". This layer consists of all the wired (POTS, coaxial, fibre optics), and wireless
(cellular, radio, PCs) information transport systems. These systems, in particular the Internet,
provide various types of telecommunication channels for transmission of contents used in e-
commerce.

2. The Second Layer: Multimedia Content and Network Dissemination

While the network infrastructure provides the transportation basis to transmit the multimedia
contents such as text, sounds and images, the second layer provides an architecture that
enables the content to be developed in a programming language know as Hyper Text Markup
Language (HTML) for publishing on the World Wide Web (WWW). Another programming
language in use is Java, which enables multimedia content to be transmitted to end users'
personal computers via various networks such as cable, wireless, fiber optics and satellites.

3. The Third Layer: Messaging and Information Dissemination

In any business, electronic messaging is an important issue. The messaging transmission for
both formatted data and non-formatted data is accomplished under this layer. The transmission
of formatted data is done by using Electronic Data Interchange (EDI) without human intervention.
It is mainly used for business documents such as purchase orders, invoices and packing lists.
The transmission of non-formatted data is done by using facsimile, electronic mail, which
mainly directs to individuals. Messaging transmission technology has encouraged business
process automation. The message transmission on the internet is done by Hyper Text Transfer
Protocol (HTTP). It uses a common display format to publish non-formatted multimedia
messages in various environments.

4. The Fourth Layer: Security Protection in Business Services

The essential constraints for doing business electronically are security, privacy and
confidentiality. It is required by both business corporations and individuals in business
transactions. The ultimate goal of this layer is to provide secured transmission of business
information, electronic payment system and the authentication of identity of both trading parties.
To ensure transaction security, e-commerce needs to ensure content reliability, integrity, non-
repudiation, and to provide the relevant evidence in case of disputes. Electronic payment
systems have become key component to enable e-commerce. Hence, the success of e-
commerce depends upon effective electronic payment systems.

5. The Fifth layer: Practical Application of E-commerce

This layer decides that what type of e-commerce application is going to be implemented The e-
commerce is widely employed in supply chain management, electronic marketing electronic
advertising, online shopping, online entertainment, pay-information service and network banking.

WEB BASED E-COMMERCE 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.

Basically, Web-based E-commerce architecture consists of the following components:

1. Web browser. It is the client interface. Essentially, it is used for displaying information to the
user as well as collecting user's input to the system. Serving as the client, the web browser also
interacts with the web server using the HTTP.

2. Web server: It is one of the main components of the service system. It interacts with the web
client as well as the backend system.

3. Application server: It is the other main component of the service system and it hosts the e-
commerce application software.

4. Backend system: It supports the service system for fulfilling the user's request. In many
cases, it is a database management system.

5. Internet: It is the communication platform for the web server and the web client to exchange
information with each other.

The service system consists of a web server and application server and is responsible for
process management. The backend system is comprised of the database and is responsible for
data management.

The browser/user interaction function is usually fulfilled by a Web browser. The business rules
and applications function is typically fulfilled by application servers and transaction servers.

An end user typically initiates a request for information by interacting with a Web browser. Once
the user has submitted a request, it must be transmitted to a target Web site. This transmission
may be via HTTP (Hyper Text Transfer Protocol). HTTP is a simple application protocol working
under a client/server computing environment. Next the HTTP or HTTPS request reaches the
Web server. From the Web server the request is forwarded to an application server. Application
server implements business logic and connectivity, which dictate how clients and servers
interact. Finally, the request for service arrives at the database, where it is converted into an
instruction to add, modify, or retrieve information.