UNIT – 1

E-Commerce or Electronics Commerce is a methodology of modern business which addresses the

need of business organizations, vendors and customers to reduce cost and improve the quality of
goods and services while increasing the speed of delivery. E-commerce refers to paperless exchange
of business information using following ways.

• Electronic Data Exchange (EDI)

• Electronic Mail (e-mail)

• Electronic Bulletin Boards

• Electronic Fund Transfer (EFT)

• Other Network-based technologies

Features
E-Commerce provides 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.

• 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.

• 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.
Traditional Commerce v/s E-Commerce
Sr.
Traditional Commerce E-Commerce
No.
Information sharing is made easy via electronic
Heavy dependency on information
1 communication channels making little dependency
exchange from person to person.
on person to person information exchange.
Communication/ transaction are done in Communication or transaction can be done in
synchronous way. Manual intervention is asynchronous way. Electronics system
2
required for each communication or automatically handles when to pass communication
transaction. to required person or do the transactions.
It is difficult to establish and maintain
A uniform strategy can be easily established and
3 standard practices in traditional
maintain in e-commerce.
commerce.
Communications of business depends In e-Commerce or Electronic Market, there is no
4
upon individual skills. human intervention.
Unavailability of a uniform platform as
E-Commerce website provides user a platform
5 traditional commerce depends heavily on
where al l information is available at one place.
personal communication.
No uniform platform for information E-Commerce provides a universal platform to
6 sharing as it depends heavily on personal support commercial / business activities across the
communication. globe.

E-Commerce advantages can be broadly classified in three major categories:

• Advantages to Organizations

• Advantages to Consumers

• Advantages to Society

Advantages to Organizations
• Using E-Commerce, organization 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 organization 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.

• E-Commerce helps to simplify the business processes and make them faster and efficient.

• E-Commerce reduces paper work a lot.

• E-Commerce increased the productivity of the organization. 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.

Advantages to Customers
• 24x7 support. Customer can do transactions for the product or enquiry about any
product/services provided by a company any time, any where from any location. Here 24x7
refers to 24 hours of each seven days of a week.

• E-Commerce application provides user more options and quicker delivery of products.

• E-Commerce application provides user more options to compare and select the cheaper and
better option.

• 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 buy.

• E-Commerce provides option of virtual auctions.

• Readily available information. A customer can see the relevant detailed information within
seconds rather than waiting for days or weeks.

• E-Commerce increases competition among the organizations and as result organizations

provides substantial discounts to customers.

Advantages to Society
• Customers need not to travel to shop a product thus less traffic on road and low air pollution.

• E-Commerce helps reducing cost of products so less affluent people can also afford the
products.

• E-Commerce has enabled access to services and products to rural areas as well which are
otherwise not available to them.

• E-Commerce helps government to deliver public services like health care, education, social
services at reduced cost and in improved way.
E-Commerce disadvantages can be broadly classified in two major categories:

• Technical disadvantages

• Non-Technical disadvantages

Technical Disadvantages
• There can be lack of system security, reliability or standards owing to poor
implementation of e-Commerce.

• Software development industry is still evolving and keeps changing rapidly.

• In many countries, network bandwidth might cause an issue as there is insufficient

telecommunication bandwidth available.

• Special types of web server or other software might be required by the vendor setting the
e-commerce environment apart from network servers.

• Sometimes, it becomes difficult to integrate E-Commerce software or website with the

existing application or databases.

• There could be software/hardware compatibility issue as some E-Commerce software

may be incompatible with some operating system or any other component.

Non-Technical Disadvantages
• Initial cost: The cost of creating / building E-Commerce application in-house may be very
high. There could be delay in launching the E-Commerce application due to mistakes,
lack of experience.

• User resistance: User may not trust the site being unknown faceless seller. Such mistrust
makes it difficult to make user switch from physical stores to online/virtual stores.

• Security/ Privacy: Difficult to ensure security or privacy on online transactions.

• Lack of touch or feel of products during online shopping.

• E-Commerce applications are still evolving and changing rapidly.

• Internet access is still not cheaper and is inconvenient to use for many potential customers
like one living in remote villages.
E-Commerce or Electronics Commerce business models can generally categorized in following
categories.

• Business - to - Business (B2B)

• Business - to - Consumer (B2C)

• Consumer - to - Consumer (C2C)

• Consumer - to - Business (C2B)

• Business - to - Government (B2G)

• Government - to - Business (G2B)

• Government - to - Citizen (G2C)

Business - to - Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then sells
the product to the final customer. As an example, a wholesaler places an order from a company's
website and after receiving the consignment, sells the end product to final customer who comes
to buy the product at wholesaler's retail outlet.

Business - to - Consumer(B2C)
Website following B2C business model sells its product directly to a customer. A customer can
view products shown on the website of business organization. The customer can choose a
product and order the same. Website will send a notification to the business organization via
email and organization will dispatch the product/goods to the customer.

Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential
property, cars, motorcycles etc. or rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services. Another consumer may opt to buy
the product of the first customer by viewing the post/advertisement on the website.

Consumer - to - Business (C2B)

In this model, a consumer approaches website showing multiple business organizations for a
particular service. Consumer places an estimate of amount he/she wants to spend for a particular
service. For example, comparison of interest rates of personal loan/ car loan provided by various
banks via website. Business organization who fulfills the consumer's requirement within
specified budget approaches the customer and provides its services.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support
auctions, tenders and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support
auctions of vehicles, machinery or any other material. Such website also provides services like
registration for birth, marriage or death certificates. Main objectives of G2C website are to
reduce average time for fulfilling people requests for various government services.