E-COMMERCE MCA-IV 2020

E-COMMERCE NOTES

E-Commerce Overview

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. Ecommerce refers to the paperless exchange of business information
using the following ways –

Electronic Data Interchange (EDI)

Electronic Mail (e-mail)
Electronic Bulletin Boards
Electronic Fund Transfer (EFT)
Other Network-based technologies Other Network-based technologies

KEY FEATURES
E-Commerce provides the following features –

 Non-Cash Payment - E-Commerce enables the 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 the business of enterprises and the way they provide
services to their customers. It is available anytime, anywhere.

 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 anytime, anywhere without any
human intervention. It gives a big boost to existing sales volumes.

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

 Inventory Management - E-commerce automates inventory management. Reports get generated instantly
when required. Product inventory management becomes very efficient and easy to maintain.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

 Communication improvement - E-commerce provides ways for faster, efficient, reliable communication with
customers and partners.
E-Commerce – Advantages

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

Advantages to Organizations Advantages to Organizations

Advantages to Consumers Advantages to Consumers
Advantages to Society Advantages to Society

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.
 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.

Advantages to Customers

 It provides 24x7 supports. 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.
 E-commerce provides options of virtual auctions.
 It provides readily available information. A 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.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

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.
E-Commerce – Disadvantages

The disadvantages of e-commerce can be broadly classified into two major categories -

Technical disadvantages Technical disadvantages.

Non-T Non-Technical disadvantages Technical disadvantages

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
ecommerce environment apart from network servers.
 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.

Non-Technical Disadvantages

 Initial cost - The cost of creating/building an e-commerce application in-house may be very
high. There could be delays in launching an e-Commerce application due to mistakes, and lack
of experience.
 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.

o Lack of touch or feel of products during online shopping is a drawback.

o E-commerce applications are still evolving and changing rapidly.
o Internet access is still not cheaper and is inconvenient to use for many potential
customers, for example, those living in remote villages.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

E-COMMERCE - BUSINESS MODELS

E-commerce business models can generally be categorized into the following categories.

Business - to - Business (B2B) Business - to - Business (B2B)

Business - to - Consumer (B2C) Business - to - Consumer (B2C)
Consumer - to - Consumer (C2C) Consumer - to - Consumer (C2C)
Consumer - to - Business (C2B) Consumer - to - Business (C2B)
Business - to - Government (B2G) Business - to - Government (B2G)
Government - to - Business (G2B) Government - to - Business (G2B)
Government - to - Citizen (G2C) Government - to - Citizen (G2C)

A typical E- Commerce Business Model

The following E commerce business Model shows the step by step process and activities followed and
used by business firms, seeking to expand their business through help of electronic and
telecommunications networks.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

 BUSINESS - TO – BUSINESS (B2B)

A website following the B2B business model sells its products 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 the final customer who comes to buy the product at one of its retail outlets.

OR

A B2B Model involves trading of goods and services between two corporate entities. A B2B model enables a business to
interact and trade with other organization i.e. business houses trade goods and services with other businesses. Both the
parties strike a deal directly through electronic networks and exchange products, services, information etc. This model is
generally used for –

 E-procurement
 E- HRM (Human resource management)
 E-CRM (Customer relationship management)

Intermediaries are usually market makers and direct service providers (DSP) who assist in matching buyers
and sellers.

It involves use of electronic medium for –

 Supply of Inventory
 Channel Management
 Distribution management and order processing
 Delivery and payment management

Example of B2B:– Business to Business Oracle, Alibaba, Qualcomm, Honeywell.

 There are three types of B2B e commerce Models

(1) Supplier Oriented or Supplier Centric Model

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

In such a model a supplier sets up an electronic marketplace in the domain of the products it supplies. Suppliers provide
customized solutions and pricing according to the needs of the buyers.

(2) Buyer Oriented or Buyer centric Model

Such a model is generally used by Big business houses which make very high volume purchases and have a very high
purchasing capacity. The organization sets up an electronic platform and places requests for quotations. Sellers contact
the organization and place a bid online with his offer. The organization selects the offer that suits its needs; the entire
purchase process is carried out using electronic mediums.

(3) Intermediary Oriented or Intermediary Centric Model

In such a model an electronic market maker provides an electronic platform to connect many buyers and sellers and
facilitate transactions between them though its potential database of buyers and sellers. The market maker is generally
an intermediary of a specific segment who quickly, conveniently and inexpensively connects many buyers and sellers of
the segment.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
 E-COMMERCE MCA-IV 2020

 Advantages of B2B Business

 Reduction in cost and time- Self-service is a norm in the B2B e-Commerce domain. With the growing
popularity of B2B e-Commerce across the world, it is apparent that your B2B buyer will prefer to search and buy
products online by themselves rather than standing in a queue to be responded by the salespersons.
Such a self-service is a win-win concept for both parties. Your customers find it convenient to access and purchase
products as per their requirements, and you can cut down costs on overheads and workforce significantly.

 Increase sales opportunities- A B2B website can readily bring new customers to your business. What’s more
fascinating is the fact that B2B buyers get younger over time with the advent of start-ups. The newer audience
is tech-savvy and spends more time on surfing to find the right B2B partner. They can take decisions quickly,
and if your business is present online, chances are high that they will remain loyal to your firm for a long time. In
A Way, The B2B Website Can Help You Increase The Conversion Rate.

 Database advantage- We live in a data-driven age. These days, every business relies heavily on data
irrespective of a B2B or B2C model. Now, the online B2B website can fetch useful data for you to make crucial
decisions.

Almost all B2B e-Commerce stores are connected with a CMS, which means that you can remain updated on purchases
and other information of customers on the move.

 Rapid Payment- In B2B business, on-time payment plays a vital role in streamlining business operations.
Though merchants offer a debit facility for a month, they want to make the payment process as fast as possible.
Here, online payment methods can help them out.

Customers can readily pay through various payment gateways available on your website. It makes both you and your
customers comfortable to keep the payment process quick and secure.
However, it does not mean that having a B2B website is a panacea for all business-related problems.

 Disadvantages Of B2B
 Complex journey for customers– Though B2B e-Commerce has opened the doors of sales opportunities,
many merchants still prefer to sit on the fence. It makes the e-Commerce B2B customer’s journey way more
complicated than B2C business and offline B2B business.
B2B products need customized quotes and multiple configurations in a fairly visible manner. It helps the
customers to make informed decisions. If the merchants fail to implement it, customers may find it inconvenient.

 High competition– Isn’t it easier to start an online business nowadays? Well, this fact gives rise to fierce
competition. You need to apply all techniques to deal with increasing competition and thieve your business
online.

SEO optimization and digital marketing for your business website can be some useful options to target customers. It
can help you get a higher ranking for your Magneto 2 website on Google SERPs.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
 E-COMMERCE MCA-IV 2020

 Absence of timely services- An e-Commerce B2B website can give your customers the freedom of discovery,
choice, and the like. But, you just cannot skip the presence of sales representatives. If your website lacks the
customer service section, people may not return to your website.
You need to arrange for providing timely customer support to facilitate your customers to make a decision in favour
of your products.

 BUSINESS - TO – CONSUMER (B2C)

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

In B2C Model Consumers get an opportunity to browse, select, customize and buy products online from a variety of
online marketplace and portals. Sellers offer price cuts, discounts, shipping and delivery options, and online customer
service through an electronic portal and allow for personalization and customization of products. This model is generally
used by existing businesses for channel enhancement purposes and by small producers or retailers to set up an online
internet based store or surpass any entry barriers.

Benefits of B2C model –

 Convenience of online buying

 Customization of products
 Online customer service
 Online delivery and payment

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
 E-COMMERCE MCA-IV 2020

Types of B2C Models

o E-retail or E-tailing – It refers to retailing of consumer goods online through a website.

o Brick & Click Retail – It refers to combination of a brick and mortar shop with e-tailing
o Virtual Malls – It is a website that hosts several merchants on one website. Owners of the website charge a
small fee from sellers to display and sell their products through its structured revenue model.

This model is suitable for –

 Goods that can be transformed into digital format e.g. books, music, movies, software etc.
 Experience – Educational programs, tutorials and training, Games, Events
 Physical products – consumer durables
 Products that have standard specifications universally
 Branded items with return security

Advantages of B2C

 You can reach a huge audience worldwide.

 It is easy to convert visitors into customers.

 You can readily set up the online store using top e-Commerce platforms like Shopify and Magneto.

 Small and mid-size businesses can grow quickly through this model.
Disadvantages of B2C

 A lot of struggle to survive and thrive in a cut-throat race.

 Website needs to be capable of handling multiple orders at once.

 Low value of orders keeps the margin lower than B2B website.

 It is difficult to get repetitive customers and need to invest more in online marketing.

 CONSUMER - TO – CONSUMER (C2C)

A website following the C2C business model helps consumers 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.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

Under this model, Consumers sell directly to other consumers through online classified ads and auctions. A C2C Model
essentially involves financial interaction of non-business entities using the web.

Consumers usually sell their personal possessions, second hand and homemade products, information services and
freelance services to other consumers. Goods and services are generally sold at market determined prices and
negotiations between parties are very common. C2C portals may or may not charge fees from its users.

Customer to purchaser manages utilized things or products. Here a shopper can post his products, products, services
and another customer, who is intrigued, can buy it by utilizing this ecommerce framework. This web innovation
encourages us to sell our utilized properties or resources like bicycle, vehicle, house, any electronic things or
kitchen things by utilizing this model. OLX, Quicker, and numerous different locales can give you this service. It’s a
straightforward procedure to incorporate posting with subtleties of a product. Or on the other hand, you may likewise
help from selling a purchaser; the site is visited by buying shoppers. Assume if the product he will submit a request and
selling shopper will send that product straightforwardly to the acquiring buyer.

Advantages of C2C E-Commerce

 It is always available so that consumers can have access to whenever they feel like shopping
 There is regular updating of the website
 Consumers selling products to other consumers benefit from the higher profitability that result from selling
directly to one another.
 There is a low transaction cost; sellers can post their goods over the internet at a cheaper rate far better than
higher price of renting a space in a store.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

 Customer can directly contact sellers and do without an intermediary.

Disadvantages of C2C E-Commerce

 Payment made has no guarantee
 There could be theft as scammers might try to create their website with names of some famous C2C
websites such as eBay to attract customers.
 There is lack of controlling quality of the products.

 CONSUMER - TO – BUSINESS (C2B)

In this model, a consumer approaches a website showing multiple business organizations for a
particular service. The consumer places an estimate of amount he/she wants to spend for a particular
service.

For example, the comparison of interest rates of personal loan/car loan provided by various
banks via websites. A business organization who fulfils the consumer's requirement within the
specified budget, approaches the customer and provides its services.

Consumer to Business transactions occurs online when, for example, a Blog owner sells advertisement space
to Target on their Blog. In that scenario a consumer is selling something to a business. Also, someone with a
certain skill can provide a service to a company without being in business themselves, such as a consumer
building a website for a local small company.

Here is an example of a C2B website that offers a Lending Tree advertisement at the top of the page . The
advantage of this website is that the owner doesn't have to sell mortgages, meet with customers or pay for
everyday business operation expenses in order to make money. If, and when, the Lendi ng Tree advertisement
is used by a visitor, the website owner gets paid a commission from Lending Tree for the lead. Two
disadvantages of C2B transactions are that one must be well versed in web design to create such a website
and the amount of money earned is far less than what could be earned by selling the mortgage directly to the
consumer instead.

 BUSINESS - TO – CONSUMER (B2C)

A website following the B2C business model sells its products directly to a customer. A customer can
view the products shown on the website. The customer can choose a product and order the same.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi
E-COMMERCE MCA-IV 2020

The website will then send a notification to the business organization via email and the organization
will dispatch the product/goods to the customer.

Business to Consumer is another common way of conducting business which includes retail stores, restaurants,
and even amusement parks. Restaurants, for instance, buy food products as a B2B transactions while selling
products as a B2C transaction. A B2C company that offers great food and a great atmosphere for consumers.

An advantage for B2C companies is that it can be easy to penetrate a second area like Fratello's did when they
opened a second location in Nashua NH. Many locals already knew that it was a good restaurant with quality
food and daily entertainment, so it was an instant success.

A disadvantage of B2C e-commerce models is that it's difficult to hit a $1 million dollar customer. Instead they
have to continue to promote products, create word of mouth or social media attention, and accumulate
numerous repeat customers in order to stay in business.

 BUSINESS - TO – GOVERNMENT(B2G)
B2G model is a variant of B2B model. Such websites are used by governments 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)
Governments use B2G model websites to approach business organizations. Such websites support
auctions, tenders, and application submission functionalities.

Department of MCA & M.SC.-IT, Dr. Shyama Prasad Mukherjee University, Ranchi