CHAPTER ONE

OVERVIEW OF E-COMMERCE

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 QUESTION

WHAT IS E-COMMERCE ?

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 What is E-commerce ?
 E-Commerce or Electronics Commerce is a methodology of modern
business, which addresses the requirements of business organizations
vendors and customers to reduce cost and improve the quality of goods
and services while increasing the speed of delivery.
It can be broadly defined as the process of buying or selling of goods or
services using an electronic medium such as the Internet
E-Commerce or Electronics Commerce is a methodology of modern

business which addresses the need of business organizations.

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 …cont’’
E-commerce is an emerging concept that describes the
process of buying and selling or exchanging of products,
services, and information via computer networks including
the internet.
Digitally enabled commercial transactions between and
among organizations and individuals.

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 …cont’’’
Ecommerce refers to the paperless
exchange of business information using
the following ways:
Electronic Data Exchange (EDI)
Electronic Mail (e-mail)
Electronic Fund Transfer (EFT)
Other Network-based technologies

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 Electronic Document Interchange.

..cont’’’

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 Definition of E-Commerce from Different Perspectives:

Communications Perspective: E-commerce is the

delivery of information, products/services, or payments
over the telephone lines, computer networks or any
other electronic means.
Business Process Perspective: E-commerce is the
application of technology toward the automation of
business transactions and work flow.

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 …cont’’’
Service Perspective: E-commerce is a tool that addresses the
desire of firms, consumers, and management to cut service costs
while improving the quality of goods and increasing the speed of
service delivery.

Online Perspective: E-commerce provides the capability of

buying and selling products and information on the internet and

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online services.
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 Features of E-Commerce

E-Commerce provides the

following features:
Non-Cash Payment : E-Commerce enables use of credit cards,
debit cards, smart cards, electronic fund transfer via bank's
website and other modes of electronics payment.
24x7 Service availability: E-commerce automates business of
enterprises and services provided by them to customers are
available anytime, anywhere. Here 24x7 refers to 24 hours of
each seven days of a week.
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 Following are the actors in the credit card system.

The card holder − Customer

The merchant − seller of product who can accept credit
card payments.
The card issuer bank − card holder's bank
The acquirer bank − the merchant's bank
The card brand − for example , visa or Master card.

Steps to set up
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 cont

Advertising / Marketing: E-commerce increases the reach of

advertising of products and services of businesses. It helps in better
marketing management of products / services.
Improved Sales: Using E-Commerce, orders for the products can be
generated any time, any where without any human intervention. By
this way, dependencies to buy a product reduce at large and sales
increases.
Support: E-Commerce provides various ways to provide pre sales
and post sales assistance to provide better services to customers.

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 Cont’’

Inventory Management: Using E-Commerce, inventory

management of products becomes automated. Reports get
generated instantly when required. Product inventory
management becomes very efficient and easy to maintain.

Communication improvement: E-Commerce provides ways for

faster, efficient, reliable communication with customers and
partners.
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 E-commerce and E-business
E-commerce primarily involves transactions that cross firm
boundaries.
E-business primarily concerns the application of digital
technologies to business processes within the firm.

It means-there is no commercial transaction (i.e. exchange of

value) in E-business but E-commerce involves commercial
transaction.
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 Unique Features of E-commerce Technology

Some unique features of E-commerce technology that is why it is in

more demand comparing to Traditional commerce
Ubiquity: E-commerce is ubiquitous, meaning that it is available just
about everywhere, at all times.
Global Reach: The potential market size for e-commerce merchants
is roughly equal to the size of the world’s online population
Universal Standards: E-commerce, are universal standards-they are
shared by all nations around the world.

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 Cont’’’
Information Richness: Information richness refers to the
complexity and content of a message.
Information Density: Information density the total amount and
quality of information available to all market participants, consumers,
and merchants alike.

Personalization/Customization: E-commerce technologies

permit personalization. Merchants can target their marketing
messages to specific individuals by adjusting the message to a
person’s name, interests, and past purchases.

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 Traditional Commerce versus E-Commerce

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 Limitation of E-commerce over traditional commerce

 Expensive Technology: Using the internet requires $10/month

connect charge.
Sophisticated Skill Set: The skills required to make effective use of the
internet and e-commerce capabilities are far more sophisticated than,
say, for television or newspapers.
Cultural Attraction and Social Event: For many, shopping is a cultural
and social event where people meet directly with merchants and other
consumers. This experience cannot yet be duplicated in digital form.
Limited Access of Technology: Most of the world’s population does
not have telephone service, PCs, or cell phones.

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 E-Commerce - Advantages
E-Commerce advantages can be broadly classified in
three major categories:
Advantages to Organizations
Advantages to Consumers (customers)
Advantages to Society

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 Advantages to Organizations

Using e-commerce, organizations can expand their market to

national and international markets with minimum capital investment.
An organization can easily locate more customers, best suppliers, and
suitable business partners across the globe.
E-commerce helps organizations to reduce the cost to create
process, distribute, retrieve and manage the paper based information
by digitizing the information.
E-commerce improves the brand image of the company.
E-commerce helps organization to provide better customer
services.

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 …Cont’’’
E-commerce helps to simplify the business processes and makes them
faster and efficient.
E-commerce reduces the paper work.
E-commerce increases the productivity of organizations. It supports
"pull" type supply management. In "pull" type supply management, a
business process starts when a request comes from a customer and it
uses just-in-time manufacturing way.

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 Advantages to Customers

It provides 24x7 support. Customers can enquire about a product or

service and place orders anytime, anywhere from any location.
E-commerce application provides users with more options and quicker
delivery of products.
E-commerce application provides users with more options to compare
and select the cheaper and better options.
A customer can put review comments about a product and can see
what others are buying, or see the review comments of other
customers before making a final purchase.

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 …Cont’’’
E-commerce provides options of virtual auctions.
It provides readily available information. customer can see the
relevant detailed information within seconds, rather than waiting
for days or weeks.
E-Commerce increases the competition among organizations and
as a result, organizations provides substantial discounts to
customers.

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 Advantages to Society

Customers need not travel to shop a product, thus less traffic on road
and low air pollution.
E-commerce helps in reducing the cost of products, so less affluent
people can also afford the products.
E-commerce has enabled rural areas to access services and products,
which are otherwise not available to them.
E-commerce helps the government to deliver public services such as
healthcare, education, social services at a reduced cost and in an
improved manner.

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 E-Commerce - Disadvantages
The disadvantages of e-commerce can be broadly classified
into two major categories:
Technical disadvantages
Non-Technical disadvantages

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 Technical Disadvantages
There can be lack of system security, reliability or standards
owing to poor implementation of e-commerce.
The software development industry is still evolving and keeps
changing rapidly.
In many countries, network bandwidth might cause an issue.
Special types of web servers or other software might be
required by the vendor, setting the e-commerce environment
apart from network servers.

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 ..cont’’’
Sometimes, it becomes difficult to integrate an e-
commerce software or website with existing
applications or databases.
There could be software/hardware compatibility
issues, as some e-commerce software may be
incompatible with some operating system or any
other component.

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 Non-Technical Disadvantages
Initial cost: The cost of creating/building an e-commerce
application in-house may be very high.

User resistance: Users may not trust the site being an

unknown faceless seller. Such mistrust makes it difficult to
convince traditional users to switch from physical stores to
online/virtual stores.

Security/Privacy: It is difficult to ensure the security or

privacy on online transactions.

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 SUCCESSES IN E-commerce
There are several basic steps you will need to accomplish before becoming
Commerce Enabled.

Getting a Merchant Bank

Account : In order to be able to accept credit cards,
you must apply for an account with a credit card merchant
account provider.

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 Cont’’’
Web Hosting Web: hosting is a very important step in this
process, as this is how you gain a presence on the internet in
the first place. There are actually two scenarios that can be
used for web hosting.
 Scenario1 involves setting up and maintaining your own web
server, while
 Scenario 2 involves farming out all webs hosting
administration to an ISP (Internet Service Provider).

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 Cont’’’

Web Design Considerations : With

little knowledge of HTML and a lot of patience, you can probably
create your own corporate web site with the help of products
like Microsoft FrontPage™ or DreamWeaver™.

 Obtaining a Digital Certificate: A

digital certificate, also known as a SSL Server Certificate, enables
SSL (Secure Socket Layer encryption) on the web server. SSL
protects communications so you can take credit card orders
securely and ensure that hackers cannot eavesdrop on you.
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