Introduction to E-Commerce.pdf

INTRODUCTION TO E-COMMERCE
By Kush Bhushanwar

WHAT IS COMMERCE
 According to Dictionary.com, Commerce is a
division of trade or production which deals with
the exchange of goods and services from producer
to final consumer.
 It comprises the trading of something of economic
 It comprises the trading of something of economic
value such as goods, services, information, or
money between two or more entities.

WHAT IS E-COMMERCE
 Commonly known as Electronic Marketing.
 “It consist of buying and selling goods and
services over an electronic systems Such as the
internet and other computer networks.”
 “E-commerce is the purchasing, selling and
 “E-commerce is the purchasing, selling and
exchanging goods and services over computer
networks (internet) through which transaction or
terms of sale are performed Electronically.

TRADITIONAL BUSINESS
DIRECT SELLING

Low Entry Cost
Reduces Transaction Costs
Access To The Global Market
Secure Market Share

Brief History
Of
E-Commerce
E-Commerce

 1970s: Electronic Funds Transfer (EFT)
 Used by the banking industry to exchange
account information over secured networks
 Late1970s 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)

THE PROCESS
OF
E-COMMERCE
E-COMMERCE

 A consumer uses Web browser to connect
to the home page of a merchant's Web site
on the Internet.
 The consumer browses the catalog of
products featured on the site and selects
items to purchase.
 The selected items are placed in the
 The selected items are placed in the
electronic equivalent of a shopping cart.
 When the consumer is ready to complete
the purchase of selected items, she
provides a bill-to and ship-to address for
purchase and delivery

 When the merchant's Web server receives
this information, it computes the total cost
of the order-- including tax, shipping, and
handling charges--and then displays the
total to the customer.
 The customer can now provide payment
information, such as a credit card number,
and then submit the order.
and then submit the order.

 When the credit card number is validated
and the order is completed at the
Commerce Server site, the merchant's site
displays a receipt confirming the
customer's purchase.
 The Commerce Server site then forwards
the order to a Processing Network for
payment processing and fulfillment.
payment processing and fulfillment.

E-COMMERCE ORGANIZATION
 An E-Commerce Organizational unit is the
organizational structure with which a company
operates its online business.
 The basic parameters and requirements for this
organizational unit are usually defined within
organizational unit are usually defined within
the framework of an E-Commerce distribution
strategy or the individual channel strategies.
 Regardless of which of the three E-Commerce
pillars (Online Marketplaces, Third Party
eRetailers, Direct Sales & Affiliates) are actively
being pursued by a company, certain basic rules
exist for ensuring high performance.

E-COMMERCE ORGANIZATIONAL UNIT

Introduction to E-Commerce.pdf

APPLICATION SERVICES
 This layer comprises of existing and
future applications.
 Three distinct classes of ecommerce
applications are:
 Consumer to business
 Business to consumer
 Intra organization

BROKERAGE AND DATA MANAGEMENT
 This layer provides service integration
through information brokerages.
 Information brokerages represents an
intermediary who provides service
integration between customers and
information providers.
 An important aspect of the brokerage
function is the support for data
management.

INTERFACE AND SUPPORT SERVICES
 This layer provides interfaces for
ecommerce applications such as
interactive catalogs and functions
necessary for information search via
directories.
directories.
 Interactive catalogs are customized
interface to customer applications like
home shopping.
 Directories organize enormous amount of
information and transactions generated to
facilitate ecommerce.

SECURE MESSAGING
 E-messaging is a critical business issue.
 Messaging is the software that sites
between the network infrastructure and
the clients or ecommerce applications.
 Messaging services offers solutions for
communicating unstructured data, reports
as well as structured data such as
purchase orders, shipping notices, etc.

MIDDLEWARE SERVICES
 With the growth of networks, client server
technology and all other forms of communicating
between or among different platforms, the
problems of getting all the pieces to work
together grew.
together grew.
 Users demanded interaction between dissimilar
systems, networks that permitted shared
resources and applications that could be accessed
by multiple software programs.
 Middleware is the ultimate mediator between
software programs that enables them to
communicate with one another.

NETWORK INFRASTRUCTURE
(WWW AS A ARCHITECTURE)

SECURITY PROTOCOL
 A communication protocol is a formal description
of digital message formats for exchanging those
messages in or between computing systems.
 The internet protocol (IP) is the principle
communications protocol used for datagram
communications protocol used for datagram
(packets) across an internet using the internet
protocol suite.

TYPES
OF
E-COMMERCE
E-COMMERCE

BUSINESS-TO-BUSINESS (B2B)
 B2B stands for Business to Business.
 It consists of largest form of Ecommerce.
 This model defines that Buyer and seller are two
different entities.
It is similar to manufacturer issuing goods to the
 It is similar to manufacturer issuing goods to the
retailer or wholesaler.
 E.g.:-Dell deals computers and other associated
accessories online but it is does not make up all
those products. So, in govern to deal those
products, first step is to purchases them from
unlike businesses i.e. the producers of those
products.

BUSINESS-TO-CONSUMER (B2C):
 It is the model taking businesses and consumers
interaction.
 The basic concept of this model is to sell the
product online to the consumers.
 B2C is the direct trade between the company and
 B2C is the direct trade between the company and
consumers.
 It provides direct selling through online.
 For example: if you want to sell goods and
services to customer so that anybody can
purchase any products directly from supplier’s
website.

BUSINESS-TO-EMPLOYEE (B2E)
 Business-to-employee (B2E) electronic
commerce uses an intrabusiness network
which allows companies to provide
products and/or services to their
employees.
employees.
 Typically, companies use B2E networks to
automate employee-related corporate
processes.

CONSUMER-TO-CONSUMER (C2C)
 There are many sites offering free
classifieds, auctions, and forums where
individuals can buy and sell thanks to
online payment systems like PayPal
where people can send and receive money
where people can send and receive money
online with ease.
 eBay's auction service is a great example
of where person-to-person transactions
take place everyday since 1995.

PROS AND CONS
OF
E-COMMERCE
E-COMMERCE

ADVANTAGES OF E-COMMERCE:
 Buying/selling a variety of goods and services from
one's home or business
 Anywhere, anytime transaction
 Can look for lowest cost for specific goods or service
 Businesses can reach out to worldwide clients - can
establish business partnerships
establish business partnerships
 Order processing cost reduced
 Electronic funds transfer faster
 Supply chain management is simpler, faster, and
cheaper using ecommerce
 Can order from several vendors and monitor supplies.
 Production schedule and inventory of an organization can
be inspected by cooperating supplier who can in-turn
schedule their work.

DISADVANTAGES OF E-COMMERCE:
 Electronic data interchange using EDI is
expensive for small businesses
 Security of internet is not very good -
viruses, hacker attacks can paralyse e-
commerce
 Privacy of e-transactions is not
guaranteed.

LIMITATIONS OF ECOMMERCE :
 Security
 Lack of Privacy
 Tax Issue
 Fear
Product Suitability
 Product Suitability
 Cultural Obstacles
 High Labour Cost
 Legal Issues
 Technical Limitations
 Huge Technological Cost

SECURITY:
 One of the main limitations of eCommerce
is security.
 In most cases, people are hesitant to
provide their personal and financial
details in spite of advanced data
encryption security systems in place.
 Moreover, there are some websites that do
not have the capability and features
installed to authenticate transactions.

LACK OF PRIVACY:
 To some extent, the privacy of a customer
is compromised in eCommerce.
 You need to provide your personal details,
such as address, telephone number, and
so on to the seller.
 There are still lots of sites that do not
have the advanced technology to protect
sensitive information.
 Moreover, there are also sites that
illegally collect consumer statistics
without permission.

TAX ISSUE:
 In case of different geographical locations,
sales tax becomes an issue.
 Many a time sellers have faced problems
in the computation of sales tax.
 Moreover, physical stores have a risk of
losing business if online transactions are
exempted from taxation.

FEAR:
 In spite of popularity, there still resides
an element of doubt in the mind of people
when it comes to online shopping.
 This is because the customer cannot
physically examine the product and is not
sure about the features and attributes.
 This is why a lot of people prefer shopping
from physical stores.

PRODUCT SUITABILITY:
 As already mentioned, it is not possible
for people to physically examine the
product in eCommerce.
 In many cases, the original product may
not match with the picture or
specifications in the eCommerce site.
 This absence of ‘touch and feel’ creates a
discouraging effect.

CULTURAL OBSTACLES:
 As the process of eCommerce encompasses
customers across the globe, the habits,
traditions, and culture differ.
 There may also be linguistic problems and
all these may lead to issues between the
seller and buyer.

HIGH LABOUR COST:
 In order to get the whole eCommerce and
delivery process right, a specialized
workforce is required.
 To get all these in the right shape,
companies have to shed a good amount of
money and employ a talented pool of
people.

LEGAL ISSUES:
 A lot of legal compliances and cyber laws
that need to be taken care of in an
eCommerce business.
 These regulations may vary from country
to country.
 All these reasons deter businesses from
going electronic.

TECHNICAL LIMITATIONS:
 eCommerce requires advanced technology
platforms for better performance.
 Some limitations, such as lack of proper
domain, network and software issues and
so on can affect the seamless performance
of an eCommerce site.

HUGE TECHNOLOGICAL COST:
 Last but not the least; a lot of money needs to be
invested to be built up the technical
infrastructure needed to run an eCommerce
business.
 Moreover, they need to be upgraded based to
 Moreover, they need to be upgraded based to
keep abreast with the changing technology.

SCOPE OF E-COMMERCE
 Marketing, sales and sales promotion.
 Pre-sales, subcontracts, supply.
 Financing and insurance.
 Commercial transactions – ordering, delivery, payment.
 Product service and maintenance.
Co-operative product development.
 Co-operative product development.
 Distributed co-operative working.
 Use of public and private services.
 Business-to-administrations
 Transport and logistics.
 Public procurement.
 Automatic trading of digital goods like games, learning material,
songs and music etc.
 Accounting and financial management.
 Legal advice

STRATEGY:
 Increase E-Commerce Search Usability
 Use High-Quality Photographs and Good
Product Descriptions
 Try Personalizing the Home Page
 Try Personalizing the Home Page
 Focus on Consistent and Unique Content
 Optimize Shopping Cart Functionality
 Build E-mail Lists
 Improve Your Social Media Strategy
 Build Advertising Strategies
 Implement User Generated Content

Introduction to E-Commerce.pdf

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