Unit I (Introduction to Electronic Commerce)

1.1 E-Commerce and E-Business

E-Commerce
E-commerce (electronic commerce or EC) is the buying and selling of
goods and services, or the transmitting of funds or data, over an
electronic network, primarily the internet. These business transactions
occur either as business-to-business, business-to-consumer,
consumer-to-consumer or consumer-to-business.
E-Commerce or electronic commerce refers to the exchange of goods
and services, funds or information, between businesses and consumers
using the electronic network, i.e. internet or online social network. E-
Commerce means trading and providing assistance to trading
activities, through the use of the electronic medium, i.e. all the
activities like purchasing, selling, ordering and paying are performed
over the internet.
The scopes of e-commerce are:
 B2B commerce: When the business transaction takes place
between two business houses, through the electronic channel, it
is called B2B commerce.
 B2C commerce: When the exchange of goods and service takes
place between the business entity and the customer, over the
internet, then it is known as B2C commerce.
 C2C commerce: When the buying and selling of goods and
services take place between customers using electronic medium,
then it is called C2C commerce
 Intra-B commerce: When the exchange occurs within the firm
or business house, with the use of electronic media, it is called
as Intra B-commerce.

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E-Business
E-business (electronic business) is the conduct of business processes
on the Internet. These electronic business processes include buying
and selling products, supplies and services; servicing customers;
processing payments; managing production control; collaborating
with business partners; sharing information; running automated
employee services; recruiting; and more.
E-business can comprise a range of functions and services, ranging
from the development of intranets and extranets to e-service, the
provision of services and tasks over the Internet by application service
providers.

BASIS FOR
TRADITIONAL COMMERCE E-COMMERCE
COMPARISON

Meaning Traditional commerce is a E-Commerce means

branch of business which carrying out
focuses on the exchange of commercial
products and services, and transactions or
includes all those activities exchange of
which encourages exchange, information,
in some way or the other. electronically on the
internet.

Processing of Manual Automatic

Transactions

Accessibility Limited Time 24×7×365

Physical Goods can be inspected Goods cannot be

inspection physically before purchase. inspected physically
before purchase.

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 BASIS FOR
TRADITIONAL COMMERCE E-COMMERCE
COMPARISON

Customer Face-to-face Screen-to-face

interaction

Scope of Limited to particular area. Worldwide reach

business

Information No uniform platform for Provides a uniform

exchange exchange of information. platform for
information
exchange.

Resource focus Supply side Demand side

Business Linear End-to-end

Relationship

Marketing One way marketing One-to-one

marketing

Payment Cash, cheque, credit card, Credit card, fund

etc. transfer etc.

Delivery of Instantly Takes time

goods

Key Differences between Traditional Commerce and e-

Commerce
The following points are noteworthy so far as the difference between
traditional commerce and e-commerce is concerned:
1. A part of business, that focuses on the exchange of products and
services, and includes all those activities which encourage

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 exchange, in some way or the other, is called traditional
commerce. E-Commerce means carrying out commercial
transactions or exchange of information, electronically on the
internet.
2. In traditional commerce, the transactions are processed
manually whereas, in the case of e-commerce, there is
automatic processing of transactions.
3. In traditional commerce, the exchange of goods and services, for
money can take place, only during working hours. On the other
hand, in e-commerce, the buying and selling of goods can occur
anytime.
4. One of the major drawbacks of e-commerce is that the
customers cannot physically inspect the goods before purchase,
however, if customers do not like the goods after delivery they
can return it within the stipulated time. Conversely, in traditional
commerce physical inspection of goods is possible.
5. In traditional commerce, the interaction between buyers and
sellers is direct, i.e. face to face. As against this, there is indirect
customer interaction, in the case of e-commerce, because it may
be possible that the customer is miles away from where they
place an order for the purchase of goods.
6. The scope of business in traditional commerce is limited to a
particular area, i.e. the reach of business is limited to the nearby
places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of
access.
7. As there is no fixed platform for information exchange in
traditional commerce, the business has to rely on the
intermediaries for information fully. Unlike e-Commerce, wherein

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 there is a universal platform for information exchange, i.e.
electronic communication channel, which lessen the dependency
on persons for information.
8. Traditional commerce is concerned with the supply side. In
contrast, the resource focus of e-commerce is the demand side.
9. In traditional commerce, the business relationship is vertical or
linear, while in the case of e-commerce there is directness in
command leading to a horizontal business relationship.
10. In traditional commerce, due to standardization, there is
mass/one way marketing. However, customization exists in e-
commerce leading to one to one marketing.
11. Payment for transactions can be done by paying cash,
cheque or via credit card. On the other hand, payment in e-
commerce transactions can be done through online payment
modes like credit card, fund transfer, etc.
12. The delivery of goods is immediate in traditional commerce
but in the case of e-commerce, the goods are delivered at the
customer’s place, after some time, usually within a week.

ADVANTAGES AND DISADVANTAGES OF ECOMMERCE

ADVANTAGES OF ECOMMERCE
1. Faster buying/selling procedure, as well as easy to find products.
2. Buying/selling 24/7.
3. More reach to customers, there is no theoretical geographic
limitations.
4. Low operational costs and better quality of services.
5. No need of physical company set-ups.
6. Easy to start and manage a business.

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 7. Customers can easily select products from different providers
without moving around physically.
DISADVANTAGES OF ECOMMERCE
 Any one, good or bad, can easily start a business. And there are
many bad sites which eat up customers’ money.
 There is no guarantee of product quality.
 Mechanical failures can cause unpredictable effects on the total
processes.
 As there is minimum chance of direct customer to company
interactions, customer loyalty is always on a check.
 There are many hackers who look for opportunities, and thus an
ecommerce site, service, payment gateway; all are always prone to
attack.

Media convergence
Media convergence is the interlinking of computing and other information
technologies, media content, media companies and communication networks
that have arisen as the result of the evolution and popularization of the
Internet as well as the activities, products and services that have emerged in
the digital media space.
Media convergence refers to the merging of both old and new media and can
be seen as a product, a system or a process.
Media convergence, phenomenon is involving the interconnection of
information and communications technologies, computer networks, and
media content. It brings together the ―three C’s‖—
computing, communication, and content—and is a direct consequence of the
digitization of media content and the popularization of the Internet. Media
convergence transforms established industries, services, and work practices
and enables entirely new forms of content to emerge.

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Business Applications E-Commerce
The most common Applications of E-commerce are as follows:
1. Retail and wholesale:
E-commerce has a number of applications in retail and wholesale.
E-retailing or on-line retailing is the selling of goods from Business-to-
Consumer through electronic stores that are designed using the
electronic catalog and shopping cart model.
Cybermall is a single Website that offers different products and
services at one Internet location. It attracts the customer and the
seller into one virtual space through a Web browser.
2. Marketing:
Another application of e-commerce is marketing.
Data collection about customer behavior, preferences, needs and
buying patterns is possible through Web and E-commerce. This helps
marketing activities such as price fixation, negotiation, product feature
enhancement and relationship with the customer.
3. Finance:
Financial companies are using E-commerce to a large extent.
Customers can check the balances of their savings and loan accounts,
transfer money to their other account and pay their bill through on-line
banking or E-banking.
Another application of E-commerce is on-line stock trading. Many
Websites provide access to news, charts, information about company
profile and analyst rating on the stocks.
4. Manufacturing:
E-commerce is also used in the supply chain operations of a company.

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 Some companies form an electronic exchange by providing together
buy and sell goods, trade market information and run back office
information such as inventory control.
This speeds up the flow of raw material and finished goods among the
members of the business community. Various issues related to the
strategic and competitive issues limit the implementation of the
business models.
Companies may not trust their competitors and may fear that they will
lose trade secrets if they participate in mass electronic exchanges.
5. Auctions:
Customer-to-Customer E-commerce is direct selling of goods and
services among customers.
It also includes electronic auctions that involve bidding. Bidding is a
special type of auction that allows prospective buyers to bid for an
item.
For example, airline companies give the customer an opportunity to
quote the price for a seat on a specific route on the specified date and
time.

Need for e-business and e-commerce

1. E-Business helps in Cost Reduction
a. E-business enables business organizations to advertise products,
receive orders, collect payments and deliver goods at lower cost.
b. E-business is very cost effective as it helps eliminate the role of
the middlemen.
c. Advertisements on internet enable a better customer to cost
ratio. They enable business organization to spend less by cutting
down the cost.

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 d. The total overhead cost required to run e-business is comparably
much cheaper than traditional business. Hosting a website
reduces the cost incurred on labor, office rent and maintenance.
e. Lack of information about product schedules of the buyers
results in high inventory build up for the seller. The speedy flow
of information between the buyers and sellers in electronic
market helps to eliminate unnecessary inventory cost.
f. E-Business organizations can enter international market at lower
cost; the primary benefit of e-business is global accessibility
at marginal cost.
g. Web enables a business organization to introduce and market a
new product without incurring huge investment.
2. E-Business helps in Customer satisfaction
a. E-business allows business organizations to have intimate
relationship with customers.
b. E-commerce enables the customers to choose and order
products according to their specifications.
c. E-business allows customers to perform online shopping. The
convenience, flexibility and speedy flow of information help the
business organizations to provide improved customer service.
d. Advertisements placed on internet attract customers from
domestic and global market.
e. The gains obtained in e-business are passed on to customers
through lower prices or as additional features of products or
services, this provides customer satisfaction.
f. Customer satisfaction helps to increase the customer base.
g. E-business enables a business organization to keep the doors
open for business, whenever a customer requires it.

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 h. Up-to-date information available on an organization’s website
provides more information to customer, thus educating them
better.
3. E-Business helps to acquire Just-In-Time Information
a. E-business enables business organizations to have direct links
with suppliers, distributors and customers through improved
information systems.
b. Speedy flow of communication paves way for quick processing of
orders.
c. The cost incurred on communication in e-business environment
is low and allows instantaneous communication between anyone
from anywhere from the world.
d. E-business enables instant flow of communication regarding
goods, services, transmission of orders and the status of
delivery. The services of the organization are available 24 hours
a day and 365 days a year.
e. E-business helps to deliver just in time information and removes
communication barriers between employees, customers,
suppliers and business associates.
4. E-Business helps in Transaction Efficiency
a. Business process is automated. Reduction in operational waste
and the automation of business process and practices lead to
transaction efficiency.
b. The time taken to complete business transactions is very less in
electronic environment.
c. E-business enables business organizations to have direct links
with customers and this enables to a business to become more
customer-focused.

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 d. E-business helps to streamline the operating processes and
enables to integrate the various business activities of an
organization.
5. Ease of Access to Global Market through E-Business
a. Internet provides the basis for global communication.
Advertisements placed on internet helps to attract customers
from anywhere in the world.
b. E-business allows business organizations to enter international
markets easily and effectively.
c. The information about the organization, products, services,
features are available online. The information and price
transparency allow business organizations to expand their
business globally.
E-commerce and e-business involve the creation of new value chains
and business relationship between an organization and its customers
and suppliers, as well as within the organization itself. There is lot of
organizational obstacles in developing an e-business strategy. It
involves major and potentially disruptive organizational change.
E-business has got a wider scope than e-commerce. E-commerce is a
subset of e-business. It is essential for all companies to have an e-
commerce strategy. But some companies need to move beyond e-
commerce and form e-business strategies especially large companies
that already have links to Electronic Data Interchange networks or
have completed major Enterprise Resource Planning implementation.
Companies that are successful in implementing e-commerce have a
bright chance of being successful in an e-business strategy.

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Basic Requirements of E-Commerce
Network
When setting up the computer systems for your e-commerce
enterprise, you need to figure out how your computers will be
configured in relation to each other. Your computer systems need to
communicate with each other in some fashion based on how many
people are working together and what kinds of computer files and
resources they share. The way they are tied together in your computer
network is known as a network topology.
Website
The first and most important step in selling online is having a
functional site. A successful e-Commerce site needs a layout that
makes finding products easy. This is known as user-centered design,
and done properly it will generate sales for your online business.
(Much like the way that sales signs and strategic placement can lead
to sales for a brick and mortar store).
Products
Products and high quality product pages are also a necessity in e-
Commerce. Products need to be categorized and include pictures and
detailed descriptions. The goal is to allow the customer to have a
shopping experience that is as dynamic as one they would experience
in a brick & mortar store.
A Way to Check Out
A comprehensive online shopping cart and checkout system is a must
for any e-Commerce store. Not having this would be the equivalent of
a brick and mortar store having no checkout counter or cash register!
Doesn’t sound like a good idea, does it? The first part of this
requirement is that a e-Commerce platform. There are many content
only platforms, but a e-Commerce specific CMS system will be needed

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 for your customers to get to a checkout page. Ideally, the checkout
process will be as short and simple as possible. It is also
recommended to make it very clear that the transaction will be private
and protected through some kind of online transaction security
system.
Domain & Domain Registrar
Domains are used in a networking context in order to represent an
Internet Protocol (IP) resource. Your site domain is like the name of
your online store, for example [Link] is a domain
name. A domain registrar is an organization that manages and handles
internet domain names and offers these services to the public.
GoDaddy is an example of a popular and widely used domain registrar.
A Place to Host
A Place to Host-A web hosting service is a company that allows people
or organizations to make their site accessible on the World Wide Web.
They will offer space on a server that is typically operated from a
secure data center facility.

Types of Electronic transactions today:

1. Business-to-Business (B2B)
2. Business-to-Consumer (B2C)
3. Consumer-to-Consumer (C2C)
4. Consumer-to-Business (C2B).
5. Business-to-Administration (B2A)
6. Consumer-to-Administration (C2A)

1. Business-to-Business (B2B)
Business-to-Business (B2B) e-commerce encompasses all electronic
transactions of goods or services conducted between companies.

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 Producers and traditional commerce wholesalers typically operate with
this type of electronic commerce.
2. Business-to-Consumer (B2C)
The Business-to-Consumer type of e-commerce is distinguished by the
establishment of electronic business relationships between businesses
and final consumers. It corresponds to the retail section of e-commerce,
where traditional retail trade normally operates.
These types of relationships can be easier and more dynamic, but also
more sporadic or discontinued. This type of commerce has developed
greatly, due to the advent of the web, and there are already many virtual
stores and malls on the Internet, which sell all kinds of consumer goods,
such as computers, software, books, shoes, cars, food, financial products,
digital publications, etc.
When compared to buying retail in traditional commerce, the consumer
usually has more information available in terms of informative content
and there is also a widespread idea that you’ll be buying cheaper, without
jeopardizing an equally personalized customer service, as well as
ensuring quick processing and delivery of your order.
3. Consumer-to-Consumer (C2C)
Consumer-to-Consumer (C2C) type e-commerce encompasses all
electronic transactions of goods or services conducted between
consumers. Generally, these transactions are conducted through a third
party, which provides the online platform where the transactions are
actually carried out.
4. Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of exchanging
goods. This type of e-commerce is very common in crowd sourcing based
projects. A large number of individuals make their services or products

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 available for purchase for companies seeking precisely these types of
services or products.
Examples of such practices are the sites where designers present several
proposals for a company logo and where only one of them is selected and
effectively purchased. Another platform that is very common in this type
of commerce are the markets that sell royalty-free photographs, images,
media and design elements, such as iStock photo.
5. Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions conducted online
between companies and public administration. This is an area that
involves a large amount and a variety of services, particularly in areas
such as fiscal, social security, employment, legal documents and
registers, etc. These types of services have increased considerably in
recent years with investments made in e-government.
6. Consumer-to-Administration (C2A)
The Consumer-to-Administration model encompasses all electronic
transactions conducted between individuals and public administration.
Examples of applications include:
Education – disseminating information, distance learning, etc.
Social Security – through the distribution of information, making
payments, etc.
Taxes – filing tax returns, payments, etc.
Health – appointments, information about illnesses, and payment of
health services, etc.
Both models involving Public Administration (B2A and C2A) are strongly
associated to the idea of efficiency and easy usability of the services
provided to citizens by the government, with the support of information
and communication technologies.

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M-commerce
M-commerce (mobile commerce) is the buying and selling of goods and
services through wireless handheld devices such as cellular telephone and
personal digital assistants (PDAs).
Mobile commerce, also referred as m-commerce, is the use of wireless
handheld devices such as cellular phones and laptops to conduct
commercial transactions online. Mobile commerce transactions continue to
grow, and the term includes the purchase and sale of a wide range of
products and services, such as online banking, bill payment and information
delivery.

Applications of Mobile-Commerce
1) M-Commerce for finance
The customer (using the mobile) can pay from their bank account using
mobile commerce facilities. Mobile users can transfer funds between
account or receive any information related to finance from financial
institutions or banks. WAP based mobile devices allow the user to access
the internet or the website of the financial institutions.
2) M-Commerce and Mobile Marketing
It is easy for business organizations to send text messages to promote a
new product or carryout any form of promotional campaign. For example,
Reliance Fresh sends the customer an SMS stating the reward points
earned by them when they purchase goods from Reliance. Even if some
changes are brought in providing reward points, they are informed to the
customer in order to encourage sales.

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3) M-Commerce and Mobile Ticketing
Airline tickets can be purchased through mobile phone. It also enables
users of mobile phone to make changes in their tickets. For example,
With ―flybuy SMS‖ launched by Kingfisher Airlines and paymate,
customers can get the details of Kingfisher airlines flights by sending
SMS. The customer can book the ticket after receiving a reply. Besides
the above, movie tickets can also be booked through mobile phones.
4) M-Commerce and Mobile Entertainment
Mobile terminal acts as a portable music player. Downloading ringtones
has become successful m-commerce application. Mobile phone
manufacturers and wireless providers are making good money by selling
different kinds of customized ringtones.
5) M-Commerce for Hotel Reservations
Using mobile devices, customer can reserve for restaurants and hotels
according to their needs.
6) M-Commerce in Healthcare and Medicine
Wireless services are used in healthcare and medicine for billing, lab
ordering, referrals, prescriptions and clinical decisions. For example, in
United States, healthcare professionals are able to obtain patient
information from any location by getting connected wirelessly to the
hospital’s information system. They are able to access the pharmaceutical
information of patients and provide better patient care.
7) M-commerce for Intra-Office Communication
Sales personnel, who are always on the move, may need to access to the
company information system to check price of products. But mobile
allows the traveling sales personnel to track inventory and maintain
communication with seniors at ease. Traveling salesmen do not have to
wait for long to get approval from the seniors. Any information could be

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 transferred easily and quickly with the help of mobile devices. It removes
barriers in intra-office communication.
8) M-Commerce for Information
Mobiles enable customers to get information like sport news or political
news of their choice. For example, today through SMS, students are able
to check their university results or public examination results.
9) M-Commerce for Gaming
Customers can play multi player games through mobiles. Mobile games
are very popular with colorful displays and it generates good revenue.

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