CHAPTER1

INTRODUCTION TO
E-COMMERCE
1.1 MEANING OF E-COMMERCE
Electronic Commerce consists of all business activities carried on with the use of
electronic media, i.e.
computer network. It involves conducting business with the help of the
electronic media, making use of the
information technology such as Electronic Data
Interchange. In Simple words, electronic commerce involves buying and selling of goods and
services over the internet.

Uses the
internet
Conducting
business
Technology
based electronically

World WHAT IS Electronic

wide webb ELECTRONIC mail
COMMERCE?
Electronic
funds transfer Bulletin
boards
Online Fax
shopping machineas

Startungrow
 1.2 INTRODU

that all your

y our
means

This Data
E-Commerce is the act of doing business
e l e c t r o n i c a l l y .

EDI
- E l e c t r o n i c

sfers and
transactions are usiness such
as transfe

paperless and you use onic

electron ssiot
means
fund

Interchange, electronic
e l e c t r o n i c

mail, bulletin boards, a n s m i s s i o n s ,

internet. a*
on
the
the Internet

E-commerce is the
presence

dynamic having
having an
which allowed the ability of a company to have a
e l e c t r o n i c a l l y ,
in
e s s e n c e

ithout
without the
thee
electronic shop. company to conduct its business electronically

need for it to be
Products aid
can be advertised, sold and paid for alall
for
about
he technology itself,
the
processed by a human being. E-con is
merce
not

it is about
doing business using the
technology. electronically.
It may
E-Commerce is the
process O
of carrying business online
out
and
buying goods
and
include buying and selling stocks and bonds,Out
carrying
selling a tangible
product,
covers the vast
services for your
E-Commerce

company's operations or purchasing a dress. transactions taking

place on the
amount of business to business
consumer and business to business
a n d business
transactions tak
weD with the Monitoring
help of internet, Website hosting and Website Monitoring and Business
involves of Business to Business
E-Commerce the automation of a variety
It includes the
use of
to Consumer transaction through reliable and s e c u r e connections.
lectronic transmission medium such as tele-communication or wirelesS tO aly
CXCnange of business document including buving and selling products and services digitally
rom one location to another using computer as component and interner as cutd.
that fOster the
COmmerce is a composite of technologies process and business strategies
instant exchange of information within between organizations. E-Commerce strengthens
customer
relationship with buyers, makes it easier to attract new customers, and improves
of
responsiveness and open new markets on a global scale. E-Commerce is the application
various communication technologies to provide the automated exchange of business
information with internal and external customer, suppliers and financial institutions..
E-Commerce is about seting your business on the Internet, allowing visitors to access
virtual catalog of your product and services online. When the
your website, and go through
visitors want to buy something he or she can uá it to their virtual shopping basket. The items
in the virtual shopping basket can be added or deleted and finally customer can move to the
virtual checkout counter, which has complete total and will ask customer for name, address
etc and methods or ways of payments such as Credit Carcds. Once all the information is
entered, the buying and selling procedure is complete then the customer has to just wait for

delivery.
The concept of E-Commerce suits to only tnose proaucts or services that appear more

sItitalble for online sales such as digitalproducts, including information storage, retrieval, and
modification, music, movies, education, communication, software, photography, and
financial transactions. Products such as such as, spare parts for consumer are also good
andidates for selling online. Retailers often need to order spare parts specially, since they
tnically do not stock them at consumer outlets- in such cases, E-Commerce solutions in
nares do not compete with retail stores, oniy with other ordering systems. A factor for the
ehoice of products to be sold online tnrOugn E-commerce concept requires providing
INTRODUCTION To E-COMMERCE 1.3

customers with exact. reliable information about which part number their particular version of
a product needs, for example by providing parts lists keyed by serial number.

Definition: E-Commerce
E-Commerce is defined as an Electronic transaction is the sale or purchase of goods or
services, whether between businesses, households, individuals, governments, and other pablic
or private organizations, conducted over computer mediated networks. The goods and
services are ordered over those networks, but the ultimate delivery of the goods or service
maybe conducted on or off-line.
E-Commerce means buying and selling products and services over the internet by means
is
of computerssending and processing electronic transmissions to each other. E-Commerce
used everywhere in everyday life. It ranges from credit card authorization, travel reservations
over a network, wire fund transfer across a globe, point of sale transactions in retailing,
and auctioneering. online education
electronic banking, fund raising, political campaigning
and training and so on.
E-Commerce is described as a "fusion of telecommunications and computing technology
conduct business which means that there is a creation and management of
relationship
to
between buyers and sellers, facilitated by an interactive and pervasive electronic medium

E. Turban and others

buying and selling or exchanging of products
"E-Commerce describes the proces of
services and information via computer networks including the internet."

various perspectives as follows:

B-commerce can be defined from
1From Communication Perspective: E-commerce is the delivery of information.
via telephone lines, computer networks.
products, services or payments
2 From Business Perspective: E-commerce is application of technology towards
workflows.
automation of business transactions and
Perspective: E-commerce is a desire of firms,
tool that fulfills the
3 From Service
of goods and increasing the speed of
consumers and management by improving the quality
service delivery.
4.From Online Perspective: E-commerce provides the capability of buying and selling
of products and information on the Internet and other online services.
 This section gives a very briefoverview of the requirements for e-commerce. However, it
is important to understand that all of these are not necessarily required for all levels of e
comierce. Requirements widely vary with different kinds ofe-commerce activities.
Telecommunication Infrastructure Requirements This mostly entails bandwidth
and security. The requirement for bandwidth varies widely from one e-commerce activity to
another making it hard to generalize. Bandwidth usually becomes crucial for service-based
B2B e-commerce as opposed to product-based one and high-traffic B2C e-commerce as

opposed to low-traffic one. Two main con1ponents of security requirements for e-commerce
are type of firewall and encryption/algorithm mechanism. This also varies widely from onee
commerce activity to the other. Ranging from protection against unwanted disclosure of
client information to guarantee of reliable electronic payment. Security requirements area
crucial part of e-commerce.
(Hardware Requirements for E-commerce Hardware requirements for high-trafic
sites may be dependent on the following issues: number of transactions per second; number
of hits per second: number of queries per second; number of queries .done by RDBMS per
second; number ofpages served per second involving all of the above parameters. Some other
factors that need to be considered when setting up a high traffic e-commerce site include
clustering i.e. use of backup servers which automatically takes over operations in case of
failure of primary ones.Low-traffic sites can be easily served from a single machine
depending on the needs of the business. Pentium lI/AIl based Intel server running Linux can
serve hundreds of unique customers each day.
(iii)
Software Requirements for E-commerce Several software are available free on the
Internet that can be used to build e-commerce exchanges. Some examples are Apache Web
Server, Apache-Jserv Servlet Engine, Linux OperatingSystem, mySQL database, postgresql
etc. Many of these open source software may not be adequate for high-traffic sites.
(iv) Technical Skill Requirements A systems administrator must have a good good
knowledge of computer hardware, mustbe able to maintain and upgrade hardware including
hard drive, processor and motherboard. He/she must also have the skill to install and compile
Apache, mySQL and Java servlet engine. A developer needs to be a high level programmer
with a few years of experience in the industry and must possess a clear understanding of how
 1.10 INTroDUCTION TO E-CoMMERC

ane-commerce system_works. Understanding how information flows from one end of the
system to another and what modifications take place in between is essential. Specific required
skills include programming skills in C, PHP and Java and knowledge on SQL programming
and data architecture

Financial Infrastructure Payment procedures are the ways in which a Seller can
receive payment in return for the goods or services sold, Access to these services aepends on
the bankingg infrastructure in location of selling and customers' locations. For ruiletiedged e
Commerce transaction the banking infrastructure requirements should De as follows:

Dependable telecommunication network Use of integratedbanking software tor back office

and front office data processing Use of WAN and lnternet for banking operations
Availability of Electronie fund transfer System Availability of Electronic Clearing System
Availability of Public Key based Encryption System Availability of Credit Card System both
for local and international payment Availability of Foreign Exchange Remittance
Mechanism over the Interne Availability of Legal Infrastructure supporting online payment
mechanism Interim Solution:
If local telecommunication services in a country do not allow for direct connection of a
web site to secure payment facilities, and in particular to those offered by credit card
companies, it may be possible to host a web site in a neighboring location that is capable of
providing the necessary financial connections.
(vi) kegal and Policy Framework n general, policies that ensure legal certainty,
security and consumer protection for online transactions and interactions should be enacted.
These include the resolution of issues such
as transactional security, electronic contract
enforceability and the authentication of individuals and documentation. The development of
such an enabling environment has involved a joint focus of
government and
efficient and sound financial system (including online payments, the useprivate
sectors
on: an
of electronic
currency and foreign exchange liberalization),
an efficient,
telecommunication system (including to long-distance market, inexpensivelocal and reliable
carriers, and high speed lines),legal competitive exchange.
consumer protection and defense of
mechanisms for the enforcement of contract law,
intellectual property
administration, and swift, transparent, and reliable customs rights, an effricient tax
an efficient tax
often influenced by national
policy,
operations.
should be considered: The following factors,
Predictability of the legal environment, Soundness of Perceived political risk,
Openness to foreign direct investment, economic and
monetary policy,
capital flows, Credit card usage, CreditConvertibility of local currency,
Restrictions on
Entrepreneurial culture, Access to startup card processing protocols, Access to credit,
business. capital, Regulations and restrictions
on small
1.5 CATEGORIES OF
E-COMMERCE
ELECTRONIC MARKETS: An
communications
that the technology to present a Electronic Market is the use of
purchaser can compare the range of offerings available in
information and
prices of the offerings and a market segment so
make a
purchase decision. The
 IN
1.6 FEATURES
OF E-COMMERCE AS AN ELECTRONIC
TRADING SYSTEM
as follows:
Key Features which are explained
E-Commerce has certain visit in order
In traditional commerce, a marketplace is a physical place you
1biquity- the consumer to go some
television and radio typically motivate
totransact. For exannple, is characterized by its ubiquity, it is
make a purchase. Whereas, E-Commerce
place to the market from being
at all times. It liberates (set free)
everywhere,
available Just about and makes it possible to shop from your desktop,
at home, at

restricted to a physical space c o m m e r c e . The

result is called markethace-a
mobile
work or even from your car, using traditional boundaries and removed
from a temporal and
marketplace extended beyond reduces transaction costs- the
point of view, ubiquity
geographic location. From
a c o n s u m e r
that you spend time
in a market. To transact, it
is no longer necessary
cost of participating of e - c o m m e r c e lowers the
market.(At a broader level, the ubiquity
and money travelling to a the mental
Cognitive energy refers
to
transact in a marketspace.
cognitive energy required to

effort required completea task.

Traditional Commerce is taking place since
2. E-Commerce is technology-enabled:
times immemorial but E-commerceis result of integration of digital
technology with business
of E-commerce are
commercial transactions. The technological foundations
processes and
Internet, wwWand various Protocols
3. Technology Mediated: In E-commerce buyers and sellers meet in cyber space rather
than physicalplace. Hence E-commerce does not involve face to face contact.
4. Universality: Buying and selling take place through websites in E-Commerce. The
web'sites can be accesses from anywhere around the globe at any time therefore it possess the
feature of Universality.
5. Intercommunication: There is one way communication on T.Vs and Radios But E
commerce technology ensures two way communications between buyer and seller. On one
hand by using E-commerce firms can communicate with customers
through E-commerce
enabled websites. On the other end, customers can also fill order forms, feedback forms and
can communicate with business operating firms.
6Delivery of Information: E-commerce serves as a best channel of
commerce technologies ensure speedy delivery of information communication. E
at very low cost and
considerably increase information density as well.
7Electronically Completion of Business Processes: By using E-commerce we can
perform business transactions like
accounting and
level. inventory through computers at global
3Multimedia: E-Commerce deals with various multimedia
audio, video and graphics. contents like text, images,
Multimedia leads to the
services such as e-books, online
music, online stock production of various
products anu
trading.
INTRoDUCTION To E-CoMMERCE 1.13

9Antra and Inter Organizational Activities: If an Organization haye intranet, that is

netivork of computers that operate internlly, than it is to be said that the Organization is at
early stage of E-Commerce.As we know Inter-Organizational
activities require Extranet and
Internet.By using Extranet a business connects with its suppliers and vendors. So by using
Intranet, E-Commerce can be in the form of Business within Business and by using Internet
and Extranet It can be in the form of Business to consumer and Business to Business.
10. Yírtual Communities: Virtual Communities are online communities created by
means such as chat rooms and specitically designed sites like, where people with can interact
with each other having common interest using the Internet.
Tnter-Disciplinary in Nature: Implementation of E-Commerce necds a lot of
knøwledgee of Managerial, Technological, Social and Legal issues. Besides this,
understanding of consumer behavior, marketing tools and financial aspects is as crucial as
designing interactive E-Commerce websites.
. Customization: With the use of E-Commerce technology, the world is moving from
ma[s-production to mass-custonmization. Product Customization ensures that goods are tailor
made as per the requirements and preferences of Customers. Like Dell Computers Website
www.dell.com enables the consumers to mention configuration of a Computer and then the
product is made available and delivered as per the configuration ordered by the customer.
 INTRODUCTION To E-CoMMERCE 1.23

1.10 NEED FOR E-cOMMERCE

Electronic commerce, known as E-Commerce, occurs daily when sellers and buyers
use the Internet to conduct business transactions. Technology makes it possible for anyone to
buy or sell practically anything online. Travelers looking to get away, even if they do not
want to go that far, can use the Internet to research and book their trips. The development of
E-Commerce makes tt easier for domestic tourism operators to promote and market their
businesses; they can easily access a large number of customers in a cost-efficient and speedy
way, as well as provide more services. The study of following factors show the NEED for E
Commerce in modern business Era:
Vider Audience-The Internet provides businesses, including domestic tourism
operators, access to millions and millions of people. A 2010 survey by Internet World Stats
showedthere are 266,244,500 Internet users in North America. Newspaper advertisingis
different
fairly targeted publicity; customers in different geographic areas may receive
editions of the newspaper, and therefore see different advertisements. Qn the World Wide
Web, comnpanies move beyond geographic limits to reach an even wider audience.
websites
2. Cost Efficiency-At the beginning of the Internet age in the 1990s, creating
became less and less
was acostly undertaking. As the years passed, building websites
can now build their own
expensive. In fact, small businesses such as domestic tour operators
and many free site-building tools and
sites; there are competitively-priced hosting services,
allows domestic tourism companies to
applications exist. The development of E-Commerce'
Internet audience in a cost-efficient manner.
promote and advertise services to a large
exchange of data
3aster Information-The information superhighway permits speedy
across the world, which also means new information, is availablefaster.
Businesses no longer
a few hours of finalizing a promotion,
the
have to wait for their ads to be published; within
information. This speed enables domestic
webmaster can update your site with the new
about great deals and allows fresh marketing
tourism providers to alert customers' quickly
business.
approaches, both of which can boost
domestic tourism
4.Enhanced Service-Development of E-Commerce equipped
customers often
to offer services to clients. Before the digital revolution,
providers more
accommodation and attractions. Now,
needed more than one company to book transportation,
on one website, saving time and
effort. Being
clients book many if not all of these things
can
and
tourism providers the opportunity to better promote
a "one-stop shop" offers domestic
clients.
market themselves and gain more

OF E-COMMERCE
1.12 BUSINESS APPLICATIONS
is used
business application areas where E-Commerce
Following are the major
widely. buy the various
E-Commerce, consumers can
Sale, Purchase of Goods: By using can purchase raw
Industries
different manufacturers.
products and services from the
 INTRODUCTION TO E-CoMMERC
1.24

materials, components etc. using E-Commerce. Sellers can sell their products by using . I
commerce. Example of items sold on Internet includes Gifts, Flowers, Books, Toys
Jewellery, apd Software etc.
2. Real Estate Market: Online real estate services are provided by websites that show
listing of houses, shops and flats put up for sale and rent. Online real estate sites play
supporting role for property dealers. Now builders can use virtual reality technology on thejr
website to demonstrate three dimensional floor plans to buyers. This helps real estate
companies to attract buyers. So transactions normally can be initiated online but materialize
offline in a face to face contact of parties. Many websites are providing online real estate

services.
99 acres.com
http://realestate.vahoo.com
realtor.com
realestateonline.in
indiaccalitors.com adialpzahav o
3Online Banking: Online Banking is also known as electronic banking, Net banking, P
Vírtual banking and Internet banking. Online banking is defined as automated delivery of
new and traditional banking products and services through electronic and interactive
communication channels. Customers can access online banking services by using electronic
devices like personal computer, laptop, palmtop, ATM, kiosks etc. Services provided through
the Internet Banking are as follows:
Customers can know account balance at anytime.
Credit Card statement is readily available.
Bill Payment service permits customer to clectronically instruct bank to transfer
funds to a business account on some specified date.
Customer can download account transaction and embed them in money management
software.
Customer can transfer money between accounts without personally going to bank.
The term "banking hours" has got new meaning. We are now moving towards 24*7
services.
Banks can handle your finances while you are
travelling.
Banks now deal with new financial instruments like Debit Cards, Credit Cards, and
Electronic Cheques etc. So Online banking has to deal with
e-money rather than just
hard currency.
4.Online Stock Trading: The cost of Online Stock Trading is very low compared
as
the-full-service broker. There is no waiting on busy telephone lines and the chance of makIng
mistakes is too small as well. Orders can also be
placed from anywhere using Online Stoc
Trading. Some of the benefits of Online Stock Trading are as follows:
INTRODUCTIO,

Less Trading Cost.

lines.
No waiting on busy telephone
mistakes is very small.
Chance of making
No Oral Communieation

Onders can placed from anywhere.

be
Information available regarding investing
in a particular company.
Free

No biased broker available to push you. the

E-Commerce allows the delivery
of products. For Example,
5. Delivery of Goods: manufacturer on Computer of the
downloaded by the software
computer software is directly
Customer. and export
playing a great role in import
are
bAmport and Export: Payments
Electronic E-commerc
and export business. By using
business. The internet has simplified
the import other
about the products, their manufacturers, price, quality,
importers can make enquiries about suitable customers.
can also make enquiries
tems and conditions etc. Exporters
means like Internet Payment
or
electronic modes including digital
Payments can be made by
Internet Money Transfer.
between a
Chain Management: A supply chain is a set of relationships
7 Supply with each other in that one company
number of companies who have a symbiotic relationship
commodities or services to other companies which,
in turn, supply commodities or
supplies
of Supply Chain consists of the
services to other companies, and so on. The Example
following steps:
() In Australia a farmer sells his orher eucalyptus crop to a processing company that
extracts the eucalyptus oil trom the leaves.

The oil is then sold to a distributor in New Jersey.

(ii)
(iii) At the sametime as the eucalyptus oil is being extracted natural gas is being drilled
in the Saudi Arabian desert in order to produce the alcohol that is added to the
raw

ingredients of the mouthwash.

iv) Union Carbide ships the alcohol where the company that
to Texas City, Texas,
manufactures the mouthwash (Warner Lambert) has its factory.
(v) Farmers in the mid-west of America grow corn which is used in the manufacture of
Sorbitol which both sweetens and adds bulk to the mouthwash. This is harvested
and sent to the factory in Texas City.
(vi) The ingredients are mixed and the mouthwash manufactured.
(vii) The final bottles of mouthwash are sent to wholesalers or to the warehouses of
chains of chemists from where they are distributed to individual retail outlets.
 Eucalyptus leaves
Gas

Grower
Union
Carbide
Bundled leaves
Alcohol
Transport
Company
Shipping
Company
Packed leaves

Grown Tanked alcohol

Packed
Corn
Distributor leaves
Manufacturing
Company

Corn Transport Bundled/ Boxed

Farmer J8undled Company corn Listening
Boxed
corn
Listening
Wholesaler

Boxed Chemists
Listening

8E-Tailing: E-tailing refers to retailing over the internet. Thus an e-tailer is a B2C
business that executes transaction with the final consumer. E-tailers can
a
be pure play
businesses like Amazon.com or businesses that have
evolved from a legacy business
Tesco.com. E-tailing is a subset of e-commerce. Amazon
is renowned for the fact that it only
sells books over the internet and doesn't even
take telephone orders. It has one of the best
organized websites and is continually referred
journalists to by as an e-commerce success
story.
Customers of Amazon interact with its website
and carry out a number of functions
including:
browsing readers' reviews of books;
reading feature articles about books and authors simiuar to those
and newspapers, found in magazine
searching for details of a book based on information such as the author's name or
title of the book;
browsing the books which are the Amazon bestsellers;
 1.28
INTRODuCTION To E-CoM
Auction sites: These are sites on the web which run conventional auctions. There are h. INTROD-
types of auction:
tW
Those that produ
arecarried out in real time, where
using a
participants log in to
browser at a specified time and bid for an article until the
an
auction si.
Comr
reached and highest price
no other bids are
forthcoming. betwe
The other of in-
type of site and the most common is where an item 1S offered for
-

and a date advertised sala

after which no more bids are accepted. Such Sites make a
from two sources: first prof offli
they usually charge a commission on the items that are sol
and, second, they display adverts which are viewed
site will then receive some fee
by visitors to the site. The auction
for displaying the advert. proe
10. Online Education: It is Exa
also possible to impart education through internet.
can interact with
teachers through video conference facility. Students can also record
Students by
download study material by use of different modes of lèctures,
E-Commerce.
11. Online Pr
Diagnoses and Treatment: Using E-commerce, online diagnosis and Cu
treatment is also possible. Even X-rays and surgical operations can also be performed
Video conferencing. through
12 Payment of Services: Using E-Commerce payments for different services
Telephone, Electricity, Water, and Insurance Premium etc can also be made. like
by using Credit Card, Debit Card, Smart Card and Electronic Transfer. Payments be
can
made

13. Tourism and Hotel Industry: Internet now makes the

comfortable and enjoyable. It is possible to know about journey or picnic very
the different tourist
accommodation throughout the world by surfing on the net. spots and
commerce facilities customers can book
By using different types of e
their tickets, accommodation in hotels.

|1.13 ADVANTAGES/ POTENTIAL BENEFITS OF

E-COMMERCE
An E-Commerce 'website offers many
sizes. advantages to mostly to businesses of all types and
Bepefts of E-Commnerce to Business
Organizations:s
1.ncreasein Sales: The total sale of the business is
of business like brick and mortar bound to increase when every type
business supported by Internet based Selling.
2 Expansion of Market
base by bringing the business toSize:
Firms can reach more
Internet. geographically scattered customer
3Better Customer Service: By using E-Commerce
customer firms and
services. Because E-Commerce companies provide better
efficiency during and after sales. technology considerably increases service
service
4Availability
mation
of current
Information: (E-Commerce
about product prices. Whenever there is enabled websites provide latest
change in price or in any feature of any
 INTRODUCTION To E-CoMMERCE 1.29

product the companies can immediately display by editing the web pages( That is why e

Commerce price quotes are latest than printed price lists.

5 Eficient Procurement of Stock: E-Procurement decreases lead time- the time gap
berween placing an order and actual receipt of goods. E-commerce also reduces the quantity
of inventories to be held in stores.
as
6.Rise in Markcting Efforts: E-Commerce initiatives raise to marketing strategy
ofnine mrketing efforts are supported by Online Marketing Initiatives.
JDecrease in Costs:There is a big reduction in Costs such as Cost of Information
processing, cost of Processing Customer Orders, Costs of Distribution and Marketing etc/ For
Example: Microsoft allows download of some software rather than sending the CDs thereof
by mail. By this way E-commerce helps to reduce distribution costs.
sDisplay of Products- On the web, a company can display its entire range 1If it were to
print a catalogue, to do the same job, it would be too expensive and time consuming The web
cuts out printing cost and distribution. For example- Amazon.com displays many millions of
books.
9Data Sharing- Groups of users are available to exchange information routinely and
quickly within the group/This could be a detailed report created by an employee in the UK
and accessed by another ih India saving considerable amount and money.
10 Electronic Business- Electronic fund transfer and electronig data interchange
facilitate payment online with document delivery making business rapid.

Benefits ofE-Commerce to Consumers:

1Convenient Shopping: E-commerce gives the benefit of convenient shopping to
consumers as they can do shopping from home or office or from any place in the world at any
time even they can do shopping from the road by using E-Commerce People can also
download forms according to their requirements such as Income Tax forms to complete their
Tax Returns.
2More Choices: E-Commerce provides ability to consumers to search for more vendors
and products over the Internet.| So the consumer's access is not limited to sellers situated in a
limited geographical area thát they can cover by walking or driving. Rather they have greater
choice of goods offered by global E-commerce enabled companies.
3. Hab of Information: Customers can get access to greater volume of information by
using search engines like Google.lBy this customer will enable to purchase products with best
feature and at competitive prices as well.
4Qdick Delivery: Online products such as e-books and software and forms can be
dowmoaded from corporate websites rather than getting through offline channels.
Benefits ofE-Commerce to Society:
1. Improvement in Standard of Living: Huge spending on Information Technology
directly leads to Economic Development and higher Standard of Living
 Other Benefits are as follows:
KAccess to a Global Market: The Internet allows companies to have access to a ght
market rather than just the potential customers in the surrounding area of their physi
Sica
location. Due to the fact that the website is open 24-hours a day so, time differences betwe
cOuntries are no longer a problem. You wouldn't have to get up early in America to
or orden
something in England anymore.
2 Cutting out the Middlenman: Business can sell direct to the consumer rather tho
having to sell to a than
supplier and then sell it on, this means the company can usually offer th
product at a discount compared to their retailers because only one company has to mal
profit rather than two or more.
3. A Level Playing Field: A Small business can compete and show itself as professional
as much as large ones as budgets for setting up a professional site are relatively cheap to the
amount of return you can get on them.
4.Open 24 Hours a Day: With
fully automated payment and order processing systems
your site need never be closed even if
your office/warehouse is. Orders can be
during opening hours while orders can be taken 24 hours a dispatched
people who might be at work or busy during normal day, this has great advantages for
working
hours of some shops.
5. Greater Customer Satisfaction: An
E-Commerce website can be a
loyalty if it is effective enough, a well designed website powerful
building customer tool for
in charge of the
relationship, they puts the customer
can buy, browse, ask for help or track the progress of order
they have placed where they want and when
they want.
6. Better Customer
Information: You can quickly and
by location and area as well as the easily analyze your customers
name and address from
products they buy as you will have to
them when request a customer's
informed about your customers, processing a transaction.
As well as you
being more
your customers are also more
Commerce sites there is more informed as generally on E-
customers choose the
information on a
product including reviews
right product for them. etc to help the
Therefore E-Commerce
Commerce brings benefits to one and all. For Business
helps
in
Organizations E
firms. To consumers reducing service costs and gaining competitive advantage
it provides access to over rival
Nations, E- more information and
Commerce can serve as
vital role for
wider product choice. 10
economy. building knowledge driven modern
| 1.14 LIMITATIONS OF
Despite of many benefits offered
E-COMMERCE
by E-Commerce it also
echnical Limitations: has some
Limitations.
Technical Limitations are
those flaws
existing in E-Commerco
 1.1.6. Disadvantages of E-Commerce
an The disadvantages of e commerce can be divided into two categori*
SSe 1) Technical Limitations
et a i) Lack of Security: There is a lack of system security, reliability,
one standards, and some communication protocols.
bandwidth.
ii) Low Bandwidth: There is insufficient telecommunication
nor Tools: It is difficult to integrate
the Internet
111) Needed More Applications
tud and electronic commerce software with some existing applications and
web servers and other
ide databases. Vendors may need special
mt infrastructures, in addition to the network servers.
 Fundamental of E-Commerce
30

electronic commerce software might not fit with

iv) Incompatibility: Some
some hardware, or may be incompatible with some operating systems r

other components.

2)
2) Non-Technical Limitations
Cost and Justification: The cost of developing electronic commerce in.
i)
house can be very high, and mistakes due to lacCk of experience mav
result in delays. There are many opportunities for outsourcing, but where
and how to do it is not a simple issue. Furthermore, to justify the system
one must deal with some intangible benefits (such as improved customer
services and the value of advertisement), which are difficult to quantify.

ii) Security and Privacy: These issues are especially important in the B2c
area, especially security issues that are perceived to be more serious than
they really are when appropriate encryption is used. Privacy measures are
constantly improved. Yet, the customers perceive these issues as very
important, and, the electronic commerce industry has a very long and
difficult task of convincing customers that online transactions and
privacy are, in fact, very secure.
iii) Lack of Trust and User Resistance: Customers do not trust
an unknown
faceless seller (sometimes they do not trust
even known
transactions, and electronic money. So switching from ones), paperless
stores may be difficult. physical to virtual
iv) Other Limiting Factors: Lack of touch
and feel online. Some
clothes and like to know exactly what customers like
to touch items such as

v) Customers Relations Problems: An they buying.

are

long term without loyal customers. e-business cannot survive over the
vi) Corporate Vulnerability: The
database catalogs and other availability of product
product information,
vulnerable to access by the about a business information.
through its web site makes 1
competition.
intelligence from the competitor's The idea of
extracting business
vii) Legal Issues: web pages is called Web
Legal problems farming
environment include: encountered in the
a) Software and
b) Credit Card Copyright
e-commerc
e-commerce

Infringements
Fraud and Stolen
c) Business Fraud Identities
1.1.7. Applicatiaw