Unit 1.

Introduction to Electronic Commerce

1.1 What is e-Commerce?

1.2 Aims of e-Commerce
1.3 e-Commerce Framework
1.4 e-Commerce Consumer Applications
1.5 e-Commerce Organizational Applications
1.6 Introduction to m-Commerce

History of E-Commerce

The Early Years

The term e-commerce was originally conceived to describe the process of

conducting business transactions electronically using technology from the
Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These
technologies, which first appeared in the late 1970’s, allowed for the exchange of
information and the execution of electronic transactions between businesses,
typically in the form of electronic purchase orders and invoices. EDI and EFT were
the enabling technologies that laid the groundwork for what we now know as e-
commerce. The Boston Computer Exchange, a marketplace for used computer
equipment started in 1982, was one of the first known examples of e-commerce.
Throughout the 1980’s, the proliferation of credit cards, ATM machines and
telephone banking was the next step in the evolution of electronic commerce.
Starting in the early 90’s, e-commerce would also include things such as enterprise
resource planning (ERP), data warehousing and data mining.

It wasn’t until 1994 that e-commerce (as we know it today) really began to
accelerate with the introduction of security protocols and high speed internet
connections such as DSL, allowing for much faster connection speeds and faster
online transaction capability. Industry “experts” predicted explosive growth in e-
commerce related businesses.

E-Commerce Pioneers

The birth of companies such as eBay and Amazon (launched in 1994) really began to
lead the way in e-commerce. Both eBay and Amazon were among the first to
establish prominent e-commerce brands. The most prominent e-commerce
categories today are computers, books, office supplies, music, and a variety of
electronics.
Amazon.com, Inc., founded by Jeff Bezos, was the original e-commerce pioneer and
certainly the most recognizable. In the beginning, Amazon’s business model
required massive investment in warehousing, delivery and fulfillment capability and
took years for Amazon to gain profitability. But finally in 2003, almost 10 years
after launching the company, Amazon.com realized its first annual profit.

Amazon began as just an online bookstore but over the years has extended its
offering to a wide variety of product categories, including electronics, software,
music, DVD’s, CD’s, video games, MP3’s, clothing, shoes, health and beauty products
and even household goods. Bezos, was responsible for naming the company
“Amazon” after the world’s largest river and it enjoys a truly global presence with
stand alone websites in six other countries, including the United Kingdom, Canada,
France, Germany, Japan and China. Amazon.com was also the original pioneer in
affiliate marketing, allowing other websites to earn sales commissions for referring
Amazon products to their customers. Today, Amazon generates anywhere between
30 to 40% of its total sales revenue from affiliates or third party merchants who list
and sell their products on Amazon’s web site. Today, the Amazon moniker certainly
applies as it is one of the most recognized and most profitable e-commerce
businesses on the planet. In 1999, Jeff Bezos was honored with Time Magazine’s
“Person of the Year” award, immortalizing him forever as probably the single most
recognizable figure in the entire e-commerce community.

Amazon and fellow e-commerce industry giant Dell remain two of the largest
internet retailers in the world, among other offline industry giants such as Staples,
Office Depot, and Hewlett Packard. Dell.com is another one of the most recognizable
e-commerce brands online. Dell.com’s website was launched in 1994 with a single
static web page and their online presence quickly grew. In 1997, Dell announced a
single-day sales record of a million dollars on its website. In fact, roughly half of
Dell’s total profits come directly from their website alone. With no offline retail
outlets to speak of, Dell is another e-commerce pioneer that many businesses have
tried to model themselves after by selling products almost exclusively online.

What is e-commerce?
E-commerce definition:
eCommerce is the process of selling & buying products and services through an
electronic medium without the use of any papers — these types of all the
procedures done over the internet (online).
Scope of e-commerce:
1. Exchange of digitized information
2. Technology-enabled transactions
3. Technology-mediated relationships
4. Intra- & inter-organizational activities

E-Commerce Advantages

E-commerce businesses have numerous advantages over offline retail locations and
catalog operators. Consumers browsing online stores can easily search to find
exactly what they are looking for while shopping and can easily comparison shop
with just a few clicks of the mouse. Even the smallest online retail sites can sell
products and turn a profit with a very simple online presence. Web tracking
technology allows e-commerce sites to closely track customer preferences and
deliver highly individualized marketing to their entire customer base.

As the popularity of e-commerce businesses continues to grow, the technology will

only continue to improve, making it even easier to open and operate a virtual online
store with or without a brick-and-mortar presence. While e-commerce is still
relatively new found territory, it certainly offers plenty of opportunity for
entrepreneurs of all types. Some of the benefits of e-commerce.

1. Increasing interest on interface technologies like Transaction management

market.
2. Processing heavy order volumes.
3. Has speed and competitive advantage.
4. It manages codependent relationships and complex products.
5. Has privacy, service provider advantage and expansion strategy support.
E-COMMERCE vs TRADITIONAL COMMERCE

Key elements E-commerce Traditional

commerce
Value Creation Information Product/Service
Strategy Sense and respond Classical
Simple rules
Competitive Speed Quality/Cost
edge
Competitive Low barriers of Power of
force entry suppliers
Power of Product
customers substitution
Resource focus Demand side Supply side
Customer Screen-to-face Face-to-face
interface
Communication Technology- Personal
mediated channels
Accessibility 24 x 7 Limited time
Customer Self-service Seller influenced
interaction
Consumer Personalization Standardization
behavior One-to-one Mass/one-way
marketing marketing
Promotion Word of mouth Merchandising
Product Commodity Perishables, feel
& touch
eCommerce is an unavoidable factor of these days. Ecommerce business
models divide into five major types according to their preferences.

1. B2B ecommerce – Business to Business

2. B2C ecommerce – Business to Consumer
3. C2C ecommerce – Consumer to Consumer
4. C2B ecommerce – Consumer to Business
5. Public Administration model
There are different kind of eCommerce app available in the market. Here are the list
of various type of eCommerce application available in the market.

1. Online marketing and purchasing

2. Retail and wholesale
3. Finance
4. Manufacturing
5. Online Auction
6. E-Banking
7. Online publishing
8. Online booking

1. Online marketing & purchasing:

eCommerce application for Online marketing & purchasing helps you to collect data
on customer behavior, preferences, requirements. There are many online media
available for online marketing.

2. Retail and wholesale:

eCommerce has lots of applications in retail & wholesale.

In retail, business goods are selling from business to consumer through an

electronic store.

3. Online booking:

In online booking, application customers can book their tickets to reach a particular
destination via online payment of booking tickets.

4. E-banking:

Online banking provide facility to pay their bills online without wasting time of their
customers. Online banking is also referred as internet banking, e-banking, virtual
banking and by other terms.

So there are many eCommerce application you can develop app as per your business
requirements that help you to run your business easily.
The Five Different Types of E-Commerce

E-commerce is the process of buying and selling of various products and services by
businesses through the Internet. It deals various kind of business concern, from
retail site of the consumer, which includes auction. The main focus is to concentrate
on business substitutes involving goods and services between various corporations.

E-commerce is the purpose of Internet and the web to Conduct business but when
we concentrate on commercial deals among organizations and individuals
demanding selective information systems under the guarantee of the firm it accepts
the form of e-business. Nowadays, the word ‘e’ is hitting momentum. If you’re
looking to get into this business, one of the fore most things you have to have is a
Virtual Private Cloud Hosting keeping the traffic in mind and respecting customer’s
valuable time.

E-commerce is the use of Internet and the web to transact business but when we
focus on digitally enabled commercial transactions between and among
organizations and individuals involving information systems under the control of
the firm it takes the form of e-business. Nowadays, 'e' is gaining momentum and
most of the things if not everything is getting digitally enabled. Thus, it becomes
very important to clearly draw the line between different types of commerce or
business integrated with the 'e' factor.

There are mainly five types of e-commerce models:

1. Business to Consumer (B2C) - B2C stands for Business to Consumer as the

name suggests, it is the model taking businesses and consumers interaction.
Online business sells to individuals. The basic concept of this model is to sell
the product online to the consumers.

B2c is the indirect trade between the company and consumers. It provides
direct selling through online. For example: if you want to sell goods and
services to customer so that anybody can purchase any products directly
from supplier’s website.

Directly interact with the customers is the main difference with other
business model. As B2B it manages directly relationship with consumers, B2C
supply chains normally deal with business that are related to the customer.
 As the name suggests, it is the model involving businesses and consumers.
This is the most common e-commerce segment. In this model, online
businesses sell to individual consumers. When B2C started, it had a small
share in the market but after 1995 its growth was exponential. The basic
concept behind this type is that the online retailers and marketers can sell
their products to the online consumer by using crystal clear data which is
made available via various online marketing tools. E.g. An online pharmacy
giving free medical consultation and selling medicines to patients is following
B2C model.

2. Business to Business (B2B) - It is the largest form of e-commerce involving

business of trillions of dollars. In this form, the buyers and sellers are both
business entities and do not involve an individual consumer. It is like the
manufacturer supplying goods to the retailer or wholesaler. E.g. Dell sells
computers and other related accessories online but it is does not manufacture
all those products. So, in order to sell those products, it first purchases them
from different businesses i.e. the manufacturers of those products.

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

“It is one of the cost effective way to sell out product throughout the world”

Benefits:

 Encourage your businesses online

 Products import and export
 Determine buyers and suppliers
 Position trade guides

3. Consumer to Consumer (C2C) - It facilitates the online transaction of goods or

services between two people. Though there is no visible intermediary involved but
the parties cannot carry out the transactions without the platform which is provided
by the online market maker such as eBay. C2C stands for Consumer to Consumer. It
helps the online dealing of goods or services among people. Though there is no
major parties needed but the parties will not fulfill the transactions without the
program which is supplied by the online market dealer such as eBay.
4. Peer to Peer (P2P) - Though it is an e-commerce model but it is more than that.
It is a technology in itself which helps people to directly share computer files and
computer resources without having to go through a central web server. To use this,
both sides need to install the required software so that they can communicate on the
common platform. This type of e-commerce has quite low revenue generation as
from the beginning it has been inclined to the free usage due to which it sometimes
got entangled in cyber laws. It is a discipline that deal itself which assists people to
instantly shares related computer files and computer sources without having to
interact with central web server. If you are going to implement this model, both
sides demand to install the expected software so that they could able to convey on
the mutual platform. This kind of e-commerce has very low revenue propagation as
from the starting it has been tended to the release of use due to which it sometimes
caught involved in cyber laws.

5. m-Commerce - It deals with conducting the transactions with the help of mobile.
The mobile device consumers can interact each other and can lead the business.
Mobile Commerce involves the change of ownership or rights to utilize goods and
related services. It refers to the use of mobile devices for conducting the
transactions. The mobile device holders can contact each other and can conduct the
business. Even the web design and development companies optimize the websites
to be viewed correctly on mobile devices.

There are other types of e-commerce business models too like Business to Employee
(B2E), Government to Business (G2B) and Government to Citizen (G2C) but in
essence they are similar to the above mentioned types. Moreover, it is not necessary
that these models are dedicatedly followed in all the online business types. It may be
the case that a business is using all the models or only one of them or some of them
as per its needs.

E-commerce Industry Framework

Introduction
The basic framework of e-commerce enables for doing business online. The
framework consists of a comprehensive structure beginning with the based
technology layer to the general service layer. E-commerce has, to a certain extent,
changed markets structure. Traditionally, market ties were created through the
exchange of goods, services, and money. E-commerce has brought in an essential
element: information. Market ties are now based on information services,
information goods and electronic money. Although the nature of exchanging products
remains unchanged, the channel and the format of doing business have changed. To
better understand the basic framework of e-commerce, the following figure explains
the features of the major layers in the environment of e-commerce.
1. The First layer: Network Infrastructure
Also known as the “Information Superhighway”, network infrastructure is the
foundation layer of hardware infrastructure. It is a mixture of many forms of
information transport systems, which include telecom, cable TV, wireless and the
Internet. These systems, in particular the Internet, provide various types of
telecommunication channels for transmission of contents used in e-commerce.
2. The Second Layer: Multimedia Content and Network Publishing
While the Information Superhighway is the transportation basis that allows
content such as text, sounds and images to be transmitted, the second layer
provides an architecture that enables the content to be developed in a
programming language know as Hyper Text Markup Language (HTML) for
publishing on the World Wide Web (WWW). Another programming language in
use is Java, which enables multimedia content to be transmitted to end users’
personal computers via various networks such as cable, wireless, fiber optics and
satellites.
3. The Third layer: Messaging and Information Dissemination
Messaging transmission is usually done by the following technologies:
(a) Communicating non-formatted data: by using facsimile, electronic mail, this
mainly directs to individuals.
(b) Communicating formatted data: by using Electronic Data Interchange (EDI)
without human intervention. It is mainly used for business documents such
as purchase orders, invoices and packing lists. Messaging transmission
technology has encouraged business process automation.
(c) Hyper Text Transfer Protocol (HTTP): HTTP is an information
dissemination tool generally used on the Internet. It uses a common display
format to publish non-formatted multimedia messages in various
environments.
(d) Uniform Resource Locator (URL): URL is at present used by many web
surfers to search for information.
4. The Fourth layer: Security Protection in Business Services
This layer is regarded as the essential facilities for doing business because it is
required by both business corporations and individuals in business transactions.
The facilities include standardized product catalogues, price lists, electronic
payment methods, secured transmission of business information, and the
authentication of identity of both trading parties. The ultimate goal of e-
commerce is that the seller gets the payment and the buyer obtains the product.
To ensure transaction security, e-commerce needs to ensure content reliability,
integrity, non-repudiation, and to provide the relevant evidence in case of
disputes. Therefore, payment security on the web is crucial to ensure smooth
completion of a transaction. The prevailing method of security measure is by
electronic certification which provides ‘end-to-end’ security protection.
5. The Fifth layer: Practical Application of E-commerce
E-commerce is widely employed in supply chain management, electronic
marketing, electronic advertising, online shopping, online entertainment, pay-
information service and network banking.
Choosing the Best Ecommerce Framework

Introduction

Choosing the best ecommerce framework for the needs of an up and coming web
storefront is more than just a question of ticking boxes in a checklist. There are
three categories of evaluation points:

 Features
 Necessities
 Luxuries

Features are those parts of the system that make it stand out from other offerings.
Necessities are the core functions of the framework that enable it to do its job; lose
one of these and it becomes difficult to argue for a particular framework, despite
any features it might otherwise have.

Luxuries are those items which need not be there, but which make the case for a
framework that comes at a premium price. The luxury components expand the
system so that if feels worth the extra price paid to be able to take advantage of
them.

Small Businesses

Typically, a small business framework will have some basic core functionality, no
luxury add-ons, and features will vary between packages on offer. When a small
ecommerce venture is starting out, money will likely be part of the decision making
process, and as such, those systems which offer free versions will always appeal.

Once the store is established, and the vendor becomes more sophisticated, one of
the for-pay versions can be purchased, and the extra features taken advantage of.
The free version supports all the core functionality one would expect:

 Checkout and cart management

 Content template system
 Reporting

In addition, the for-pay versions add features such as credit card blacklisting,
encryption for credit card details, the possibility to manage special offers by
category, and multiple product support built-in. These features make the for-pay
versions attractive, because they take some of the manual work away from the site
creator.
Search engine optimization features might fall into the luxury category, but the
framework should at least support content management in a search engine friendly
way. The bare minimum should be URL rewriting and image tag customization, to
allow descriptions in image tags.

Larger Businesses

For those with a larger catalogue, more customers, and sophisticated requirements,
will be more appropriate. Besides a similar core function offering, these packages
add modules for marketing, loyalty, affiliate management and powerful design
features.

Generally speaking, given that the client base, product range, and business volume
will be higher for larger ecommerce sites, ecommerce frameworks in this category
need to take almost all the manual processing away from the site owner. If they do
not, then the tasks associated with order management (returns, shipping, tracking,
etc.), and basic site maintenance, will quickly become unmanageable.

Subsequently, those items which are luxuries for small ecommerce site owners
become features, and even necessities once the site in question grows much larger.
The potential for larger ecommerce sites is much higher and so the site owners will
want to offer affiliate schemes and the like to their visitors.

Marketing modules are of more importance in a large ecommerce framework,

because the site has to be able to generate income to offset the purchase price of the
framework. Of particular note are the features which make the site search engine
friendly, coupled with cross-selling possibilities.

The cross-selling aspect is important, because it allows the system to suggest

companion products to the customer. These will be suggested at the time of
purchase, either when adding an item to the cart, or when the cart is being checked
out. A framework that allows automatic and manual cross-selling should be
seriously considered, even when some other features might be lacking.

The network infrastructure of e-commerce

Network infrastructure is required for e-commerce to transport content. I-way is a
high-capacity, interactive electronic pipeline used to transfer content in case of e-
commerce. I-way can transfer any type of context like, text, graphics, audio, video. In
other words, multimedia contents are easily transported through I-way.
Components of I-way: - Consumer access equipment. - Local on-ramps, and - Global
information distribution networks.
Consumer access equipment are devices used by consumers to access the
multimedia interactive contents of e-commerce. In this segment, hardware and
software vendors are also included.

Local or access road, or on-ramps: This segment of I-way simplify linkages between
businesses, universities, and homes to the communications backbone. There are
four different types of provider of access ramps: - telecom-based - cable TV-based -
wireless-based and - computer-based online information services. These providers
link users and e-commerce application providers.

Global information distribution networks are the infrastructure that are connecting
countries and continents.

There are seven major issues to be discussed about I-way: cost, subsidies, and
allocation of scarce resources, regulation, universal access, privacy and social issues.
Cost: Who will pay for constructing the I-way? Subsidies: Who are to be given
subsidies? Allocation of scarce resources: Investment of the allocation of different
scarce resources would be wasted or not. Regulation: Who will fund for the highway
and who will write and enforce the rules to use the highway? Universal access: who
can access and at what cost? Privacy: Is using online activities secure? Social and
religious barriers: In cyberspace, everybody has right to write anything or publish.

Summary

So, the three most important points to look for in any ecommerce framework are:

 Template management
 Core framework functionality
 Search engine features

The framework needs to be adaptable enough to be able to cope with future

evolution of the site and market, whilst making this as easy as possible. The
functions must be able to support existing business, as well as take away as much of
the manual processing as possible.

Without good integration with search engine optimization functions, the framework
will not create content that will be suitable for direct submission to search engines.
Subsequently, the site creator will spend valuable time preparing submission pages,
time which would be better spent creating extending the site itself.
So long as the balance between cost and benefit can be kept, it is worth paying the
extra fees to have a framework that takes all the grind out of maintaining the
infrastructure and processing payments. The end result is profitability, as expensive
manual work is taken out of the loop.

Questions:
1. What do you mean by e-commerce? Write difference between inter and
intra organizational e-commerce?
2. What are the types of e-commerce? Explain point wise.
3. Explain what are the forces behind the development of e-commerce?
4. Explain the economic potential of e-commerce with example?
5. Discuss the incentives of engaging of e-commerce point wise.
6. What are the advantages of e-commerce to businesses & consumers
separately? Explain each point in detail.
7. Write short note on:- peer to peer e-commerce, business to business e-
commerce, consumer to consumer e-commerce.
8. What do you mean by mobile commerce?
9. Draw & explain the framework of electronic commerce.
10. How and when internet was adopted for E-commerce?
11. Write short note on B2B, B2C e-commerce.
12. Discuss the impact of E-commerce on business.
13. What is the difference between intranet and extranet?
14. Why do we need E-Commerce? What benefits does it offer when compared to
traditional Commerce?
15. Give an example situation where e-commerce is not preferable.
16. What are the significant issued in implementing electronic commerce in an
organization?
17. State the advantages of Electronic Commerce.
18. Differentiate between Internet and World Wide Web.
19. Explain the role of Internet in today’s marketing.
20. Draw and explain industry framework of E-com?